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April 7, 2026 Get Citation Alerts Download PDF Add Note

McKee Foods Corp. v. BFP Inc.

Court of Appeals for the Sixth Circuit

• Citations: None known
• Docket Number: 25-5416
• Panel: David William McKeague, Chad Andrew Readler

• Judges: David W. McKeague; Chad A. Readler; Stephanie Dawkins Davis

• Opinion

• Authorities (53)

• Cited By (0)

• Summaries (0)

• Similar Cases (3.7K)

• PDF

Combined Opinion

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 26a0110p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

┐
MCKEE FOODS CORPORATION,
│
Plaintiff-Appellee, │
│
v. │

   No. 25-5416

│
BFP INC., │
Defendant, │
│
│
CARTER LAWRENCE, in his official capacity as │
Commissioner of the Tennessee Department of │
Commerce and Insurance, │
Defendant-Appellant. │
┘

Appeal from the United States District Court
for the Eastern District of Tennessee at Chattanooga.
No. 1:21-cv-00279—Charles Edward Atchley, Jr., District Judge.

Argued: December 10, 2025

Decided and Filed: April 7, 2026

Before: McKEAGUE, READLER, and DAVIS, Circuit Judges.

---

COUNSEL

ARGUED: Gabriel Krimm, OFFICE OF THE ATTORNEY GENERAL, Nashville, Tennessee,
for Appellant. William H. Pickering, CHAMBLISS, BAHNER & STOPHEL, P.C.,
Chattanooga, Tennessee, for Appellee. ON BRIEF: Gabriel Krimm, Michael N. Wennerlund,
OFFICE OF THE ATTORNEY GENERAL, Nashville, Tennessee, for Appellant. William H.
Pickering, Peter A. Newman, CHAMBLISS, BAHNER & STOPHEL, P.C., Chattanooga,
Tennessee, Mark E. Schmidtke, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C.,
Valparaiso, Indiana, for Appellee. Robert T. Smith, Timothy H. Gray, KATTEN MUCHIN
ROSENMAN LLP, Washington, D.C., Cory L. Andrews, WASHINGTON LEGAL
FOUNDATION, Washington, D.C., Deborah S. Davidson, MORGAN, LEWIS & BOCKIUS
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 2

LLP, Chicago, Illinois, Michael Kenneally, MORGAN, LEWIS & BOCKIUS LLP, Washington,
D.C., for Amici Curiae.

---

OPINION

---

DAVIS, Circuit Judge. Pharmacy benefit managers—referred to in the industry as
PBMs—play a pivotal role in American healthcare. They oversee prescription-drug benefits for
health plans, perform administrative services, help negotiate drug rebates, and set up pharmacy
networks, working with health plans, drug manufacturers, and pharmacies along the way. But
the rise of PBMs has been met with state-level regulation efforts. PBMs often own pharmacies
to which they steer significant business, and in the process build a significant market share of the
prescription-drug benefit field in a given geographic area. Some policymakers have raised
concerns that such practices can lead to the closure of small, rural pharmacies.

Citing this policy concern, Tennessee enacted laws to tamp down the PBM practice of
steering patients to PBM-managed pharmacies. These laws ban interference with a patient’s
choice of pharmacy and restrict the provision of incentives for patients to choose certain
pharmacies over others. These restrictions sweep in self-funded health plans that are governed
by the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., running
headlong into that Act’s preemption provision and the Supreme Court’s decision in Rutledge
v. PCMA, 592 U.S. 80 (2020). All this led to the present suit and the question we confront today:
Does ERISA preempt Tennessee’s PBM-focused laws? The district court thought so, and we
agree. Hence, for the reasons that follow, we AFFIRM.

I.

A. Factual Background

McKee is a commercial bakery with a national presence, producing baked goods under
brands such as Little Debbie and Drake’s. Headquartered in Tennessee, McKee has nearly 7,000
employees, more than half of whom work in other states. McKee offers a health benefits plan
(“Health Plan” or “Plan”) to eligible employees. McKee and Plan participants fund the Plan,
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 3

making it a “self-funded” program governed by ERISA. Our review centers on but one of its
many benefits: the Plan’s Prescription Drug Program (“Program”). Under the Program, Plan
participants who purchase medication from in-network pharmacies receive more favorable
benefits than they would for purchasing from out-of-network pharmacies. As co-administrator
of the Program, McKee plays an active role in determining the composition of the Program’s
approved pharmacy network.

ERISA requires every benefit plan to have a written document outlining its operation and
administration. See 29 U.S.C. § 1102 (a)(1). The Plan Document for McKee’s Health Plan
defines McKee as the “Plan Administrator” and the “Plan Sponsor.” (Plan Doc., R. 83-1,
PageID 1092; see also Am. Plan Doc., R. 118-1, PageID 1553). Under the Plan Document,
McKee, a claims administrator, or an insurer may administer Plan benefits. It also indicates that
the Plan has contracted with a PBM, which has reached agreements with pharmacies for
prescription-drug services.

1. McKee’s Role in Designing and Administering the Plan

McKee structured and designed the Health Plan, including the Prescription Drug
Program. For example, it determined the eligibility requirements for Plan participants and
established that the Program would have “different tiers of covered medications,” including
generic, preferred, and non-preferred brands. (Jolls Dec., R. 118-1, PageID 1544). McKee also
fixed the available pharmacy benefits, varying the available options based on the medication tiers
and where the medication is purchased. By McKee’s design, the Plan also includes benefits for
specialty medicine that treats chronic or complex conditions. On the financial front, McKee set
annual deductibles, out-of-pocket maximums, copayments, and coinsurance for the Plan’s
various coverage options. And McKee used a PBM to provide certain administrative services for
the Plan.

McKee also formed the pharmacy network from which participants may purchase
medication covered by the Plan. The Program has different benefits, copays, and coinsurance
depending on whether prescriptions are filled at an in- or out-of-network pharmacy. Certain
pharmacies could be excluded from coverage under the Program, too. McKee and its PBM,
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 4

MedImpact Healthcare Systems, Inc. (“MedImpact”), make decisions together about inclusion or
exclusion from the network or Program. All of these decisions about the Plan’s networks are
“extremely important” and “central to” the Plan’s administration. (Jolls Dec., R. 118-1, PageID
1545).

In designing the Plan, McKee also established a preferred pharmacy network. Plan
participants have lower copays on medications they purchase at pharmacies within the preferred
network. McKee maintains preferred pharmacy networks in states where it does business, except
Tennessee, which it attributes to “the challenged laws.” (Appellee Br., ECF 26, 5). Near its
Tennessee headquarters, McKee created its own pharmacy—the McKee Foods Family Pharmacy
(“McKee Pharmacy”)—which opened in December 2022. According to McKee, the creation,
availability, and funding of its Pharmacy, along with the cost of medication purchased there,
were decisions it made in designing the Plan.

1. Pharmacy Benefit Managers

Enter PBMs—the “middlemen” that oversee prescription-drug benefits for health plans.
Ohio ex rel. Yost v. Ascent Health Servs., LLC, 165 F.4th 999, 1003 (6th Cir. 2026). PBMs
leverage the prospect of high-volume exclusivity to secure lower prices for prescription drugs,
contracting with several key players in the prescription-drug-benefit world. PBMs work with
drug manufacturers to negotiate drug rebates, health plans to structure and manage a plan’s
prescription-drug benefits, and pharmacies to design pharmacy networks. See PCMA
v. Mulready, 78 F.4th 1183, 1188 (10th Cir. 2023). It is these helpful services provided by
PBMs that lead “most health plans [to] choose to work with” them. Id. Indeed, PBMs are
“ubiquitous” in American healthcare; they “administer[] the drug benefits for around 270 million
people”—almost “everyone with a prescription drug benefit.” Id. at 1188–89 (citation omitted).

We focus on two perceived advantages of utilizing PBMs. First, plans that contract with
a PBM gain access to the PBM’s pharmacy network. See id. at 1189. With these plan
relationships in place, PBMs can “contract with pharmacies to set prices and terms for
beneficiary access” that pharmacies may then “package” into pharmacy networks. Id. From
there, and “[d]epending on [its] goals,” a plan can decide if it wants to “offer its beneficiaries
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 5

more or fewer pharmacy options, as tailored by the PBM’s network.” Id. Such “fine-tun[ing]”
of a plan’s network by a PBM allows the plan to “promote a higher quality of care” and “reduce
other costs to beneficiaries, [like] insurance premiums.” Id.

