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Thursday, June 13, 2024 | Back issues
Courthouse News Service Courthouse News Service

UnitedHealth Accused of Overcharging for Drugs

(CN) — A class-action lawsuit claims insurance giant UnitedHealth Group caused customers to pay higher prices for prescription drugs to the point where it would have been cheaper to buy the drugs without insurance.

The federal lawsuit, filed Tuesday in Minnesota federal court, labels the alleged illegal charges as "clawbacks" and defines them as excessive charges that UnitedHealth Group required pharmacies to charge insured patients.

The class, headed up by lead plaintiff Anna Mohr, claims that after these charges were collected by pharmacies, they were "clawed back" and given to the insurance company.

In an example from the lawsuit, one class member was allegedly charged a $50 co-payment for the drug Sprintec, and the pharmacy was only paid $11.65 of the payment, with the rest being given to UnitedHealth.

The class alleges that the scheme is based on deals with pharmacy benefits managers, or PBMs, that do not allow the disclosure of these extra charges.

"Insurer/PBMs contractually bind pharmacies to keep the clawback scheme secret and they prevent pharmacies from informing patients that their drugs could cost less if the pharmacy were permitted to process the purchase outside of the patients' insurance plans," the 72-page complaint states.

The class claims that these kinds of charges were not authorized under the insurance policies, as they go above and beyond the actual cost of the drug and violate RICO laws the Employee Retirement Income Security Act, or ERISA.

In addition to Mohr, Samantha Sohmer and Charles Wiltsie are also named as plaintiffs. They seek class-action status and unspecified damages for the alleged overcharging, and are represented by Daniel Shulman of Gray Plant Mooty in Minneapolis.

This is not the first time UnitedHealth has been accused of an overcharging scheme. In 2000, a case titled Smith v. United Healthcare Services was filed in the same court against the company and sought damages for a similar alleged scheme involving co-payment overcharges.

In Smith, the lawsuit claimed that the insurance company played fast and loose with definitions contained within its policies, as the plans specified that the patients should pay the lesser of the plan's co-payment or the actual cost of the drug, referred to in the complaint as the "contracted reimbursement rate."

That rate, according to court records, should be the amount the insurance company repays the pharmacy for filling a given prescription drug, and plaintiffs in Smith claimed they were overcharged.

The court granted the Smith plaintiffs summary judgment in 2003, and in 2004 the case was settled through a court-approved agreement that totaled $9.95 million and an additional $1.2 million for administration costs.

The proposed class in Tuesday's lawsuit claims that UnitedHealth is violating the court's decision in the Smith case "by charging plaintiffs and the class members here co-payments that were and are higher than the amount that they repay the pharmacy for filling a given prescription drug."

Tyler Mason, a representative of UnitedHealth Group, declined Courthouse News' request to fully comment on the lawsuit, instead saying, "We have not been officially served with the complaint, and pharmacy benefits are administered in line with the coverage described in the plan documents."

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