Gibson Dunn’s ERISA litigation update summarizes key legal opinions and developments during the past year to assist plan sponsors and administrators navigating the rapidly changing ERISA litigation landscape.~~This past year was another busy one for Employee Retirement Income Security Act (“ERISA”) litigation, including significant activity at the United States Supreme Court and the federal courts of appeals on issues impacting retirement and healthcare plans, coupled with the promulgation of new regulations affecting ERISA plan sponsors and administrators.~~Our Annual ERISA Litigation Review and Outlook summarizes key legal opinions and developments to assist plan sponsors and administrators navigating the rapidly changing ERISA litigation landscape.~~Section I highlights two notable cases pending before the United States Supreme Court addressing the scope of the Chevron doctrine and the implications for ERISA plans if Chevron deference is curtailed or eliminated.~~Section II provides an update on two decisions from the Third Circuit, and one from the Second Circuit, concerning the enforceability of arbitration provisions and class action waivers in ERISA plans.~~Section III then explores other noteworthy legal developments for ERISA-governed retirement plans, including how federal courts are implementing the Supreme Court’s holdings in Hughes v. Northwestern Univ., 595 U.S. 170 (2022), and TransUnion LLC v. Ramirez, 594 U.S. 413 (2021); a growing circuit split on the scope of ERISA’s prohibited transaction provisions; and, an update on the lawsuits challenging the Department of Labor’s environmental, social, and governance (“ESG”) investment rulemaking.~~Section IV offers an overview of litigation and rulemaking impacting employer-provided health and welfare plans, such as the Tenth Circuit’s application of Rutledge v. Pharmaceutical Care Management Association, 141 S. Ct. 474 (2020), to hold that ERISA preempts an Oklahoma law regulating pharmacy benefit managers; decisions from the courts of appeal concerning appropriate remedies under ERISA and the scope of the Mental Health Parity and Addiction Equity Act; and, proposed and final regulations implementing the No Surprises Act that are likely to have significant implications for ERISA health plans moving forward.~~And finally, Section V looks ahead to key ERISA issues and cases that we expect to see litigated this year.~~I. Supreme Court Activity Concerning the Chevron Doctrine~~We have been closely monitoring two related pending Supreme Court cases pertaining to the Chevron doctrine—under which courts defer to an agency’s reasonable interpretation of its governing statute if the statute is ambiguous—that carry significant implications for ERISA plans.  See Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842–44 (1984).  In Loper Bright Enterprises v. Raimondo, No. 22-451, and a companion case, Relentless, Inc. v. Department of Commerce, No. 22-1219, the Supreme Court is deciding whether to overturn or narrow the scope of this long-standing administrative law principle.~~The Chevron doctrine has made it easier for agencies to withstand challenges to their legal interpretations, with one study finding that agencies prevail 25% more often when Chevron deference is applied than when it is not, and another concluding that courts that find the statute ambiguous uphold the agency view 89% of the time.  Cong. Research Serv., R44954, Chevron Deference: A Primer 15 & n.143 (2023) (collecting sources).  By contrast, under a related doctrine called Skidmore deference, courts will accord weight to the agency’s view, but only to the extent the agency’s interpretation is persuasive.  Justice Kagan questioned whether Skidmore would have any impact on how cases are actually decided, as it leaves courts free to disregard agency interpretations they find unpersuasive.  E.g., Transcript of Oral Argument at 32:17–23, Loper Bright Enters. v. Raimondo, No. 22-451 (U.S. Jan. 17, 2024) (“Tr.”) (Kagan, J.) (“Skidmore, I mean, what does Skidmore mean?  Skidmore means, if we think you’re right, we’ll tell you you’re right.  So the idea that Skidmore is going to be a backup once you get rid of Chevron, that Skidmore means anything other than nothing, Skidmore has always meant nothing.”).~~At argument, the Court also raised questions about how overruling Chevron would affect regulations previously deemed valid.  See Tr. at 20–22.  One possible outcome is that these regulations will be subject to renewed challenges, which could launch a wave of litigation challenging these regulations under the new framework.