Second, PBMs help plans with lowering costs by offering “other options for refining plan
networks.” Mulready, 78 F.4th at 1189. Tiered networks—preferred and non-preferred
pharmacies—are one option. Id. A pharmacy marked as “preferred” has struck a bargain with
the PBM and the health plan: for more patient traffic, the pharmacy accepts lower
reimbursements from the benefits plan. Id. To get that higher volume, the preferred pharmacies
lower the copays required of customers. Id. Mail-order pharmacies offer plans an even cheaper
option. Id. And yet another option is a specialty pharmacy that dispenses “specialty” drugs that
treat chronic diseases. Id.

But there are perceived disadvantages to PBMs, too. For instance, PBMs frequently own
and operate their own pharmacies, some of which are mail-order. Mulready, 78 F.4th at 1189.
And PBMs regularly give their own pharmacies preferred status and label them as specialty
pharmacies. Id. With this breadth of service, PBMs can “steer” beneficiaries to their
pharmacies. Id. But, according to some, this steering disadvantages “non-PBM pharmacies,”
which (1) cannot “fill[] specialty-drug prescriptions,” (2) are reimbursed at rates lower than a
“drugs’ wholesale price[],” and (3) are “assessed retroactive fees,” among other restrictions on
pharmacy practice. Id. at 1189–90. And say some legislators, at the local level, steering can lead
to the shuttering of small rural pharmacies that are left out of the network. Such closures, in
turn, can result in drug-access issues for those in the rural communities.

1. Tennessee’s Laws Regulating Pharmacy Benefit Managers

From the late 1990s through the 2010s, Tennessee generally recognized that it could not
regulate self-funded ERISA plans. But then came the 2020 Supreme Court decision in Rutledge,
and with it, a perceived sea change. Rutledge upheld an Arkansas law regulating the
reimbursement rates PBMs offered to pharmacies, holding that ERISA did not preempt the state
law. 592 U.S. at 83, 85–86. Interpreting Rutledge as the green light it needed, Tennessee
enacted Public Chapter (“PC”) 569 in 2021 to gain greater oversight over PBMs. 2021 Tenn.
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 6

Pub. Ch. 569, § 2 (effective July 1, 2021). Relevant here are two provisions of PC 569. The first
(“§ 3120(a)”) barred PBMs and covered entities from making participants pay higher or
additional copays or coinsurance when obtaining prescriptions. Tenn. Code Ann. § 56-7-3120 (a)
(2021). And the second (“§ 3120(b)”) barred PBMs and covered entities from interfering with a
patient’s choice of pharmacy “in a manner that violate[d] § 56-7-2359 or by other means,” which
included “inducement, steering, or offering financial or other incentives.” Id. at § 56-7-3120(b)
(2021). Notably, these provisions did not target pharmacy reimbursement rates (like the law in
Rutledge); they targeted more fundamental elements of how PBMs design benefit structures for
health plans.

In July 2021, Carter Lawrence, the Commissioner (“Commissioner”) of the Tennessee
Department of Commerce and Insurance (“Department”), issued a bulletin about PC 569. The
Commissioner announced that the new laws did not “exclude plans currently regulated by
ERISA.” (Bulletin, R. 119-3, PageID 1678). It was the state legislature’s intent, he explained,
“for ERISA plans to be included in the requirements set forth in” the new laws. (Id.). This
meant the Department would “enforce Pub. Ch. 569 accordingly.” (Id.). The Commissioner
confirmed his belief that PC 569 regulates ERISA plans “[i]nsofar as they meet the definition of
[a] ‘covered entity.’” (Lawrence Dep., R. 119-4, PageID 1697).

After apparent difficulty enforcing PC 569, Tennessee enacted PC 1070. Effective
January 1, 2023, PC 1070 made three relevant revisions. First, although it left § 3120(a)
unaltered, PC 1070 revised the prohibitions against PBMs and covered entities under § 3120(b)
to prevent interference with provider choice and restrict incentives that persuade patients to
choose PBM-owned pharmacies. See 2022 Tenn. Pub. Ch. 1070 § 5 (effective Jan. 1, 2023);
Tenn. Code Ann. § 56-7-3120 (b). Second, PC 1070 expanded the definitions of “pharmacy
benefits manager” and “covered entity” to include plans governed by ERISA. 2022 Tenn. Pub.
Ch. 1070 §§ 3, 4 (effective Jan. 1, 2023); see Tenn. Code Ann. § 56-7-3102 (1)(A)(xii), (5); see
also id. at § 56-7-3122 (“Notwithstanding another law, this part applies to plans governed by
[ERISA].”). Third, the Tennessee Legislature added language requiring PBMs to admit to their
networks any willing pharmacy and precluding pharmacy favoritism. See 2022 Tenn. Pub. Ch.
1070 § 6 (effective Jan. 1, 2023); Tenn. Code Ann. § 56-7-3121.
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 7

Like the district court, we group these provisions into two categories: (1) the
any-willing-provider (“AWP”) provisions and (2) the “incentive” provisions. The AWP
provisions include Tenn. Code Ann. §§ 56-7-2359, 3120(b)(1), and 3121(a) and (b).1 And the
incentive provisions include Tenn. Code Ann. §§ 56-7-3120 (a), (b)(2), and 3121(c).
Collectively, these are the “PBM laws.”2

B. Procedural Background

This case began as a dispute between McKee and Defendant BFP Inc., doing business as
Thrifty MedPlus Pharmacy (“Thrifty Med”), after Thrifty Med was removed from the Plan’s
network. Thrifty Med was a member of the Program’s in-network pharmacies until an audit
revealed issues with its billing practices. The audit results led McKee and MedImpact to jointly
decide to expel Thrifty Med from the Plan’s pharmacy network. Thrifty Med protested its
removal and repeatedly sought reinstatement to the Plan. Then came PC 569.

After enactment of PC 569, Thrifty Med once again sought reinstatement to the Plan’s
pharmacy network. MedImpact rejected the request, prompting Thrifty Med to file three
administrative complaints in the fall of 2021. All three were dismissed a short time later.3 But
soon after Thrifty Med filed its third administrative complaint, McKee filed this lawsuit, asking
for declaratory and injunctive relief related to PC 569.

1
Section 2359, through operation of § 3120(b)(1), prohibits PBMs and covered entities from either
(1) denying a licensed pharmacy the right to participate in a plan on the same terms and conditions offered to
other providers under the plan or (2) preventing a party to or beneficiary of a plan “from selecting a licensed
pharmacy of the person’s choice to furnish the pharmaceutical services offered under any . . . plan.” Tenn. Code
Ann. § 56-7-2359 (a)(1)–(2).
2
The Commissioner suggests § 2359(e) is included in the PBM laws. Section 2359(e), seemingly through
operation of § 3120(b)(1), requires PBMs and covered entities to apply “the same coinsurance, co-payment,
deductible and quantity limit factors within the same employee group.” Tenn. Code Ann. § 56-7-2359 (e). Though
§§ 3120(b)(1) and 2359(e) seem to also constitute “incentive” provisions, the district court omitted them from its
consideration. We do the same, but note that, regardless, our analysis would remain the same. See Frenchko
v. Monroe, 160 F.4th 784, 803 (6th Cir. 2025) (“Ordinarily, we will not address an issue not passed upon by the
district court.”) (citation modified).
3
Just after PC 1070 went into effect on January 1, 2023, another Tennessee pharmacy filed an
administrative complaint against MedImpact in which it claimed that McKee was utilizing lower copays to
impermissibly steer patients to the McKee Pharmacy. According to McKee, this complaint remains pending.
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 8

In early 2022, the State of Tennessee intervened and moved to dismiss. By May 2022,
Tennessee had enacted PC 1070. In late May 2022, McKee and Thrifty Med filed competing
dispositive motions. After a hearing, the court granted Thrifty Med’s motion, dismissed for lack
of subject-matter jurisdiction on mootness grounds, and denied the other two motions as moot.
On appeal, we reversed and remanded after concluding McKee’s claims were not moot. See
McKee Foods Corp. v. BFP, Inc., No. 23-5170, 2024 WL 1213808 (6th Cir. Mar. 21, 2024).

