Congress Amends ERISA to Impose Sweeping Pharmacy Benefit Reporting Requirements

On February 3, 2026, the Consolidated Appropriations Act, 2026 (CAA) was signed into law, amending ERISA Part 7, along with the Public Health Service (PHS) Act and Internal Revenue Code (IRC), to mandate extensive reporting requirements related to group health plan contracting for pharmacy benefit management services. The new statutory provisions do not take effect until plan years beginning 30 months after the date of enactment, and the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments) are directed to undertake rulemaking to implement parts of the law. Read our full alert on the new reporting requirements here.

The CAA also amended ERISA section 408(b)(2) to impose additional requirements for ERISA health plan contracts and arrangements for pharmacy benefit management services to be deemed "reasonable" for purposes of qualifying for a prohibited transaction exemption, including that 100 percent of rebates and other renumeration from "applicable entities" pass through to plans and issuers. These amendments also expand the types of service providers and services covered by the prohibited transaction exemption fee disclosure requirements for health plans added to ERISA in 2020. We will address these amendments in a separate alert.

EBSA Commences Rulemaking on PBM Compensation Disclosure Requirements

The DOL Employee Benefits Security Administration (EBSA) published its much-anticipated proposed rule on pharmacy benefit manager (PBM) fee and compensation disclosures. The rule reaches beyond PBMs to impose disclosure obligations on third-party administrators (TPAs) and other service providers to ERISA self-funded group health plans and brokers and consultants to those plans. Read our full alert on the proposed rule here.

Seventh Circuit Finds Deceased Employee Failed to Effectuate Beneficiary Change from Ex-Wife

On February 2, 2026, the U.S. Court of Appeals for the Seventh Circuit reversed a district court decision in Packaging Corp. of America Thrift Plan for Hourly Employees v. Langdon, No. 25-1859 (7th Cir.), holding that the ex-wife of a deceased Packaging Corp. of America (PCA) employee was entitled to the balance of his 401(k) account. The appeal arose out of a 2023 interpleader action filed by PCA after both the ex-wife and the employee's estate claimed to be entitled to the balance of the employee's plan account. 

Following the employee's death, both the ex-wife and the estate demanded full payment of the 401(k) balance. The ex-wife relied on her status as the designated beneficiary of record since 2006. The estate, however, argued that the employee had effectively revoked that designation based on a fax he sent to the plan in 2022. In that fax, the employee requested that his ex-wife be removed "from the health, vision[,] and dental insurance and as a beneficiary of my 401(k), pension[,] and life insurance accounts." The fax further requested that the plan "fax [him] any necessary paperwork... that [he] may need to complete to effectuate the beneficiary change." 

The plan responded that a change of beneficiary required compliance with specific plan procedures, and no additional materials were ever submitted by the employee. Despite this, the district court denied the claims of both the ex-wife and the estate, instead awarding the account balance to the contingent beneficiary. The ex-wife appealed.

In reviewing the decision, the Seventh Circuit emphasized the absence of statutory guidance in ERISA regarding disputes among competing claimants or what constitutes an effective change in beneficiary designation. In such circumstances, the court explained, it is appropriate to apply the common law doctrine of substantial compliance. Under that doctrine, an attempted change is effective only if the insured "(1) evidenced his intent to make the change and (2) attempted to effectuate the change by undertaking positive action which is for all practical purposes similar to the action required by the change of beneficiary provisions of the policy." 

The court found that the employee satisfied the first requirement because his fax "unequivocally evidences his intent" to remove his ex-wife as beneficiary. But it concluded the second requirement was not met. The court noted that he "did not even attempt to utilize the proper procedures," and that his request for the necessary paperwork indicated he understood that additional formal steps were required. Because he failed to take those steps, the court held that the original 2006 beneficiary designation remained in effect. Accordingly, the ex-wife — not the estate or the contingent beneficiary — was entitled to the 401(k) balance.

This decision underscores the importance of adhering to plan specified procedures when making changes, including updating beneficiary designations. Plan sponsors and administrators should ensure that participants are clearly informed of these requirements, and participants should follow all required procedures in a prompt manner when seeking to modify beneficiary designations. As this case demonstrates, failure to follow plan procedures can result in unintended outcomes and costly disputes among surviving family members.

EBSA Releases FY 2025 Enforcement Data

EBSA released its fiscal year (FY) 2025 data on its enforcement results and informal complaint resolution activities. According to its report, EBSA recovered nearly $1.4 billion in FY 2025, $714 million of which was obtained through enforcement actions. Another $468 million was paid to workers through the work of EBSA Benefits Advisors who oversee the agency's informal complaint resolution process. EBSA also reports that it closed 878 civil investigations, with results in the form of monetary recoveries or other corrections in 63 percent of those investigations, and that 75 cases were referred to the DOL Office of the Solicitor for litigation. The report lists 253 criminal investigations, with 62 indictments and 45 criminal convictions. You can view the complete report here.

In the News

Joanne commented on the EBSA's revamped enforcement priorities in Bloomberg Law.

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