We have now moved to monthly publication of the ERISA Edit, with a deep dive into more topics than the previous weekly version. In this edition, we address some important developments in the health and welfare and retirement spaces to include: 

• McKee decision from the Sixth Circuit on ERISA preemption of state pharmacy benefit manager (PBM) laws
• Circuit court jurisprudence on anti-discrimination challenges to gender-affirming care plan exclusions 
• Developments in district court PBM fee litigation 
• Department of Labor (DOL) proposed rule on alternative investment options
• DOL final rule on investment advice fiduciary framework 
• Challenge of environmental, social, and governance (ESG) financial risk in 401(k) plans
• The Supreme Court's renewed interest in the scope of equitable remedies under ERISA

Sixth Circuit Issues Decision in McKee

On April 7, 2026, the Sixth Circuit issued its decision in McKee Foods Corporation v. BFP Inc. d/b/a Thrifty Med Plus Pharmacy, et al., No. 25-5416 (6th Cir. Apr. 7, 2026), delivering a complete victory to McKee in its challenge, based on ERISA preemption, to Tennessee's law regulating PBMs, 2021 Tenn. Pub. Ch. 569. McKee sponsors a self-funded health benefits plan for its employees and has been in a long-running dispute with a particular pharmacy and the State of Tennessee regarding the application of Tennessee's PBM law. Our prior report on this case is here.

In its decision, the Sixth Circuit swatted down various procedural efforts by the State to avoid a ruling on the merits, including arguments concerning standing, the supposed lack of an ERISA private right of action, and ripeness. When addressing the merits of ERISA preemption, the court held forcefully that ERISA preempts the Tennessee law's any-willing-pharmacy requirements, as well as the law's "incentive provisions," which the court listed as regulating copays and coinsurance, the use of specialty drugs from specific providers, and the offering of financial incentives for the use of specific pharmacies. The court saw all of these state measures as impermissibly interfering with ERISA-plan design features, central matters of plan administration, and the nationally uniform administration of plan benefits. Finally, the Sixth Circuit rejected the notion that Tennessee could reach the McKee plan by virtue of ERISA's insurance savings clause. Overall, the Sixth Circuit followed the approach adopted by the Tenth Circuit in PCMA v. Mulready, 78 F.4th 1183 (10th Cir. 2023), where the Tenth Circuit held that an expansive Oklahoma law regulating PBMs flunked ERISA preemption. Our previous reports on Mulready are here, here, and here.

McKee, along with Mulready, limits the Supreme Court's decision in Rutledge v. PCMA, 592 U.S. 80 (2020), which upheld an Arkansas PBM law, to state regulations that simply and exclusively address cost reimbursement rates between PBMs and pharmacies, with Tennessee's law in McKee and Oklahoma's in Mulready plainly doing much more. The Seventh Circuit is next poised to address ERISA preemption of state PBM laws in Central States, Southeast & Southwest Areas Health & Welfare Fund & Whobrey v. McClain, No. 25-2727 (7th Cir.), with the oral argument having occurred on April 10, 2026. After that, the Eighth Circuit will consider ERISA preemption of Iowa’s PBM law in Iowa Association of Business & Industry v. Ommen, Nos. 25-2494, 25-2591, where Miller & Chevalier is representing the plaintiffs/appellees/cross-appellants. That case awaits an order from the Eighth Circuit setting an oral argument date. 

Fourth Circuit Latest to Reject Discrimination Challenge to Exclusion for Gender-Affirming Care

On March 10, 2026, in Anderson v. Crouch, No. 22-1927 (4th Cir., Mar. 10, 2026), the U.S. Court of Appeals for the Fourth Circuit held that a state health plan's coverage exclusion of gender-affirming surgery did not violate the Equal Protection Clause, the Patient Protection and Affordable Care Act (ACA), or the Medicaid Act. Crouch concerns a West Virginia Medicaid plan that excludes surgical treatments for gender dysphoria. The panel found that United States v. Skrmetti, 605 U.S. 495 (2025), dictated the holding, thereby departing from the prior en banc ruling in the case. The recent decision also found that Medina v. Planned Parenthood South Atlantic, 606 U.S. 357 (2025), foreclosed the plaintiffs' claims under the Medicaid Act. 

