In this Independence Day edition of the ERISA Edit, we address some important circuit court rulings and Department of Labor (DOL) guidance pertaining to both retirement and health and welfare plans, including:

• Eleventh Circuit revives Drummond actuarial equivalence case 
• Eighth Circuit exempts General Electric from millions in withdrawal liability 
• Third Circuit affirms dismissal of 401(k) funds ERISA claim in favor of Quest
• Eighth Circuit advances ERISA preemption doctrine in class action against a pharmacy benefit manager (PBM)
• New district court suits challenging state PBM laws 
• DOL issues Trump account technical guidance

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Eleventh Circuit Revives Actuarial Equivalence Lawsuit

On May 26, 2026, the Eleventh Circuit reversed the district court decision dismissing the plaintiffs' actuarial equivalence lawsuit in Drummond v. Southern Company Services, No. 24-12773 (11th Cir.). Originally filed in September 2022 and later amended in September 2023, the putative class action lawsuit was filed against Southern Company, the plan's sponsor, the pension plan benefits committee, and the pension plan itself, relating to the defendants' treatment of annuity conversions and pre-retirement survivor benefits under ERISA. The complaint asserted four causes of action challenging the actuarial assumptions used to calculate joint-and-survivor annuities (JSAs) and qualified pre-retirement survivor annuity (QPSA) charges, alleging violations of ERISA §§ 1055 and 1053(a) and breach of fiduciary duties. The plaintiffs appealed the district court's dismissal (previously discussed here).

In the complaint, the plaintiffs alleged that their JSAs were worth less than the "actuarial equivalent" of the single-life annuities (SLAs) because the plan relied on outdated actuarial assumptions, including a nearly 75-year-old mortality table and an improper interest rate. The plaintiffs also challenged the plan's QPSA charges, alleging that the outdated assumptions "dramatically overestimated" mortality risk, resulting in charges exceeding the cost reasonably necessary to provide pre-retirement survivor benefits. The defendants argued that the use of the mortality tables was appropriate because ERISA requires only mathematical equivalence and permits plans to use any assumptions specified in the plan document.

The Eleventh Circuit rejected the defendants' position, holding that ERISA's requirement that a JSA be the "actuarial equivalent" of an SLA requires the use of assumptions a reasonable actuary would employ. The court emphasized that actuarial equivalence must be grounded in realistic, empirically based expectations and cannot be satisfied by "anything goes" assumptions merely because they are specified in the plan document. In doing so, the court aligned with the Sixth Circuit in Reichert v. Kellogg Company, 170 F.4th 473 (6th Cir. 2026), and relied on the statutory text, actuarial standards, and legislative history to conclude that plans must use reasonable mortality and interest rate assumptions at the time benefits are calculated, while still retaining flexibility within a range of reasonable choices.

Applying that framework, the court held that the plaintiffs' allegations regarding outdated mortality tables and resulting reductions in annuity value were sufficient to state a claim under ERISA § 1055. The court further concluded that an undervalued JSA may violate ERISA's anti-forfeiture provision because it effectively reduces the participant's protected normal retirement benefit. Similarly, the court found that the plaintiffs plausibly alleged that their QPSA charges exceeded the cost of providing the benefit in violation of ERISA's nonforfeiture rule.

Eighth Circuit Affirms $230 Million Withdrawal Liability Exemption 

On May 26, 2026, the U.S. Court of Appeals for the Eighth Circuit affirmed the district court's decision in General Electric Company v. Boilermaker-Blacksmith National Pension Trust, et al., No. 25-1442 (8th Cir.), exempting General Electric Company (GE) from withdrawal liability in the amount of $230 million. The case arises from an attempt by the Boilermaker-Blacksmith National Pension Trust (the Fund) to impose approximately $230 million in withdrawal liability on GE under ERISA.

