Compliance News Week Ending January 31, 2025

Compliance News Week Ending January 31, 2025

In this Article

1. Johnson and Johnson Case Dismissed
2. Complaint Filed Challenging Mental Health Parity Final Rules
3. Updated IRS Publication 969 - Taxation Rules for HSAs, MSAs, FSAs and HRAs

Johnson and Johnson Case Dismissed 

Lewandowski v. Johnson & Johnson made plan fiduciaries and ERISA attorneys pay closer attention to the risks of fiduciary breaches for health and welfare benefit plans. Amongst other things, the complaint alleged that Johnson & Johnson failed to prudently manage prescription drug costs in its selection and management of the plan's pharmacy benefit manager (PBM), which led to excessive drug costs for the plan and for plan participants. 

The case was dismissed for lack of standing. The court determined that the alleged injury due to higher premiums, deductibles and coinsurance was speculative and hypothetical, and the injury due to higher out-of-pocket costs was not redressable. 

For many employers worried about an increase in litigation and potential liability related to breach of ERISA fiduciary duties, this case dismissal may be interpreted as good news. However, potential plaintiffs may view the detail in the court's dismissal as a guide to how to successfully bring future claims. 

Regardless, employers as plan sponsors and fiduciaries are encouraged to act in the best interest of plan participants and to regularly monitor benefit compliance requirements and operate their plans accordingly. 

Complaint Filed Challenging MHPAEA (Mental Health Parity) Final Rules 

At the same time that the previous administration released its annual report to Congress providing an overview of the agencies' enforcement efforts and findings regarding compliance with the Mental Health Parity & Addiction Equity Act (MHPAEA), The ERISA Industry Committee v. HHS, IRS & DOL was filed in the U.S. District Court of DC challenging the MHPAEA final rules issued in September 2024. 

The complaint argues broad overreach by the agencies as well as a violation of the Administrative Procedure Act (APA) in regard to the final rules' introduction of meaningful benefits, material differences in access, and the ERISA fiduciary certification requirements. In addition, the complaint argues that the 2025 effective date is unreasonable and that no clear guidance has been provided on what should be in a comparative analysis. 

It's not clear how the new administration will respond to this challenge, but even if the challenge is successful in rolling back some or all of the final rules issued last year, the framework of MHPAEA remains in place, including the requirement for plans to have a written comparative analysis (which was added by legislation). 

Updated IRS Pub. 969 

The IRS released an updated Publication 969 with general information about the taxation rules associated with health savings accounts (HSAs), medical savings accounts (MSAs), health flexible spending arrangements (FSAs) and health reimbursement arrangements (HRAs) to be used in preparing individuals' 2024 tax returns.

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