Specialty Pharmacy Sues United Healthcare for Unpaid Claims

Multiple Allegations Asserted in Fraud and Breach of Contract

IV Solutions, a California-based specialty pharmacy, filed a lawsuit against the nation’s largest health insurance company, United Healthcare Services (“United”) in December 2016.  IV Solutions claims that it was defrauded out of $47 million by United through fraud and delay tactics that ultimately resulted in the pharmacy not being paid for services it rendered.

The federal lawsuit alleges that the pharmacy was authorized by United to provide intravenous infusion therapy to insured California patients. When it came time for reimbursement of submitted claims, United repeatedly provided reasons as to why it was unable to pay the agreed to claims. The extensive complaint alleges that United “engaged in a scheme involving third-party contracts, promised payments, partial payments, extensive delays, and bogus denials to create the illusion that IV Solutions would ‘eventually’ get paid, when all the while the defendant had no intention of paying.”

The filed complaint contains numerous counts against United including fraudulent misrepresentation, breach of implied and written contract, unjust enrichment, breach of covenant of good faith dealing, and quantum meruit. The complaint seeks recoupment of $47 million owed in claims reimbursements.

The complaint alleges that physician and hospital providers repeatedly referred United patients to IV Solutions because United was unable to offer similar in-network pharmacies to meet patient needs. Initially, the volume of prescribed treatments was minimal, and proper reimbursements were made. Subsequently, as treatment volume and reimbursements increased, IV Solutions claims it was induced to continue providing pharmacy services, although in the end United never intended to fully reimburse it.

IV Solutions states that it came across an employee who worked in United’s claims department and who explained that the insurer “had a corporate practice of intentionally denying claims that [it] knew it should cover.” The employee went on to state that United took the position that providers “would accept low or partial payments rather than fight an extended battle with the defendant’s claims department and legal team to get the contracted amount.” The complaint states “[i]t was a practice she had witnessed many times while working for the defendant.”  Additionally, the pharmacy states that other United representatives “leaked information” that United “had marked IV Solutions for underpayment in 2009.”

IV Solutions further alleged it is a “a high-end, specialty pharmacy.” It styles itself as a pharmacy provider offering home infusion treatment services to AIDS patients, when patients with compromised immune systems benefit more from home therapy rather than running the risk of nosocomial infections. As a result, IV Solutions claims that it is not an “in-network” provider for United or any other health insurers, and its fees run high. United would agree to pay those fees when necessary to avoid being sued by its insureds, but ultimately, United decided not to pay IV Solutions any more than the lower rates it had negotiated with its in-network infusion therapy pharmacies. Some claims were paid in full, some at discounted rates and many not at all, according to IV Solutions.

On average, United paid about 8 percent of what IV Solutions billed, according to IV Solutions. That is equivalent to the rate United pays the in-network providers, “which is the rate that the defendant had wanted to pay IV Solutions all along, and which is the rate that IV Solutions explicitly rejected numerous times,” as stated in the complaint.

In addition to unpaid bills of $47 million, the pharmacy is seeking punitive damages for fraudulent misrepresentation, breach of contract, unjust enrichment and several other causes of action.

Ned Milenkovich, co-chair of the firm’s Health Care practice, helps health care and drug and pharmacy clients meet the demands of federal and state regulators, strengthen their positions in a highly competitive marketplace, and resolve a broad range of commercial disputes. Ned represents businesses of all sizes, with a focus on companies with interests and operations throughout the drug supply chain.

This article contains material of general interest and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. Under applicable rules of professional conduct, this content may be regarded as attorney advertising.