Under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), withdrawal liability operates as an "exit price," requiring employers that withdraw from a multiemployer pension plan to pay their pro rata share of unfunded vested benefits, with liability triggered by either a complete or partial withdrawal pursuant to 29 U.S.C. § 1381(a). Partial withdrawal liability may arise from a significant decline in contribution base units or a "bargaining-out" withdrawal. Congress, however, created a limited exception for employers in the building and construction industry (BCI), specifying in 29 U.S.C. § 1383(b)(1)(A) that an employer is exempt where "substantially all" employees for whom it has a contribution obligation perform work in that industry. The court noted that the statute is silent on how "substantially all" is to be calculated.

In this case, the Fund assessed GE for two partial withdrawals totaling approximately $230 million, based on a decline in contribution base units and the closure of a facility. GE initiated arbitration under 29 U.S.C. § 1401(a), arguing that it qualified for the BCI exception because its workforce – comprised of boilermakers divided between field workers performing construction work and shop workers – was overwhelmingly engaged in the construction industry. The arbitrator agreed, finding that GE consistently operated within the construction industry during the relevant lookback period, and the district court upheld that determination.

On appeal, the central dispute was how to count employees to determine whether "substantially all" performed construction work under 29 U.S.C. § 1383(b)(1)(A). The Fund advocated for a monthly headcount approach that evaluates workforce composition month-by-month, while GE urged a cumulative approach aggregating employees over the entire lookback period. The court held that, although the statute does not prescribe a specific method, the cumulative headcount approach is more consistent with the purpose of the MPPAA and the BCI exception. Emphasizing the cyclical nature of construction employment, the court reasoned that a cumulative analysis "is better able to accommodate natural fluctuations inherent in building and construction employment," whereas the monthly method risks disqualifying employers based on temporary variation.

The court also rejected the Fund's argument that the parties' collective bargaining agreement – which required monthly contributions – should dictate the methodology for evaluating the BCI exception, explaining that contractual contribution mechanics do not control interpretation of the statutory exemption. At the same time, the court noted that employers and plans remain free to agree contractually on a particular method for assessing workforce composition. The court emphasized, however, that its conclusion was fact-specific and that a different method may be appropriate under a different set of circumstances. 

Third Circuit Focuses on Process in Affirming Judgment in Favor of Quest in Challenge to 401(k) Plan Management

On June 22, 2026, the U.S. Court of Appeals for the Third Circuit affirmed judgment in favor of Quest in the putative class action lawsuit, Johnson v. Quest Diagnostics Inc., No. 24-2866 (3d Cir.). The plaintiffs – participants in a Quest Diagnostics 401(k) Plan (the Plan) – brought a putative class action challenging the continued inclusion of two investment options in the Plan's lineup, an actively managed target-date fund and a real estate fund. The plaintiffs alleged that both funds underperformed comparable alternatives and should have been removed, arguing that retaining them and designating the challenged target-date fund (the Fidelity Freedom Funds) as the Plan's default investment was a breach of ERISA's prudence standard. 

The plaintiffs asserted claims for breach of the duty of prudence under ERISA § 404(a), failure to monitor under §§ 405(a) and 409(a), and, in the alternative, knowing-breach-of-trust. The district court granted summary judgment to the defendants, finding no breach because the record reflected a robust fiduciary process. That process included quarterly meetings of the investment committee, retention of independent investment advisors, regular fiduciary training, and targeted follow-up actions regarding the challenged funds. Because there was no breach, the plaintiffs' derivative claims also failed. 

On appeal, in assessing whether the defendants breached their fiduciary duty, the Third Circuit focused on whether the fiduciary process was prudent and concluded that it was. The appellate court agreed with the district court that the Plan's committee actively engaged with its advisors rather than simply adopting their views, regularly reviewed performance data, sought additional analyses when appropriate, and met with fund managers to discuss fund performance and strategy.