Following remand, McKee amended its complaint to add Tennessee and the
Commissioner as named defendants. McKee sought (1) a declaration that ERISA preempts
Tennessee’s PBM laws, thereby precluding their enforcement against ERISA plans and their
PBMs; (2) an order enjoining enforcement of the PBM laws against McKee, the McKee Health
Plan, or McKee’s PBM; and (3) an order enjoining Thrifty Med from seeking reinstatement to
the Plan’s network.

Tennessee and the Commissioner moved to dismiss. The district court granted the
motion in part, dismissing Tennessee on sovereign immunity grounds. But it denied the motion
as to the Commissioner, allowing the claims against him to proceed along with those against
Thrifty Med. Thereafter, McKee and the Commissioner each filed motions for summary
judgment, and Thrifty Med filed alternative motions to dismiss or for judgment on the pleadings.

The district court dismissed Thrifty Med from the case, partially granted McKee’s
motion, and denied the Commissioner’s. The court found that McKee had standing to bring a
pre-enforcement challenge against the Commissioner, stated a claim upon which relief could be
granted under 29 U.S.C. § 1132 (a)(3), and could request equitable relief against the
Commissioner. The district court also concluded that the PBM laws had an impermissible
connection with ERISA plans and were therefore preempted. The district court then permanently
enjoined the Commissioner from enforcing the PBM laws against McKee, “whether through
direct enforcement against the Health Plan or indirect enforcement against McKee’s PBM for
actions taken on the Health Plan’s behalf.” (Op. & Ord., R. 142, PageID 2223).

The Commissioner now appeals.
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 9

II.

We review de novo the district court’s resolution of the parties’ cross-motions for
summary judgment. See Frenchko v. Monroe, 160 F.4th 784, 795 (6th Cir. 2025). Summary
judgment is appropriate when the evidence, taken in the light most favorable to the nonmoving
party, shows there is “no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a); Young v. United Parcel Serv., Inc., 575 U.S.
206, 231 (2015). We also “review de novo a district court’s decision to grant summary judgment
on the issue[] of preemption,” including “[w]hether ERISA preempts a state law.” Fenner
v. Gen. Motors, LLC, 113 F.4th 585, 593 (6th Cir. 2024) (preemption generally); Self-Ins. Inst. of
Am., Inc. v. Snyder, 827 F.3d 549, 554 (6th Cir. 2016) (ERISA preemption). We review standing
determinations de novo, too. Merck v. Walmart, Inc., 114 F.4th 762, 771 (6th Cir. 2024).

III.

The Commissioner begins with several threshold arguments challenging McKee’s ability
to bring this suit. None have merit.

A. ERISA Private Right of Action

The Commissioner argues that McKee has no private right of action and thus cannot
bring a suit for a claim under ERISA. “But sometimes Congress . . . allows private parties to
enforce the law through civil litigation” by creating a private right of action. Medina v. Planned
Parenthood S. Atl., 606 U.S. 357, 367 (2025). That is the case here.

ERISA explicitly authorizes civil enforcement actions in certain circumstances. As
relevant here, ERISA creates a private right of action for “a participant, beneficiary, or
fiduciary . . . to enjoin any act or practice which violates any provision of [ERISA] or the terms
of the plan, or . . . to obtain other appropriate equitable relief (i) to redress such violations or (ii)
to enforce any provisions of [ERISA] or the terms of the plan.” 29 U.S.C. § 1132 (a)(3).
According to the Commissioner, however, this right of action does not allow McKee to bring a
civil suit.
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 10

1. McKee’s Fiduciary Status

The Commissioner first argues that McKee cannot maintain a private right of action
under ERISA because it is suing as a plan sponsor, not as a plan participant, beneficiary, or
fiduciary. McKee counters that it is a fiduciary of its health plan.

Under ERISA, every employee benefit plan must be “established and maintained” by a
written instrument that designates a fiduciary with “authority to control and manage” the plan’s
operation and administration. 29 U.S.C. § 1102 (a)(1). A plan fiduciary is one who “exercises
any discretionary authority or discretionary control respecting management of such plan or
exercises any authority or control respecting management or disposition of its assets” or who
“has any discretionary authority or discretionary responsibility in the administration of such
plan.” 29 U.S.C. § 1002 (21)(A)(i), (iii); see Briscoe v. Fine, 444 F.3d 478, 488 (6th Cir. 2006).
We “take a functional approach to ERISA fiduciary analysis,” asking if any of the entity’s
actions “involve[] either control over plan assets or discretionary authority over plan
management or administration.” Tiara Yachts, Inc. v. Blue Cross Blue Shield of Mich., 138 F.4th
457, 463–64 (6th Cir. 2025).

McKee meets the test for fiduciaries. True enough, McKee wears several hats, in that it
is the employer, the plan administrator, and the plan sponsor. See 29 U.S.C. § 1002 (5), 16(A),
(B). Under the Plan Document, McKee administers plan benefits and holds the deciding vote on
whether to allow other entities (i.e., other employers) to adopt the Plan and thereby expand the
network. And McKee plays a substantial role in designing and administering the Health Plan.
As one of the amici points out, ERISA plan fiduciaries have a “duty to monitor” their plans and
must discharge that duty with “care, skill, prudence, and diligence.” See Hughes v. Nw. Univ.,
595 U.S. 170, 172–73, 175 (2022) (quoting 29 U.S.C. § 1104 (a)(1)(B)). McKee performed this
fiduciary “duty to monitor,” acting as a “prudent man” would when it removed Thrifty Med for
defrauding a plan participant. See id. (explaining that ERISA requires a “context-specific
inquiry” and noting fiduciary “duty to monitor all plan investments and remove any imprudent
ones” (citing Tibble v. Edison Int’l, 575 U.S. 523, 530 (2015))). McKee’s authority and
responsibility for administering the Plan makes it a fiduciary under ERISA. See 29 U.S.C.
§ 1002 (21)(A)(iii); see also Gobeille v. Liberty Mut. Ins. Co., 577 U.S. 312, 317 (2016)
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 11

(“Respondent, as the Plan sponsor, is both a fiduciary and plan administrator.”); Hunter
v. Caliber Sys., Inc., 220 F.3d 702, 718 (6th Cir. 2000) (recognizing that employer plan sponsors
“wear two hats: one as a fiduciary in administering or managing the plan for the benefit of
participants and the other as employer in performing settlor functions”). This conclusion is
bolstered by the Commissioner’s answer to the amended complaint, where he expressly
acknowledges that “McKee is the sponsor, administrator, and fiduciary of the [McKee Health
Plan].” (First Am. Compl. (“FAC”), R. 83, PageID 1069, ¶ 13 (emphasis added); Commissioner
Ans. to FAC, R. 117, PageID 1528, ¶ 13); see also Ferguson v. Neighborhood Hous. Servs. of
Cleveland, Inc., 780 F.2d 549, 550–51 (6th Cir. 1986) (observing that judicial admissions
eliminate the need for evidence on subject matter of admission because the admitted fact is no
longer at issue).

For its part, McKee urges us not to consider the Commissioner’s private-right-of-action
argument because he failed to advance it below. We resist this entreaty because “the absence
of a private right of action means the district court lacked subject-matter jurisdiction.” Stew
Farm, Ltd. v. Nat. Res. Conservation Serv., 767 F.3d 554, 566 (6th Cir. 2014). And the lack of
subject-matter jurisdiction may be raised “at any stage in the litigation.” Arbaugh v. Y&H Corp.,
546 U.S. 500, 506 (2006). In any event, we are not persuaded by the Commissioner’s contention
that McKee sued only in its capacity as plan sponsor. McKee said below that it was suing as
plan sponsor and plan fiduciary. (See McKee MSJ Rep., R. 139, PageID 2138). And the record
substantiates its assertion. So we reject the Commissioner’s assertion to the contrary.

1. Enforcing ERISA

Next, the Commissioner argues that McKee’s suit fails under 29 U.S.C. § 1132 (a)(3)(A)
because McKee cannot show how enforcement of the PBM laws would violate ERISA.

As noted above, the ERISA private right of action allows a fiduciary to bring a civil
action “(A) to enjoin any act or practice which violates any provision of this subchapter or the
terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations
or (ii) to enforce any provisions of this subchapter or the terms of the plan.” 29 U.S.C.
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 12

§ 1132(a)(3). McKee relies on both subsections, but the Commissioner focuses mostly on
subsection (A).

