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"stt_transcript": "Judges of the United States Court of Appeals for the Eighth Circuit. Hear ye, hear ye, hear ye. The United States Court of Appeals for the Eighth Circuit is now in session. All persons having business before this Honorable Court may now draw near and they will be heard. God save the United States and this Honorable Court. Please be seated. Welcome to the first argument session of the new term of court. Madam Clerk, will you please publish the cases for argument this morning. The cases for oral argument in Division II on Tuesday, September 22, 2026. Cases 25-2494 and 25-2591. Iowa Association of Business and Industry et al. v. Iowa Insurance Commissioner. The second case, 25-2023. Jose Mandred-Liva v. Todd Blanche. The third case, 25-2649. From the Eastern District of Missouri, United States v. Tanya Haddox. And the last case for argument today is case number 25-3333. From Western Missouri, United States v. Antoine Tolfrey. The first case is Iowa Association of Business and Industry et al. v. Iowa Insurance Commissioner. Thank you. Mr. Valencia. I will just note that given how thoroughly over brief this case is, you will not go 30 seconds already a lot of time. Understood, Your Honor. I will be Chief Justice Rehnquist when the time is up this morning. Understood, Your Honor. Good morning. May it please the Court. Patrick Valencia on behalf of Iowa Insurance Commissioner Doug Oman. The District Court made two key errors here. So although there is a lot going on in this case, once this Court corrects those two errors, this case, relatively speaking, can become much more straightforward. These are the District Court's two errors. First, the District Court erred when it said that plaintiffs had standing to challenge laws that do not regulate them. Seventeen of the 26 challenged regulations regulate only PBMs, or Pharmacy Benefit Managers, but no plaintiff is a PBM. Correcting that error will narrow plaintiff's challenge from the 26 challenged regulations to just the nine that do, in fact, regulate plaintiff's plan and plaintiff's plan sponsors. The District Court's second error, key error, was that it failed to analyze the ERISA Insurance Savings Clause. That is a key step in the ERISA Preemption Analysis, which goes Preemption Clause, Saving Clause, and then DMER Clause. But the District Court stopped its analysis at the first step. That failure alone allows this Court to vacate the injunction and remand to allow the District Court to analyze the Saving Clause in the first instance. That would further narrow plaintiff's ERISA challenges down to just one remaining section. So once this Court corrects those two key errors, this case does simplify. It becomes one section challenged under ERISA and two under the First Amendment. So with that path laid out, I will start with standing. Plaintiffs are two plan sponsors, two plans, and an organization made up of plans and plan sponsors. No plaintiff pleads that it is a PBM, and the organization does not plead that it has a member that is a PBM. Yet they challenge 17 sections that regulate only PBMs. That much is undisputed. Their argument, though, is that they can challenge laws that don't regulate them because PBMs are the functional equivalent of an ERISA plan. That is a novel standing theory that takes this Court's case, Weavey, an ERISA preemption case in which standing was not at issue, and takes the ERISA preemption standard and applies it to Article III to dramatically expand Article III standing. Ordinarily, if you'd like to sue on behalf of a third party, you plead third party standing. Plaintiffs don't do that, and they couldn't even if they tried, because one of the key factors with third party standing is hindrance. You have to establish that there's a hindrance to the third party's ability to sue on its own behalf. Plaintiffs can't do that because PBMs are quite litigious, and we know that if we look at the table of authorities in these briefs. Many of these cases are brought by an organization called PCMA. PCMA is the PBM's trade association. So when the PBMs seek relief against the state law that regulates PBMs, they sue for themselves. So plaintiffs can't plead, nor do they even try, to plead third party standing. That should close the door to their ability to challenge 17 regulations that undisputedly regulate only PBMs. The district court's theory of standing, as I mentioned, was novel because it took the ERISA preemption standard and applied it to Article III, which would be improper because that dramatically expands Article III. The reason for that is there's- All preemption principles begin with Article III. That's just a crazy argument or a crazy misstatement of fundamental preemption law. Your Honor, the district court's theory here is that plaintiffs can have redressability against non-parties based off of this court's analysis in Weeby, which said that PBMs are the functional equivalent of plans. So what that then allowed by applying that here is for the plans and plan sponsors to sue on behalf of non-party PBMs without pleading third party standing. So it creates a back door to the court rather than requiring PBMs to sue on their own behalf. So what's your best case for no standing? My best case for no standing would be any case that requires redressability. No, you can't say any case. Best PBM case. Your Honor, there's not a PBM case here that addresses a plan trying to sue to ERISA preempt a statute. What's your best case? You tell me that they don't have a good case when I ask you for your best case. I think the best case would be if you look at this court's case in Weeby. There, Weeby had a regulated entity that was suing to get relief on behalf against the law that actually regulated them. Your Honor asked, what is the best ERISA preemption case? And the reason I said that is because it's difficult because there's not a case where standing has been alleged by a non-regulated entity trying to claim ERISA preemption against a law that doesn't regulate them. So plaintiffs point to Weeby. They point to a case out of the Tenth Circuit called Mulready. And in Mulready, if you look at that, that's PCMA versus Mulready. All you're doing is conceding it's a case of first impression. Exactly. You have no case. No preemption case, Your Honor. And that leaped out at me from your briefs. No preemption case, exactly, because the theory here applied by the district court was incredibly novel. And the district court and plaintiffs relied on cases where each one of those cases