Indivisible-Conduct Disclaimers Cannot Defeat Federal-Officer Removal for PBMs in Opioid Public-Nuisance Litigation

1. Introduction

In County of Westchester v. Express Scripts (2d Cir. Sept. 2, 2026), dozens of New York counties and municipalities (collectively, “Plaintiffs”) sued two pharmacy benefit managers (“PBMs”)—Express Scripts, Inc. and OptumRx, Inc. (collectively, “Defendants”)—in state court, asserting only state-law causes of action (e.g., public nuisance, fraud, negligence, NY GBL §§ 349–350) arising from the local harms of the nationwide opioid epidemic.

Defendants removed under the federal-officer removal statute, 28 U.S.C. § 1442(a)(1), arguing that some of the challenged PBM activities were performed “acting under” federal agencies through contracts supporting TRICARE (DoD), FEHBP (OPM), and VHA (VA), and that Defendants would assert federal defenses (including contractor immunity and federal preemption).

Plaintiffs responded by amending their complaints to disclaim any claims “related to” federal contracts, federal formularies, or federal-plan damages. The district courts accepted those disclaimers and remanded. The Second Circuit reversed, holding that the disclaimers were ineffective because the complaints targeted indivisible conduct and indivisible community-wide harms that necessarily implicated Defendants’ federally directed work, and because Defendants satisfied the removal elements as clarified by the Supreme Court in Chevron USA Inc. v. Plaquemines Parish (2026).

2. Summary of the Opinion

  • Holding on disclaimers: Plaintiffs’ disclaimers could not defeat federal-officer removal where the alleged PBM conduct (notably rebate negotiations and formulary-related practices) was plausibly single, unified conduct performed for both federal and non-federal clients, and the alleged opioid oversupply and municipal costs were likewise not meaningfully separable between federal and non-federal sources.
  • Holding on § 1442(a)(1): Applying Plaquemines, Defendants met all three federal-officer removal elements: (1) they were “persons acting under” federal officers; (2) Plaintiffs’ claims were “for or relating to” acts under color of federal office under the statute’s broad “relating to” standard; and (3) Defendants asserted colorable federal defenses (contractor defense; TRICARE and FEHBA preemption).
  • Scope: The court emphasized it was not deciding ultimate liability under New York law; it decided only that remand was unlawful once the cases were properly removed.

3. Analysis

3.1 Precedents Cited

A. PBM disclaimer decisions from other circuits (persuasive authority)

The Second Circuit framed the issue as one of first impression within the circuit but aligned itself with a growing appellate consensus rejecting “disclaimer-by-pleading” strategies in PBM cases when the challenged conduct is alleged to be operationally indivisible:

  • Gov't of Puerto Rico v. Express Scripts, Inc. (“Puerto Rico II”) (1st Cir. 2024): The court treated as “particularly instructive” Puerto Rico II’s rule that a valid disclaimer must “eliminate any basis” for federal-officer removal such that, on remand, “there is no possibility” the state court must decide whether the defendant acted under federal authority. Disclaimers are invalid if they are “circular” and still require state-court adjudication of the federal nexus.
  • California v. CaremarkPCS Health LLC (“California II”) (9th Cir. 2024) (mem.): The Second Circuit cited California II (and the concurrence) for the proposition that disclaimers fail where rebate negotiations remain causally connected and cannot be disaggregated between federal and non-federal lines of business.
  • West Virginia ex rel. Hunt v. CaremarkPCS Health, L.L.C. (4th Cir. 2025): Adopted Puerto Rico II’s logic in the PBM context; supported the Second Circuit’s skepticism toward disclaimers that leave unresolved allocation/causation questions.
  • Ohio ex rel. Yost v. Ascent Health Servs., LLC (6th Cir. 2026) and Griffin v. Optum, Inc. (8th Cir. 2026): Reinforced that PBMs act under federal direction in benefit administration and that disclaimers do not negate removal when the alleged conduct spans the PBM’s entire book of business.
  • California ex rel. Harrison v. Express Scripts, Inc. (9th Cir. 2025): Noted as reaching a different result on different facts—especially waiver of an indivisible-rebate-negotiation theory. The Second Circuit also explained that Plaquemines undercut the “causal nexus” approach that had influenced some outcomes.

