The JPMorgan employee healthcare lawsuit is a proposed class action filed in March 2025 by three current and former employees who accuse the bank of mismanaging its prescription drug benefits and letting pharmacy benefit manager CVS Caremark charge the employee health plan grossly inflated prices for generic medications. The case, Stern v. JPMorgan Chase & Co., No. 1:25-cv-02097, is pending in the U.S. District Court for the Southern District of New York. In March 2026, a federal judge dismissed the fiduciary-breach claims but let the prohibited-transaction claims move forward, making it the first of several similar lawsuits against major employers to survive a motion to dismiss.1Cohen Milstein. Class Action Alleges JPMorgan Mismanaged Employee Health and Prescription Benefits
What the Employees Are Alleging
Plaintiffs Seth Stern, Angela Bindner, and Marianne Schmitt filed the complaint on March 13, 2025, on behalf of a proposed class of current and former JPMorgan employees and their families.2Georgetown Law Litigation Tracker. Stern et al. v. JPMorgan Chase Complaint They claim JPMorgan let Caremark charge the plan and its participants sharply inflated prices for prescription drugs and failed to police the arrangement.
The complaint identifies 366 generic drugs on the plan’s formulary allegedly marked up an average of 211% above what pharmacies paid to acquire them, with some individual markups above 5,000% and even 10,000%. The starkest example is teriflunomide, a generic multiple sclerosis drug: Caremark allegedly billed the plan $6,229 for a 30-unit prescription available at retail pharmacies for roughly $11 to $35.3Cohen Milstein. JPMorgan Chase Prescription Drug Litigation The leukemia drug imatinib was reportedly billed at $6,100 when pharmacies acquired it for around $70.4HR Grapevine. Wake-Up Call for Employers as Judge Rules JPMorgan Staff May Sue Over High Drug Costs
The plaintiffs say these overcharges hit employees three ways: higher premiums, larger out-of-pocket costs at the pharmacy counter, and suppressed wages.
The PBM Practices at the Center of the Case
Several Caremark practices are called out in the complaint. One is spread pricing, where the PBM charges the plan more for a drug than it reimburses the dispensing pharmacy and pockets the difference.5NAPA-Net. JPMorgan Targeted in ERISA Healthcare Fiduciary Breach Suit Another is formulary manipulation. The plaintiffs allege the plan’s formulary was designed to steer prescriptions toward Caremark’s own specialty pharmacy and its affiliated product Hyrimoz, rather than cheaper biosimilar alternatives to Humira.6Kutak Rock. EBEC Update on Wells Fargo, J&J, and JPMorgan Chase
The complaint also alleges Caremark used a subsidiary called Zinc Health Services to divert manufacturer drug rebates that should have flowed back to the plan.1Cohen Milstein. Class Action Alleges JPMorgan Mismanaged Employee Health and Prescription Benefits CVS has denied in other proceedings that this structure siphons rebates from plans, saying it passes through nearly all rebates and manufacturer fees to clients and members.7Federal Trade Commission. CVS Answer to FTC Complaint
A separate thread involves an alleged conflict of interest. The plaintiffs claim JPMorgan’s investment banking division counted CVS and its parent as clients and that this relationship influenced the bank’s decision to hire and keep Caremark instead of shopping for a more transparent vendor. According to the complaint, JPMorgan received millions of dollars through transactions with Caremark and CVS.6Kutak Rock. EBEC Update on Wells Fargo, J&J, and JPMorgan Chase
Who Is Suing Whom
The defendants are JPMorgan Chase & Co., JPMorgan Chase Bank N.A., the JPMorgan Chase U.S. Benefits Executive, and the JPMorgan Chase Compensation & Management Development Committee.8Georgetown Law Litigation Tracker. Seth Stern et al. v. JPMorgan Chase Co. et al. The original complaint also named five individual fiduciaries, including plan administrator Bernadette J. Branosky and Compensation Committee members Stephen B. Burke, Linda B. Bammann, Todd A. Combs, and Virginia M. Rometty.2Georgetown Law Litigation Tracker. Stern et al. v. JPMorgan Chase Complaint All five were voluntarily dismissed without prejudice in July 2025 under a joint stipulation.9CourtListener. Seth Stern v. JPMorgan Chase Co. Docket
CVS Caremark is not a defendant. It is described throughout the complaint as a third-party service provider and party in interest.2Georgetown Law Litigation Tracker. Stern et al. v. JPMorgan Chase Complaint The plaintiffs are represented by Cohen Milstein Sellers & Toll PLLC and Fairmark Partners LLP, which are simultaneously running similar cases against Johnson & Johnson and Wells Fargo.10Bloomberg Law. Evolving Litigation Tactics Emerge in JPMorgan Drug Cost Case
The ERISA Claims
The suit is brought under the Employee Retirement Income Security Act, which sets fiduciary standards for employer-sponsored benefit plans. It raises two categories of claims.
