By: Sam Schwartz-Fenwick

In a widely awaited for decision, the Supreme Court in a 6-3 opinion authored by Justice Roberts held that a Tennessee law which prohibits certain medical treatments (puberty blockers and hormones) for transgender minors, does not violate the Equal Protection Clause of the Fourteenth Amendment. (Justice Alito concurred in part and joined in part with the Majority)

Justice Roberts analyzed the law under a rational basis review, not the heightened scrutiny called for by the transgender plaintiffs in the case.  The Majority found the law was constitutional under this standard due to the legitimate interest of the Tennessee legislature in preventing harm associated with using puberty blockers to treat gender dysphoria in minors.  The Court reached this holding while acknowledging that under Tennessee law puberty blockers remain a legal treatment of minors for conditions other than gender dysphoria. The Court found this distinction did not create an unlawful sex-based distinction. “The law does not prohibit conduct for one sex that it permits for the other. Under SB1, no minor may be administered puberty blockers or hormones to treat gender dysphoria, gender identity disorder, or gender incongruence; minors of any sex may be administered puberty blockers or hormones for other purpose.” The Court noted that this reasoning was in accord with Bostock, as even if that decision based in Title VII applied to a constitutional analysis, the fact would remain in the Majority’s view that neither sex nor transgender status were the but-for-cause of the prohibition on treatment.

In a searing dissent, Justice Sotomayor wrote the law at issue was unconstitutional as it targets transgender minors by denying them treatments available to others. The dissent noted that heightened scrutiny was required in cases like this that treat people differently based on sex. In her framing of the statute “Male (but not female) adolescents can receive medicines that help them look like boys, and female (but not male) adolescents can receive medicines that help them look like girls.” She rejected the medical uncertainty referenced by the Majority, and noted “the American Academy of Pediatrics, American Medical Association, American Psychiatric Association, American Psychological Association, and American Academy of Child Adolescent Psychiatry all agree that hormones and puberty blockers are appropriate and medically necessary to treat gender dysphoria when clinically indicated.” (Justice Kagan agreed that analysis of the law required heightened scrutiny but did not opine as to whether or not the law met this test).

This decision will have significant consequences as over 20 states have enacted bans similar to the law in Tennessee in that it will preclude children in these jurisdictions from medically treating gender dysphoria. It is uncertain what impact these statutes will have on the ability of employee benefit plans to continue to offer gender dysphoria coverage to minors. It is possible that employers and their plans that offer such benefits may be targeted for aiding a crime under some state statutes. In addition, it is possible that the DOJ’s recent initiative under Attorney General Bondi to investigate and aid criminal prosecutions related to gender affirming care will target parents of transgender children (i.e. employees) and benefit plans.  Whether or not this transpires is unknown, and it is recommended that in light of this decision benefit plans review their benefit offerings in close contact with legal counsel.

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Edited by Diane Dygert and Richard Schwartz, Beneficially Yours covers the latest hot topics related to ERISA and employee benefits, ranging from litigation trends to compliance issues. Our ERISA litigation team, together with our Employee Benefits and Executive Compensation team, draw on their first-hand experience in handling ERISA and employee benefits matters to provide timely insights on cutting-edge issues in the field.

Seyfarth Synopsis: As expected, the lawsuits have commenced following the enactment of the Arkansas legislation prohibiting pharmacy benefit managers (PBM’s) from owning or operating actual pharmacies within the state. Michigan has filed its own lawsuit against PBMs. Further, a similar bill targeting PBMs is winding its way through the Illinois legislature.

Arkansas Law

As we discussed in our blog post here, Arkansas recently became the first state in the nation to prohibit licenses for retail, mail order or specialty pharmacies that are owned (directly or indirectly) by a PBM. The law does contain a limited exception that allows the issuance of licenses to PBM-affiliated pharmacies for certain rare, orphan, or limited distribution drugs, but this window for exceptions closes in September 2027 (presumably intended to provide a transition period to source these drugs through pharmacies not affiliated with PBMs). 

PBM Reaction

Two lawsuits have now been filed by PBMs challenging Arkansas’ authority to pass this legislation. The lawsuits allege harm to residents of Arkansas by causing the closure of many brick and mortar pharmacies across the state and the inability to access mail-order pharmacies. Express Scripts, in its suit, argues that the Arkansas state law violates several provisions of the United States Constitution, claiming that:

  • the intended purpose of the state statute — to protect local pharmacies — violates the Commerce Clause.
  • the protectionist purpose of burdening out-of-state citizens violates the Privileges and Immunities Clause
  • the singling out of PBMs and their affiliated pharmacies for punishment violates the Attainder Clause, which bars legislative punishment (including banishment) of specific groups.