B. Supreme Court and Second Circuit federal-officer removal framework

  • Chevron USA Inc. v. Plaquemines Parish (2026): The centerpiece of the decision. Plaquemines distilled § 1442(a)(1) into three elements and—critically—clarified that the “relating to” requirement “sweeps broadly,” does not require strict causation, and is satisfied by a non-remote connection. The Second Circuit treated Plaquemines as dispositive in rejecting attempts to demand a federal “mandate” compelling the precise challenged conduct.
  • Watson v. Philip Morris Cos., Inc. (2007): Supplied the baseline for “acting under”: private parties must assist federal officers in carrying out federal tasks, not merely comply with regulation.
  • Agyin v. Razman (2d Cir. 2021) and Badilla v. Midwest Air Traffic Control Serv., Inc. (2d Cir. 2021): Emphasized broad construction of § 1442, including for private contractors, and identified factors showing “acting under” (performing tasks government would otherwise do; supporting federal mission; oversight/control).
  • Cuomo v. Crane Co. (2d Cir. 2014): Used for the principle that a federal defense need only be “colorable” and that courts should avoid fact-intensive merits litigation at the jurisdictional stage; disputed facts about the defense belong in federal court.
  • Kircher v. Putnam Funds Tr. (2006) and Tennessee v. Davis (1879): Anchored the statute’s purpose: protecting federal operations and ensuring federal defenses are tried in a federal forum.
  • Isaacson v. Dow Chem. Co. (2d Cir. 2008): Quoted for the “colorable defense” standard and the principle that the defense need not be clearly sustainable at removal.

C. Indivisibility, allocation, and merits questions

  • Baker v. Atl. Richfield Co. (7th Cir. 2020) and Maryland v. 3M Co. (4th Cir. 2025): Cited to support the court’s key move: where allocation/causation between federal and non-federal sources is difficult (or, per defendant, impossible), that is a merits question to be resolved in federal court after removal—not a basis to remand.
  • Illinois ex rel. Raoul v. 3M Co. (7th Cir. 2024): Discussed indirectly through Maryland as an example where a geographically bounded disclaimer could succeed because it removed any need to apportion contamination between sources.
  • Town of Pine Hill v. 3M Co. (11th Cir. 2026): Noted as part of the broader trend rejecting disclaimers when federal/non-federal conduct cannot be cleanly separated.

D. Background law on PBMs, formularies, and public nuisance

  • Rutledge v. Pharm. Care Mgmt. Ass'n (2020): Provided the court’s functional description of PBMs and their intermediary role, grounding the plausibility of allegations that PBMs can “steer” utilization through formularies.
  • Sergeants Benevolent Ass'n Health & Welfare Fund v. Sanofi-Aventus U.S. LLP (2d Cir. 2015) and New York ex rel. Schneiderman v. Actavis PLC (2d Cir. 2015): Cited for how formularies and tiering affect patient costs and can steer demand—supporting the complaint’s theory of harm.
  • 532 Madison Ave. Gourmet Foods, Inc. v. Finlandia Ctr., Inc. (N.Y. 2001): Quoted for New York’s definition of public nuisance, important because the municipalities alleged diffuse, community-wide interference—making disaggregation of harms especially problematic.

3.2 Legal Reasoning

A. Why the disclaimers failed: “indivisible conduct” + “indivisible harms”

The court’s central analytical move was to treat Defendants’ removal theory as plausibly alleging that the complained-of PBM practices were unitary across clients:

  • Unitary conduct: Defendants asserted they negotiated rebates for their “entire book of business” and did not maintain separate “federal-only” rebate negotiations or contracts.
  • Unitary harm: Plaintiffs sought municipal cost recovery for a broad opioid “oversupply” and associated public expenditures. The court reasoned that even if Plaintiffs tried to avoid federal evidence, a factfinder would still face allocation/causation issues about what portion of the alleged oversupply (and municipal costs) was attributable to federally administered plans versus non-federal plans.