We have not specifically held that a claim that state laws are preempted by ERISA
constitutes a viable theory under which a fiduciary can sue under § 1132(a)(3)(A), though two of
our sister circuits have suggested it is a permissible avenue. See Darne v. Wisconsin, 137 F.3d
484, 489 (7th Cir. 1998); Denny’s, Inc. v. Cake, 364 F.3d 521, 527–28 (4th Cir. 2004). And we
need not resolve that question here because, regardless of the answer, McKee’s suit may proceed
under § 1132(a)(3)(B)(ii).

In US Airways, Inc. v. McCutchen, the Supreme Court explained that “other appropriate
equitable relief” as used in § 1132(a)(3)(B) “authorizes the kinds of relief ‘typically available in
equity’ in the days of ‘the divided bench,’ before law and equity merged.” 569 U.S. 88, 94–95
(2013) (citation omitted). Because injunctions were a kind of relief “typically available in
equity,” they are a type of equitable relief available under § 1132(a)(3)(B). Mertens v. Hewitt
Assocs., 508 U.S. 248, 256 (1993) (emphasis omitted); see CIGNA Corp. v. Amara, 563 U.S.
421, 440 (2011). That includes injunctions against government officials. See Armstrong
v. Exceptional Child Ctr., Inc., 575 U.S. 320, 326–27 (2015) (explaining the “long history of
judicial review of illegal executive action”). And, regardless, even if ERISA did not provide this
private right of action, McKee could sue the Commissioner under the “long recognized,” court-
created “ability to sue” when “an individual claims federal law immunizes him from state
regulation.” Id. (citing Ex parte Young, 209 U.S. 123, 155–56 (1908)). ERISA does not
preclude McKee’s request for equitable relief through this avenue. Cf. id. at 327–29.

In letters submitted pursuant to Federal Rule of Appellate Procedure 28(j), the
Commissioner cites two of our recent decisions, Smith v. Michigan Department of Corrections,
159 F.4th 1067 (6th Cir. 2025), and Stovall v. Jefferson County Board of Education, 164 F.4th
554 (6th Cir. 2026), to argue that (1) until the court explicitly recognizes a cause of action, one
does not exist, and (2) McKee needs a separate right of action—apart from the Declaratory
Judgment Act—to seek declaratory relief. Neither case moves the needle for the Commissioner.
Courts have long recognized that ERISA creates a cause of action. See Franchise Tax Bd. of
California v. Constr. Laborers Vacation Tr. for S. California, 463 U.S. 1, 27 n.31 (1983)
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 13

(acknowledging that “[s]ection 502(a)(3)(B) of ERISA has been interpreted as creating a cause
of action for a declaratory judgment.”); Bluecross Blueshield of Tenn., Inc. v. Nicolopoulos,
136 F.4th 681, 688–89 (6th Cir. 2025). And, while it is true that the Declaratory Judgment Act
does not create a right (or cause) of action, Davis v. United States, 499 F.3d 590, 594 (6th Cir.
2007) (citing Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671 (1950)), as explained
above, McKee has a right to pursue an ERISA-based preemption claim against the
Commissioner via other avenues such as the long-established right to pursue equitable
relief against a state official, so McKee can seek declaratory relief. See Armstrong, 575 U.S. at
326–27; see also Franchise Tax Bd. of California, 463 U.S. at 27 n.31.

B. Jurisdiction

The Commissioner next argues that even if ERISA provides a private right of action
for McKee, three separate jurisdictional doctrines—standing, ripeness, and sovereign
immunity—stand as additional barriers to McKee’s lawsuit.

1. Standing

The Commissioner argues that McKee has no standing to sue because McKee cannot
show there is an imminent threat of the Commissioner enforcing the PBM laws against it. We do
not agree.

Standing is a “prerequisite to federal jurisdiction.” Yoder v. Bowen, 146 F.4th 516,
522 (6th Cir. 2025). It requires showing (1) an injury in fact, (2) that is traceable to the
defendant’s complained-of actions, and (3) is redressable by the court. See id. at 522–23. We
focus on injury in fact, which requires a plaintiff to show that it has “suffered an actual past
injury, or will suffer imminent future injury, that is concrete and particularized.” Id. at
522 (citation omitted). To show an “imminent future injury” in a pre-enforcement challenge
(such as this one), a plaintiff must establish four requirements: “(1) ‘an intention to engage in a
course of conduct’ that is (2) ‘arguably affected with a constitutional interest’ but (3) is
‘proscribed by a statute,’ and (4) that there is ‘a credible threat of prosecution’ under that
statute.” Id. at 523 (quoting Susan B. Anthony List v. Driehaus, 573 U.S. 149, 159 (2014)).
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 14

McKee has shown that it intended to engage in a course of conduct arguably affected
with a constitutional interest and proscribed by statute (satisfying the first three Yoder
pre-enforcement elements). McKee sought to dictate which pharmacies could be included
within—or, in the case of Thrifty Med, excluded from—its plan, which would limit
beneficiaries’ choices and conflict with the AWP laws. Tenn. Code. Ann. § 56-7-3120(b)(1).
And McKee also engaged (or intended to engage) in other conduct proscribed by the PBM laws.
For example, McKee created its own pharmacy to offer beneficiaries lower copays for
prescription drugs, but this element of its Plan violated Tennessee’s prohibition on “[o]ffer[ing]
financial or other incentives to a . . . beneficiary to persuade the . . . beneficiary to utilize a
pharmacy owned by . . . the . . . covered entity” (which, in this case, was McKee). Id. at § 56-7-
3120(b)(2). This incentivization to use the McKee Pharmacy has led to at least one
administrative complaint against MedImpact. So the record supports the district court’s finding
that “McKee intends to act—and indeed is already acting—in a manner proscribed by the
challenged laws.” (Op. & Ord., R. 142, PageID 2214). And McKee’s conduct is affected with a
constitutional interest by virtue of its federal preemption claim, which is “basically constitutional
in nature” because it “deriv[es] its force from the operation of the Supremacy Clause.” See
Douglas v. Seacoast Prods., Inc., 431 U.S. 265, 271–72 (1977); see also Crosby v. Nat’l Foreign
Trade Council, 530 U.S. 363, 388 (2000); Torres v. Precision Indus., Inc., 938 F.3d 752, 755
(6th Cir. 2019). At bottom, the success of McKee’s claim relies on constitutional protections and
the constitutionality of the Commissioner’s conduct.

The fourth pre-enforcement element—credible threat of prosecution—is satisfied, too. A
plaintiff like McKee can show a “credible threat of prosecution” if it “point[s] to some
combination” of the four McKay factors: (1) “a history of past enforcement”; (2) “receipt of
enforcement warning letters regarding their specific conduct”; (3) “an attribute of the challenged
statute that makes enforcement easier or more likely, such as a provision allowing any member
of the public to initiate an enforcement action”; and (4) whether the defendant has “disavow[ed]
enforcement of the challenged statute against a particular plaintiff.” Yoder, 146 F.4th at 524–25
(quoting McKay v. Federspiel, 823 F.3d 862, 869 (6th Cir. 2016) (ellipsis omitted)). “A plaintiff
need not satisfy all the McKay factors to establish a credible threat.” Id. at 525 (citing Christian
Healthcare Ctrs., Inc. v. Nessel, 117 F.4th 826, 848 (6th Cir. 2024)).
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 15

McKee has satisfied a sufficient combination of the McKay factors to illustrate a credible
threat of enforcement. The first factor—a history of past enforcement—favors McKee because
the lodging of previous complaints against a plaintiff can show a history of past enforcement.
See Driehaus, 573 U.S. at 164. There were four administrative complaints here, three by Thrifty
Med and one by a competitor of McKee’s. That the Department dismissed Thrifty Med’s three
complaints and only one remains pending is a consideration in this holistic analysis. Id.
(explaining that “the threat” of future enforcement “is even more substantial” when the
government has actually taken adverse action due to previous complaints based on the same or
similar conduct). Nonetheless, complaints are the initial stage of enforcement actions, and in our
attempt to determine whether the threat of enforcement is “chimerical,” these complaints show
that McKee’s conduct has led to preliminary enforcement activity. See id. (quoting Steffel
v. Thompson, 415 U.S. 452, 459 (1974)); cf. Steffel, 415 U.S. at 459 (recognizing that harm
comes from the threat of prosecution, not just the threat of the ultimate sanction). So the first
factor points toward a threat of enforcement against McKee.