included a regulated entity. But this case, as to the 17 regulations that regulate only PBMs, does not include a regulated entity. So that's Mulready, McKee, Flowers, Weeby, Prudential. All of those cases included a regulated entity. So it is indeed novel. On the indemnification clause argument that plaintiffs raised. I think standing is fundamentally intuitive here. To me, you're the one that's pushing for a novel result. Your Honor, I think if we look at the district court's order, it proves why standing wouldn't be intuitive. Because what it required. You can pick away at orders all you want. I'm talking about the way the case fundamentally looks to me. And that is with all the PBM action all over the nation. This looks, nobody's ever thrown anything like this out for lack of standing. And that's because in those cases that you're talking about that are around the nation? You can distinguish all you like. I'm looking at it from a universal standpoint. And from what? The precedent we have to write. Oh, well, nobody could cite a case, so it's out of here. Good. Aren't you doing your job description? Your Honor, I think the issue here is redressability or a remedies issue. Well, redressability, if this all passes through, the PBMs are going to pass all these costs on. And that's what the actuary testified to. I mean, common sense will tell you that that's what's going to happen. And doesn't that look like a redressable loss? And if not, why not? It doesn't because if we look at this from a remedies standpoint, this order can only apply to parties before this case. The only way that the passed on costs that you're referencing, Your Honor, would be redressed by this court's order. You know, I'd love to take that quote and put it against all the cases where there's all kinds of collateral outflow, predictable and actual from decisions. I understand there's cases where an order could have incidental relief, but this is not one. And the reason is because the district court's order squarely required plaintiffs to file, actually, a list of all of the non-parties that should be getting relief under this injunction. So this isn't merely incidental relief that would be collateral to the district court's order. This was a central part of the district court's scope of relief. In order to redress the passed on costs here, the district court had to extend its order to give relief to non-parties. So it ordered plaintiffs within 24 hours after the injunction issued to file on the docket a list of all of the non-party PBMs. This isn't PBMs that are members of ABI, the organization plaintiff here. These are non-party. They're non-parties and they're not members of any underlying organization that is filed in any way. So your argument essentially is that if we look at the remedy sought, that the remedy sought will evidence the fact that there really is no Article III standing, because the remedy is necessarily directed at non-parties. That's exactly right, Your Honor. And this court's done that recently in the Sisney case, where it looks at how the remedy might play out here in order to determine whether there's redressability. And in that case, it did exactly what Your Honor just previewed. In order for there to be a redressable injury, the order itself would have to extend to non-parties. And that's why here plaintiffs can't challenge 17 regulations that only regulate PBMs, because in order to do so, the order has to extend relief to non-parties. So turning to the... So you're saying they've got to come back with a PBM as plaintiff who will immediately face enforcement action? That's correct, that a regulated entity, if they would like... The second half is the important part of my statement. Your Honor, I think the second half of your statement gets that third-party standing, that if there's going to be immediate enforcement against... No, you're saying the only people they could possibly come who would solve the remedy, redressability problem, is a PBM. And I say, who would then, if they did it, would immediately face enforcement by your client. I can't predict whether they would face immediate enforcement or not. The statute says so on its face. They're subject to the statute, that's exactly right. Right. And they're not before this court, so the remedy can't extend relief to non-parties under Trump v. Casa. I'm talking about... Okay. You don't want to talk about what I'm talking about. Your Honor, perhaps I'm not understanding. I apologize. I'm talking about what you're asking the world to say, that the only people that can sue us are those who we can immediately, while the case is pending, put them out of business. What I'm saying, Your Honor, is that to get relief against the state law, you have to be the regulated entity or you should plead third-party standing, and they don't satisfy either of those requirements here. So as to the ERISA preemption analysis, the district court didn't analyze the saving clause. ERISA has an insurance savings clause that says, even if a state law has an impermissible connection with ERISA, it still might be saved if it's a state law that regulates insurance. And the U.S. Supreme Court told us in Miller what that test looks like, and it's two prongs. Are you saying this entire statute is an insurance regulation, and therefore subject to the savings clause, the entire statute? No, we're not saying the entire statute, Your Honor. There are two sections that are in the cross appeal that we're not raising the saving clause as to, and those would be section 510B.4B.2B, and then the other one would be 8B.4A and B. Okay, what's two of those? Short name, short description. Yes, the short description of the first one is the third-party payer notice requirement, where they have to give notice to covered persons. The second one is the reporting and disclosure requirement that applies to PBMs. Okay. So those two we're not raising the savings clause as to, but we are as to the rest, and the reason is because they satisfy the Miller two-prong analysis. So the first step of Miller is that the law must be specifically directed towards the activity of insurance. Well, insurance is somewhat in the insurance business, isn't that correct? The activity of insurance or the business of insurance is what the Supreme Court- I don't understand how this is a-you're going to save myriad statutes from preemption by simply calling them statutes that regulate insurance. I just don't think that's what we have here. I think this is a statute that deals with the relationship between PBMs and providers and plan