Critically, the Third Circuit rejected the plaintiffs' imprudence theory based on underperformance alone, emphasizing that ERISA does not require fiduciaries to guarantee results or react to short-term fluctuations. The court noted that pointing to a higher-performing alternative over a limited time horizon – particularly for investments designed to operate over decades – does not establish imprudence. Instead, it focused on whether the Plan's fiduciaries evaluated performance concerns and the underlying investment strategy in a prudent manner. The court found that the record showed the committee did so, including by meeting with the managers of the challenged funds, reviewing their performance, and considering alternatives before deciding to retain them.

The court also rejected the plaintiffs' argument that deviations from the Plan's Investment Policy Statements constituted a breach of fiduciary duty. It found that even if the statements were binding, they provided discretion to deviate, and doing so would not in itself constitute a breach. 

The decision emphasizes that a well-documented and thoughtful process remains the strongest defense to ERISA fiduciary claims. Performance outcomes alone are insufficient to establish liability, and fiduciaries who engage advisors, actively oversee investments, and respond to concerns through a reasoned process are well positioned to withstand scrutiny.

Eighth Circuit Advances ERISA Preemption Doctrine in PBM Putative Class Action

On June 29, 2026, the Eighth Circuit held in Flowers v. Caremark PCS Health, LLC --- F.4th---, 2026 WL 1859929 (8th Cir. June 29, 2026), that ERISA preempts the regulations implementing the network adequacy provisions of Arkansas's Pharmacy Benefits Manager Licensure Act (Network Adequacy Provision), Ark. Code Ann. § 23-92-505. 

Flowers was filed as a putative class action against the participant's PBM, Caremark PCS Health, LLC & Caremark PCS Pennsylvania Mail Pharmacy, LLC (Caremark), alleging that Caremark unjustly enriched itself by failing to provide an adequate pharmacy network as required under the Network Adequacy Provision and in violation of another Arkansas law providing for prescription delivery standards, Ark. Code Ann. § 17-92-119(b)(2) (Mail Order Provision). The Network Adequacy Provision states that PBMs must provide "[a] reasonably adequate and accessible [PBM] network for the provision of prescription drugs... [with] convenient patient access to pharmacies within a reasonable distance from a patient's residence." The Mail Order Provision provides in relevant part that "[i]f a pharmacy... is owned or controlled by... [a] pharmacy benefits manager,... then the pharmacy, including any common ownership or controlling entities,... shall not require that a patient receive his or her prescriptions through home delivery services." The Arkansas Insurance Commissioner's implementing regulations require PBMs to "ensure" that certain minimum percentages of plan members live within certain distances of in-network "retail community pharmac[ies]," Code Ark. R. 003.22.118-7(A)(1)-(2) (Geographic Coverage Requirements). 

Flowers alleges that Caremark unjustly enriches itself, in violation of the Network Adequacy Provision and Mail Order Provision, when it only covers plan members' maintenance prescriptions (prescriptions taken regularly for more than 90 days), if members fill those prescriptions "at one of its CVS retail pharmacy stores or through its mail-order delivery service." The district court dismissed the complaint for failure to state a claim and the Eighth Circuit affirmed. The Eighth Circuit quickly resolved Flowers's Mail Order Provision claim, agreeing with the district court that he did not plead sufficient facts to support the allegation that Caremark requires patients to fill prescriptions only through home-delivery services. 

The Eighth Circuit's decision thus focuses on ERISA's preemption of the Geographic Coverage Requirements. The court holds that these requirements "bulldoze" through Congress's objectives in enacting ERISA "to minimize[e] the administrative and financial burden of complying with conflicting directives and ensur[e] that plans do not have to tailor substantive benefits to the particularities of multiple jurisdictions" because they "require[] PBMs to tailor and retailor their networks—and perhaps even build new brick-and-mortar pharmacies—to comply with a set of exacting particularities." The Eighth Circuit contrasted the Geographic Coverage Requirements with another set of Arkansas PBM accreditation provisions that were not found to be ERISA-preempted by the Eighth Circuit in PCMA v. Wehbi, 18 F.4th 956, 968 (8th Cir. 2021). Essentially limiting Wehbi strictly to its facts, the court found that, unlike the Geographic Coverage Requirements, the provisions in Wehbi governed only a "noncentral" matter of plan administration, had only de minimis economic effects, and any disuniformity of plan administration was modest because the statutory provisions there "gave a simple, easily administrable instruction to PBMs." Also of note, the Eighth Circuit found that even though there was no fact record developed as to the economic effects of the Geographic Coverage Requirement because the case was at the motion to dismiss stage, the case could still be dismissed on ERISA preemption grounds because of the interference with plan administration uniformity based on the statutory language itself.