The second factor favors the Commissioner. There is no evidence McKee ever received
an enforcement warning letter from the Commissioner about McKee’s specific conduct. Yoder,
146 F.4th at 524.

The third and fourth factors, however, also fall in McKee’s corner. The third factor
considers whether the PBM laws have a feature making it easier to enforce them. They do.
As written, the PBM laws permit any member of the public to initiate administrative
proceedings against any PBM or covered entity for violations of the laws. See Tenn. Code Ann.
§§ 56-7-3101 (b)(1)(C), 56-7-3110. This makes the laws easier to enforce; “[b]ecause the
universe of potential complainants is not restricted to state officials who are constrained by
explicit guidelines or ethical obligations, there is a real risk of complaints from [competitors].”
Driehaus, 573 U.S. at 164. The fourth factor considers whether the Commissioner
has disavowed enforcement of the PBM laws against McKee specifically. Yoder, 146 F.4th at
524–25. He has not. Indeed, the Commissioner has, time and again, indicated that he and his
Department will enforce the PBM laws against ERISA plans—going as far as to single them out
in at least two letters and a response to public comments. Thus, looking across the McKay
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 16

factors, McKee has demonstrated a threat of enforcement. And with each sub-element of
injury-in-fact established, McKee has standing; this injury is attributable to the Commissioner,
and an injunction would provide redress.

The Commissioner offers four counters that fail to persuade. First, the Commissioner
argues that the district court failed to identify anything in the record indicating he wants to block
McKee from incentivizing its employees to use the company pharmacy, pointing to the
pharmacy’s continued operation for two-plus years before the district court’s summary-judgment
decision. But there is more to this than meets the eye. The McKee Pharmacy opened in
December 2022, while the first round of dispositive motions in this case was pending. The
district court dismissed the case in February 2023, we resolved the appeal of that dismissal in
March 2024, and McKee amended its complaint in June 2024. By late January 2025, the parties
had fully briefed another round of dispositive motions—including an argument by the
Commissioner that there was no credible threat of prosecution. The district court resolved these
motions in late March 2025, and the parties have awaited our resolution of this appeal. These
procedural events explain why the record evidence does not reflect any threats of prosecution
against McKee’s Tennessee pharmacy—making such a threat while an argument about the lack
of threats was pending would have undermined the Commissioner’s efforts to dismiss the case.

Second, the Commissioner asserts that the district court considered McKee’s operation of
the company-owned pharmacy to be the foundation for McKee’s claims—even though McKee
did not offer this as a basis “for its claims either when it sued Thrifty or when it sued
Commissioner Lawrence.” (Appellant Br., ECF 19, 23). When McKee filed its initial and
amended complaints, says the Commissioner, the Pharmacy was “not the locus of its claims,”
and it was inappropriate for the district court to “retroactively generate standing” on that basis.
(Id. at 23–24 (citation omitted)). We view this as a stretch of the district court’s analysis. In full
context, the district court referred to the operation of the company-owned pharmacy in
explaining how McKee and its PBM’s conduct met the first three parts of the pre-enforcement
standing inquiry that became relevant once the Commissioner was added to the lawsuit. See
McKee Foods Corp., 2024 WL 1213808, at *4 (“[T]he parties do not dispute that an actual case
and controversy existed at the outset of the litigation.”); see also Lester v. Wow Car Co., Ltd.,
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 17

675 F. App’x 588, 593 (6th Cir. 2017) (citing In re Kent Holland Die Casting & Plating, Inc.,
928 F.2d 1448, 1450 (6th Cir. 1991), for the proposition that “an amendment adding a new party
creates a new cause of action”); cf. Bare v. Cardinal Health, Inc., No. 22-5557, 2023 WL
395026, at *2 (“[A] plaintiff’s standing must be assessed anew any time he seeks to amend his
complaint.” (citing Rockwell Int’l Corp. v. United States, 549 U.S. 457, 473–74 (2007)).
Moreover, the Commissioner’s contention that the amended complaint does not mention the
McKee Pharmacy overlooks the fact that McKee attached its Plan Document—which references
the Pharmacy throughout—to its amended complaint. And written instruments attached to a
pleading become part of the pleading. See Fed. R. Civ. P. 10(c). Besides, among the many
provisions of Tennessee’s PBM laws referenced in the amended complaint, McKee specifically
cites the provision limiting its ability to steer beneficiaries to its Pharmacy, claiming that the
provision “interferes with McKee’s right to design and structure its ERISA Health Plan.” (FAC,
R. 83, PageID 1077–78).

Third, the Commissioner argues that the district court failed to “cabin its merits analysis
to fit its theory of jurisdiction.” (Appellant Br., ECF 19, 25). He contends that the only relief the
district court could give McKee had to relate to the lower copays at its company-owned
pharmacy, with respect to the incentive provisions. This too narrowly construes the district
court’s decision. True, before discussing the copay issue, the district court noted McKee’s
failure to include an interested pharmacy in the network. But in so doing, the district court did
not limit this case to an issue about the McKee Pharmacy; it was instead demonstrating that
McKee took actions, or wanted to take actions, that could be or were precluded by the PBM
laws.

Fourth, the Commissioner broadly contends that “McKee and the district court have
viewed this suit as an open-ended, abstract challenge to multiple statutory provisions” instead of
a “real case or controversy” about the Commissioner’s “enforcement of some specific legal rule
against McKee.” (Appellant Rep. Br., ECF 36, 11 (citation modified)). He says that an
appropriate claim for relief would seek an injunction prohibiting the Commissioner from
enforcing a “discrete legal provision” against McKee in a “tangible way.” (Id. at 12). But
McKee’s amended complaint requested just that. It limited its request to an injunction barring
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 18

the Commissioner from enforcing §§ 3120, 3121, and 2359 against McKee, the Plan, or its PBM,
or from otherwise forcing McKee or its PBM to include any pharmacy in its network. The basis
for that request is McKee’s assertion that ERISA preempts each of those sections of the PBM
laws, and McKee based these claims on the ways these sections impacted McKee’s Health Plan.
The district court obliged—it declared those three sections of the PBM laws preempted and
limited the relief to enjoining the Commissioner from enforcing them “against McKee’s Health
Plan.” (Op. & Ord., R. 142, PageID 2231–32). The court’s limitation included “direct
enforcement against the Health Plan” plus “indirect enforcement against the Health Plan’s PBM
for actions the PBM takes on the Health Plan’s behalf.” (Id. at PageID 2232).

Finally, we address the third-party standing argument, raised in amici briefing, that
McKee lacks standing because the Tennessee laws regulate PBMs—not McKee. That portrayal
cuts too fine a distinction. Both PBMs and plan sponsors like McKee are the “object[s]” of
Tennessee’s regulations because the laws impose requirements on the entities that design and
administer pharmacy benefit networks. Lujan v. Defenders of Wildlife, 504 U.S. 555, 562
(1992). As detailed above, those requirements dictate how McKee structures and administers its
plan, operating directly on McKee in its roles as plan sponsor and fiduciary and, independently,
as the owner of an in-house pharmacy. That PBMs are also injured by these laws does not
negate McKee’s own injury. Cf. Lathfield Invs., LLC v. City of Lathrup Vill., 136 F.4th 282, 294
(6th Cir. 2025) (explaining there is no third-party standing if the plaintiff was not injured in his
own right and lacked a close enough relationship to the third party).

1. Ripeness

The Commissioner’s ripeness argument is intertwined with his standing argument. See
Carman v. Yellen, 112 F.4th 386, 400 (6th Cir. 2024) (“The constitutional elements of ripeness
encompass traditional parts of the standing inquiry.”). To be ripe, a case must not be “dependent
on contingent future events that may not occur as anticipated, or indeed may not occur at all.”
Trump v. New York, 592 U.S. 125, 131 (2020) (citation modified). Indeed, ripeness is mainly
concerned with “whether a plaintiff is threatened with imminent injury in fact.” Carman,
112 F.4th at 400 (citation modified). And for the reasons already explained, McKee has shown a
threat of imminent injury in fact. See id.; Norton v. Ashcroft, 298 F.3d 547, 554 (6th Cir. 2002)
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 19

(“For pre-enforcement challenges, a case is ordinarily ripe for review only if the probability of
the future event occurring is substantial and of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment.” (citation modified)). Additionally, as there are no
“important future intervening events, such as impending regulatory action[s] [that] will clarify
the dispute or obviate the need for weighing in” on the question of preemption, McKee’s suit is
ripe for our review. Carman, 112 F.4th at 400.

