Our periodic Washington D.C. newsletter highlights the expertise of our Wagner Law Group attorneys analyzing legislative, regulatory and other cutting-edge benefits issues arising from activity in Washington or other important jurisdictions. Our office members are well suited for this given many of them have decades of experience working in key governmental agencies such as the Department of Labor and Pension Benefit Guaranty Corporation (“PBGC”).
This edition of our Benefits Bulletin has articles analyzing:
- recent pharmacy benefit manager developments and updates
- PBGC seeks Supreme Court review of scope of special financial assistance
- PBGC Advocate Annual Report Highlights and other PBGC updates; and
- HHS asks Fifth Circuit to reverse federal district court opinion declaring current regulatory framework for assessing the Affordable Care Act’s employer mandate excise taxes is void and unenforceable
Recent Pharmacy Benefit Manager Developments and Updates
By Camille Castro and Stephen Wilkes
Pharmacy Benefit Managers (“PBMs”) continue to remain at the center of significant regulatory, legislative, and legal activity. This activity has largely focused on oversight measures to improve disclosure and transparency into PBM compensation and practices so plan fiduciaries can evaluate whether such arrangements are prudent and in the best interest of participants.
The recently enacted Consolidated Appropriations Act of 2026 (the “Act”), which was signed into law February 3, 2026, included several PBM oversight and transparency reforms. The Act requires PBMs to provide group health plan sponsors with periodic disclosures of pricing data and to report on any self-steering practices that require patients to use PBM-affiliated pharmacies. The Act also requires PBMs to pass through 100 percent of negotiated rebates and fees to group health plans. These reforms are effective for plan years beginning on or after 30 months from February 3, 2026.
The Department of Labor (the “DOL”) also recently issued proposed regulations that would impose similar reporting and disclosure requirements on PBMs. The proposed rule implements the “Lowering Drug Prices by Once Again Putting Americans First” Executive Order, which directed the DOL to propose regulations under ERISA section 408(b)(2)(B) to improve plan fiduciary transparency into direct and indirect compensation received by PBMs. The proposed rule requires PBMs to provide a series of disclosures regarding direct and indirect compensation, actual compensation (such as rebates, fees, and other payments), and any conflicts of interest. The proposed rule provides new audit rights for plan fiduciaries, requiring that PBMs provide all requested information. It also includes a new proposed administrative class exemption in the event a plan fiduciary does not receive the required disclosures from the PBM. Comments on the proposed rule are due by March 31, 2026.
These federal legislative and regulatory updates come at a time when multiple states have also proposed or enacted similar legislative measures to regulate PBM activity. These state legislative efforts have prompted a series of challenges in court, with many still pending resolution.
As PBM reform continues to evolve, plan fiduciaries should continue to monitor and consider the broader impact of these reforms and how they may affect their duties related to PBMs. The Wagner Law Group has significant expertise and experience advising on PBM issues as both legal counsel and Independent Fiduciary for health plans.
PBGC Seeks Supreme Court Review of Scope of Special Financial Assistance
By Israel Goldowitz
On December 12, 2025, PBGC filed a certiorari petition in the Bakery Drivers Local 550 Pension Fund case. The petition asks the Supreme Court to review a Second Circuit decision that could extend coverage of the Special Financial Assistance (SFA) program to more than 100 multiemployer plans that terminated before 2020, at a cost of $6 billion. A response to the petition is due March 23.
Congress enacted the SFA program as part of the COVID-era American Rescue Plan Act of 2021. SFA is a lump sum grant of taxpayer funds that allows a multiemployer plan that was in “critical and declining” status in any plan year beginning in 2020 through 2022 to pay benefits through 2051. In October 2022, the Congressional Budget Office estimated that PBGC would disburse $90 billion in SFA. Though September 2025, PBGC has disbursed $74 billion to 174 plans.
Congress defined a “critical and declining” plan under ERISA’s minimum funding standard as a plan that is expected to become insolvent within 15 to 20 years (depending on its inactive:active participant ratio or funding level). When a plan terminates by the withdrawal of all employers, however, the minimum funding standard no longer applies. PBGC therefore took the position that a plan that terminated before 2020 does not qualify for SFA. The Bakery Drivers Fund terminated in 2016 by withdrawal of all employers.
The Bakery Drivers union and a withdrawn employer, Bimbo Bakeries USA, tried to restart the plan in late 2020 by having Bimbo re-enter as a contributing employer. That, they hoped, would allow the Fund to qualify for SFA as a non-terminated critical and declining status plan, and in turn allow the Fund to pay benefits at plan levels through 2051. The Fund is now receiving traditional PBGC financial assistance, which covers benefits only at guaranteed levels.
PBGC refused to recognize the restart and denied the Fund’s application for SFA because the Fund was not in critical and declining status for any 2020-2022 plan year, as the minimum funding standard ceased to apply when the plan terminated in 2016.