owners and providers and also beneficiaries. That's not an insurance statute or regulation. I think if we look at what the definition of a PBM is under Iowa law, and that's 510B.1 sub 15, a PBM is one who manages a prescription drug benefit provided by a third-party payer, and the definition of a third-party payer includes one who engages in health insurance. And so this law, even the parts of it that are directed only at PBMs, is specifically directed towards the activity of insurance. It doesn't have an effect on insurance, of course, but that's not good enough. Under prong one, it has to be specifically directed towards insurance, and the Supreme Court has said that it doesn't have to be directed towards an insurance company or an entity that is itself an insurance entity. It has to be specifically directed towards the activity of insurance. Has anyone ever raised this kind of argument before, this broad brush argument, that almost the entire regulatory scheme is out the window because of the savings clause? Has anybody ever raised that before? This is a unique case because there's a lot of statutes. We're not saying that the entire regulatory scheme goes out the door. We are going section by section, and we don't raise it as to a couple. I understand, but that's just a tiny bit that might be saved from the savings. There's a lot that's going on in Chapter 510B. This is just sort of 26 subparts of it. It's a much broader statute. There's a lot that's in there. We're not raising the savings clause as to each of them, but a threshold problem. I'm sorry. It seems to me it's an awfully ambitious aim that you've taken here with almost the entire statute, so I just want to make sure that I understood that that was your position. Going section by section, yes, that is our position for the ones that we raise the savings clause as to, and a threshold problem on appeal is that the district court didn't even analyze the savings. The district court sort of mentioned the savings clause and the so-called dimmer clause in passing, but I think implicit in doing that was the district court's assumption, assertion, feeling, holding, as it were, the kind of sub salendio kind that this was just not an insurance regulation statute. You're right. You're correct that the district court did mention the savings clause standard when it was laying out the standards at the beginning of its opinion. The opinion's over 80 pages, and it never analyzed the savings clause. That's true. And so I don't believe that it just quietly denied the savings clause arguments because if you look specifically at one of our any willing provider laws that applies to a third party payer, this is section 4B2A. This is governed by a Supreme Court precedent and Eighth Circuit precedent, the Prudential case in the Eighth Circuit and Miller in the U.S. Supreme Court, where both of those courts found in any willing provider law that applied to a third party payer fell within the insurance saving clause, and that's exactly what section 4B2A is. And so at a minimum, that should have had the savings clause applied to it. Here's a related question. I think you're saying that at least the self-funded plans are subject to regulation because they are, in effect, insurers and therefore accepted by the savings clause? So the self-funded plans first fall within the savings clause, but then they fall within the Deamer clause because the Deamer clause says that applications of the law to self-funded plans are sort of scooped back out of the savings clause, and those applications we concede, if you find that they have an impermissible connection with preemption, can't be exempted from that. I want to step back for just a moment. I'm still trying to figure out exactly what your position is as regards the district court opinion and the sub salento doctrine. When we look at a case where a district judge acknowledges that an issue exists and then they go on and they write in a manner which tends to indicate that they have made a decision, and that is that the doctrine being advocated does not apply in this case, and they just go on and analyze it, we don't usually just come back and say, well, they didn't analyze it, without first deciding are they wrong on that particular point. So it seems to me that really where we ought to be sitting is that the district court made a decision and that decision is not the decision that you want, and then why are they wrong on that point, because I think that's how we look at that, because otherwise what we do is we're directing district judges to write 400 page opinions rather than 80 page opinions. I understand, Your Honor, and if we didn't have a binding Supreme Court case Miller that held in any willing provider law that applied to a third party payer, then I might think that the district court did sub salento decide the issue, but I don't believe that this district judge just ignored Supreme Court precedent or the Eighth Circuit case credential. I think that what happened was this case was moving quickly, and it laid it out, it didn't recognize that we raised the savings clause, it laid it out as here's the standard for a risk of preemption, and then it just, by the time it got 80 pages later, it didn't get to it. Okay, so you're saying they just acknowledged it, they didn't acknowledge that you raised the argument, it's not that there's a difference there. That's correct. Because, you know, we see this mostly where somebody says, yeah, these are the issues that have been raised, blah, blah, blah, and you're saying that's not what this opinion did. That's correct, and I think that binding Supreme Court precedent tells us that, that a district judge is not going to ignore that without at least some conversation as to why that doesn't apply. We raised that in the district court, and the district court didn't discuss it. Now, going section by section, I could go section by section if that would be helpful to this court. There's obviously 26 sections here, so if you'd like to ask a question about a specific section, I can do that. I'd like to turn for a minute at least to the First Amendment analysis before I save some time for rebuttal. On the First Amendment analysis, if this court finds, as the district court did, that plaintiffs do not have standing to challenge a, to raise a First Amendment challenge to a law that imposes restrictions only on PDMs, then there would only be two First Amendment claims to analyze, and those would be the third-party payer notice requirement, which is section 4B-2A, and then it would be the