The Eighth Circuit's decision is important because it advances ERISA preemption doctrine in the Eighth Circuit, a particularly hot circuit on this topic. We have previously discussed pending PBM preemption cases in the Eighth Circuit here and here. 

ERISA Preemption Challenges Continue to Focus on State PBM Laws

Two new ERISA preemption cases were filed in June 2026 that challenge state PBM laws, PCMA v. Gillespie, No. 3:26-cv-03200 (C.D. Ill. June 16, 2026), and PCMA v. Blane, et al., No. 3:26-cv-00816 (M.D. Tenn. June 15, 2026). These cases reflect a recent trend of ERISA preemption challenges to state PBM laws, including two categories of state law provisions: anti-steering/network design and those prohibiting PBMs and/or health insurance issuers from owning pharmacies. Recent ERISA preemption jurisprudence has increasingly developed through these specific lines of cases regarding state PBM challenges. 

Gillespie challenges the reporting and anti-steering/network design provisions of the Illinois Prescription Drug Affordability Act (PDAA), which was signed into law on July 1, 2025, and became effective on January 1, 2026. With respect to reporting, the PDAA requires a PBM that provides services for a health benefit plan to submit an annual report to the Illinois Department of Insurance, health plan sponsors, and insurers no later than September 1 of each year or else face fines of up to $10,000 a day per offense. This reporting includes an extensive set of information to include drug costs, drug-related claims, and rebates. The Gillespie complaint argues that the reporting provisions are preempted because they intrude upon a central matter of plan administration consistent with the Vermont reporting law found to be preempted in Gobeille v. Liberty Mutual Insurance Company, 577 U.S. 312 (2016). 

The network design provisions of the PDAA prohibit "steering," which is defined to include requiring a patient to use an affiliated pharmacy or "offering or implementing" a plan design that "encourages" a covered individual to use an affiliated pharmacy "if the plan design increases costs" for the patient, such as imposing higher co-pays or cost-sharing for use of non-affiliated pharmacies and reimbursing a pharmacy less than the amount that a PBM would reimburse itself or an affiliate. In Gillespie, PCMA argues that the network design provisions are preempted under McKee Foods Corporation v. BFP Inc., 173 F.4th 242 (6th Cir. 2026), and PCMA v. Mulready, 78 F.4th 1183 (10th Cir. 2023), because the provisions dictate the design of health benefit plan provider networks.

Blane challenges Tennessee's Freedom, Access, and Integrity in Registered Pharmacy (FAIR Rx) Act, signed into law on May 22, 2026. The FAIR Rx Act prohibits any person from directly or indirectly owning, operating, controlling, or directing the operation of, in whole or in part, both a pharmacy and a health insurance issuer and PBM, subject to limited exceptions. PCMA brings ERISA and Medicare preemption claims, as well as Dormant Commerce Clause claims. As to the Commerce Clause claims, the complaint alleges that the FAIR Rx Act was not actually passed to protect against predatory PBM practices, given that there is already an extensive PBM regulatory framework in place, but that "[t]he real purpose is the protection of in-state companies at the expense of out-of-state companies." Blane also alleges that the FAIR Rx Act was modeled after Arkansas Act 624, which places restrictions on a PBM's ability to own or operate pharmacies in Arkansas, and notes that Arkansas Act 624 was preliminarily enjoined on July 28, 2025, on Dormant Commerce Clause grounds in Express Scripts Inc. v. Richmond, Nos. 4:25-cv-00520, 524, 561, 598 (E.D. Ar.). The Express Scripts decision is currently on appeal to the Eighth Circuit and has been fully briefed but not yet orally argued. The Eighth Circuit case is significant for its development of jurisprudence challenging state PBM laws on constitutional commerce clause grounds. We've previously discussed Express Scripts here. 

