Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Oxford Health Insurance Inc. is the latest insurer to be accused of overcharging patients for prescription drugs.
The proposed class action, filed Feb. 16 in a New York federal court, says Oxford worked with pharmacies to charge patients more for certain drugs than the patients would have paid without insurance. The alleged scheme allowed Oxford to collect the difference between a patient’s copayment amount and the cost of a given drug, a spread that sometimes amounted to a 250 percent markup, according to the complaint.
Health insurers UnitedHealth Group, Cigna Corp., and Humana have been hit with similar class actions in the last several years. Cases against CVS Health Corp. and Walgreens Boots Alliance were voluntarily dismissed in 2017. The lawsuits are partly a response to an investigation into health insurance “clawbacks” aired by New Orleans television station Fox 8 beginning in 2016.
The lawsuit against Oxford—which is owned by UnitedHealth—comes two months after UnitedHealth became the first insurer to beat these allegations. A federal judge dismissed that case in December 2017, saying the would-be class of “thousands, and potentially millions,” of patients failed to show that the defendants violated the Employee Retirement Income Security Act or federal racketeering law. In particular, there was no indication the defendants were acting as ERISA fiduciaries when they engaged in the challenged conduct, the judge said.
The new case against Oxford and UnitedHealth-affiliated Optum Rx also raises claims under ERISA and racketeering law. Unlike the UnitedHealth case, which was filed in federal court in Minnesota, the new case was filed in the U.S. District Court for the Southern District of New York.
Oxford didn’t immediately respond to Bloomberg Law’s request for comment.
The lawsuit was filed by Izard Kindall & Raabe LLP, Motley Rice LLC, Scott & Scott, Keller Rohrback LLP, and Sarraf Gentile LLP.
The case is Mohr-Lercara v. Oxford Health Ins., Inc., S.D.N.Y., No. 7:18-cv-01427, complaint 2/16/18.
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