UnitedHealth Tries to Stop Lawsuits From Mom-And-Pop Drugstores

(Bloomberg) -- Hundreds of small, independent drugstores are accusing UnitedHealth Group Inc. of short-changing them by more than $100 million, and the health-care giant is trying to head off a lawsuit before it goes to court.

UnitedHealth's Optum Rx unit filed more than 200 legal cases this week in federal court in California to force the cases into individual arbitration processes, rather than allow a joint lawsuit to go forward, according to legal filings.

At least 1,000 independent U.S. pharmacies are challenging payment practices at Optum Rx, UnitedHealth's pharmacy benefits management unit that negotiates drug prices for health plans and companies, according to Mark Cuker, a lawyer representing the drugstores. About 500 are involved in the current dispute, while others have already filed cases in different courts. Making each of them enter arbitration is costly and limits the information they could gather through discovery, Cuker said.

“They want each of these pharmacies to have a separate arbitration, 500 separate arbitrations,” even though the pharmacies are raising common issues, Cuker said. Optum Rx is “gaming the system,” he said.

State courts have rejected other attempts to compel private arbitration over similar claims he's brought against Optum Rx, Cuker said.

“Optum Rx is focused on delivering affordable access to prescription drugs,” the company said in a statement. “The more than 67,000 retail pharmacies in Optum Rx's networks are important partners in these efforts, and we continue to work with them to balance the need to fairly compensate pharmacies while managing costs.”

The pharmacies involved in the cases say Optum Rx reimbursed them less than required and clawed back payments, according to UnitedHealth's filings. They also said Optum Rx sometimes called medications brand-named drugs when dealing with health plans but considered the same medicines lower-cost generics when paying pharmacies. Cuker estimated the total value of payments from Optum Rx that his clients are disputing exceeds $100 million over almost a decade.

Optum Rx received notice of the dispute from more than 500 pharmacies in December and said that the pharmacies' lawyer would only resolve the dispute in court. The pharmacies have not yet filed litigation against Optum Rx.