On the fiduciary-duty side, the plaintiffs alleged that JPMorgan violated its duties of prudence and loyalty by failing to select a cost-effective PBM, failing to negotiate reasonable drug prices, failing to monitor Caremark’s performance, and allowing conflicts of interest to shape plan decisions.5NAPA-Net. JPMorgan Targeted in ERISA Healthcare Fiduciary Breach Suit The complaint also alleged that fiduciaries violated plan documents by allowing Caremark to keep manufacturer rebates while charging participants coinsurance based on pre-rebate drug costs.6Kutak Rock. EBEC Update on Wells Fargo, J&J, and JPMorgan Chase
On the prohibited-transaction side, the plaintiffs alleged that JPMorgan’s contract with Caremark violated ERISA Section 406(a)(1)(C), which bars a fiduciary from causing a plan to pay a party in interest more than reasonable compensation for services.11NFP. ERISA Lawsuit on PBM Practices Moves Forward Against JPMorgan They tied that to Section 202 of the 2021 Consolidated Appropriations Act, arguing that Caremark’s failure to make adequate compensation disclosures rendered the entire service contract a prohibited transaction.5NAPA-Net. JPMorgan Targeted in ERISA Healthcare Fiduciary Breach Suit
The March 2026 Ruling
JPMorgan moved to dismiss on June 3, 2025, arguing the plaintiffs suffered no concrete injury, that any claim of higher premiums was too attenuated, and that decisions about how to structure the plan and which PBM to hire were business decisions, not fiduciary acts.12Source on Healthcare. JPMorgan ERISA Drug Cost Suit Partially Survives Motion to Dismiss
After oral argument on February 13, 2026, Judge Jennifer L. Rochon issued a mixed ruling on March 9, 2026.13Justia. Stern et al. v. JPMorgan Chase, Opinion and Order She dismissed the breach-of-fiduciary-duty claims (Counts One and Two) with prejudice, agreeing that decisions about the “architecture” of the plan’s prescription drug benefits and business relationships with third parties are settlor functions that sit outside ERISA’s fiduciary framework.14Yahoo Finance. JPMorgan Chase Employees May Sue Over High Drug Costs
The prohibited-transaction claims (Counts Four and Five) survived. Judge Rochon found the plaintiffs had plausibly alleged that JPMorgan allowed repeated, unauthorized excessive payments to Caremark that benefited the PBM at the plan’s expense.14Yahoo Finance. JPMorgan Chase Employees May Sue Over High Drug Costs On standing, she rejected the premium theory as too speculative but held that concrete out-of-pocket overpayments for specific overpriced drugs were injury enough to keep the case alive.13Justia. Stern et al. v. JPMorgan Chase, Opinion and Order
The ruling drew on the Supreme Court’s April 2025 decision in Cunningham v. Cornell University, which held that ERISA plaintiffs alleging prohibited transactions need only plead the basic elements of their claim and are not required to disprove potential exemptions at the outset.15U.S. Supreme Court. Cunningham v. Cornell University, No. 23-1007 Exemptions like the “reasonable compensation” defense under Section 408(b)(2) must be raised by the defendant. Judge Rochon acknowledged JPMorgan “may have ample defenses” to the surviving claims, but said those defenses belong at a later stage.12Source on Healthcare. JPMorgan ERISA Drug Cost Suit Partially Survives Motion to Dismiss
Where the Case Stands Now
The case remains active. Defendants were ordered to answer the complaint by March 25, 2026, and plaintiffs had until April 8, 2026, to reply to any exemptions raised.13Justia. Stern et al. v. JPMorgan Chase, Opinion and Order On June 3, 2026, JPMorgan filed a new Motion for Judgment on the Pleadings, with the plaintiffs’ response due by July 10, 2026.8Georgetown Law Litigation Tracker. Seth Stern et al. v. JPMorgan Chase Co. et al. No discovery orders or settlement discussions appear on the docket. Class certification has not been sought.
The next major question is whether JPMorgan can show Caremark’s compensation was “reasonable” under ERISA Section 408(b)(2). That analysis may be shaped by the Consolidated Appropriations Act of 2026, signed into law on February 3, 2026, which amended Section 408(b)(2) to require PBMs to pass through 100% of manufacturer rebates, fees, and alternative discounts to health plans on a quarterly basis in order to qualify for the exemption.16Miller & Chevalier. New ERISA Section 408(b)(2) Amendments Impose Obligations on PBMs and Beyond
How This Case Compares to the Wells Fargo and J&J Lawsuits
The JPMorgan case is one of three closely related lawsuits filed by the same plaintiffs’ counsel against major employers. The other two have fared worse.
Navarro v. Wells Fargo & Co. was dismissed without prejudice by a federal court in Minnesota on March 24, 2025, for lack of standing, with the court finding the alleged harm too speculative.17Miller & Chevalier. Court Dismisses ERISA Health Plan Fee Claims Against Wells Fargo The plaintiffs appealed to the Eighth Circuit on April 3, 2026.18Georgetown Law Litigation Tracker. Navarro et al. v. Wells Fargo & Company Lewandowski v. Johnson & Johnson was also dismissed for lack of standing by a New Jersey federal court on November 26, 2025; that appeal is now before the Third Circuit.19Georgetown Law Litigation Tracker. Lewandowski et al. v. Johnson & Johnson et al.
The Stern plaintiffs cleared the standing bar that tripped the other two because they specifically alleged they had not hit their annual out-of-pocket maximums and identified concrete overpayments for particular drugs, rather than relying only on a theory about inflated premiums.20Miller & Chevalier. More ERISA Class Action Claims Involving Health Plans That distinction is why the JPMorgan case is now the furthest-advanced test of whether ERISA’s fiduciary standards can be used to attack how large employers oversee their pharmacy benefit contracts. How the two pending appeals come out could still shape what happens next in the JPMorgan litigation.