The “Indivisible Negotiation” Doctrine: Fourth Circuit Confirms Broad Federal-Officer Removal Despite State Disclaimers

1. Introduction

In State of West Virginia ex rel. Mark A. Hunt v. CaremarkPCS Health, L.L.C., No. 24-1924 (4th Cir. 2025), the United States Court of Appeals for the Fourth Circuit confronted an increasingly common procedural battlefront in nationwide pharmaceutical-pricing litigation: whether pharmacy benefit managers (PBMs) that negotiate drug rebates on behalf of federal and non-federal health plans may remove state-law suits to federal court under the federal-officer removal statute, 28 U.S.C. § 1442(a)(1). The State of West Virginia, seeking to avoid the federal forum, “disclaimed” any recovery tied to federal contracts. The Fourth Circuit rejected that tactic and joined the First and Ninth Circuits in holding that PBMs act “under” a federal officer when negotiating rebates for Federal Employees Health Benefits Act (FEHBA) plans and that the indivisibility of those negotiations with private-plan negotiations establishes the required causal nexus for § 1442(a)(1) removal.

The decision establishes what this commentary calls the “Indivisible Negotiation” Doctrine: when a defendant’s challenged conduct is jointly performed for federal and non-federal clients in a single, inseparable process, post-filing disclaimers cannot defeat federal-officer removal. The court’s reasoning strengthens defendants’ ability to secure a federal forum, clarifies the low threshold for showing a colorable federal defense, and has far-reaching implications for litigation involving mixed federal-private activities.

2. Summary of the Judgment

Holding: Reversing the district court, the Fourth Circuit held that CaremarkPCS Health, L.L.C. was entitled to remove West Virginia’s state-law complaint under § 1442(a)(1).
Key Findings:
- West Virginia’s mid-litigation disclaimer of federal connections does not bar removal; plaintiffs are not the “masters of the complaint” once § 1442(a)(1) is invoked.
- Caremark acted “under” a federal officer (the Office of Personnel Management, OPM) by administering FEHBA benefits subject to detailed OPM oversight.
- Caremark plausibly asserted a colorable federal defense—namely, FEHBA express pre-emption of conflicting state laws.
- The alleged wrongful conduct (rebate negotiations) is indivisible as between federal and non-federal clients, satisfying the “for or relating to” nexus requirement.
Disposition: District court’s remand order reversed; case returned to federal court.

3. Analysis

3.1 Precedents Cited and Their Influence

Government of Puerto Rico v. Express Scripts, Inc., 119 F.4th 174 (1st Cir. 2024) – First major appellate decision recognizing PBM rebate negotiations as basis for federal-officer removal. The Fourth Circuit expressly “join[ed] our sister circuits” and adopted its logic.
California v. CaremarkPCS Health LLC, Nos. 23-55597/99, 2024 WL 3770326 (9th Cir. Aug. 13, 2024) – Though unpublished, provided persuasive reasoning (especially Judge Ikuta’s concurrence) that no disclaimer can segregate federal and non-federal aspects of a single rebate negotiation.
Maryland v. 3M Co., 130 F.4th 380 (4th Cir. 2025) – Clarified that a plaintiff’s disclaimers receive little weight in the § 1442 analysis; relied upon to reject West Virginia’s disclaimers.
County Bd. of Arlington Cnty. v. Express Scripts Pharmacy, Inc., 996 F.3d 243 (4th Cir. 2021) – Provided the circuit’s framework for “acting under,” colorable defenses, and nexus requirements.
Supreme Court authorities:
- Jefferson County v. Acker, 527 U.S. 423 (1999) – Mandates liberal construction of § 1442.
- Willingham v. Morgan, 395 U.S. 402 (1969) – Removal right “absolute” regardless of original jurisdiction.
- BP p.l.c. v. Mayor & City Council of Baltimore, 593 U.S. 230 (2021) – Modern reaffirmation of § 1442 breadth.
- Watson v. Philip Morris Cos., 551 U.S. 142 (2007) – Defined “acting under.”

3.2 Court’s Legal Reasoning

(a) Disclaimers and the “Master of the Complaint” Doctrine

The district court had credited West Virginia’s assertion that it sought no relief stemming from federal contracts. The Fourth Circuit invoked Kircher v. Putnam Funds Trust and its own decision in Maryland v. 3M to hold that the well-pleaded-complaint rule is displaced in the § 1442 context. Because Congress wanted a federal forum for federal officers’ defenses, a plaintiff cannot re-plead away federal jurisdiction once the defendant presents a plausible federal narrative. Hence, disclaimers—either in the complaint or in motion practice—carry no dispositive weight.

