LOS ANGELES (CN) - Berkshire Hathaway workers comp insurers and claims administrators defrauded California Pharmacy Management of millions of dollars by using "sham litigation and fraudulent objections" to refuse to cover medications that doctors prescribed for injured workers, the pharmacy company says in a RICO complaint in Federal Court.
California Pharmacy Management sued Redwood Fire and Casualty Insurance, Cypress Insurance, Oak River Insurance, American All Risk Insurance Services, American Commercial Claims Administrators, Applied Risk Services, Applied Underwriters California Insurance Co., and National Liability and Fire Insurance Co.
The complaint states: "This is a federal RICO case against Berkshire Hathaway (BH) workers' compensation insurers and claims administrators for undertaking a scheme to defraud, through a campaign of sham litigation and fraudulent objections carried out by mail fraud and wire fraud, to avoid payment of all medications prescribed and dispensed to injured workers by physicians contracting with plaintiff California Pharmacy Management LLC (CPM). BH entities have been and are refusing to pay or negotiate valid bills and liens for tens of thousands of needed medications prescribed and dispensed to over 4,000 injured workers by CPM contracted physicians. BH entities are wrongfully withholding workers' compensation premium revenue set aside for and rightfully owed to injured workers and their physicians and that BH entities have a duty to pay, on false pretenses. As a result of the scheme to defraud and the extensive and continuing pattern of racketeering activity, CPM has been injured in its business and property in the millions of dollars ..."
The complaint adds: "Starting several months ago, adjustors for BH entities systematically began refusing to negotiate all bills and liens with CPM collectors, or offering to pay $0 of $1, or referring CPM collectors to outside attorneys who claim not to have the file and never call back. BH entities are engaging in a concerted, blanket denial of valid bills and liens submitted by CPM on behalf of its contracted physicians for tens of thousands of needed medications dispensed to over 4,000 injured workers."
CPM demands treble damages and an injunction. It is represented by John McDermott with Howrey LLP.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.