UnitedHealth Hit Again in Drug Price Litigation Wave

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

Nov. 16 — UnitedHealth Group is once again in the crosshairs of a lawsuit by a health plan participant who claims she was secretly overcharged for prescription drugs ( Fellgren v. UnitedHealth Group Inc. , D. Minn., No. 0:16-cv-03914, complaint filed 11/15/16 ).

The newest lawsuit, filed Nov. 15 as a proposed class action, attacks the insurer’s relationship with its pharmacy benefit manager, OptumRx. The complaint alleges UnitedHealth and OptumRx added “hidden bogus fees” to sales of prescription drugs that had retail prices below an insured patient’s copayment amount. When a copayment exceeds the retail price of a given drug, the defendants “claw back” that excess copayment amount as “pure, undisclosed profits,” according to the complaint.

The lawsuit follows investigations into prescription drug costs by a New Orleans television station, and it marks at least the third time in the past six weeks that UnitedHealth has been sued over its relationship with Optum. Similar lawsuits were filed on Oct. 4 and Oct. 14, and Cigna Corp. and Humana have been sued over similar alleged schemes.

According to the latest complaint, these clawback amounts are “not insignificant” and can sometimes exceed the total cost of a given medication. This means that pharmacy benefit managers such as OptumRx “are often collecting for themselves more than the prescription even costs, while the patient’s insurance plan provides no benefit to the patient,” the complaint alleges.

Fox 8 Investigation

All five pending lawsuits cite a 2016 investigation into health insurance clawbacks conducted by New Orleans television station Fox 8. The investigation found that some insured patients may be paying more for prescription drugs than they would pay if they lacked insurance altogether.

Lee Zurik, anchor and chief investigative reporter for Fox 8, told Bloomberg BNA that smaller insurance companies may be engaged in similar clawback practices. Zurik said he knew of other attorneys looking into these issues, adding that it “definitely wouldn’t surprise me if more suits are filed.”

The latest lawsuit also takes aim at UnitedHealth’s alleged use of contractual “gag clauses” that prohibit pharmacists from telling patients the true cost of their prescription drugs.

Zurik said that these gag clauses make it “extremely difficult” for patients to know if they’re being overcharged for drugs, which in turn makes it hard to estimate how many people may be affected by these practices.

However, Zurik said that this may be changing—at least in some states.

In June, Louisiana Gov. John Bel Edwards (D) signed a law that aims to prevent patients from overpaying for prescription drugs at the pharmacy. Arkansas lawmakers enacted similar legislation in 2015.


The five lawsuits vary considerably in terms of legal theories, although all five bring claims under the Racketeer Influenced and Corrupt Organizations Act.

The most recent lawsuit against UnitedHealth also raises claims under Minnesota and Florida law, while the Humana lawsuit was filed under Kentucky law. The lawsuit against Cigna is largely based on the Employee Retirement Income Security Act, as is the first lawsuit against UnitedHealth filed on Oct. 4.

The latest complaint was filed in the U.S. District Court for the District of Minnesota by Keller Rohrback LLP and Lockridge Grindal Nauen PLLP. The other law firms leading this litigation push are Izard Kindall & Raabe LLP, Sarraf Gentile LLP, Gray Plant Mooty, Scott & Scott, Wood Law Firm, Davis & Taliaferro LLC, Lemmon Law Firm and Zimmerman Reed LLP.

UnitedHealth didn’t immediately respond to Bloomberg BNA’s request for comment.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Pension & Benefits Daily