(b) “Acting Under” OPM

The court emphasized OPM’s “detailed regulation, monitoring, and supervision” of FEHBA carriers and their PBMs. Specific contract provisions (Section 1.28 of the Standard FEHBA Contract) require pass-through pricing and rebate transparency, granting OPM audit rights. Such active oversight exceeds the mere sale of “off-the-shelf” goods and fits the Supreme Court’s “subjection, guidance, or control” test from Watson.

(c) Colorable Federal Defense: FEHBA Pre-emption

FEHBA’s express pre-emption clause (5 U.S.C. § 8902(m)(1)) supersedes state laws “which relate to” health-plan benefits. Because West Virginia’s theories seek to impose liability for rebate structures expressly contemplated in FEHBA contracts, Caremark could plausibly argue those claims are pre-empted. The Fourth Circuit reaffirmed that, at the removal stage, plausibility—not certainty—suffices.

(d) “Related-To” or Nexus Requirement and the Indivisible Negotiation Doctrine

At the heart of the opinion lies the court’s acceptance of Caremark’s factual assertion that rebate bargaining is conducted once, for all clients, yielding a single national rebate table. Because that negotiation is the gravamen of West Virginia’s complaint, and because it simultaneously serves FEHBA plans, the required connection to federal authority exists. The court crystallized this principle: “If Caremark were liable for negotiating rebates on behalf of private clients, it would necessarily also be liable for negotiating rebates on behalf of the federal government—because it is the same negotiation.”

3.3 Impact on Future Litigation and Legal Landscape

Pharmaceutical Pricing Actions: States suing PBMs or manufacturers for drug-price inflation will now find it markedly harder within the Fourth Circuit to keep their cases in state court.
Broader Federal-Private Overlaps: Any industry that performs unified tasks for both federal and private clients—defense contractors, data vendors, healthcare providers, tech companies running cloud services for federal agencies—may cite this decision to remove litigation.
Uniformity and Multidistrict Coordination: By funneling such cases to federal court, the decision facilitates consolidation (e.g., JPML) and enhances consistency in interpreting FEHBA pre-emption.
Narrowing Plaintiffs’ Pleading Strategies: Disclaimers or artful pleading that attempt to slice out federal aspects will receive skeptical treatment. Plaintiffs may now need to truly segregate conduct at the factual level (if possible) rather than by verbal disclaimers.
Circuit Alignment: With the First, Ninth, and now Fourth Circuits in agreement, a “mini-circuit split” has essentially closed, reducing the likelihood of Supreme Court intervention—unless another circuit diverges.

4. Complex Concepts Simplified

Federal-Officer Removal (28 U.S.C. § 1442): A special statute letting federal officers—or entities “acting under” them—move a case from state to federal court, even if the lawsuit asserts only state-law claims. It ensures that federal defenses are heard by federal judges.
“Acting Under”: Not mere compliance with federal law. The defendant must assist or help carry out government duties under significant federal supervision.
Colorable Federal Defense: A genuinely plausible federal-law defense (e.g., pre-emption, immunity). The defendant need not prove it will win—only that the defense is not frivolous.
FEHBA: The Federal Employees Health Benefits Act, a comprehensive program for federal workers’ health insurance, administered by the Office of Personnel Management. FEHBA contracts contain a powerful express pre-emption clause.
Indivisible Negotiation: Concept coined from the opinion: when a single course of conduct (e.g., rebate bargaining session) simultaneously serves federal and private clients, it cannot be partitioned for jurisdictional purposes.
Disclaimer Strategy: A plaintiff’s attempt to avoid federal jurisdiction by stating it seeks no relief for federal-related conduct. Under this decision, such disclaimers are ineffective if the underlying facts remain intertwined with federal activity.

5. Conclusion

The Fourth Circuit’s decision in Hunt v. CaremarkPCS cements a robust reading of the federal-officer removal statute, extends the protective mantle of § 1442 to PBMs entangled in national rebate negotiations, and curtails plaintiffs’ reliance on strategic disclaimers. The newly articulated Indivisible Negotiation Doctrine highlights that, where federal and non-federal activities are fused, jurisdiction follows the federal thread. Consequently, defendants performing shared services for the federal government and private clients now possess a clearer—and easier—path to a federal forum. Future litigants, courts, and policymakers must account for this precedent when designing claims, defenses, and statutory regimes in domains where public-private collaboration is the norm rather than the exception.