third-party payer and PBM referral discrimination section, which is part of section 4-4. So under 4B-2A, this is a disclosure requirement. This disclosure requirement targets inherently misleading speech, and the reason it does that, and thus gets the lower standard of scrutiny under Zauderer, is because it is triggered when a third-party payer restricts its network. That's the inherently misleading speech, because when a third-party payer restricts its network, it does so under the guise that it's doing that to decrease costs, create a more robust network of providers and benefits and things like that. We are arguing that that's inherently misleading speech, and so then Zauderer applies. If this court finds that that is inherently misleading speech, plaintiffs don't make an alternative argument that this law would not satisfy Zauderer. But this law could also satisfy Central Hudson if the court doesn't find that it's inherently misleading. This court could look to the recent Ninth Circuit case that we briefed called Stolfi. Plaintiffs actually relied on the district court opinion from that case, which was then reversed by the Ninth Circuit. In a similar PBM disclosure law, the Ninth Circuit there said that states have a substantial interest in the free flow of information, and then that the law requiring disclosure of this ordinary economic information was substantially directed towards that substantial interest. And that's exactly what you have here, the third-party payer notice requirement that I'm talking about. All it requires is pharmacies to notify, or excuse me, third-party payers to notify the pharmacies within the geographic coverage area that the plan covers. It requires them to notify them of what the restrictions are to its network. That is just ordinary economic information that's letting them know what the terms of the game are if they want to take the playing field. And that is directed towards the state's substantial interest. As to the other First Amendment claim, which is the referral discrimination section, that's Section 4.4. Referral is one word within a broader statute. What does that mean? Who's referring what to whom? So if we look at Section 4.4, referral refers to a PBM, health carrier, health benefit plan, or a third-party payer. And the law says those entities shall not discriminate against a pharmacy by doing this list of conduct. And the list of conduct includes referral. I don't understand, but what is that? And that's exactly the question. So plaintiffs are arguing that referral means refer, and so they're sort of broadening it. What referral is, is just if you look at the list of the other ones, it is in that list. Participation, referral, reimbursement, or indemnification. So we should interpret referral within that list of activities. These are contract activities, participation, reimbursement, indemnification. So referral is necessarily conduct. So it's a PBM, or a third-party payer, or whoever else is under the statute, referring the prescription to their preferred pharmacy. To a pharmacy. Exactly. So it's referring the prescription, or referring the covered person, to their preferred pharmacy, their affiliated pharmacy where they get. Directing the prescription to a certain party. That's exactly right. And we know that based off the list of conduct that's in Subsection 4.4. And because it's conduct, then it's not subject to strict scrutiny as a speech regulation. It's conduct regulation. If we're correct on that statutory interpretation, plaintiffs don't make an alternative argument that if it is conduct, that that doesn't satisfy the First Amendment. I don't follow that. Sorry. As to the referral discrimination section, if we're correct, that referral is conduct. Plaintiffs don't argue that if it is solely conduct, enforcement of that law violates the First Amendment. So they don't make an alternative argument under that. So really what that analysis there comes down to is just a statutory interpretation question. If we're correct on our statutory interpretation of the word referral, then you don't need to reach the First Amendment question because plaintiffs don't make that alternative argument. I'll save that time for rebuttal. Thank you. Thank you. Mr. Shelley. Good morning. May it please the Court, I'm Anthony Shelley here for the plaintiffs. This case has become markedly easier to decide due to various developments this year, all of which favor the plaintiffs. Three new appellate decisions have come out straightforwardly endorsing the Mulready approach of striking as preempted state statutes that regulate any willing provider matters, as well as cost sharing between plans and beneficiaries. Those decisions most notably are the Flowers decision from this court, which actually cited the district court, Chief Judge Rose's decision, on a positive preemption ruling itself, making essentially Chief Judge Rose's decision somewhat of a persuasive precedent in itself. In addition, there's the McKee decision from the Sixth Circuit, and then there's the McClain decision from the Seventh Circuit. These decisions all negate broad swaths of arguments that the defendant just made. But besides the new case law, there are some developments at the federal level. The U.S. Department of Labor has issued proposed regulations regulating the PVM plan relationship. Congress passed new ERISA amendments in February. Those won't be in effect for quite a while. They won't be, but our point on that, Your Honor, is that they show that this relationship is subject to federal regulation. If it's subject to federal regulation, that means ERISA says whatever falls within ERISA's ambit is exclusively a federal concern. So Congress has shown this is an ERISA matter, albeit not yet regulating, but making it subject to regulation in 2028. Regulations aren't actions of Congress. Excuse me. Congress did pass, in February, statutes. The Consolidated Appropriations Act of 2026, Sections 6201 and 2 are ERISA amendments that regulate PBMs and plans with respect to their relationship with PBMs. And then the Department of Labor, in January and February, proposed regulations also regulating PBMs and plans together. And what they show is that this is a matter for federal regulation. If it's a matter for federal regulations, it's exclusive under ERISA because of the preemption provision. And as a result, it's off limits to the states. So it's not surprising that, given these developments, Mr. Valencia has decided to focus on standing and the Insurance Savings Clause because the preemption issues are pretty