Because Express Scripts and its affiliates provide services to the US Defense Department’s TRICARE program, the suit also claims that the state statute is preempted by the federal law and regulations surrounding that program.

Arkansas has not yet filed its response to the suits.

Continue Reading States Seeking Remedies for the Rising Costs of Prescription Drugs

Seyfarth Synopsis: On May 15, 2025 the Departments of Labor, Health and Human Services, and Treasury (the “Departments”) announced they will temporarily not enforce their new standards published under the mental health parity Final Rule last fall. However, the earlier final rules and the statute itself remain in place and plan sponsors and fiduciaries should continue to prepare the comparative analyses required by the Consolidated Appropriations Act, 2021 (“CAA”) and monitor their plan design for any limitations on mental health and substance use disorder benefits that may violate the Mental Health Parity and Addiction Equity Act (“MHPAEA”).

Since the passage of the CAA, plan sponsors, administrators, and fiduciaries have agonized over how to comply with the requirement that medical and prescription drug plans perform and document a written analysis of their non-quantitative treatment limitations (“NQTLs”). In September 2024, the Biden administration published a Final Rule that added multiple complex and onerous content requirements to the NQTL comparative analysis, causing even more panic and uncertainty as many struggled to understand how to apply the rules and comply with the new regulations. In response to employer dissatisfaction with the new standards under the Final Rule, the ERISA Industry Committee (“ERIC”) filed a lawsuit challenging the Final Rule on numerous grounds.

In connection with President Trump’s Executive Order 14219, which directs federal agencies to review agency regulations that have unduly burdensome requirements and high costs for private parties and small businesses, the Departments issued a statement on May 15, 2025 announcing a policy of nonenforcement with respect to the Final Rule. Additionally, the Departments indicated they may issue a notice of proposed rulemaking either rescinding or modifying the Final Rule.

Importantly, while this non-enforcement policy is directed at the Final Rule, it does not apply to the underlying NQTL comparative analysis requirement itself, which is part of the original language in the CAA (although the Departments noted they will generally engage in a broad of review of the mental health parity provisions under the CAA). Further, it does not apply to the underlying parity rules under MHPAEA that have been in place over a decade, which require employers to ensure that the limits on mental health and substance use disorder benefits are no more restrictive than those applied to medical and surgical benefits (to the extent mental health benefits are covered). As such, plan sponsors, administrators, and fiduciaries should continue to work toward compliance with the NQTL comparative analysis requirement, keeping in mind that the complex content requirements added last year may be going by the wayside.

The non-enforcement relief would apply to several of the more onerous requirements under the final rule, however, most notably including:

  • Meaningful Benefits Standard.  The Final Rule would have required that plans provide “meaningful benefits” for mental health/substance use disorder benefits in any category where the plan provides medical/surgical benefits.
  • Production of Comparative Analysis in Response to Participant Requests or in Connection to Claim for Benefits.  The Final Rule would have required that ERISA plan sponsors produce a copy of the comparative analysis within 30 day of a participant request (essentially treating this analysis as an “operative plan document” for purposes of ERISA 104(b)(4)).  Similarly, it would have required that all plans produce a copy of the comparative analysis in connection with a claim for mental health or substance use disorder benefits denied on the basis of an NQTL imposed by the plan. 
  • Fiduciary Certification.  The Final Rule would have required that ERISA plan fiduciaries certify that they have engaged a “qualified service provider” to prepare the plan’s comparative analysis. 

Because these standards derive from the Final Rule, they should fall under the DOL’s non-enforcement standard. 

Notably, however, the DOL’s non-enforcement standard does not protect plans from potential private enforcement action by plan participants.  While courts may decline to enforce standards declared to be under review by the DOL, they would have the discretion to interpret applicability of these regulations to plans as they see fit.  Moreover, the DOL and plan participants could continue to enforce/seek enforcement of the 2013 rules and the statutory requirements under the CAA. 

Additionally, plan sponsors and fiduciaries should continue to review their plan design for potentially problematic limitations, paying particularly close attention to those limitations that have publicly been identified by the Departments as widespread problems.

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Seyfarth is proud to serve as a Gold sponsor of the International Employment Lawyer (IEL) Executive Compensation & Benefits Summit, taking place May 27, 2025, in New York City. This prestigious global event brings together leading legal and HR professionals to explore the evolving landscape of executive pay, incentive design, and cross-border benefits strategy.

