Sixth Circuit Upholds ERISA Preemption on Tennessee PBM Laws

On April 7, 2026, the Sixth Circuit Court of Appeals upheld a ruling that aspects of Tennessee’s pharmacy benefit manager (PBM) laws are overridden by the Employee Retirement Income Security Act (ERISA) when applied to self-funded employer health plans. The decision in McKee Foods Corporation v. BFP, Inc. is significant for stakeholders involved in self-funded ERISA plans and PBMs, further defining the limits of state regulatory intervention through PBM legislation.

McKee Foods Corporation manages a self-insured ERISA health and prescription drug plan for its employees. After discovering procedural discrepancies during an audit, McKee excluded BFP, Inc., operating as Thrifty Med Plus Pharmacy, from its network. Thrifty Med challenged the exclusion, citing two Tennessee statutes for reinstatement. McKee countered with a legal action seeking to affirm ERISA preemption over these state laws. The district court favored McKee in March 2025, leading Tennessee officials to appeal.

The Sixth Circuit supported the lower court's decision, stating that Tennessee’s “any-willing-provider” and “incentive” statutes are preempted by ERISA due to their impact on ERISA-regulated plans. The court distinguished this from the Supreme Court's 2020 decision on Arkansas PBM regulations, which addressed cost regulation without affecting plan structure. Tennessee's statutes, however, influenced pharmacy network composition and plan design, conflicting with ERISA's regulatory framework.

This ruling aligns with a prior Tenth Circuit decision on similar Oklahoma laws, reinforcing the precedent that ERISA precludes state regulations affecting self-funded plan administration. For employers and plan sponsors, especially those in Tennessee, Kentucky, Ohio, Michigan, or nearby regions, this judgment highlights ERISA’s precedence over conflicting state PBM legislation, supporting the autonomy of self-funded plans.