Anne Bucher  |  March 16, 2018

Category: Legal News

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cignaOn March 12, a Connecticut federal judge rejected a bid to dismiss Racketeer Influenced and Corrupt Organizations Act (RICO) and Employment Retirement Income Security Act (ERISA) claims against Cigna Health and Life Insurance Co. in a class action lawsuit alleging Cigna and others inflated the price of prescription drugs without notifying customers.

The Cigna class action lawsuit accuses the defendants of participating in a conspiracy to overcharge patients for medically necessary prescription medications.

The plaintiffs claim the defendants misrepresent the cost of prescription drugs by charging patients increased costs, then they “clawback” a large portion of the patients’ payments from the pharmacies.

The Cigna class action lawsuit points to an example in which a Vitamin D prescription was purchased by a pharmacy for 60 cents from the manufacturer or wholesaler. In accordance with the Pharmacy Benefit Manager Pharmacy Agreement, the contracted charge made by the pharmacy was $2.57.

However, the pharmacy agreement allegedly required the pharmacy to charge a $7.69 copayment for the prescription, amounting to a nearly 300 percent overcharge. From this payment, the defendants would allegedly receive a $5.11 clawback. However, the pharmacies were allegedly prohibited from disclosing the amount paid to the pharmacy or the clawback.

U.S. District Judge Warren W. Eginton found that the plaintiffs alleged Cigna designed the clawback scheme and that it required pharmacies to misrepresent the cost-sharing amounts and directed them to send clawbacks.

“Taking the allegations to be true, the court cannot hold as a matter of law that plaintiffs have failed to allege that Cigna directly or indirectly participated in the alleged enterprises’ affairs through racketeering activity,” Judge Eginton wrote.

For the ERISA claims, the judge found that the plaintiffs in this case did not need to exhaust their administrative remedies before filing the Cigna prescription overcharging class action lawsuit because there aren’t procedures in place that address the overcharging claims.

The plaintiffs, who receive prescription drug benefits through individual or group health plans issued or administered by the defendants, claimed that the defendants breached their fiduciary duty under ERISA. Judge Eginton allowed most of the claims to survive after he determined the defendants were acting as fiduciaries.

The plaintiffs are represented by Robert A. Izard, Craig A. Raabe and Christopher M. Barrett of Izard Kindall & Raabe LLP; William H. Narwold and Matthew Jasinski of Motley Rice LLC; Joseph P. Guglielmo, Erin Green Comite and Carey Alexander of Scott & Scott Attorneys at Law LLP; Derek W. Losser and Gretchen S. Obrist of Keller Rohrback LLP; Brian C. Gudmundson of Zimmerman Reed LLP; Ronen Sarraf Lemmon of Lemmon Law Firm LLC; Brad J. Moore of Stritmatter Kessler Whelan Koehler Moore Kahler; Daniel K. Bryson and Jeremy R. Williams of Whitfield Bryson & Mason LLP; and E. Kirk Wood of Wood Law Firm LLC.

The Cigna Prescription Overcharging Class Action Lawsuit is Kimberly Negron, et al. v. Cigna Health and Life Insurance, et al., Case No. 3:16-cv-01702, in the U.S. District Court for the District of Connecticut.

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33 thoughts onCigna Prescription Overcharging Class Action Survives Motion to Dismiss

  1. jeremy reisner says:

    please add me

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