~~Chevron deference comes into play for ERISA plans because ERISA grants the Secretary of Labor the authority to issue regulations to implement and enforce its provisions.  See 29 U.S.C. § 1135.  Over the years, the Department of Labor has issued and revised a number of regulations covering a wide range of ERISA issues, including, inter alia, fiduciary responsibilities owed by plan administrators and the minimum requirements for ERISA plans, and the Department’s 2022 rule concerning environmental, social, and governance (ESG) investing that we discussed in our March 2023 review.    Moreover, the Pension Benefit Guaranty Corporation “generally receives Chevron deference for its authoritative interpretation of ambiguous provisions of ERISA.”  Vanderkam v. Pension Ben. Guar. Corp., 943 F. Supp. 2d 130, 145 (D.D.C. 2013), aff’d sub nom. VanderKam v. VanderKam, 776 F.3d 883 (D.C. Cir. 2015).~~For example, in Vanderam, neither side argued that ERISA unambiguously supported a PRBC determination that a different survivor annuity beneficiary could not be substituted pursuant to a domestic relations order, but the court found the determination to be “a reasonable and permissible interpretation of ERISA” and upheld the decision.  Id. at 145–46.  And in National Association for Fixed Annuities v. Perez, the court upheld new regulations relating to conflicts of interest in retirement investing, finding there was no “affirmative indication” Congress intended to prohibit the interpretation and that the Department of Labor’s interpretation of ERISA provision was reasonable.  217 F. Supp. 3d 1, 27–30 (D.D.C. 2016).~~The Loper Bright case is of particular interest in the ERISA context because, in the decision under review, the D.C. Circuit relied in part on the Secretary of Commerce’s general rulemaking authority to promulgate regulations “necessary and appropriate” to further the legislation’s aims relating to Atlantic fishing monitorships to uphold the regulation.  See Loper Bright Enterprises, Inc. v. Raimondo, 45 F.4th 359, 363–69 (D.C. Cir. 2022).  Because ERISA uses similar language to authorize the Secretary of Labor to implement regulations “necessary or appropriate” to carry out ERISA, see 29 U.S.C. § 1135, a ruling affirming the D.C. Circuit’s reasoning could potentially be used by the Department of Labor in defense of future regulations that impose substantial economic costs on plans and plan sponsors, even if ERISA by its terms does not clearly authorize the agency to impose those costs.~~The Supreme Court typically issues opinions for a given term by the end of June, and we are closely monitoring and will report the Court’s opinions on this important issue.~~II. An Update on Arbitrability of ERISA Benefits Claims~~The arbitrability of ERISA Section 502(a)(2) fiduciary-breach claims continues to be a frequently litigated issue.  As we detailed in our 2020 and 2021 year-end updates, the Ninth Circuit’s decision in Dorman v. Charles Schwab Corp., 934 F.3d 1107 (9th Cir. 2019), overturned decades of case law that had held that ERISA fiduciary-breach suits could not be arbitrated.  Id. at 1111–12.  In response to Dorman, companies have increasingly incorporated arbitration provisions into their ERISA plans.  And as we reported in our 2022 update, courts across the country have since faced complicated arbitration issues.  This year, two Third Circuit decisions and one Second Circuit decision on ERISA arbitrability are of particular interest.~~First, in Henry ex rel. BSC Ventures Holdings, Inc. Employee Stock Ownership Plan v. Wilmington Trust, 72 F.4th 499 (3d Cir. 2023), the Third Circuit found a class action waiver in a plan arbitration clause to be unenforceable because it “purport[ed] to waive plan participants’ rights to seek remedies expressly authorized by” ERISA § 409(a).  Id. at 507.  The class waiver in Henry “prohibited a claimant from ‘seek[ing] or receiv[ing] any remedy which has the purpose or effect of providing additional benefits or monetary or other relief’ to anyone other than the claimant.”  Id. at 503.  The court held that this language effectively barred plan participants from pursuing “benefits or monetary relief” on behalf of the plan as a whole, removal of plan fiduciaries, and “such other equitable or remedial relief as the court may deem appropriate,” which are all forms of relief statutorily available under ERISA.  Id. at 507 (citing 29 U.S.C. § 1109(a)).  Although the Third Circuit recognized that federal law generally favors arbitration, it noted that agreements to arbitrate are not enforceable where they “prohibit[] a litigant from pursuing his statutory rights in the arbitral forum.”  Id. at 506.  