A federal judge tossed a proposed class-action lawsuit by thousands of health plans against Cigna Corp. on Thursday, saying beneficiaries were relying on a “whack-a-mole” approach for coordinating the disparate language across the different contracts.
The federal lawsuit, filed in Connecticut district court, aimed to consolidate the claims of thousands of nationwide health plans operated under the Employee Retirement Income Security Act, or ERISA, and which comprised some 500 million transactions, according to the complaint. These health plans alleged that Cigna schemed to overcharge their participants for prescription drugs purchased, sometimes by as much as 300%. The lawsuit claimed that when a given prescription drug costs less than a patient’s copayment amount, the insurer “clawed back” the difference through an inappropriate method kept secret from patients. This sometimes caused insured patients to pay more for drugs than they would without insurance, with pharmacists contractually prohibited from telling patients this information, according to the suit.
Cigna did not dispute this charge. The insurer argued that health plans are complaining that their contracts did not offer them a pass-through pricing arrangement, which requires pharmacy benefit managers to charge payers the same amount that they reimburse pharmacies, along with a set administrative fee.
Regardless of which model health plans had agreed to, there were too many variations in the legal language to allow for resolution on a class-wide basis, U.S. District Judge Jeffrey Alker Meyer wrote in his decision. While plan participants argued that these variations are not significant, “how should I determine which terms are specific and exact, and which terms are general?” Meyer wrote.
“This kind of whack-a-mole approach to what appear to be material variations is not tenable,” he wrote. “Nor can I simply take plaintiffs’ word that other variations do not exist in all the other thousands of plans that fall under the class and subclass definitions. As far as I can tell, it is holes with moles all the way down.”
While the judge denied plaintiffs’ class status, he said the health plans had a right to dispute claims going forward, and that their expert witness was reliable. Cigna had argued that, because the witness was unable to include individual members’ deductibles when calculating how much its pharmacy benefit manager profited from every transaction, his calculations were not an adequate representation of what the Bloomfield, Conn.-based insurer could owe each participant. Meyer wrote that he wasn’t there to judge the expert witness’ method for calculating the insurer’s alleged debts; he was there to decide whether the man could be trusted.
“I am not all that concerned that (the witness’) methodology is at odds with Cigna’s theory of alleged liability,” he wrote.
Meyer also ruled that Cigna could include information from its document source tool as evidence, if it chose to, going forward. Cigna did not respond to an interview request.
The ruling comes as government officials increasingly investigate their pharmacy benefit managers. While many of the reviews come from states like Arkansas, Mississippi and New Mexico that are investigating claims of inflated drug costs among their Medicaid managed-care programs, some officials are also investigating the pharmacy benefit managers that manage their ERISA programs, according to The Wall Street Journal.
Cigna currently faces a suit from the Ohio attorney general, alleging its Express Scripts pharmacy benefit manager overcharged the state’s Highway Patrol Retirement System for medications.