A California federal court dismissed PCMA’s challenge to California’s law SB 41 imposing fiduciary duties on PBMs. PCMA sued California Attorney General Rob Bonta in the US District Court for the Central District of California in January, arguing that this law interferes with self-funded health plans that are federally regulated under ERISA. Bonta argued that PCMA had not demonstrated specifics on how the law would negatively impact their daily business practices and that “other than regulating prohibited transactions, ERISA has nothing to say about plan-service provider relationships.” Judge Otis D. Wright, II, agreed, saying PCMA’s arguments only amounted to an “abstract theory” of injury by failing to identify specific contract provisions or operational changes PBMs would have to undergo. “Without such allegations, the Court is left to guess what conduct the statute requires and what burdens it imposes,” he wrote in his opinion dated July 24. The judge allowed PCMA to file an amended complaint, which the group said in a statement it plans to do. PCMA Counsel Michael Kimberly noted that Wright “recognized that compliance costs and changes to business operations are concrete injuries.” If Judge Wright finds that PCMA’s amended complaint properly states a concrete injury, the case will move forward.
For more information, contact NACDS’ Sandra Guckian at 703-774-4801.