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Over One Million May Benefit from Judgment Entered Against United HealthCare Services

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Case ID: 2704 | Insurance | 09/08/2004

Judgment has been entered against United HealthCare Services, Inc. and its insurer-sibling HealthCare Insurance Company on behalf of participants in pharmacy benefit plans governed by the federal Employee Retirement Income Security Act and administered by United. The action asks United to provide reimbursement for drug overcharges that occurred when the plan administrator failed to pass on its negotiated prices to participants. Monetary damages will not be distributed until all proceedings have been finalized and all possible appeals have been exhausted.

The judgment states that United unreasonably interpreted its Employee Retirement Income Security Act-governed benefit plans to require plan participants to pay the full retail cost of their prescription drugs even when the price of the drugs as negotiated by United--usually lower than the retail amount--was less than the participants owed as a copayment. The court found that when a prescription drug cost is less than a participant's copayment, the participant should only have to pay the lesser negotiated cost set under United's contract with various pharmacies.

Under United's plans, participants and subscribers should have been entitled to pay the lesser of a fixed dollar copay or the "prescription drug cost," which was defined as the plans' contracted reimbursement rate with the pharmacy. Contrary to this, whenever the negotiated rate was lower than the copay, United's computers routinely told pharmacists that the appropriate charge was full retail. In many cases, the court found that a drug's full cost exceeded the copayment, although the drug's negotiated cost was less than the copayment.

In February 2002, the district court certified the case as a class action. In that decision, the court noted that over one million subscribers may have been affected by United's practice.


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