And because the class waiver was not severable from the arbitration provision itself due to a non-severability clause, the court held that “the entire arbitration provision must fall with the class action waiver,” and affirmed the district court’s order declining to enforce the provision.  Id. at 508.~~Second, in Berkelhammer v. ADP TotalSource Group, Inc., 74 F.4th 115 (3d Cir. 2023), the Third Circuit addressed whether participants must consent to arbitrate claims brought on a plan’s behalf under ERISA § 502(a)(2) and held that the plan (not participants) must consent.  Id. at 120.  Plaintiffs in Berkelhammer brought claims against a plan fiduciary committee, among others, for fiduciary breach “on behalf of the plan” under ERISA § 502(a)(2), claiming poor investment performance caused monetary losses to their retirement plan.  Id. at 117.  In response, the committee sought to enforce an arbitration clause in the plan’s service contract with a third-party investment advisor that provided advice on the plan’s investment strategy.  Id.  Plaintiffs argued that their claims could not be compelled into arbitration because they had not consented to arbitrate.  Id.  But the district court rejected this argument, concluding that arbitration was required because the plan had already consented to arbitrate.  Id.  The Third Circuit affirmed, holding that under ERISA § 502(a)(2), which authorizes plan participants to bring claims “on behalf of a plan,” plaintiffs’ claims “belong to the Plan, [so] the Plan’s consent to arbitrate controls.”  Id. at 119–20.  Notably, because the dispute in Berkelhammer did not implicate any class waiver, the case did not reach the issue that was ultimately dispositive in Henry.~~Third, in Cedeno v. Sasson, No. 21-2891, 2024 WL 1895053 (2d Cir. May 1, 2024), the Second Circuit ruled that a plan arbitration provision limiting the relief available in an arbitration proceeding to remedies impacting only the participant’s own account and forbidding any relief that would benefit any other employee, participant, or plan beneficiary was unenforceable.  Id. at *1.  The plaintiff in Cedeno brought claims “on behalf of the plan” against the company, its trustee, and other defendants under ERISA § 502(a)(2).  Id..  Defendants moved to compel arbitration, pointing to the plan’s arbitration provision.  Id. at *4.  The district court concluded that the arbitration agreement was unenforceable because it prevented participants from pursuing plan-wide remedies under § 502(a)(2).  Id.  The Second Circuit affirmed, holding that “[b]ecause [plaintiff’s] avenue for relief under ERISA is to seek a plan-wide remedy, and the specific terms of the arbitration agreement seek to prevent [plaintiff] from doing so, the agreement is unenforceable.”  Id. at *5.  In reaching its conclusion, the Second Circuit pointed to recent decisions from other courts of appeal—including, among others, the Third Circuit’s Henry opinion—as support for its conclusion “that the challenged provisions in the arbitration agreement operate as an impermissible prospective waiver of the plaintiff’s statutory rights.”  Id. at *15–*17.~~As Henry, Berkelhammer, and Cedeno illustrate, a plan must consent to arbitrate claims brought on its behalf under ERISA § 502(a), but limiting the relief available in arbitration to remedies impacting only a plaintiff’s own account may risk invalidation of the arbitration clause in its entirety absent language making clear that the challenged provisions are severable.  Thus, plan administrators should closely evaluate the implications of express severability clauses in plan arbitration provisions.~~III. Further Important Developments Concerning ERISA-Governed Retirement Plans~~In addition to litigation concerning Chevron deference and arbitrability, other legal and regulatory changes in 2023 had significant impact on ERISA-governed retirement plans.~~A. How Courts Interpret the Pleading Standard Post-Hughes~~As we addressed in our 2022 update, the Supreme Court reiterated in Hughes v. Northwestern Univ., 595 U.S. 170, 177 (2022) (“Hughes”) that “excessive fees” fiduciary breach suits under ERISA must satisfy the pleading standard set out in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009).  The Supreme Court also reiterated that because an ERISA duty of prudence claim “‘turns on the circumstances . . . prevailing at the time the fiduciary acts,’” any inquiry into the sufficiency of the pleadings “‘will necessarily be context specific.’”  Id. (quoting Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409, 425 (2014)).  