Fifth Circuit Affirms Decision Rejecting Arbitration of ERISA Claims

On December 18, 2025, the U.S. Court of Appeals for the Fifth Circuit issued a decision in Aramark Services, Inc. Group Health Plan, et al. v. Aetna Life Insurance Co., No. 24 40323 (5th Cir. Dec. 18, 2025), affirming the denial of the defendant’s motion to stay litigation of the plaintiffs’ ERISA claims pending arbitration. The lawsuit was brought by plaintiffs-appellees Aramark Services Inc., its benefits committee, and its self-funded group health plan (the Plan) (collectively, Aramark) alleging that the Plan’s third-party administrator, Aetna Life Insurance Company (Aetna), breached its fiduciary duties and engaged in prohibited transactions in violation of ERISA. Specifically, Aramark alleges that Aetna “approved improper or fraudulent claims for Aetna subcontractors, provided inadequate subrogation services, made certain post-adjudication adjustments to claims to Aramark’s detriment, and commingled Plan funds with Aetna’s funds.” The complaint seeks restoration of losses to the Plan and other equitable relief under ERISA §§ 502(a)(2) and (a)(3). 

The Master Services Agreement (MSA) between Aramark and Aetna contained an arbitration clause that excluded claims for “temporary, preliminary, or permanent injunctive relief or any other form of equitable relief.” According to this contract provision, “[t]he arbitrator may award only monetary relief and is not empowered to award damages other than compensatory damages.” The provision required arbitration in Hartford, Connecticut. 

After Aramark amended its complaint in December 2023, Aetna filed a petition to compel arbitration in the U.S. District Court for the District of Connecticut and a motion to stay the litigation in the Eastern District of Texas. The Texas district court denied Aetna’s motion to stay, reasoning that the arbitration provision was not enforceable because Aramark was seeking equitable relief – a type of remedy the arbitration provision specifically excludes.

On appeal, Aetna argued that the district court erred by (1) deciding arbitrability itself rather than deferring to the arbitrator, (2) characterizing Aramark’s claims as equitable rather than legal, and (3) effectively denying a discretionary stay pending arbitration.

The Fifth Circuit rejected each of these arguments. First, it held that the MSA did not “clearly and unmistakably” delegate questions of arbitrability to the arbitrator for claims seeking equitable relief. Although the arbitration clause incorporated the American Arbitration Association’s (AAA) rules, the court emphasized that the carve out for equitable claims – and its placement within the arbitration provision – created ambiguity as to the parties’ intent. The Fifth Circuit explained that incorporation of arbitral rules is not dispositive where contractual language excludes certain categories of claims from arbitration. The court was “persuaded that by the plain language of the agreement, the Exclusionary Clause applies to both controversy and claim,” and therefore held that the district court – not the arbitrator – properly resolved the threshold question of arbitrability. 

Next, the Fifth Circuit agreed with the district court that Aramark’s claims under ERISA §§ 502(a)(2) and (a)(3) were equitable in nature, even though Aramark sought a monetary recovery. Relying on CIGNA Corp. v. Amara, 563 U.S. 421 (2011), and Gearlds v. Entergy Servs., Inc., 709 F.3d 448 (5th Cir. 2013), and distinguishing the Fourth Circuit’s decision in Rose v. PSA Airlines, Inc., 80 F.4th 488 (4th Cir. 2023), the court concluded that because Aramark was “seeking make-whole relief for a violation of a duty imposed upon that fiduciary,” their claims were equitable and therefore not subject to the mandatory arbitration provision. 

Finally, because the court determined that arbitrability was properly resolved and that Aramark’s claims were not subject to the arbitration provision, it held that there was no abuse of discretion in the district court’s refusal to stay the litigation.

This decision is noteworthy insofar as it emphasizes the importance of drafting arbitration clauses to align with the parties’ intent and because the Fifth Circuit did not adopt the approach of the Fourth Circuit in rejecting the make-whole remedy of surcharge in ERISA fiduciary breach cases.