The Crouch decision is notable for several reasons. First, circuits have been divided over how Skrmetti applies Bostock v. Clayton County, 590 U.S. 644, 656 (2020), to gender-affirming care exclusions. In Bostock, the Supreme Court held that firing an individual based on sexual orientation or gender identity violated Title VII. Courts have disagreed over whether Skrmetti relied on Bostock in concluding that Tennessee's law prohibiting gender-affirming medical treatment for minors did not violate the Equal Protection Clause. 

In Lange v. Houston County, 152 F.4th 1245 (11th Cir. 2025) (en banc), which we have previously covered, the Eleventh Circuit found that a county health policy excluding gender-affirming surgeries did not violate Title VII, relying primarily on Skrmetti, and rejecting the argument that Bostock compelled a different decision. The Fourth Circuit adopted a similar approach in Crouch, relying on Skrmetti's application of Bostock to hold that the West Virginia policy exclusion for gender-affirming surgeries does not discriminate. 

Second, Crouch is significant because it extends the reasoning of Skrmetti (and Skrmetti's interpretation of Bostock) to discrimination claims pursuant to section 1557 of the ACA. Although Skrmetti did not involve the ACA, in Crouch, the Fourth Circuit held that Skrmetti's reasoning "compels the conclusion" under section 1557, which incorporates Title IX's prohibition on discrimination "on the basis of sex." In so doing, Crouch creates connective tissue among the Equal Protection Clause, Title VII, section 1557 of the ACA, and Title IX in a post-Skrmetti world. 

A similar case, Folwell v. Kadel, No. 22-1721, originally heard en banc by the Fourth Circuit with Crouch and dealing with a similar Medicaid exclusion, was remanded and stayed pending resolution of Crouch and is likely to be resolved consistently with that decision. 

Although discrimination claims against plan exclusions have recently failed in federal court, employers and health plans must still proceed cautiously, especially given that some states' laws, including California, Colorado, and Virginia, require the very coverage at issue in cases like Crouch and Lange. 

District Court Invokes Rule 7(a)(7) Reply as to Prohibited Transaction Claims in Closely Watched PBM-Fees Litigation

On March 9, 2026, in Stern v. JPMorgan Chase & Company, et al., No. 25-cv-02097 (JLR), the U.S. District Court for the Southern District of New York granted in part JPMorgan Chase & Co. and related parties' (JPMorgan) motion to dismiss for lack of jurisdiction and failure to state a claim. We have previously written about this case here. For background, current and former JPMorgan employees brought a putative class action under ERISA, alleging that JPMorgan breached its fiduciary duties and engaged in prohibited transactions with respect to JPMorgan's self-funded health plan's prescription drug program. 

We have previously written about two similar PBM fee cases. These cases, though, failed at the motion to dismiss stage on Article III standing grounds, Navarro v. Wells Fargo & Co., No. 24-cv-3043 (D. Minn. Mar. 6, 2026), and Lewandowski v. Johnson & Johnson, No. 24-cv-671 (D.N.J. Nov. 26, 2025), appeal docketed, No. 26-1107 (3d Cir. Jan. 21, 2026) (Lewandowski II). The Stern court, instead, found that the plaintiffs had adequately pled standing on the specific theory that they had paid more out of pocket for prescription drugs because of JPMorgan's alleged fiduciary breaches, but rejected the plaintiffs' theory that they were injured by higher premiums as too speculative. Unlike in Navarro, the plaintiffs in Stern sufficiently pled personal financial injury through allegations regarding markups of the 404 generic drugs contained in the plan's formularies. The Stern court warned, however, that while the "Plaintiffs' use of [National Average Drug Acquisition Cost] and cash prices as benchmarks in their pricing analysis" withstands a motion to dismiss, it is ultimately a "question for the merits." Further, the court included an extensive explanation that the alleged benchmark comparisons were not "apples to apples," and that the "Plaintiffs' allegations that they overpaid for their prescriptions fall apart on closer inspection." Lastly, on standing, the Stern court rejected Lewandowski II because of its reliance on Navarro and also because it reasoned Lewandowski II incorrectly suggested there was no injury-in-fact on the basis that "prescription-drug overcharges could be offset by benefits received from other covered services."