Recent decisions from the Seventh and Tenth Circuits help to illustrate what “context” a plaintiff must show to survive a Federal Rule 12(b)(6) pleading challenge.~~On remand, the Seventh Circuit in Hughes v. Northwestern Univ., 63 F.4th 615 (7th Cir. 2023), held that “to plead a breach of the duty of prudence under ERISA, a plaintiff must plausibly allege fiduciary decisions outside a range of reasonableness.”  Id. at 630.  This standard, the Seventh Circuit explained, requires plaintiffs to “provide enough facts to show that a prudent alternative action was plausibly available” but not that the prudent alternative action was “actually available.”  Id.  Applying this standard, the Seventh Circuit found the plaintiffs in Hughes to have adequately pled their imprudence claims by alleging that materially similar but lower cost investment options and recordkeeping services were available in the marketplace but not adopted by plaintiffs’ plan.  Id. at 633–34.  However, the Court cautioned that the inquiry was context specific and claims “in a future case may or may not survive dismissal based on different pleadings and the specific circumstances facing the ERISA fiduciary.”  Id. at 634.~~Likewise, in Matney v. Barrick Gold of North America, 80 F.4th 1136 (10th Cir. 2023), the Tenth Circuit relied on the Supreme Court’s guidance in Hughes and held that to establish that investment or recordkeeping fees are plausibly excessive, a “meaningful benchmark” is required, and whether a benchmark is “meaningful” will “depend on context because ‘the content of the duty of prudence’ is necessarily ‘context specific.’”  Id. at 1148 (citing Hughes, 595 U.S. at 177).  Specifically, in the context of an excessive investment fees claim, the Tenth Circuit explained that a plaintiff must allege that “the alternative investment options have similar investment strategies, . . . objectives, or . . . risk profiles.”  Id.  In the context of an excessive recordkeeping fees claim, a plaintiff must allege “that the recordkeeping services rendered by the [benchmark plans] are similar to the services offered by the plaintiff’s plan.”  Id.  Because plaintiffs’ complaint in Matney lacked this level of factual detail, it failed to state a claim, and was therefore properly dismissed.  Id. at 1149.~~At bottom, the Hughes decision directs courts that there is no ERISA-specific pleading standard for fiduciary-breach claims and plaintiffs must satisfy the plausibility requirements set forth in Twombly and Iqbal.  But, as the Hughes and Matney decisions make clear, defendants have a path for challenging the sufficiency of plaintiffs’ pleadings where plaintiffs have failed to allege facts showing meaningfully similar, but lower cost, alternatives were plausibly available in the marketplace.~~B. Potential Circuit Split in How Courts Are Applying TransUnion in Assessing Class-Member Standing~~In our 2021 update, we addressed how federal courts were implementing the Supreme Court’s decision in TransUnion LLC v. Ramirez, 594 U.S. 413, 431 (2021), which held that “Article III does not give federal courts the power to order relief to any uninjured plaintiff, class action or not.”  This year, the Fifth Circuit in Chavez v. Plan Benefits Servs., Inc., 77 F.4th 370 (5th Cir. 2023), identified a potential circuit split regarding how this holding should be applied to class member standing challenges in ERISA fiduciary breach suits.~~The issue in Chavez was whether a class could be certified of participants in benefit plans administered by defendant where the named plaintiffs did not participate in some of those plans.  Id. at 378.  Defendants argued that certification in that context was improper because it allowed the plaintiffs “to challenge fees that they were never subjected to, in plans that they never participated in, relating to services that they never received, from employers for whom they never worked.”  Id. at 378.  The Fifth Circuit noted that “whether a class representative may seek to litigate harms not precisely analogous to the ones she suffered but harms that were nonetheless suffered by other class members” is a point of disagreement among the circuits and summarized the differing approaches.  Id. at 379 (citation omitted).~~Under the “class certification approach” adopted by the First, Third, Sixth, and Ninth Circuits, if a “class representative has standing to pursue her own claims,” then the standing inquiry is settled and any remaining concerns regarding disjuncture between the representative and putative class members (including dissimilarity in injuries suffered) are approached “as an issue of class certification”—e.g., as part of the Rule 23(a) commonality analysis.  Id. at 380 (citation omitted).  