We are also closely watching for a decision by the Seventh Circuit in Central States, Southeast & Southwest Areas Health & Welfare Fund & Whobrey v. McClain, No. 25-2727 (7th Cir.). Oral argument occurred on April 10, 2026. As described in greater detail here, Central States involves an ERISA preemption challenge to the compensation and network adequacy provisions of the Arkansas Pharmacy Benefit Manager Licensure Act (PBMA), the same state statute involved in the Flowers matter above. Central States has appealed to the Seventh Circuit the dismissal of its ERISA preemption claim, with the dismissal having been based on the challenged provisions supposedly constituting cost regulation allowable under Rutledge v. PCMA, 592 U.S. 80 (2020). 

DOL Guidance Says Trump Accounts Are Generally Not ERISA Plans

On June 17, 2026, the DOL's Employee Benefits Security Administration (EBSA) issued Technical Release 2026-02 to address whether Trump accounts and/or employer contributions to Trump accounts are ERISA plans. Trump accounts were established as part of § 70204 of the One Big Beautiful Bill Act of 2025 (OBBBA) and are a type of individual retirement account (IRA) established for the exclusive benefit of an eligible individual and designated as a Trump account at the time it is established. EBSA issued this guidance ahead of implementation of the Trump account program, including the pilot program for eligible children born after December 31, 2024, and before January 1, 2029. 

The Technical Release notes that "[i]n enacting the OBBBA, Congress allowed employers to make tax-favored contributions under section 128 of the Code, but did not explicitly address whether such a contribution arrangement or the accounts that receive the contributions are subject to Title I of ERISA." The Technical Release concludes that "Trump accounts and Trump account contribution programs generally will not constitute 'employee pension benefit plans' within the meaning of section 3(2) of ERISA." The main reasoning is that Trump accounts generally provide benefits to dependents of employees rather than employees themselves and therefore do not meet the definition of "employee pension benefit plan" or "pension plan" in section 3(2) of ERISA even if funded in whole or in part by employer contributions. 

The Technical Release highlights one exception to non-ERISA status of Trump accounts, which is if a Trump account is established for "eligible individuals" including employees that are minors, which "could potentially trigger ERISA coverage." As to this category of individuals, the Technical Release explains that "a pension plan within the meaning of section 3(2) of ERISA would not exist so long as the conditions of the Department's IRA safe harbor regulation at 29 C.F.R. 2510.3-2(d) are satisfied." 

The Technical Release goes on to offer practical guidance as to what may or may not constitute employer involvement with respect to the safe harbor regulation, citing the premise from Massachusetts v. Morash, 490 U.S. 107 (1989), for the principle that "courts should look to the provisions of the whole law, and to its object and policy in deciding what type of benefit programs are covered by ERISA." Adopting this philosophy, the Technical Release reflects an employer-friendly view of endorsement, stating that while employers should be careful not to endorse these types of benefits, the endorsement prong of the safe harbor regulation should "not paralyze the employer and prevent it from acting reasonably and rationally while carrying out the many different types of activities clearly contemplated by the safe harbor." In sum, "[w]hen an employer merely facilitates the program's availability, however, and does not exercise control over it or make it appear to employees to be part and parcel of the company's own benefit package, the endorsement prong is not violated." 

The Technical Release's focus on employer actions with respect to voluntary benefit status is also notable given the recent spotlight on voluntary benefits created by the recent wave of voluntary benefit cases regarding accident, critical illness, and hospital indemnity insurance programs, which are typically fully funded by employees, as discussed previously here. It remains to be seen whether any of these principles articulated with respect to Trump accounts will be extended more broadly to safe harbor analysis for other types of employee benefit plans. 

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