Plumbers’ Union in Illinois alleges that several leading PBM’s are guilty of fraud and racketeering.
Case & Parties:
On February 17, 2026, the Plumbers’ Welfare Fund, Local 130 U.A. (a multi-employer health benefit plan) filed a federal complaint in the U.S. District Court for the Northern District of Illinois against Express Scripts, Inc., Cigna Group and its health services subsidiary Evernorth (including Swiss-based Ascent Health Services) alleging an industry-wide fraud and racketeering scheme under federal law (RICO) as well as traditional contract and unjust enrichment claims.
Allegations
The suit claims that defendants grossly abused their roles in drug pricing and rebate management for the Plumbers Welfare Fund and other commercial health plans:
- Rebate Misclassification & Retention: The complaint alleges drug manufacturers paid rebates and “kickbacks” totaling billions of dollars in exchange for favorable formulary placement, but these payments were funneled through Ascent Health Services and mischaracterized as administrative fees to avoid contractual duties to return rebates to customers like the Plumbers’ Welfare Fund.
- Breach of Contract & Good Faith: By failing to disclose and return rebate value that should have been provided to plan sponsors, the plaintiffs allege the PBM breached its contractual and fiduciary obligations.
- RICO Racketeering Claims: The complaint asserts that the entire rebate scheme, structured through Ascent and involving many major drug manufacturers, is a racketeering enterprise under the Racketeer Influenced and Corrupt Organizations Act (RICO), alleging coordinated “fraudulent schemes” designed to enrich the defendants at the expense of plan sponsors.
Unique Legal Approach
- Use of RICO: Unlike typical PBM disputes (often handled as ERISA-based fiduciary breach or contract claims), this case alleges systemic racketeering which enables treble damages but requires a higher burden of proof. Allegations that defendants participated in an organized, ongoing fraudulent enterprise elevate the claims beyond simple breach of contract.
- Rebates Characterized as Admin Fees: Plaintiffs argue that categorizing rebates as administrative fees and use of an offshore GPO is a deliberate attempt to obscure the value of the rebates owed to plan sponsors.
- Inclusion of Affiliated Entities: By naming ESI, Cigna/Evernorth and Ascent, the complaint is reflective of broader regulatory concerns about vertical integration in the PBM-insurance industry.
Class Action Status Request
The complaint seeks class action status, alleging that the scheme harmed an entire class of similarly situated health plans that paid for ESI’s PBM services under similar terms. If granted by the court, class certification could:
- Incorporate claims for other employer and union-sponsored plans, dramatically increasing the potential liability beyond the Plumbers Welfare Fund’s damages.
- Facilitate broader discovery into PBM rebate practices and inner workings
Industry & Regulatory Context
This case continues the trend of increased scrutiny of PBMs by regulators and plan sponsors:
- The Federal Trade Commission has already entered into a historic settlement agreement with ESI and is pursuing their enforcement actions against both CVS Caremark and OptumRx for rebate-driven pricing dynamics that inflate list prices and out-of-pocket costs for patients.
- Employers, unions, and health plans have increasingly challenged PBM rebates, spread pricing, and opacity as breaching fiduciary duties or harming plan sponsors.
This lawsuit, with RICO and class action potential, represents a unique legal strategy to challenge PBM conduct. This could potentially set the precedent for how rebates, fees, and formulary incentives are treated in litigation and regulatory reform efforts.
Northwind Core Values: Northwind fully supports transparency and best-practice standards in pricing, rebates and reporting as a reflection of the true partnership created with those we serve.