In contrast, the Second and Eleventh Circuits have adopted different variations of the “standing approach,” and hold that if a class representative did not “possess the same interest and suffer the same injury as the class members,” then “the class representative lacks standing to pursue [such] claims,” and the claims should be dismissed on Article III grounds.  Id.  at 380, 383 (citation omitted).~~Ultimately, the Fifth Circuit declined to take a position in Chavez because, there, the court concluded that plaintiffs’ claims “wholly implicate the same concerns with respect to each member of the class that [p]laintiffs seek to represent,” so certification could be supported under either of the competing approaches.  Id. at 386 (citation omitted).~~A recent example of how courts analyze Article III standing in ERISA fiduciary breach suits after TransUnion can be seen in Lucero v. Credit Union Retirement Board, 2024 WL 95327 (W.D. Wisc. Jan 9, 2024), where the court concluded that plaintiffs’ failure to demonstrate concrete injury across the putative class doomed their certification bid.  There, plaintiffs brought claims on behalf of their plan under ERISA §§ 502(a)(2) and 409, alleging that they were charged excessive recordkeeping fees.  Id. at *1.  But the record in the case showed that three of the four named plaintiffs in fact paid recordkeeping fees in a range that plaintiffs themselves alleged was reasonable.  Id. at *2.  Relying on TransUnion, the court found the three plaintiffs lacked Article III standing, ruling that “‘[o]nly those plaintiffs who have been concretely harmed by a defendant’s statutory violation may sue that private defendant over that violation in federal court.’”  Id. (quoting TransUnion, 594 U.S. at 427).  Defendants also argued that the remaining plaintiff could not satisfy Rule 23(a)’s adequacy and typicality requirements because she paid different fees than other putative class members.  Id. at *3–*4.  The court agreed, finding that the class lacked the necessary “congruence between the investments held by the named plaintiff and those held by members of the class[] she wishes to represent.”  Id. at *5, *6 (citation omitted).~~We will continue to monitor this potential circuit split as the law continues to develop.  For now, the Supreme Court’s TransUnion opinion, and the decisions interpreting it, give ERISA defendants paths for challenging Article III standing and class certification where named plaintiffs have not suffered the same injury as the putative class.~~C. Growing Split on the Scope of ERISA’s Prohibited Transaction Clause~~Late last year, the Ninth and Second Circuits issued published decisions addressing the scope and application of ERISA’s prohibited transaction provisions.  As the Second Circuit recognized, there appears to be a growing split between the Third, Seventh, and Tenth Circuits on the one hand, and the Eighth and Ninth Circuits on the other hand, concerning whether a plan fiduciary engages in a prohibited transaction under ERISA § 406(a)(1)(C) simply by entering into a routine, arm’s-length agreement with a third party for plan services such as recordkeeping or investment consulting.  Litigants in both cases have filed petitions for writs of certiorari with the Supreme Court.  If the Court takes up one or both cases, it will have the opportunity to provide meaningful guidance to plan sponsors and administrators concerning what ERISA requires when a plan contracts with third party service providers.~~As background, ERISA § 406(a)(1)(C) prohibits plan fiduciaries from involving plans and assets in certain kinds of business deals, including a prohibition against the “furnishing of goods, services, or facilities” between a plan and a “party in interest.”  29 U.S.C. § 1106(a)(1)(C).  A “party in interest” of an employee benefit plan is defined to include “a person providing services to such plan.”  29 U.S.C. § 1002(14)(B).  ERISA § 408(b)(2) exempts certain transactions between a plan and a “party in interest” from § 406’s prohibitions if: (1) the contract or arrangement is reasonable, (2) the services are necessary for the establishment or operation of the plan, and (3) no more than reasonable compensation is paid for the services.  29 U.S.C. § 1108(b)(2).~~In Bugielski v. AT&T Services, Inc., 76 F.4th 894(9th Cir. 2023), the Ninth Circuit held that contract amendments executed between defendants and a service provider to provide investment advising services and access to a brokerage window were prohibited transactions under section 406(a)(1)(C) because defendants “cause[d] the plan to engage in [] transaction[s]” that constituted “furnishing of goods, services, or facilities between the plan and a party in interest.”  