The Fund disagreed, asserting that when Congress adopted the definition of “critical and declining” for SFA purposes, it did not include the portion of the definition that tied it to non-terminated status. The Fund sued PBGC in federal court for the Eastern District of New York, which agreed with the PBGC. The Second Circuit reversed the district court, holding that Congress effectively “cut and pasted” the definition of critical and declining status into the SFA eligibility requirement without regard to its context as part of ERISA’s minimum funding standard. The Second Circuit did not address whether a terminated plan could be restarted by the re-entry of one employer.
Though there is no circuit split, PBGC (represented by the Solicitor General) asserts that the case warrants Supreme Court review because courts must consider a statute’s “text and context,” not “a one-size-fits-all approach to cross-references,” and because the decision could result in the payment of $6 billion in taxpayer dollars and strain PBGC’s resources in processing applications from potentially affected plans. Indeed, it could result in approvals by default, as an SFA application is deemed approved if PBGC does not act on it within 120 days.
If the Court denies the petition, PBGC could acquiesce in the Second Circuit’s decision and apply its holding nationwide. It could seek a split of circuits, denying applications of terminated plans based in other circuits and acquiesce only if it lost in at least one more circuit. And through its Board members, the Secretaries of Labor, Treasury, and Commerce, it could ask Congress either to validate the Second Circuit’s decision or overrule it
Taxpayer “rescues” (or “bailouts”) are always controversial. But union members and retirees are voters. It will therefore be worth watching not only PBGC’s actions on this issue but those of its Board members, the White House, and Congress.
PBGC Advocate Annual Report Highlights and Other PBGC Updates
By Camille Castro
The Participant and Plan Sponsor Advocate (the “Advocate”) and the Office of the Advocate at the PBGC play an important role in helping participants and defined benefit plan sponsors. The Advocate, which is a statutory position under ERISA section 4004, advocates for the rights of participants in plans trusteed by the PBGC and assists both defined benefit plan sponsors and participants in resolving disputes with the agency. Each year, the Advocate is statutorily required to submit an annual report on its activities, priorities, and recommendations for changes to mitigate participant and plan sponsor issues with the PBGC.
On December 18, 2025, the Advocate issued its FY 2025 Annual Report (the “Report”) detailing the Office of the Advocate’s achievements, activities, and notable areas for improvement. The Report highlighted Office of the Advocate internal improvements, including a new case management system, the launch of an educational resource library on the Advocate’s website, and the continued success of the Advocate’s online self-help tool for pension tracing cases. The Report also detailed notable participant initiatives, including efforts to improve education and communications around survivor benefits and dividing benefits in divorce. Additionally, the Report described customer service-related challenges and the Advocate’s efforts to coordinate internally within PBGC to resolve these issues and improve the agency’s processes.
The Report also highlighted the Office of the Advocate’s activities involving plan sponsors, including addressing issues that can arise when a plan is undergoing a distress termination, resolving concerns related to the timing for coverage determinations, and engaging with small plan sponsors to identify ways the Advocate can assist these plan sponsors. The Report indicated that the Office of the Advocate expects to collaborate with various departments within PBGC to implement the Report’s recommendations and address ongoing participant and plan sponsor concerns in FY 2026.
Additionally, recent reporting from the PBGC confirms that both the Single-Employer and Multiemployer Programs continue to have a strong financial position. Notably, the Agency’s FY 2025 Annual Report, issued January 27, 2026, indicates that the Single-Employer Program had a positive net position of $62.2 billion as of September 30, 2025. PBGC projects that this program’s surplus is expected to grow to an estimated average of $105 billion in 2034 in its FY 2024 Projections Report, issued January 27, 2026, prompting questions from the agency’s stakeholders about single-employer premium reform given this sound financial position.
Whether you are a participant or plan sponsor, if you want to know more about working with the PBGC, contact the PBGC-focused Practice Group at the Wagner Law Group for more information.
HHS Asks Fifth Circuit to Reverse Federal District Court Opinion Declaring Current Regulatory Framework for Assessing Excise Taxes Under the Affordable Care Act’s Employer Mandate is Void and Unenforceable
By Eric Keller
In April of last year, the United States District Court for the Northern District of Texas declared that a Department of Health and Human Services (“HHS”) regulation published in 2013 as part of the rulemaking for the Affordable Care Act’s employer mandate was void and unenforceable. As a result, the court held that the employer who requested the declaration was not liable for excises taxes paid to the Internal Revenue Service under Section 4980H of the Internal Revenue Code of 1986, as amended, and was entitled to a full refund of the taxes. For a discussion of the decision and its potential ramifications, please see our April 2025 D.C. Office Benefits Bulletin article. https://www.wagnerlawgroup.com/blog/2025/04/federal-district-court-declares-current-regulatory-framework-for-assessing-excise-taxes-under-the-affordable-care-acts-employer-mandate-is-void-and-unenforceable/
HHS has now appealed the decision to the United States Court of Appeals for the Fifth Circuit asking the court to reverse the district court’s ruling.