1. Sovereign Immunity

Lastly, the Commissioner argues that he is entitled to sovereign immunity because
McKee does not seek prospective relief from a specific and imminent use of government
authority. Not so.

Ex Parte Young, 209 U.S. at 123, establishes “an important limit” on and exception to a
state official’s sovereign immunity protections. Virginia Off. for Prot. & Advoc. v. Stewart,
563 U.S. 247, 254 (2011). McKee’s suit meets the conditions of Ex Parte Young: (1) “the
complaint alleges an ongoing violation of federal law,” and (2) it “seeks relief properly
characterized as prospective.” League of Women Voters of Oh. v. Brunner, 548 F.3d 463,
474 (6th Cir. 2008) (citation modified). For this inquiry, we focus on the complaint’s allegations
only and do not analyze the claim’s merits. Id. McKee alleged that the PBM laws violate
ERISA by effectively preventing McKee from carrying out its fiduciary responsibilities required
by federal law, administering its pharmacy network, and determining benefits and providers.
And, McKee contended, the PBM laws also violate ERISA by interfering with plan structure and
disrupting national uniformity among plans by restricting copayments and other financial
inducements. These are allegations of ongoing violations of federal law (ERISA) sufficient to
satisfy Ex Parte Young’s first condition, as the Commissioner is the state official charged with
enforcing the laws in question. Tenn. Code Ann. §§ 56-7-3110, 56-2-305; see also
Whole Woman’s Health v. Jackson, 595 U.S. 30, 39, 45–46 (2021). And the relief McKee
seeks—declaratory and injunctive relief—satisfies the second. League of Women Voters of Oh.,
548 F.3d at 474.
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 20

IV.

A. ERISA Preemption—The PBM laws “relate to” ERISA

Having resolved these threshold issues, we now turn to the merits: Does ERISA preempt
the Tennessee PBM laws that McKee has challenged?

Congress enacted ERISA to “make the benefits promised by an employer more secure
by mandating certain oversight systems and other standard procedures.” Gobeille, 577 U.S. at
320–21. Its aim was uniformity among those systems and procedures. Id. at 321. Otherwise,
“requiring ERISA administrators to master the relevant laws of 50 States and to contend with
litigation would undermine” Congress’s mission of “minimizing the administrative and financial
burdens on plan administrators.” Id. (citation modified).

ERISA contains an express preemption clause, which provides that ERISA “supersede[s]
any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.”
29 U.S.C. § 1144 (a). For a state law to “relate to” an ERISA plan, and thus be preempted, the
state law must have either an impermissible “connection with” the plan or a “reference to” it.
Rutledge, 592 U.S. at 86. Because the Commissioner’s main focus is the “connection with”
prong, the district court analyzed only that prong, and because we conclude that the PBM laws
have an impermissible connection with ERISA, we likewise limit our analysis to that prong.

“Connection with” preemption focuses on “the nature of the effect of the state law on
ERISA plans.” Cal. Div. of Lab. Standards Enf’t v. Dillingham Constr., N.A., Inc., 519 U.S.
316, 325 (1997). Relevant here, there are four bases for finding that a state law has an
impermissible connection with ERISA. First, a state law has an impermissible connection with
ERISA if it either requires “providers to structure benefit plans in particular ways,” Rutledge,
592 U.S. at 86–87, or “prohibits employers from structuring their employee benefit plans” in a
certain manner, Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983). Second, if the state law
“bind[s] plan administrators to [a] particular choice” about a plan’s substantive benefits, it has an
impermissible connection with ERISA. Rutledge, 592 U.S. at 87 (quoting N.Y. State Conf. of
Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 659 (1995)). Third, there is
an impermissible connection with ERISA if the state law “governs a central matter of plan
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 21

administration.” Id. (quoting Gobeille, 577 U.S. at 320). And fourth, when a state law
“interferes with nationally uniform plan administration” it has an impermissible connection with
ERISA. Id. (quoting Gobeille, 577 U.S. at 320). That said, ERISA will not preempt a state law
simply because it “increase[s] costs or alter[s] incentives for ERISA plans,” unless the law forces
the “adopt[ion] [of] any particular scheme of substantive coverage.” Id. at 88.

The Commissioner focuses on the second basis, arguing that the PBM laws do not bind
administrators to particular choices about substantive plan benefits. But the PBM laws meet the
other three bases: They require particular plan structures, govern a central matter of plan
administration, and interfere with nationally uniform plan administration. So the PBM laws have
an impermissible connection with ERISA.

1. Any-Willing-Provider Provisions

We begin with Tennessee’s AWP provisions, which include Tenn. Code Ann.
§§ 56-7-2359, 3120(b)(1), and 3121(a) and (b). Section 3120(b)(1) prohibits PBMs or covered
entities from “interfer[ing] with” a participant or beneficiary’s right “to choose a contracted
pharmacy or contracted provider of choice in a manner that violates § 56-7-2359.” Id. at
§ 3120(b)(1). Section 2359, in relevant part and when paired with § 3120(b)(1), prohibits PBMs
and covered entities from either (1) denying a licensed pharmacy the right to participate in a plan
“on the same terms and conditions as are offered” to other providers under the plan or (2)
“[p]revent[ing]” plan participants “from selecting a licensed pharmacy of [their] choice to
furnish the pharmaceutical services offered.” Id. at § 2359(a)(1)–(2).

Then are the provisions in § 3121. Section 3121(a) says that PBMs “shall allow”
participants and beneficiaries of a plan served by the PBM to use “any” Tennessee-licensed
pharmacy for prescription medication, “as long as the pharmacy is willing to accept the same
terms and conditions” established by the PBM for a pharmacy network it established to “serve
patients, participants, and beneficiaries within th[e] state.” Id. at § 3121(a). And § 3121(b)
provides that although a PBM may establish preferred and non-preferred pharmacy networks, it
cannot preclude a Tennessee-licensed pharmacy from participating in either type of network if it
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 22

is “willing to accept the same terms and conditions” the PBM established for other participating
pharmacies in the network. Id. at § 3121(b).

The AWP provisions have an impermissible connection with ERISA because they require
McKee to structure its plan in a particular way, they govern a central matter of plan
administration, and they interfere with nationally uniform plan administration. Rutledge,
592 U.S. at 86–87. One of the main advantages of utilizing a PBM is gaining access to its
pharmacy network. Mulready, 78 F.4th at 1189. In designing and administering benefits, a plan
can decide things like the number of pharmacies it wishes to offer beneficiaries. Id.
“[T]ailor[ing]” the network in this way gives the plan the ability to “promote a higher quality of
care” while reducing beneficiaries’ other costs, like insurance premiums. Id. Some “other
options for refining plan networks,” like utilizing preferred networks or mail-order pharmacies,
can provide further cost-saving. See, e.g., id. at 1189, 1199.

