EMPLOYMENT CORNER

A class action lawsuit recently filed against a pharmaceutical company (the “Company”), as well as its Pensions and Benefits Committee and individual committee members may foreshadow future litigation. The suit contained allegations of breach of fiduciary duties and other violations of ERISA in the management of the Company’s group health plan. The complaint focused on the alleged mismanagement of the Company’s prescription-drug benefits, which plan participants claim cost the Company’s ERISA plans and its employees millions of dollars in the form of higher payments for prescription drugs. The Company was accused of failing to exercise prudence in selecting its pharmacy benefit manager (“PBM”) and, in turn, agreeing to poor contract terms that led to overpayment. The complaint alleged that ERISA required a diligent and thorough comparison of PBMs that sought the lowest level of costs for services and continuous monitoring to ensure plan expenses remained reasonable, which the Company allegedly failed to undertake. 

This lawsuit may be the beginning of a trend of plaintiffs’ firms focusing on group health plan management and higher scrutiny of internal processes surrounding vendor selection and oversight. With the potential for increased litigation in the area, it is essential for companies to work with their insurance brokers to reevaluate their current structure and ensure that proper and periodic oversight that can help avoid being targeted.

For its fiscal year 2023 (“2023 fiscal year”) the EEOC recovered more than $665 million for employment discrimination victims. This record-breaking recovery reflects a 29.5% increase over the past year and an increased demand for the EEOC’s services and proposed remedies for victims of employment discrimination. 

Of the $655 million recovered by the EEOC, a large portion of that amount was secured through mediation and settlement of employment discrimination suits in the private sector and state/local government workplaces. Additionally, a portion of the EEOC’s recovery was obtained for thousands of federal employees and applicants, resulting in more than a 53% increase from the 2022 fiscal year. 

The EEOC also initiated hundreds of new lawsuits in 2023 fiscal year, with these new actions being brought on behalf of individual victims and both non-systemic and systemic suits involving multiple victims. The EEOC reported that it has authorized the hiring of hundreds of new positions within the commission to prevent and remedy employment discrimination. 

Based upon its record-breaking year, the EEOC is finding some success in fulfilling the agency’s main objective, remedying unlawful employment discrimination, and advancing equal opportunities for all by enforcing federal laws prohibiting discrimination in the workplace.