Cigna Hit With Racketeering Case Over Prescription Drug Costs

A Massachusetts woman is suing a Fortune 500 insurance company, claiming that it requires the network of pharmacies with which it contracts to overcharge insured patients “unauthorized and excessive amounts” for prescription drugs.

The suit, filed Oct. 13 by Kimberly Negron in federal court in Connecticut, accuses Bloomfield, Connecticut-based Cigna Corp. and the company’s Cigna Health and Life Insurance Co. unit of engaging in a racketeering scheme that’s led to multiple violations of federal Employee Retirement Income Security Act provisions.

The suit claims that Cigna or its agents, without customer knowledge, “clawed back” excess charges as high as 1,043 percent for low-cost, generic prescriptions, according to the suit. Negron seeks to certify her case as a class action, claiming the alleged overcharge scheme “is pervasive and significantly increases the costs to patients across the country.”

According to the suit, the illegal overcharges occur “thousands of times each day in pharmacies all across the country” and are imposed through “a nationwide, clandestine, computerized scheme” that allegedly includes mail and wire fraud.

The suit contends that Cigna or its agents, among them Optum and Argus Health Systems, which are pharmacy benefit managers not included in the litigation, routinely require Cigna network pharmacies to collect co-payments from Cigna customers even when Cigna contracted to pay far less. In one case, Cigna contracted to pay $1.75 per prescription for a well-known blood pressure medication but required its pharmacy network to collect $20 co-pays from customers. The $18.25 difference, which the suit describes as “the spread,” was then sent to Cigna.

The result is “a hidden payment” to the insurance company, according to the suit. But under confidentiality provisions included in agreements between the pharmacy benefits managers and the network pharmacies, the pharmacies cannot tell insured customers they’re being overcharged or that the drugs can be obtained more cheaply, the suit contents.

Claw backs were imposed most frequently on widely used, low-cost generic drugs, according to the suit. “It enables the defendants to impose deductible costs, co-payments and co-insurance costs that are higher than the cost of the drug,” according to the suit.

The proposed class would include anyone insured by Cigna who bought prescription drugs and paid fees that were higher than Cigna contracted to pay.

A Cigna spokeswoman declined to comment on the suit.

West Hartford attorney Robert Izard of Izard, Kindall & Raabe, whose firm is representing Negron, said Monday that the alleged overcharge scheme has been in place for at least three years. The firm partnered with Great Neck, New York, firm Sarraf Gentile in the case.

The suit asks for actual as well as treble damages under the Racketeer Influenced and Corrupt Organizations Act, but Izard said it’s difficult to calculate the amount of money Cigna may have collected. “I don’t know how many prescriptions are written under Cigna policies every year,” he said. “It’s hard to put a dollar figure on [it].”

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