Borrowing Puerto Rico II’s framing, the Second Circuit treated the disclaimers as circular: they purported to carve out federal conduct, yet the validity of the carve-out itself depended on deciding whether the conduct/harm could be separated—exactly the question § 1442 is designed to have litigated in federal court.

B. Application of § 1442(a)(1) after Plaquemines

(1) “Acting under”

The court held Defendants were “acting under” federal officers because their PBM services for TRICARE/FEHBP/VHA assisted federal agencies in performing statutory duties to deliver pharmacy benefits, under detailed contractual control and oversight (e.g., DoD’s uniform formulary mandate and supervision).

Notably, the court rejected Plaintiffs’ attempt to use disclaimers to collapse “acting under” into the separate “relating to” requirement—echoing Plaquemines’ insistence that the elements remain distinct.

(2) “For or relating to”

Relying on Plaquemines, the court applied a broad association standard, requiring only a non-remote connection—not strict causation and not a showing that federal duties “mandated” the exact challenged practice. Because Plaintiffs’ claims (on Defendants’ plausible account) targeted the same rebate/formulary conduct performed for federal plans, the claims “related to” acts under color of federal office.

(3) “Colorable federal defense”

Because the disclaimers were ineffective, Defendants’ asserted defenses remained in play and were deemed colorable under Isaacson/Cuomo, including:

  • Government contractor defense (contractor immunity principles);
  • TRICARE preemption; and
  • FEHBA preemption.

Consistent with § 1442’s purpose, the court declined to test the ultimate merits of these defenses at the jurisdictional stage.

3.3 Impact

  • Constraining pleading-based remand strategies: The decision makes it significantly harder for plaintiffs in the Second Circuit to defeat federal-officer removal through generalized disclaimers when the defendant plausibly asserts integrated federal/non-federal operations and non-severable harms.
  • Alignment with post-2024 appellate trend: The Second Circuit joins the First, Fourth, Sixth, and Eighth Circuits in treating these disclaimers as ineffective in materially similar PBM litigation—promoting predictability (and likely more federal fora) in nationwide public-entity suits against PBMs.
  • Plaquemines’ “relating to” standard becomes operational: The opinion is an early, concrete application of Plaquemines in a complex mass-tort/public-nuisance setting, signaling that courts should not demand a tight causal nexus or an express federal mandate.
  • Forum consequences (not merits): Plaintiffs’ state-law claims survive as claims, but they will be litigated (at least initially) in federal court, where federal defenses and allocation questions will be resolved.

4. Complex Concepts Simplified

  • Federal-officer removal (28 U.S.C. § 1442(a)(1)): A rule allowing federal officers—and private contractors acting for them—to move a state-court case into federal court when sued for (or relating to) acts connected to federal duties, so federal defenses are decided in a federal forum.
  • “Acting under”: More than being regulated; it means helping the federal government perform tasks it is responsible for, under federal direction/oversight.
  • “Relating to” after Plaquemines: A broad connection test—claims need only have a meaningful association with the federally directed conduct; strict causation is not required.
  • Colorable federal defense: A plausible federal defense that is not frivolous; it need not be proven correct at the removal stage.
  • Disclaimer (in this context): A plaintiff’s attempt to amend pleadings to renounce federal components (federal contracts, damages, or conduct) to avoid federal jurisdiction. This case holds disclaimers fail when they depend on contested, hard-to-sever facts.
  • PBM / formulary / rebates: PBMs manage drug benefits; formularies are the “covered drug lists” often tiered to affect patient cost; rebates are payments negotiated with manufacturers that can influence placement and utilization.
  • Public nuisance (New York): A substantial interference with public rights affecting a considerable number of people; its diffuse nature often makes causation and allocation (who contributed what portion of harm) complex.

5. Conclusion

County of Westchester v. Express Scripts establishes a clear Second Circuit rule: plaintiffs cannot defeat federal-officer removal through disclaimers when the claims target allegedly indivisible PBM conduct performed for both federal and non-federal clients and implicate similarly indivisible public harms. Applying Chevron USA Inc. v. Plaquemines Parish, the court broadens the practical availability of § 1442(a)(1) in large-scale public-entity litigation against federal contractors, ensuring that disputed questions about federal direction, allocation, and federal defenses are resolved in federal court.