Turning to the merits, the court found that the plaintiffs failed to state a claim with respect to breaches of fiduciary duty because JPMorgan's alleged conduct was "not fiduciary in nature and may be dismissed on that basis alone." The court noted that the allegations "collectively focus less on administration and more on Defendants' decisions regarding the design and structure of the Plan's pharmacy benefit arrangements" and further specified that "[d]efining the formulary framework, determining cost-sharing terms, and choosing between pricing models are components of benefit design." The court also rejected the breach of duty of loyalty claim, including conflicts of interest with JPMorgan's Haven Healthcare and other business dealings, as corporate business decisions rather than fiduciary duties of a plan administrator. 

The court, however, retained the prohibited transaction claims. The plaintiffs allege that JPMorgan "transferr[ed] assets to Caremark in exchange for services, with compensation that included spread pricing and retained rebates," and that the administrative fees paid to Caremark were unreasonable. As expected, the court cited Cunningham v. Cornell, 604 U.S. 693 (2025), to find that the plaintiffs had adequately pleaded an ERISA § 406 claim on its face and refused to dismiss those claims. In adherence with Cunningham, the court is requiring the plaintiffs to file a reply pursuant to Federal Rule of Civil Procedure 7(a)(7) that raises one of the ERISA § 408 exemptions from prohibited transactions as an affirmative tool as suggested by the court in Cunningham. A Rule 7(a)(7) reply is rarely utilized, but in this case we will see the procedure used in practice. 

Proposed Regulation on Alternative Investment Options

On March 30 2026, the DOL issued a proposed regulation in response to Executive Order (E.O.) 14330, "Democratizing Access to Alternative Assets for 401(k) Investors." The proposed regulation seeks to clarify fiduciaries' obligations under ERISA when selecting designated investment alternatives (DIAs) for participant-directed plans. Although E.O. 14330 focused on the inclusion and accessibility of alternative investments, the proposed regulation extends well beyond that scope. It applies to the selection of any designated investment alternative, regardless of asset class, and adopts a process-driven framework that emphasizes ERISA's prudence standard as one grounded in disciplined, well-documented decision-making rather than categorical judgments about particular types of investments.

This broader, process-based approach reflects recent litigation trends in which plaintiffs have attempted to challenge certain investments as imprudent DIAs solely because they differ from traditional target date funds. The proposed regulation effectively responds to this litigation strategy by reaffirming fiduciary discretion and flexibility, while establishing a process-based safe harbor built around six non-exclusive factors: performance, fees, liquidity, valuation, meaningful benchmarks, and complexity. By clarifying these considerations, the proposal seeks to provide fiduciaries with greater certainty, reduce litigation risk, and reinforce the principle that prudence under ERISA depends on how investment decisions are made, rather than on the nature of the investment itself. The DOL has opened a 60-day comment period, providing interested parties an opportunity to submit comments on the proposed rule.

DOL Reinstates Investment Advice Fiduciary Rule

On March 17, 2026, the DOL published a final rule and related technical amendments reinstating its long standing investment advice fiduciary framework. This action followed decisions by two federal district courts in Texas, Federation of Americans for Consumer Choice, Inc. v. U.S. Department of Labor, No. 6:24-cv-00163-JDK (E.D. Tex. Mar. 12, 2026), and American Council of Life Insurers v. U.S. Department of Labor, No. 4:24-cv-00482 (N.D. Tex. Mar. 17, 2026), that vacated the Biden administration's 2024 Retirement Security Rule. The 2024 Rule sought to significantly expand the circumstances under which individuals and entities providing investment related advice would be treated as ERISA fiduciaries.

The DOL's final rule restores the five-part test first adopted in 1975 to determine when a person is acting as an "investment advice fiduciary" under ERISA. In explaining the DOL's approach, Assistant Secretary of Labor for Employee Benefits Security Daniel Aronowitz stated that the 2024 Rule "wrongly sought to impose ERISA fiduciary status on securities brokers and insurance agents when there was not a relationship of trust and confidence…." He further noted that regulation of those market participants would continue to fall within the purview of the Securities and Exchange Commission (SEC).

