A federal district court has ruled that the Employee Retirement Income Security Act (ERISA) preempts a state's "any willing provider" (AWP) law as applied to self-insured health plans. The case is McKee Foods Corp. v. BFP, Inc., 2025 WL 968404 (E.D. Tenn. 2025).
In McKee, an employer offered a self-insured health plan, including prescription drug benefits. The plan's pharmacy benefit manager (PBM) excluded a pharmacy from the plan's network after an audit resulted in allegations of misconduct. The Tennessee State law banned any interference with the patient's right to choose a pharmacy. As a result, the law required PBMs to allow any willing pharmacy to join their network. Furthermore, the state insurance commissioner believed that the AWP law applied to self-insured entities, and therefore, the state would enforce the law as to those entities.
However, ERISA governs self-insured health plans. Therefore, the employee sued the employer and, later, the state insurance commissioner, alleging that ERISA preempted the state AWP law. The court agreed, finding that ERISA preempts state laws that impermissibly connect to or reference an ERISA plan. Relying on the U.S. Supreme Court's decision in Rutledge v. Pharm. Care Mgmt. Ass'n, 592 U.S. 80, 86 (2020), an impermissible connection between a state law and an ERISA plan may exist if the law "require[s] providers to structure benefit plans in particular ways" and when "acute, albeit indirect, economic effects of the state law force[s] an ERISA plan to adopt a certain scheme of substantive coverage." In other words, the inquiry is "whether a state law governs a central matter of plan administration or interferes with nationally uniform plan administration."
In applying the legal framework outlined in Rutledge, the court found that the AWP requirements in the state law affected a central aspect of plan administration and forced the plans to structure their benefits in a certain way. Unlike other state laws not preempted by ERISA, the state law at issue directly and impermissibly attempted to regulate benefits structures. Therefore, the court permanently enjoined the state insurance commissioner from enforcing the state's PBM law against the employer, directly against the self-insured plan, or indirectly against the PBM.
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