The AWP provisions seek to upend this structure by requiring PBMs to admit all
pharmacies to a preferred network. That, in turn, requires a plan to be designed in a particular
way. ERISA prohibits this. Rutledge, 592 U.S. at 86–87. By requiring a particular structure, the
PBM laws also attempt to govern a central matter of plan administration: the scope and extent of
a plan’s pharmacy network—yet another indication that the state laws are preempted. Id. at 87.
And the PBM laws disrupt “nationally uniform plan administration” because they require plans
to tailor benefits in ways specific to Tennessee, once more crossing the preemption line. Id.
Imagine other states adopting similar AWP provisions, each with slight variations from the other.
Such a patchwork of laws would require plans to “maintain a familiarity with the laws of all
50 States so that they can update their plans as necessary to satisfy the [any-willing-provider]
requirements of other, similar statutes.” Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141,
151 (2001). Plans would also have to “be attentive to changes in the interpretations of those
statutes by state courts.” Id. This sort of “tailoring of plans and employer conduct to the
peculiarities of the law of each jurisdiction is exactly the burden ERISA seeks to eliminate.” Id.
(citation modified). So we affirm the district court’s preemption determination as to the AWP
provisions.
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 23

Doing so is consistent with our decision in Kentucky Ass’n of Health Plans, Inc.
v. Nichols, 227 F.3d 352 (6th Cir. 2000), aff’d sub nom. Kentucky Ass’n of Health Plans, Inc.
v. Miller, 538 U.S. 329 (2003). There, we held that ERISA preempted two AWP statutes in
Kentucky (though they were ultimately saved under ERISA’s saving clause, as discussed in
Section IV.B). Id. at 357–63, 372. Like the AWP provisions here, the Kentucky laws prohibited
discriminating against providers “willing to meet the [plan’s] terms and conditions for
participation.” Id. at 355. Though Kentucky’s laws “did not operate directly on ERISA plans,”
they in effect required plans to “purchase benefits of a certain structure.” Id. at 362. This, in
turn, bore “indirectly but substantially” on all plans, leading us to conclude that the Kentucky
laws “did more than just indirectly affect the cost of ERISA plans”—they “mandated benefit
structures.” Id.; see also Travelers, 514 U.S. at 668 (noting state laws with “indirect[] economic
effects” “might” be preempted if they “effectively restrict [an ERISA plan’s] choice of
insurers”). Kentucky’s laws “affect[ed] the benefits available by increasing the potential
providers” and “directly affect[ed] the administration of the plans.” Nichols, 227 F.3d at 363.
So we deemed Kentucky’s AWP laws preempted because they were “‘connected with’ ERISA
covered plans.” Id. at 363, 372.

As with the laws in Nichols, Tennessee’s PBM laws prohibit PBMs and covered
entities—like McKee, the McKee Health Plan, and MedImpact—from discriminating against any
provider willing to accept the same terms and conditions established by the PBM for its other
participating pharmacies. Tenn. Code Ann. §§ 56-7-2359 (a), 3120(b)(1), 3121(a)–(b). The
Commissioner takes the position that the PBM laws neither “prevent the construction of
pharmacy networks,” nor “dictate what pharmacies must be included in such networks.”
(Appellant Br., ECF 19, 34). But we agree with the district court that the AWP provisions
“eliminate [any] choice” in how a plan structures and designs the benefits it offers by mandating
pharmacy inclusion. (Op. & Ord., R. 142, PageID 2220). Though the PBM laws may not
outright identify the pharmacies that must be included in a network, they improperly remove
control from the ERISA plans; under Tennessee’s AWP provisions, any pharmacy will be
included in an ERISA plan’s network so long as it will accept the network’s terms and
conditions. See Associated Builders & Contractors v. Mich. Dep’t of Lab. & Econ. Growth,
543 F.3d 275, 281 (6th Cir. 2008) (“A state law has an impermissible connection with an ERISA
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 24

plan if it directly regulates or effectively mandates some element of the structure or
administration of employers’ ERISA plans.” (citation modified)). ERISA plans cannot dictate
the size and scope of their health plan networks under the Tennessee laws; this is the type of
“impermissible connection” that ERISA’s preemption clause sought to prevent.

The Tenth Circuit’s decision in Mulready reinforces our analysis. There, Oklahoma
enacted a swath of laws regulating PBMs, including an AWP provision. Mulready, 78 F.4th at
1191. Oklahoma’s AWP statute barred PBMs and their agents from denying providers the
chance to participate in a preferred-status pharmacy network so long as they would accept the
PBM-established terms and conditions “for other providers as a condition of preferred” status.
Id. (citation omitted). Relying in part on Nichols, the Tenth Circuit held that the AWP provision
(and two others) “succumb[ed] to ERISA preemption.” Mulready, 78 F.4th at 1197–99. The
Oklahoma laws mandated a certain benefit structure by excluding one method of structuring
benefits. Id. at 1198. By working in tandem with a provision that “dictate[d] which pharmacies
[had to] be included” in a network, Oklahoma’s AWP provision “require[d] that those
pharmacies be invited to join the PBM’s preferred network.” Id.

So too here. As explained above, the AWP provisions mandate a specific benefit
structure by eliminating the option for plans to set up a limited pharmacy network. Just as the
Tenth Circuit determined ERISA preempts Oklahoma from implementing this type of regulatory
structure, we do the same for Tennessee.

The Commissioner resists this conclusion on several grounds. He contends that we
should disregard Nichols because (1) its discussion of “connection with” preemption was dicta,
and (2) it is factually distinguishable. Neither ground is convincing.

As an initial matter, we may forgo consideration of the Commissioner’s dicta argument,
because he did not raise it below. See Bannister v. Knox Cnty. Bd. of Educ., 49 F.4th 1000,
1011 (6th Cir. 2022) (explaining that “a party has forfeited an argument when the party belatedly
asserts it on appeal after having failed to raise it in the district court.”). Under appropriate
circumstances, we can excuse such a forfeiture in the ends of justice. See Berkshire v. Dahl,
928 F.3d 520, 530–31 (6th Cir. 2019). But no such circumstances are present here.
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 25

At any rate, the Commissioner’s argument is unpersuasive. While “the line between a
holding and dictum is not always clear,” Freed v. Thomas, 976 F.3d 729, 738 (6th Cir. 2020)
(quoting Metro. Hosp. v. U.S. Dep’t of Health & Hum. Servs., 712 F.3d 248, 274 (6th Cir. 2013)
(McKeague, J., dissenting) (citation modified)), “a ‘holding’ is ‘a court’s determination of a
matter of law pivotal to its decision,” id. (quoting United States v. Hardin, 539 F.3d 404,
438 (6th Cir. 2008) (Batchelder, J., concurring in part and dissenting in part) (citation modified)).
Nichols’s discussion of “connection with” preemption was pivotal to the ultimate conclusion as
to whether the Kentucky laws at issue were valid, so it was a holding. And, even if the Nichols
preemption discussion were dicta, we could—and would—consider it as persuasive authority.
See BDT Prods., Inc. v. Lexmark Int’l, Inc., 602 F.3d 742, 750–51 (6th Cir. 2010) (noting that
while dicta may be nonbinding on future panels, it still may be followed as persuasive authority).

Nor is Nichols’s applicability diminished by the fact that it involved physicians instead of
pharmacists. Both physicians and pharmacists provide personalized healthcare services. True,
pharmacists “generally dispense identical prescription-drug products.” (Appellant Br., ECF 19,
39). But they also provide individualized guidance to patients on how to use those
pharmaceuticals. So this is a distinction without a difference for purposes of the preemption
analysis. Whether a health maintenance organization (as in Nichols) or a PBM (as here), both
types of entities perform certain functions for ERISA health benefit plans. So the ultimate
question remains the same: Is it permissible for a state to enact laws that encroach on the
discretion bestowed on plans to structure and design them as they see fit? As we answered
above, ERISA prevents such state-level interference with ERISA plan autonomy. See Rutledge,
592 U.S. at 86–88.

Additionally, contrary to the Commissioner’s urging, we find Mulready instructive.
First, the Commissioner’s argument that the Tenth Circuit was wrong to assume that
pharmacy networks are a part of prescription-drug-benefit design fails because it relies on the
physician-pharmacist distinction dismissed above. Second, his insistence that the case relied too
heavily on Nichols also gets him nowhere considering our earlier discussion of that case. And as
to the former, we note that the Commissioner premises his entire preemption argument on a
single prong of the connection-with analysis—whether the PBM laws require a plan to “provide
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 26

specific substantive benefits.” (Appellant Br., ECF 19, 34 (citation modified)). But he ignores
the other three ways that a state law may be connected with ERISA: where the law (1) mandates
or prohibits certain benefit plan structures, (2) “governs a central matter of plan administration,”
or (3) “interferes with nationally uniform plan administration.” See Rutledge, 592 U.S. at 86–87;
Shaw, 463 U.S. at 97. And laws forcing a plan to include pharmacies it may not otherwise
include, like the AWP provisions, exercise control over a matter central to the administration of
benefit plans—the design and structure of the plans. That is impermissible under ERISA.
Rutledge, 592 U.S. at 86–87.

