A U.S. district judge in New Jersey has granted, in part, Johnson & Johnson’s motion to dismiss a lawsuit against the company alleging mismanagement of its health plan costs.

The court ruled on Friday that the plaintiff, Ann Lewandowski, lacked Article III standing to claim that she suffered economic injury by paying higher premiums and out-of-pocket costs due to J&J’s “mismanagement” of its health plan.

In Lewandowski v. Johnson and Johnson, filed in February 2024 in U.S. District Court for the District of New Jersey, an employee accused the company of breaching its fiduciary duties by mismanaging its prescription-drug benefits program, thereby costing its Employee Retirement Income Security Act-covered plans and their employees millions of dollars in the form of higher payments for prescription drugs, higher premiums, higher deductibles, higher coinsurance payments and higher copays.

The J&J case was the first lawsuit to challenge the fiduciary standard for health care plan sponsors under the Consolidated Appropriations Act of 2021. The CAA requires certain service providers to issue fee disclosures to employer-sponsored group health plans in a manner akin to employer-sponsored retirement plans.

In the lawsuit, Lewandowski, represented by Fairmark Partners LLP, cited the pricing of a generic drug for multiple sclerosis, for which the plan pays substantially more than large retail pharmacies charge without insurance.

Instead of using more reasonable, “cost-effective” options for its participants, the plaintiff argued that J&J “force[d] its benefits plans and covered employees and retirees to acquire drugs via some of the most expensive methods conceivable.”

J&J was also accused of steering beneficiaries toward a mail-order pharmacy that charges higher prices than retail pharmacies for the same drug and of failing to engage in a prudent and reasoned decisionmaking process before agreeing to a pharmacy benefit manager contract that required participants to pay a higher price for drugs.

U.S. District Judge Zahid Quraishi found that Lewandowski did not prove she suffered an injury by alleging that “harms to participants/beneficiaries have taken the form of higher premiums, higher deductibles, higher coinsurance, higher copays and lower wages or limited wage growth.”

“Such an injury, at best, is speculative and hypothetical,” the judge wrote in his opinion.

Quraishi also found that Lewandowski’s claim that she paid more in health care premiums due to J&J’s alleged breach of fiduciary duty during the negotiation process for the health plans does not support Article III standing because the “outcome of the suit would not affect [the plaintiff’s] future benefit payments.”

Again, Quraishi stated that the allegations about higher premiums are “speculative and stand on nothing more than supposition.”

According to the decision, the plaintiff alleged that she pays premiums “equivalent to 102% of the combined employer and employee contributions for similarly situated individuals under the plans,” without any allegation or evidence of premiums on other plans or that J&J’s specific conduct resulted in higher premiums.

In addition, the court found that the plaintiff lacked standing for her claim that she suffered injury by paying higher out-of-pocket costs because the injury is “not redressable by an order from the court.” Lewandowski’s injury is not redressable because she reached her prescription drug cap for each year asserted in the amended complaint, according to the opinion. Essentially, Quraishi held that a favorable decision would not be able to compensate Lewandowski for the money she already paid.

However, the court found that the Lewandowski’s third count, which alleged that Johnson & Johnson failed to provide her documents after she requested them in writing, was justified. The court agreed that the company failed to respond to the request for documents within 30 days and, thus, denied the defendant’s motion to dismiss that claim.

With two counts dismissed without prejudice for lack of standing, the plaintiff will be given leave to file a second amended complaint within 30 days of the ruling.

Because the complaint’s main claims were dismissed on a standing issue, Paul Holmes, a partner in Williams Barbel Morel and an attorney not involved in the case, says the claims could be resurrected by adding in, as named plaintiffs for the class, other J&J employees who have standing. Holmes says he assumes this will happen and that the case will resume where it left off.

According to Holmes, the plaintiff’s lawyers might want to add some additional fiduciary breach allegations to bolster their case, as claiming outrageously high prices for certain generic drugs may not be enough.

“There is little doubt that the fiduciaries of many large prescription drug plans have been swindled by the large PBMs and large consulting firms who are financially aligned,” Holmes says. “A pretty clear conflict of interest for both.”

The Federal Trade Commission recently issued a second interim report exposing the “opaque” practices of PBMs. Lawsuits like the case against J&J have highlighted the need for plan sponsors to closely monitor the fees they are paying for their health care plans.

J&J is represented by McCarter & English LLP and Chiesa Shahinian & Giantomasi PC.