Id. at 900–01.  In so ruling, the court rejected the reasoning of other courts of appeal—including Sweda v. Univ. of Penn., 923 F.3d 320 (3d Cir. 2019) and Albert v. Oshkosh Corp., 47 F.4th 570 (7th Cir. 2022)—which more narrowly construe the prohibition against “furnishing services” based on concerns that a broad construction of the statute would hinder fiduciaries’ ability to contract with third parties for essential plan services.  Id. at 906–07.  The Ninth Circuit concluded that remand was necessary for the district court to consider whether the prohibited transactions satisfied the exemption in ERISA § 408(b)(2) that a “party in interest”—here, the third-party service provider—received no more than “reasonable compensation” from all sources for its services to the plan.  Id.~~Subsequently, in Cunningham v. Cornell University, 86 F.4th 961, 973–74 (2d Cir. 2023), the Second Circuit acknowledged the split that the Ninth Circuit deepened in Bugielski and took a different approach entirely.  The Court held that to plead a violation of § 406(a)(1)(C), a “complaint must plausibly allege that a fiduciary has caused the plan to engage in a transaction that constitutes the ‘furnishing of . . . services . . . between the plan and a party in interest’ where that transaction was unnecessary or involved unreasonable compensation.”  Id. at 975 (quoting 29 U.S.C. §§ 1106(a)(1)(C), 1108(b)(2)(A)) (original emphasis).  The court explained that this interpretation of ERISA’s prohibited transaction provisions as “incorporate[ing]” the exemptions, and “flow[ing] directly from the text and structure of the statute.”  Id.  The court then affirmed dismissal of plaintiffs’ prohibited transaction claims because plaintiffs had not alleged that the transactions were unnecessary or that the compensation tendered was unreasonable.  Id. at  978.~~We expect ERISA’s prohibited transaction rules will continue to be a highly litigated area this year, and the developing circuit split may pave the way to a Supreme Court decision in this area.  Indeed, plaintiffs filed a petition for certiorari in the Cunningham case, and the Supreme Court requested briefing from defendant, suggesting it may be interested in taking up that case.  Defendants also filed a petition in the Bugielski case on April 9, 2024.  Should the Court grant either or both of these petitions, it would have the opportunity to further define and clarify ERISA’s requirements for plans contracting with third parties for routine plan services.~~D. An Update on the Department of Labor’s ESG Rulemaking~~As addressed above in Section I, and as discussed in our 2021 and 2022 updates, the Department of Labor (“DOL”) has been actively engaged in rulemaking concerning environmental, social, and governance (“ESG”) investing for the better part of a decade.  Specifically, our update last year focused on the final rule released by the DOL on November 22, 2022 (the “2022 Rule”).  Last year’s update also highlighted two lawsuits that challenge the 2022 Rule, Utah v. Walsh and Braun v. Walsh.~~In Utah v. Walsh, the 2022 Rule was upheld, and an appeal is now pending. In that case, attorneys general from 25 states filed sued to prevent the 2022 Rule from taking effect. Utah v. Walsh, 2023 WL 6205926, at *1 (N.D. Tex. Sept. 21, 2023). In denying the challenge and ruling for the DOL, the district court applied the two-step framework outlined in Chevron USA Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984),and held that the 2022 Rule did not violate ERISA. The court first analyzed “whether Congress has directly spoken to the precise question at issue,” and found that it had not. 2023 WL 6205926, at *4 (quotation omitted). The court then concluded that the 2022 Rule was a reasonable interpretation of ERISA and “the reasonableness of DOL’s interpretation [wa]s supported by its prior rulemakings.” Id. at *4-*5. The court also held that the 2022 Rule was not arbitrary or capricious under the Administrative Procedure Act because, among other reasons, the DOL reasonably concluded, based on the rulemaking record, that the prior rule could have “a chilling effect on fiduciaries’ consideration of pertinent information when making investment decisions.” Id. at *6. On October 26, 2023, the plaintiffs filed a notice of appeal to the Fifth Circuit, and the appeal is now fully briefed. The Fifth Circuit has tentatively scheduled oral argument for the week of July 8, 2024.