straightforward. I'd like to start with standing simply because so much time was spent on that, and I have just a few points to make on that. I think Mr. Valencia mentioned that there were 17 or so provisions at issue that related just to PBMs, but I read in his brief there were five on appeal and one on cross-appeal. So I only understood there to be six that addressed just PBMs. But this issue is easy because the Eighth Circuit has already recognized that plans have standing to challenge as preempted state laws applicable to their third-party contractors. So, Judge Loken, you asked for the best case. The best case on this is Prudential Insurance Company of America v. National Park Medical Center, 413 F3rd 897 at pages 901, 903, and 913. This case holds that Tyson's, which was an employer, self-funded plan. That's our court? That's your court, yes. It's the Eighth Circuit 2005 decision from this court. In that case, Tyson's, which sponsored a self-funded ERISA plan, was allowed to challenge in any willing provider law that applied solely to its contracted third-party administrator who was an insurance company. Mr. Valencia has argued that, oh, but there was also an insurance company present there, so that's who had standing. But the insurance company was suing for insured plans. Tyson's was suing for its own self-funded plan because the state wanted to regulate its third-party administrator. And on page 913, the court specifically says the injunction here held that it was preempted, by the way, which is its own problem for the AWP provisions for the state. But it specifically said the injunction will provide the state, or excuse me, enforcement of the statute is preempted and unallowable either directly against the self-funded plans or indirectly against the third-party administrator. Here would be a PBM. That really should end the matter since it's finding precedent, and the law hasn't changed since then. If anything, the law has gotten better. The Wiebe case that Mr. Valencia mentioned actually emphasizes the interchangeability and the functional relationship and equivalence, really, for better or worse, of ERISA plans and PBMs. The ERISA plans can't exist in providing pharmacy benefits without PBMs. So this notion that Prudential adopted is simply picked up again in the theory of the way Wiebe goes. I also want to just make two more short points on standing. One is that this isn't third-party standing. That's when you sue on behalf of someone else. And also, that kind of standing isn't even jurisdictional. It's Prudential under the Supreme Court's June medical decision, which is 591 U.S. 299. But we're suing on our own behalf, even with respect to the PBM provisions, because a PBM can only be liable or be fined with respect to its administration of a health plan. We're the health plan. So the state comes knocking on the PBM's door saying, you are maladministering, in violation of state law, the Vermeer plan or the Pella plan or the Iowa Bankers plan, and you better stop doing it. And here's an injunction telling you to stop doing it. Well, that injunction isn't just against the PBMs. That's against us, because the PBM doesn't exist in the abstract and isn't being enjoined just in the abstract. It's being enjoined because of its behavior for us. And so the injunction itself extends to us. There was a point made, I think, by Mr. Valencia that all these agents and contractors have been added to the case, and that's because we're entitled to complete relief. The Supreme Court said under Trump v. CASA, we get an injunction for complete relief. That means it extends to us and our privies, which would be our contractors, agents, and in this case, that's the PBMs. This isn't a case where we're suing for ERISA plans who aren't members of the trade association, who are similarly situated. That's what the Supreme Court was talking about in Trump v. CASA, where an ERISA plan might sue and the district court universally issues an injunction saying every ERISA plan out there doesn't have to comply with this law. That's not what we have here. The injunction was limited to our plans and those who administer it. So on standing, I think also Judge Erickson, you mentioned the indemnification issue. The judge, that's already been decided by the Second Circuit, and Chief Judge Rose agreed with it, that if the PBMs are going to be held liable for actions in association with our plans, that then under indemnification, they can pass on the liability and penalties to the plans. That's enforcement against the plans themselves. We would ask the court to follow that precedent as well. So that's another good case for us, Your Honor. So with that, I'd like to turn a bit to preemption. Again, the two sides seem to have difficulty in stating exactly which ones are at issue, but I understood 18 provisions of the statute to be at issue. Issue 10 were declared preempted by the district court, and we'd ask this court to reverse the district court on eight others. So we see them there being 18 altogether, and they're outlined in the questions presented in, as Judge Loken mentioned, some very long briefs. But the statutory provisions fall into six broad buckets. First bucket are the any willing pharmacy provisions. Second bucket is limits on cost sharing, differentiation, and calculation. That's limits on coinsurance, copay differentiation, deductibles. Then there's the dispensing fee that the district court addressed that applies only to retail pharmacies, not national chain pharmacies. Then there are, I guess we're up to about the fourth bucket, is planned PBM contracting requirements. Fifth bucket is reporting and disclosure requirements. And then there are the enforcement provisions last. On the any willing provider provisions, this court, again, in that same prudential decision I mentioned on standing, already held that any willing provider provisions are preempted by ERISA, at least for self-funded plans. And I'll talk about the insurance savings clause shortly. But the establishment of networks, Moridi says, is the quintessential matter of benefit design and benefit structures, which ERISA says the states cannot regulate. Moridi says that, and then Flowers, this court's own decision, picks up on that and says the same thing. So the AWP provisions are easily held to be preempted for self-funded plans, as are the cost sharing and deductible limitations and regulations. Those, again, were at issue in Moridi that this court and Flowers endorsed, and so they should be preempted as well, again, by settled precedent. As for the dispensing