Litigation Challenges Fiduciary Treatment of Climate-Related Financial Risk in 401(k) Plans

On March 3, 2026, a participant in the Cushman & Wakefield 401(k) Plan filed a putative class action in the U.S. District Court for the Western District of Washington, Kvek v. Cushman & Wakefield, No. 2:26 cv 00736 JHC, against Cushman & Wakefield U.S., Inc., and members of its investment committee. The complaint alleges ERISA violations arising from the selection and retention of one of the plan's investment options despite what the plaintiff characterizes as warning signs relating to climate-related financial risk.

The action is brought under ERISA §§ 502(a)(2) and 502(a)(3) and asserts claims for breach of fiduciary duties under ERISA § 404, prohibited transactions under ERISA § 406, and failure to monitor appointed fiduciaries. While the complaint includes allegations commonly seen in 401(k) fee and performance litigation – such as underperformance, high fees, and conflicted service arrangements – it is notable for its emphasis on climate-related financial risk as part of the fiduciary prudence analysis.

Specifically, the plaintiff alleges that the defendants breached their fiduciary duties with respect to the challenged fund due to the fund's allegedly deficient approach to identifying and managing climate-related financial risks, as well as its asserted underperformance relative to its benchmark and comparatively high expense ratios. The complaint further alleges that these issues were present at the time the fund was added to the plan and became more pronounced over time, yet the fund remained available to participants. In addition, the plaintiff alleges that the fiduciaries' decision-making process was flawed by the failure to account for conflicts of interest involving the plan's trustee, whose affiliates also served as the plan's recordkeeper and investment advisor.

The allegations in Kvek are unusual in that, rather than framing environmental considerations as values-based ESG investing, the complaint characterizes climate change as a financially material, cross-sector risk affecting investment performance and portfolio stability within ERISA's established duties of prudence and loyalty. The complaint asserts that prudent plan fiduciaries routinely account for such risks and that climate risk management has become standard institutional practice, while noting that Cushman & Wakefield offers advisory services in this area but allegedly did not ensure comparable analysis in its own plan.

Whether Kvek represents an isolated application of existing ERISA theories or signals the emergence of a broader category of climate risk-focused fiduciary litigation remains to be seen, and the case will likely be closely watched for its potential influence on future filings.

Supreme Court Again Shows Interest in the Scope of ERISA's Equitable Remedies

In a long litany of decisions since the 1990s – we all know them by their shorthand names: Mertens, Great-West, Sereboff, McCutchen, and Montanile – the Supreme Court has shown remarkable fascination with exactly what constitutes "appropriate equitable relief" under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3). It has reached back to the days prior to 1938 when the equity and law benches were separate, in order to determine what qualifies as equitable relief under ERISA. The focus on the dusty tomes of Old Equity once prompted Justice Ruth Bader Ginsburg (in her dissent in Great-West) to say colorfully that the Court's jurisprudence in this area exists in a "time warp" and calls "for analysis that may seem to reek unduly of the study, if not of the museum."

Nonetheless, the Supreme Court is ready for more. On April 6, 2026, it asked for the Solicitor General's views on whether to grant certiorari in Aldridge v. Regions Bank, No. 24-5603 (petition filed Nov. 14, 2025), a case coming from the Sixth Circuit, No. 24-5603 (July 17, 2025), reported at 144 F.4th 828 (6th Cir. 2025). That case deals with the question of whether "surcharge" is an equitable remedy available against a fiduciary under § 502(a)(3). Along with the Fourth Circuit's recent decision in Rose v. PSA Airlines, Inc., 80 F.4th 488 (4th Cir. 2023), the Sixth Circuit in Aldridge held that surcharge is not available against a fiduciary. Our previous reporting on PSA Airlines can be found here, here, and here. The petitioners suggest that these holdings are contrary to dictum in CIGNA Corp. v. Amara, 563 U.S. 421 (2011). The views of the Solicitor General probably will not be filed with the Court until the end of 2026, postponing a decision from the Supreme Court on whether or not to grant certiorari until January 2027.

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