~~Additionally, as we reported last year, a group of participants in ERISA-regulated retirement plans filed suit in the Eastern district of Wisconsin claiming that the 2022 Rule violates ERISA and exceeds the statutory authority granted to the Secretary of Labor and DOL.  See Braun v. Walsh, No. 23-cv-234 (E.D. Wisc.).  Since our last report, plaintiffs filed a motion for preliminary injunction and temporary restraining order.  No. 23-cv-234, Dkt. 8.  As of the time of this publication, the motion is fully briefed and awaiting decision by the court.~~We will continue to monitor the legal and regulatory landscape surrounding the 2022 Rule and the changing role of ESG factors in plan sponsor and fiduciary decision making.~~IV. Key Developments for Health & Welfare Plans~~ERISA-governed health benefit plans remain an active source of litigation.  This year, the Tenth Circuit issued a significant decision applying Rutledge v. Pharmaceutical Care Management Association, 141 S. Ct. 474 (2020), to hold that ERISA preempts an Oklahoma law regulating pharmacy benefit managers.  The federal courts of appeals also continued to grapple with whether “reprocessing” is an appropriate remedy under ERISA, and whether monetary relief is available for claims brought under ERISA § 502(a)(3).  Litigation over the Mental Health Parity and Addiction Equity Act also continued to be active this year, particularly in the Tenth Circuit.  And, finally, proposed and final regulations implementing the No Surprises Act are likely to have significant implications for ERISA health plans moving forward.~~A. Tenth Circuit Holds That ERISA Preempts Oklahoma Law Regulating Pharmacy Benefit Managers~~In recent years, litigation involving pharmacy benefit managers (“PBM”) has become a fertile area for development of case law regarding ERISA preemption.  PBMs act as third-party intermediaries between health plans and various entities in the prescription drug supply chain, including manufacturers and pharmacies.  As states increasing seek to regulate PBMs, a number of recent decisions involving PBMs have addressed ERISA preemption.~~The Supreme Court addressed this issue four years ago in Rutledge v. Pharmaceutical Care Management Association, 141 S. Ct. 474 (2020), holding that ERISA did not preempt a state law regulating the maximum allowable cost (“MAC”) lists that PBMs use to determine the rate at which PBMs reimburse pharmacies for covered prescription drugs.  Since then, lower courts have struggled with the implications of Rutledge for other state laws, including other laws regulating PBMs’ interactions with pharmacies.~~This year, the Tenth Circuit addressed that issue in Pharmaceutical Care Management Association v. Mulready, 78 F.4th 1183 (10th Cir. 2023), holding that ERISA preempts certain provisions of the Oklahoma Patient’s Right to Pharmacy Choice Act (“the Act”).  Enacted in 2019, the Act sought to regulate the network of pharmacies with which PBMs contract by requiring PBMs “to admit every pharmacy that is willing to accept the PBM’s preferred-network terms into that preferred network,” (“network restrictions”), id. at 1183, and by preventing PBMs from denying or terminating “a pharmacy’s contract because one of its pharmacists is on probation with the Oklahoma State Board of Pharmacy” (“probation prohibition”), among other things, id. at 1201–02.~~The Pharmaceutical Care Management Association (“PCMA”), a trade association representing PBMs, challenged these provisions, arguing that they were preempted by ERISA because they effectively regulated plans’ decisions about the structure of their coverage networks, and thus effectively prevented plan administrators from administering their plans in a uniform manner.  Id. at 1197.  The Tenth Circuit agreed, holding that the Act’s network restrictions “have an impermissible connection with ERISA plans”—and are therefore preempted—because they “effectively abolish the two-tiered network structure, eliminate any reason for plans to employ mail-order or specialty pharmacies, and oblige PBMs to embrace every pharmacy into the fold.”  Id. at 1196, 1199.  The court likewise concluded that ERISA preempted the Act’s probation prohibition because “limiting the accreditation requirements that a PBM may impose on pharmacies as a condition for participation in its network . . . affect[s] the benefits available by increasing the potential providers” and “eliminates the choice of one method of structuring benefits.”  Id. at 1203–04. The Tenth Circuit distinguished Rutledge on the grounds that the Arkansas law there—governing MAC pricing—was a “mere cost regulation” and “ERISA does not pre-empt state rate regulations that merely increase costs or alter incentives for ERISA plans without forcing pl