fee, there's been a lot of argument about this, because we admit that the dispensing fee, now the dispensing fee is, if the particular beneficiary goes to the CVS, which is a national chain, there's one price that they go to. Hy-Vee's, which is next door, for instance, in Des Moines, to CVS, the pharmacy is entitled to a larger dispensing fee. I'm sorry, what was the last thing you said? If the beneficiary goes to a CVS, for instance, they will pay a certain, the pharmaceutical will be distributed at a certain price. If they go next door to a pharmacy called Hy-Vee's, H-Y-V-E-E, which is not a national chain under the definition here, there would be a dispensing fee added, and the pharmacy would get significantly more money for that particular prescription. We argued this is a cost measure, and we admit that under the Rutledge case, that it typically would not be preempted. The problem here is that the Supreme Court in Rutledge also noted that, however, even a cost measure can be preempted if it has acute effect on an ERISA plan. And here, the legislature got very aggressive and made the statute effective within essentially 15 days after it was signed. The result was supreme dislocation for ERISA plans, that they suddenly had to pay so much more for these drugs. And the declarations in the record note that plans were ready to suddenly slash benefits, increase beneficiary co-pays, because suddenly the costs went much higher. That's the kind of acute effect that the Supreme Court was talking about that can make a non-preempted cost measure turn into one that is. We admit that if the state had been less aggressive and, say, set up the 2028 plan year or even the 2027 plan year for something like this, that might be a different story. That's what Congress did in its February statutory amendments to ERISA. They don't come into effect until 2028. But the legislature here said you've got 15 days, now comply. That causes acute dislocation, making the dispensing fee one of the rare instances in which a cost regulation is preempted by ERISA. The next bucket of state regulations is the regulations of the contracting relationship between plans and PBMs. On that side, we assert that this is a fiduciary function. How to set up a contract, the plan's contract with its service provider, to administer benefits is a matter of fiduciary concern. It, in fact, is addressed directly in ERISA Sections 406 and 408. That's 29 U.S.C. 1106 and 1108, where Congress had said, you may only enter reasonable contracts with service providers and you may only pay reasonable compensation and you have to get certain disclosures in that instance. So the state comes in and says, well, on top of what ERISA says, we want all these other things. We want all these other bells and whistles in your contracts and all these other requirements and limitations. It's an exclusively federal area subject to fiduciary decision making and enforcement against the fiduciary if they do it right. That's preempted because of the fiduciary relationship. With respect to disclosures and reporting, this Court's decision in Gearhart, we mentioned, still lives in its connection with holding. There was a reference to holding that's no longer relevant because the Supreme Court's subsequent case law does away with that. But in its connection with analysis, the Gearhart Court specifically said, forcing PBMs to make reports to the state about their plans, claims, not only as privacy problems, but it invades the central matter of plan administration that is governed by the disclosure and record-keeping requirements of ERISA alone, and the state cannot supplement those. And then the last bucket is the enforcement provisions. Those are pretty easily preempted under settled law, both the prudential decision of this Court, again, throws out enforcement provisions that were associated with an AWP law as preempted, and then the Supreme Court's decision in Aetna v. Davila makes plain that any additional enforcement measure applicable or affecting an ERISA plan is a non-starter, and only ERISA's remedies can be used. So there are no possibilities that legitimately invoke this statute, no circumstances in which this statute might not be preempted by ERISA? Not under provisions that we have asserted are preempted. We don't assert every single provision in the statute is preempted. We assert that the vast majority of provisions are, and the rest is inseverable from it because it's almost impossible to determine as an Article III court what the legislature would have liked and what it wouldn't have liked in that situation. But with respect to any provision, if it's going to be enforced against an ERISA plan, it has to be done through ERISA. It cannot be done through state law because of the special line of cases the Supreme Court has, most notably Aetna v. Davila, that says ERISA's remedies are exclusive even for saved state insurance laws. Even for what? Even for saved state insurance laws. So let's say Mr. Valencia had been right, which is not that some parts of this are saved as insurance regulations. If somehow an ERISA plan violated that, the beneficiary would have to sue under ERISA to say, you violated state law which has been transmogrified onto the plan because of the savings clause. So enforcement provisions are probably the most preempted of anything that the Supreme Court has talked about because of the special preemption that attaches to them. So that gets us to the insurance savings clause. Again, we're not exactly sure which ones we're fighting about because I think the briefing said there were far fewer that were at issue. But in any event, it's only relevant for provisions applicable directly to third-party payers who are insurance companies. This goes to your question earlier, Judge Arnold. For self-funded plans that are administered by PBMs, there's no insurance company involved in that situation. So this insurance savings clause issue is very limited to the situation where there is a third-party payer that's an insurance company. And due to the Deamer Clause, it doesn't cover the self-funded side. And even there, it could only be relevant to the provisions that apply directly to third-party payer insurance companies, which are very few because, as you also noted, Judge Arnold, the vast majority of the statute applies to PBMs, which carry no risk. They're not insurers. They're just administrators. So the issue is narrow in scope, but it's also, again, easily decided because, as I think Judge Arnold was noting, this is a law, overall, when you look at it as