A federal judge has dismissed the ERISA lawsuit brought by former Wells Fargo employees against the company for breach of fiduciary duty in its management of the employee health plan.
A Quick Recap The plaintiffs alleged that Wells Fargo mismanaged its prescription drug program by choosing Express Scripts (ESI) as its pharmacy benefit manager (PBM) without a competitive bidding process. The complaint detailed massive price inflation: for example, charging over $1,800 for a cancer drug that pharmacies acquired for under $100.
The employees argued that this mismanagement resulted in higher premiums and out-of-pocket costs for plan participants and violated Wells Fargo's fiduciary obligations under ERISA.
But the court never got to the merits. Instead, it dismissed the case under Rule 12(b)(1) for lack of Article III standing.
The Court’s Rationale: No Concrete and Personal Injury The court ruled that the plaintiffs failed to demonstrate the kind of "concrete and particularized" harm that Article III requires. It found their injury to be too "speculative" and "conjectural."
Specifically:
The health plan functions more like a defined benefit plan, where participants are entitled to a set of health services, not to any particular cost savings.
Even if Wells Fargo overpaid ESI, the court emphasized that the plaintiffs could not show they personally paid more as a result.
Crucially, the plan grants Wells Fargo "sole discretion" to set premium and cost-sharing amounts. So even if the plan saved money, the employer wasn’t obligated to pass those savings along.
As the judge put it:
"If Plaintiffs prevailed in this case and received every bit of the relief they request, Wells Fargo could still increase Plan participants' contribution amounts under the Plan's terms without any violation of ERISA having occurred."
And:
"The connection between what Plan participants were required to pay... and the administrative fees the Plan was required to pay ESI, is tenuous at best."
The Result? Dismissed without prejudice. The court left the door open for plaintiffs to try again—but only if they can plead a more direct, redressable injury.
What Would That Look Like? The “Perfect Plaintiff” For a case like this to survive dismissal, you need a plaintiff who:
Is a current participant in the health plan;
Is enrolled in a high-deductible health plan, so inflated prices hit them directly;
Has Explanation of Benefits (EOBs) or receipts showing they paid significantly more than market price (e.g., $1,881 for a drug they could've gotten for $115);
Possesses an actuarial report or consultant analysis showing the employer could have saved X% by carving out specialty pharmacy or selecting a pass-through PBM, but instead chose ESI, inflating costs;
Can point to internal employer communications or historical documentation linking increased plan costs to participant contributions (e.g., "Due to rising healthcare costs, your premium will increase next year").
The Bigger Problem: Courts Still Treat Health Plans Like Pensions There is a growing disconnect between judicial reasoning and the reality of how modern health plans work.
Health benefits aren’t pensions. Costs are not abstract or decades away. They are annual, they are direct, and they are passed down to employees in the form of higher premiums, deductibles, and coinsurance.
Every year, employers use projected plan costs to determine how much employees will pay. When PBMs inflate prices or TPAs mismanage claims, those excess costs don’t disappear. They show up in next year’s employee cost share. That is not hypothetical. It is math.
And yet courts continue to rely on precedents developed in the context of retirement benefits—where the injury analysis is fundamentally different. It’s not that the judiciary is ignoring reality; it’s that the statutory and doctrinal tools they have were built for a different kind of plan.
A possible path forward? A clearer statutory framework—or interpretive guidance—that acknowledges how financial harm manifests in health plans differently than in retirement plans. Courts need a roadmap for analyzing injury and redressability in a system where cost-sharing mechanisms shift burden to participants immediately and annually.
"Saying participants have no injury unless they were ‘denied a benefit’ is an insult to every employee who has deferred care because they couldn’t afford their deductible."
Until that distinction is recognized—and ideally codified—fiduciaries will continue to escape accountability, and the rising cost of mismanagement will remain a silent tax on the American worker.
This dismissal isn’t the end. But it is a signal. It tells us what must be shown next time.
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