ERISA Preemption Suit Filed Challenging California’s PBM Fiduciary Provision 

On January 2, 2026, the Pharmaceutical Care Management Association (PCMA) filed a complaint in the U.S. District Court for the Central District of California against Robert Bonta, Attorney General of California, and Kimberly Kirchmeyer, Director of the California Department of Consumer Affairs, alleging that section 4441(c)(2) of California’s pharmacy benefit manager (PBM) law, Senate Bill 41 (SB41), is preempted by ERISA. PCMA v. Bonta & Kirchmeyer, No. 2:26-cv-00012 (E.D. Ca.). SB41 was signed into law on October 11, 2025, and took effect on January 1, 2026. 

Section 4441(c)(2) seeks to impose a fiduciary duty under state law on PBMs by stating: “A pharmacy benefit manager has a fiduciary duty to a self-insured employer plan that includes a duty to be fair and truthful toward the client, to act in the client’s best interests, to avoid conflicts of interest, and to perform its duties with care, skill, prudence, and diligence.”

The PCMA alleges that section 4441(c)(2) is preempted by ERISA because it both bears an impermissible “reference to” and has an impermissible “connection with” ERISA plans. As to “reference to” preemption, the complaint alleges that section 4441(c)(2) acts “‘immediately and exclusively upon ERISA plans’ because its trigger and target—’a self-insured employer plan’—are ERISA-covered plans” and the “existence of ERISA plans is essential to the law’s operation” because “[s]ection 4441(c)(2) has no operation absent a self-funded plan to which ERISA applies.” 

As to “connection with” preemption, the complaint alleges that section 4441(c)(2): (1) “intrudes upon a field of regulation that ERISA and its implementing regulations already comprehensively cover: identification of plan fiduciaries, their responsibilities, and any delegation of those responsibilities”; and (2) “regulates plan design by dictating who must be treated as a fiduciary to a self-funded ERISA plan.” 

The PCMA seeks both declaratory and injunctive relief, and for the latter, seeks “statewide or nationwide relief.” This request is noteworthy given the Supreme Court’s June 2025 holding in Trump v. Casa, No. 24A884, that “universal injunctions likely exceed the equitable authority that Congress has given to federal courts.” 

California is not the first state to regulate PBMs as fiduciaries. For example, section 3.4 of North Carolina Senate Bill 479 (the SCRIPT Act), effective July 9, 2025, states: 

“A pharmacy benefit manager has a fiduciary duty to act in good faith and fair dealing in the performance of all of its contractual duties, including all of the following: (1) Controlling costs. (2) Acting in the best interest of the insurers and health benefit plans offered by the insurers with which the pharmacy benefit manager has a contract. (3) Acting with prudence and passing through any rebates or discounts the pharmacy benefits manager received related to covered benefits bought and paid for with the contracted insurer’s assets or funds. (4) Avoiding self-dealing and conflicts of interest.” 

This type of imposition of fiduciary duties on PBMs at the state level is likely to continue elsewhere, making the PCMA’s latest ERISA preemption challenge one to watch.

DOL Expands Delinquent Filer Program to MEWAs and ECEs

The U.S. Department of Labor (DOL) announced changes to its Delinquent Filer Voluntary Compliance Program (DFVCP), effective December 31, 2025. According to a notice published in the Federal Register, the DFVCP is now available to multiple employer welfare arrangements (MEWAs) that are group health plans (plan MEWAs), MEWAs that are not group health plans but provide benefits that consist of medical care (non-plan MEWAs), and Entities Claiming Exception (ECEs) that are required to file Form M-1 annually. The DOL states that to encourage voluntary compliance with ERISA’s reporting requirements, it “is extending to plan and non-plan MEWAs and ECEs that are required to file Form M-1 the same $750 maximum penalty amount currently available to small plans filing a late Form 5500, and to filers of apprenticeship and training plans and top hat plans.” Information about DOL’s DFVCP and how to submit required reports under the program is available here.

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