a whole, it is a law that seeks to regulate PBMs. It says so on the preamble. It doesn't say anything about third-party payers, ERISA plans, or anything. It's designed to regulate PBMs. They carry no risk, and therefore the first provision of the Kentucky v. Miller test, is it specifically directed at insuring entities? It's not. It's directed at a non-insuring entity, and the insuring entities, whether you're a self-funded ERISA plan or an insurance company, they're scooped in because the state thought, this isn't really going to be effective against the PBMs if we also don't try to directly regulate them in some ways. And so this is, it'd be one thing if the statute mostly regulated insurers, and there was a little bit of it that regulated PBMs. That would be like the Kentucky v. Miller footnote number one. But that's not what this is. This is a statute that, in wide measure, regulates PBMs and adds in smaller measure plans directly because it wants to perfect what it's done with respect to PBMs. And so that's not the situation that Miller was, and it's not one that allows for saving under the insurance savings clause. And I would mention Judge Erickson. I think this is a situation where Chief Judge Rose did decide the insurance savings clause issue because not only did she summarize what the law was on the insurance savings clause, but her injunction extended specifically to all the plaintiffs, two of whom could only be reached if she also was deciding the insurance savings clause. And I will note, as Mr. Valencia said, this was an urgent hearing and urgent process. So Chief Judge Rose needs to be applauded for the decision. She issued 90 pages in a very short order. But she had a lengthy hearing, and at the hearing she issued, which was very helpful, I thought, to both of us, a series of questions, 13 to each side saying, I want to hear about this at the hearing. One of them was specifically on the insurance savings clause. Tell me why the insurance savings clause applies or doesn't apply. And it had subparts. We argued that in front of Chief Judge Rose. So she had it all in front of her. She decided it, and I think she approached this, as Judge Arnold possibly suggested, that this doesn't look like an insurance statute. This looks like a statute that regulates contracting partners about the administration of plans, and therefore she didn't need to detail it, I suppose, in her mind, though I don't want to put words in her mouth. So that's the insurance savings clause. I'll just briefly touch on the First Amendment. The First Amendment involves three different provisions, we say. The health plan, PBM anti-referral provision, which Judge Arnold asked questions about. The PBM anti-promotion provision, which the district court didn't reach because she got one standing issue wrong, but we argue had she gotten that correct, she would have reached this. And then the health plan requirement that they have to, they have to divulge to all providers in a geographic area, even if they don't want to hear about it, their competitive requirements for being in the network. This is very sensitive corporate information that the state just willy-nilly says, you shall provide it to every provider in the geographic area, how to become a member of the network. The way Mr. Valencia tries to get rid of the district court's holdings on this is to say, well, this is all misleading behavior. Well, the district court was not willing to condemn the entire body of ERISA plans and the entire body of PBMs to be engaged in misleading behavior. She said, this isn't misleading behavior. What's happening here is someone calls the customer service agent at the PBM or at the plan and says, I have this very expensive specialty drug that needs to be administered to me. Which pharmacy should I go to in order to get it filled? And the customer service rep or directly the PBM or directly the ERISA plan says, you should go to, let's say, the CVS because we have a specialty network with them. This is a very expensive drug. They alone administer it for us because we need to guarantee volume to them in order to get discounts that we're getting from them on the pricing. So you need to go to the CVS. And, in fact, under the Iowa Bankers Plan, for instance, we will pay the coinsurance, but it doesn't count towards your deductible. So the beneficiaries, this is terrific. I get to go. I get basically the drug for free. Otherwise, it's a $100,000 drug. But I have to go to the CVS to do it. In that situation, supposedly everything is misleading in that situation because the beneficiaries' best interests are served by that. The plans' interests are best served by that. Maybe the PBMs too. I don't know. But for what it's worth, that's not misleading. That's actually a fiduciary requirement. You must help the beneficiaries determine how they can best get the benefits at the cheapest cost. And you also have to defray the administrative costs of the plan. To do anything other than promote the pharmacy that's in the network would be a breach of fiduciary duties. So that provision, those provisions, there's nothing misleading about that. As to the other provision that is at issue, this requirement that health plans have to send out their competitive information about how to be a network to everybody in a geographic area, whether they want it or not, that's not misleading either. The whole idea in setting up a network is you have to have a limited number of networks in order to get very discounted prices from those pharmacies because they have to count on volume. If the network is huge, the beneficiary can go to everyone and get the same rate, you're not going to be able to get the discounts from individuals. Again, that's not misleading behavior. That is behavior designed to further the fiduciary's obligation to keep the cost of the plan down and help the beneficiaries themselves. So the district court was right to hold that two of these provisions, and she should have held a third, are barred by the First Amendment, which also then supported her severability analysis. Wasn't one of those provisions preempted? Yes, this was a kind of Belt and Suspenders approach where she held the anti-discrimination provision, the referral provision fell on both sides. If we thought that was correct, we wouldn't have to reach this? Correct. And you wouldn't have to reach the contracting requirement, the obligation to send out all of your terms, you wouldn't have to reach the First Amendment issue there, too, either, because it's part of the Any Willing Provider, Any