Iowa Association of Business and Industry v. Ommen
4:25-cv-00211
| S.D. Iowa | Jun 30, 2025Background
- Plaintiffs (various Iowa-based employer benefit plans and organizations) challenged the newly enacted Iowa Senate File 383 (SF 383), which regulates Pharmacy Benefits Managers (PBMs), on the grounds that it is preempted by ERISA and violates the First Amendment.
- SF 383 contains provisions impacting the structure of health benefit plans, non-discrimination towards pharmacies, and restrictions on communications about comparative drug pricing.
- Plaintiffs allege that SF 383 would require mid-year, mid-contract changes to their benefit plans, cause significant, unrecoverable financial harm, and interfere with administration of ERISA plans and contractual negotiations.
- The Iowa Insurance Commissioner (defendant) planned to enforce SF 383 beginning July 1, 2025; plaintiffs sought an ex parte temporary restraining order (TRO) to prevent immediate enforcement and preserve the status quo.
- The court applied the Dataphase factors for preliminary injunctions, and heightened scrutiny because the relief sought was to enjoin enforcement of a state statute.
- The court granted the TRO, barred enforcement of SF 383 against plaintiffs (and members of one association, conditionally), and scheduled a hearing on a preliminary injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| ERISA preemption of SF 383 provisions | SF 383 directly/indirectly dictates plan design/operation, interfering with ERISA plans. | SF 383 validly regulates PBMs, not preempted. | Likely preempted as to central plan structure provisions. |
| First Amendment—Commercial Speech | SF 383 impermissibly suppresses or compels commercial speech (e.g., truthful price info). | SF 383 is a reasonable regulation in public interest. | Likely fails Central Hudson test; overbroad suppression. |
| Irreparable harm from enforcement | Enforcement would disrupt existing contracts/plans and cause unrecoverable losses. | No immediate, irreparable harm; economic harms are remediable. | Irreparable harm shown due to unrecoverable losses and interference with plan structure. |
| Severability of statute | Illegal provisions are integral; cannot be severed; whole statute should be enjoined. | Severability clause allows partial enforcement; if some parts invalid, others should remain. | Too complex for expedited ex parte analysis; TRO maintains status quo without broad severability ruling for now. |
Key Cases Cited
- Rutledge v. Pharm. Care Mgmt. Ass’n, 592 U.S. 80 (2020) (addressed whether state PBM regulation is preempted by ERISA)
- Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) (state laws that dictate benefit plans are preempted by ERISA)
- Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109 (8th Cir. 1981) (sets forth factors for preliminary injunctive relief)
- Planned Parenthood Minn., N.D., S.D. v. Rounds, 530 F.3d 724 (8th Cir. 2008) (heightened showing required to enjoin state laws)
- Centr. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of New York, 447 U.S. 557 (1980) (establishes four-part test for regulation of commercial speech under First Amendment)