Knudsen v. MetLife Grp., U.S. App. LEXIS 23419 (U.S. 3d. Cir., September 25, 2024) (Martini, J.)
McKEE, Circuit Judge.
The Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (“ERISA”), is a rather complicated statute that uniformly regulates employee benefit plans, like pension plans and certain health insurance plans, to protect plan participants and beneficiaries.
Named Plaintiffs Marla Knudsen and William Dutra bring this putative ERISA class action on behalf of participants in the MetLife Options & Choices Plan (the “Plan”) against Defendant MetLife Group, Inc. (“MetLife”), the asserted Plan administrator and fiduciary. Plaintiffs claim that their former employer, MetLife, has misappropriated the Plan’s funding in violation of ERISA. Plaintiffs allege that MetLife’s illegal conduct has caused them to pay higher out-of-pocket costs, mainly [**2] in the form of insurance premiums, and that MetLife owes them those misappropriated funds. More specifically, Plaintiffs allege that MetLife violated its ERISA obligations by diverting $65 million in drug rebates from the Plan to itself from 2016 to 2021. The District Court dismissed Plaintiffs’ suit for lack of standing, and this appeal followed. For the reasons that follow, we will affirm.
Plaintiffs generally allege that their out-of-pocket costs (copays, co-insurance, premiums) increased, but they do not allege which out-of-pocket costs increased, in what years, or by how much. Any increase in costs was determined by MetLife, but it is incumbent upon Plaintiffs to allege concrete facts establishing that MetLife’s challenged conduct caused increased costs.86 The purportedly violative conduct is the retention of $65 [**19] million in PBM drug rebates. But the Complaint does not include well-pleaded allegations that drug rebates (or even the total value of plan assets) are, under the Plan documents, used to calculate Plan participants’ out-of-pocket costs and that the effect of these inputs would decrease costs. Allegations of this sort are necessary because Plaintiffs must show that the purported violative conduct was the but-for-cause of their injury in fact, namely, an increase in their out-of-pocket costs above what they would have been if MetLife had deposited the rebate monies into the Plan trust.87 In other words, Plaintiffs must show that they have an “individual right” to the withheld rebate monies, such that, MetLife’s purportedly unlawful retention of the monies harmed Plaintiffs.88 On these allegations, it is speculative that MetLife’s alleged misappropriation of drug rebate money resulted in Plaintiffs paying more for their health insurance or had any effect at all.
For the foregoing reasons, we will affirm the District Court’s dismissal without prejudice. As always, the District Court may exercise its discretion on remand in responding to any request to amend the Complaint.