As part of the day’s programming, Seyfarth Employee Benefits & Executive Compensation partner Alan Wilmit will serve as a featured panelist on the session titled “Changing Governments and Their Impact on Executive Pay Structures.” This timely discussion will examine how political transitions, regulatory reform, and shifting public sentiment are influencing compensation policies in the US and around the world.

Alan brings deep experience advising multinational employers on the tax, governance, and disclosure implications of executive pay—particularly in periods of policy uncertainty. He will join a panel of international experts offering comparative insights and best practices for navigating political change in both mature and emerging markets.

To learn more about the summit, visit the International Employment Lawyer website.

Seyfarth Synopsis: Arkansas has become the first state in the nation to enact legislation, effective starting in 2026, prohibiting pharmacy benefit managers (PBMs) from owning or operating actual pharmacies within the state. We take a look at what that may mean for employers sponsoring health plans with pharmacy benefits in the state.

Background on PBMs Role in the Marketplace

PBMs have become a unifying scapegoat in the escalating concern about the cost of prescription drug coverage in the country. So, it becomes important to understand what role they really play. PBMs act as a middle man of sorts for the prescription drug coverage offered by many employer health benefit plans. With the ever-expanding universe of prescription drugs, including the many specialty drugs that are being offered and widely advertised to the public, it is difficult for plan sponsors to be able to directly manage this benefit. PBMs grew up as an answer to the needs for a third party to administer drug coverage under plans. 

Continue Reading Cutting Out the Middle Man

Seyfarth Synopsis: In a unanimous decision reversing dismissal of prohibited transaction claims based on fees paid to defined contribution plan recordkeepers, the Supreme Court held that ERISA’s prohibited transaction exemptions are affirmative defenses, and do not present additional pleading elements plaintiffs must satisfy to state viable claims. While acknowledging the decision may allow plaintiffs to survive dismissal with “barebones” allegations, the Court held that the practical concerns of an increase in meritless litigation cannot overcome the statutory text and structure.

Click here to read the full Legal Update.

Two courts. Two opposite rulings. One critical question: Do plaintiffs have standing to challenge pension risk transfers under ERISA?

In the first two decisions to address Article III standing in this rising wave of class actions, federal courts in Maryland and D.C. have landed on opposing sides. One case will head to discovery; the other was dismissed outright. At stake is whether moving pension obligations from plans to insurers — a common de-risking strategy — gives rise to real legal injury.

The outcomes hint at what could become a growing divide in how courts assess harm, risk, and fiduciary duties in the pension risk transfer space. And with many more motions pending, these early rulings set the tone for what’s to come.

Click here to read our Legal Update and dive into the details of these pivotal cases and what they mean for plan sponsors, fiduciaries, and the future of de-risking litigation.

In this episode, we’re joined by Ameena Majid, Seyfarth’s Impact & Sustainability Partner, to explore the intricacies of ESG (Environmental, Social, and Governance) investing. Ameena explains the core principles of ESG, why it has become a priority for companies, and the different types of ESG investing. We also discuss how corporate ESG goals influence 401(k) and pension plan investments, the regulatory landscape, and potential legal hurdles. Grab your cup of coffee and tune in to hear
Ameena share her expertise on navigating the evolving
ESG legal landscape.

Click here to listen to the full episode.

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Seyfarth Synopsis: On January 17, 2025, the U.S. Departments of Treasury, Labor and Health and Human Services (the “Agencies”) released its annual report to Congress assessing compliance with statutory mental health parity requirements under the Mental Health Parity and Addiction Equity Act (“MHPAEA”). On the same day, a federal lawsuit was filed against the Agencies challenging the recently published final rule governing MHPAEA compliance (the “Final Rule”).

Each year since the passage of the Consolidated Appropriations Act, 2021, the Agencies have published a report to Congress detailing widespread noncompliance with the MHPAEA rules governing non-quantitative treatment limitations (“NQTLs”), providing examples of problematic NQTLs, and outlining related corrective actions enforced by the Agencies. This year was no different. In January, the Agencies’ annual report to Congress identified common NQTLs and how to address them, focusing primarily on certain key priority areas such as mental health and substance use disorder benefit exclusions, prior authorization requirements, and network composition issues. For example:

Continue Reading Federal Lawsuit and Tri-Agency Report Shake Up Mental Health Parity