Willing Pharmacy provision, and if you throw that out in Arisa Grounds, you wouldn't need to get to it on the First Amendment. So as we noted in our brief, we'd ask that the court affirm much of what the district court did, and we'd ask that on cross-appeal that the court hold an additional several provisions are preempted, and that certainly there was standing in the situation for the court to be able to get to all that it did. So thank you. Thank you. Thank you, counsel. For Rebel. Let me start, Mr. Valancivi, with something that bothered me and we didn't get to before. It seems to me you are telling this panel to disregard the holding in which is in most situations absolutely contrary to binding Eighth Circuit and bank law. So where are we on that? So Flowers, as to at least let's start with standing, Flowers doesn't say anything about standing because there you are. I understand it doesn't cover everything, but it covers much of what you essentially were arguing. So what the law that was at issue in Flowers required. You can dodge it for another 10 minutes. I want an answer to my question. Do we, are you telling us not to view Flowers as controlling our panel? No, Your Honor. And we submitted a response 28 J letter on that explaining. You didn't cover that question. The question, whether it's binding. Yes, it's binding on this court, just as is we be in prudential. And so I'd like to talk about prudential for a minute because prudential found in any willing provider law that applied to a third party payer was saved. And so my friends referenced prudential as to standing, but in prudential, the regulated entity was a plaintiff. So one plaintiff had standing and the court went on from there. So prudential doesn't answer the standing issue here and it does answer the ERISA insurance savings clause issue as to at least the, any willing provider law that applies to third party payers, which is section four B two a. I'd like to touch on the indemnification clause point that was, was mentioned. I think it's important for the court. If it's going to analyze indemnification clause and whether indemnification clauses is what gives plaintiffs standing for the pass through costs. Look at those, the two indemnification clauses that plaintiff cited, they only cited two and they're at the appendix pages two 16 to two 17 and appendix page three 84. The district court determined that these indemnification clauses were standard, but those two clauses themselves are different from one another. Plaintiffs pointed to a case called Liberty mutual and said the indemnification clause there gives them standing here because, but the, the, excuse me, the indemnification clause in Liberty mutual allowed. I don't remember this arguing being argued before. They mentioned indemnification clauses. So I'm responding to that. An argument just now. Yes. What they mentioned the pastor costs that judge Erickson was mentioning. And so they relied on the indemnification clauses. I didn't hear the word indemnification that I believe they did. You want to, you want to add on to what you argued before? I don't your honor. I'm just responding to the, the point about pass through costs. So I'll turn next to the dispensing fee, the dispensing fee, the plaintiffs argue imposes an acute effect. If the court looks at what the U S Supreme court did in travelers in travelers, they are analyzed whether a cost regulation imposed an acute economic effect. And in travelers, the way to analyze the word acute, acute is not a statutory term. It was the term the court used in its opinion and acute meant some, some fee that was so great that it imposed effectively a Hobson's choice on the plan. What plaintiffs are arguing here is a different interpretation of acute. And they're saying it takes effect so suddenly, but they've at least conceded that under the travelers interpretation of acute, the fee itself is not so large that it imposes a Hobson's choice. The fee is $10 in some sense, a dispensing fee. Go ahead. And the fee in travelers was a 13% surcharge on hospital billing rates. And so $10 is quite, quite much smaller than the 13% surcharge in travelers. So acute has a number of meanings, depending on how it's used. It's a word with broad interpretations in the English language. And there's one that's commonly used in medical care. And that is that it has an immediate and substantial effect. And so, you know, somebody has an acute diagnosis of acute onset pneumonia or something viral pneumonia, that that's what that tells us. And then there's a sense in which we use acute as just being substantial and overwhelming, right? You know, and are you saying that the Supreme Court's opinion limits it to the second and not the first? Because what I understood them to be arguing is that the term acute actually does have both meanings. Both are common in the English language and both could be appropriately applied under these circumstances. But you're saying that really only the second meaning that it's overwhelming and substantial. I'm looking at the traveler's opinion as a whole and seeing what it meant by acute rather than looking at it as sort of a statutory term where we're going to look to the dictionary definition, which we ordinarily wouldn't do for a Supreme Court opinion. And the opinion as a whole and travelers looked at a 13% hospital billing rate and said, that wasn't so large that effectively opposed the Hobson's choice. And so we'd ask the court to apply that same theory here. The last point I would like to make is on severability. The plaintiffs argued that it's impossible to know whether the legislature would have wanted any of these statutes to stand on their own. That is wrong. The legislature told us twice. There's two severability clauses here. Iowa code 4.12 is a severability clause imposed on interpretation of Iowa statutes. And then within SF 383 itself, section eight is a severability clause. So we shouldn't be getting into a guessing game about effects on the market and things like that. This is not a factual question and the district court got that wrong. It should have taken the legislature at its word when it imposed a double presumption of severability in the Texas statute. Thank you, your honors. Thank you, counsel. The case has certainly been thoroughly briefed and argued and it's very complex and council stayed within the time limit, which is not easy in this environment, in this situation. So we appreciate that and we appreciate the effort and we'll take it under advisement."
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