Finally, we are not persuaded to treat the PBM laws as cost regulations like those
approved in Rutledge. The Arkansas law at issue in Rutledge had “three key enforcement
mechanisms”: (1) requiring PBMs to “tether reimbursement rates to pharmacies’ [drug]
acquisition costs,” (2) mandating that PBMs establish “administrative appeal procedures for
pharmacies to challenge” those reimbursement prices, and (3) allowing pharmacies to “decline to
sell a drug to a beneficiary” should the PBM “reimburse the pharmacy at less than its acquisition
cost.” 592 U.S. at 84–85. These requirements were a mere “form of cost regulation,” the effect
of which was not “so acute” that it “effectively dictate[d] plan choices,” and thus did “not have
an impermissible connection with an ERISA plan.” Id. at 88.

But Tennessee’s AWP provisions differ from the Arkansas law in Rutledge because they
go beyond regulating PBM reimbursement rates as cost regulations. The AWP provisions
diminish, if not outright eliminate, a plan’s ability to design its network in a way most
accommodating and beneficial to its participants. See Mulready, 78 F.4th at 1198 (explaining
that the pharmacies included in a network is a “key benefit design[] for an ERISA plan”). So we
reject the comparison. Tennessee’s AWP laws have an impermissible connection with ERISA
and are preempted.

1. Incentive Provisions

The incentive provisions include provisions that both incentivize and disincentivize
certain conduct and are found in Tenn. Code Ann. §§ 56-7-3120 (a), (b)(2), and 3121(c). Section
3120(a) bars PBMs and covered entities from requiring plan participants to “pay an additional
No. 25-5416 McKee Foods Corp. v. BFP Inc., et al. Page 27

fee, higher copay, higher coinsurance, second copay, second coinsurance, or other penalty when
obtaining prescription drugs, including specialty drugs from a contracted pharmacy.” Tenn.
Code Ann. § 56-7-3120 (a). Section 3120(b)(2) prohibits PBMs or covered entities from
“[o]ffer[ing] financial or other incentives” to participants “to persuade the[m] . . . to utilize a
pharmacy owned by or financially beneficial to the [PBM] or covered entity.” Id. at
§ 56-7-3120(b)(2). And § 3121(c) prohibits PBMs from charging a plan participant “a different
copayment obligation or additional fee, or provide any inducement or financial incentive, for
using any pharmacy” in a pharmacy network established by a PBM to serve participants in
Tennessee. Id. at § 56-7-3121(c).

The incentive provisions impede cost-sharing arrangements, an important facet of
pharmacy network structure. These arrangements divvy up the allocation of who bears what
cost and include things like copays and coinsurance. The D.C. Circuit has concluded that a
PBM-focused law precluding adoption of a cost-sharing arrangement may “function as a
regulation of an ERISA plan itself.” PCMA v. Dist. of Columbia, 613 F.3d 179, 188 (D.C. Cir.
2010) (citation omitted). Here, the PBM laws regulate ERISA plans directly, as such plans are
included in the definition of both “covered entity” and “pharmacy benefits manager.” Tenn.
Code Ann. § 56-7-3102 (1)(A)(xii), (5); see also id. at § 56-7-3122 (“Notwithstanding another
law, this part applies to plans governed by [ERISA].”). Regardless, the incentive provisions bar
ERISA plans operating in Tennessee from steering plan participants toward or away from certain
pharmacies with higher or lower cost-sharing arrangements. This restriction operates to require
an ERISA plan to “structure [its] benefit plans in [a] particular way[].” Rutledge, 592 U.S. at
86–87.

And the incentive provisions are more than mere cost regulations like the Court
approved in Rutledge. 592 U.S. at 88. The effect of Tennessee’s incentive provisions is to
impose across-the-board, universal copays and other fees at every pharmacy in a given network.
See Mulready, 78 F.4th at 1198 (concluding that the discount prohibition at issue there
“require[d] that cost-sharing and copayments be the same for all network pharmacies.”). As the
district court observed, “forbidding differential cost-sharing structures is the same as requiring
identical cost-sharing structures.” (Op. & Ord., R. 142, PageID 2221 (citing Mulready, 78 F.4th
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at 1198)). Thus, it goes beyond “merely increas[ing] costs or alter[ing] incentives for ERISA
plans.” Rutledge, 592 U.S. at 88. It is an impermissible dictate seeking to control how a plan is
designed and structured. See Mulready, 78 F.4th at 1198 (explaining that the “cost-sharing
arrangement[]” for in-network pharmacies is a “key benefit design[] for an ERISA plan.”). So
the effect of the incentive provisions is “so acute” that they “effectively dictate plan choices.”
Rutledge, 592 U.S. at 88. These provisions disrupt uniformity in McKee’s Health Plan and
impermissibly dictate its plan’s design. We therefore conclude that ERISA preempts the
incentive provisions, too.

B. Saving and Deemer Clauses

Our analysis does not stop at preemption, because even when a state’s statute has an
impermissible connection with ERISA plans, Congress included carveouts that could keep these
laws in effect. The Commissioner argues that ERISA’s saving clause applies to the Tennessee
laws at issue. But this argument fails. To begin, neither the Commissioner nor the district court
addressed it below. So, the argument is forfeited. See Frenchko, 160 F.4th at 803 (“Ordinarily,
we will not address an issue not passed upon by the district court.”) (citation modified).

Forfeiture aside, the Commissioner’s saving clause argument is not persuasive. ERISA’s
saving clause exempts an otherwise preempted state law if it “regulates insurance.” 29 U.S.C.
§ 1144 (b)(2)(A). But there is also the “deemer clause,” which says, in relevant part, that “an
employee benefit plan . . . shall [not] be deemed to be an insurance company or other insurer, . . .
or to be engaged in the business of insurance . . . for purposes of any law of any State purporting
to regulate insurance companies[] [or] insurance contracts.” Id. at § 1144(b)(2)(B). These two
provisions, plus ERISA’s preemption provision, operate as follows: (1) “If a state law relates to
employee benefit plans, it is pre-empted”; (2) “The saving clause excepts from the pre-emption
clause laws that regulate insurance”; and (3) “The deemer clause makes clear that a state law that
purports to regulate insurance cannot deem an employee benefit plan to be an insurance
company.” Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45 (1987) (citation modified).

We need not decide whether the PBM laws regulate insurance, because even if they do,
the deemer clause steps in and prevents the PBM laws from deeming McKee, its Plan, or its
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PBM to be insurance companies. The deemer clause “exempt[s] self-funded ERISA plans from
state laws that regulate insurance within the meaning of the saving clause.” FMC Corp.
v. Holliday, 498 U.S. 52, 61 (1990) (citation modified). Under the PBM laws, ERISA plans are
considered to be PBMs—a fact the Department acknowledged in a response to a public hearing
comment—and self-funded ERISA plans cannot be treated as an insurance company under
ERISA. See 29 U.S.C. § 1144 (b)(2)(B); Tenn. Code Ann. § 56-7-3102 (5).4 Thus, the saving
clause does not apply; Tennessee’s PBM laws at issue in this case are preempted.

The Commissioner argues that there is “no material difference between a principal
insurer and a PBM engaged in pharmacy networking,” and that PBMs have therefore “invited
regulation as insurers under state law” so as to trigger the saving clause. (Appellant Br., ECF 19,
44, 47 (citation modified)). But because Tennessee included ERISA plans in the definition of a
PBM, the PBM laws’ regulation of PBMs captures those ERISA plans within it. Accordingly,
even if the saving clause applies here, the deemer clause jumps in to allow preemption.

And because we conclude that ERISA’s express preemption provision applies, we need
not address the alternative argument regarding implied preemption. See In re Ford Motor Co.
F-150 & Ranger Truck Fuel Econ. Mktg. & Sales Pracs. Litig., 65 F.4th 851, 860 n.6 (6th Cir.
2023) (declining to address express preemption argument where implied preemption resolved the
case).

V.

States can enact laws looking to regulate health care and PBMs. But those laws cannot
trespass into ERISA’s territory. Because the Tennessee laws McKee challenges have an
impermissible connection with ERISA plans, they are preempted.

We AFFIRM.

4
To avoid any confusion that the Department’s response refers to a self-insured plan governed by ERISA
(which would be “bound by state insurance regulations insofar as they apply to the plan’s insurer,” Holliday,
498 U.S. at 61), the statutory definitions of “covered entity” and “pharmacy benefits manager” separate out
“self-insured entity” or “self-insured entities” and “plans governed by” ERISA. See Tenn. Code Ann.
§ 56-7-3102 (1)(A)(xi)–(xii), (5).