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Life Health > Health Insurance

Medco Attacks Government Complaint

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NU Online News Service, Dec. 19, 2003, 5:03 p.m. EST – Medco Health Solutions Inc., Franklin Lakes, N.J., has responded in court to a complaint filed against it by the U.S. attorney’s office in Philadelphia.[@@]

The original complaint accused the pharmacy benefit manager of providing illegally bad service to members of Medicare plans and members of the Federal Employees Health Benefits Program.

An amended complaint filed 10 days ago repeats the earlier allegations and adds allegations that accuse Medco of using an $87.4 million kickback to win a PBM contract from a health insurer in 2001.

The government has not named the health insurer, but Oxford Health Plans Inc., Trumbull, Conn., has acknowledged that it is the insurer.

Oxford reported in 2001 that it had picked Medco to be its PBM and that Medco had agreed to pay it a total of $87.4 million over 5 years to cover transition costs and the cost of providing detailed information about Oxford plan members.

Medco has reacted to the government’s amended complaint by filing a motion that asks U.S. District Judge Clarence Newcomer to dismiss the complaint.

“We believe that each of the allegations is false, overstated, or pertains to unauthorized instances over several years that were identified and corrected — and in no case are we aware of any situation that compromised our high level of patient care,” Medco General Counsel David Machlowitz says in a statement.

But, to persuade Newcomer to dismiss the complaint, federal court procedures require Medco to convince the judge that the U.S. attorney would have no valid legal foundation for a case even if all the facts presented in the complaint were true.

Prosecutors have filled their complaint with generalities that have little connection with the False Claims Act and other laws cited in the complaint, Medco says.

The government itself acknowledges in the complaint that Medco acted as a subcontractor to medical plans run by the Blue Cross and Blue Shield Association, Chicago, and other organizations, Medco says.

“Therefore, to the extent that Medco allegedly owes any contractual penalty at all, such alleged penalty would be owed to BCBSA – not the government,” Medco says.

Medco also rejects the allegations that it received an illegal kickback from Oxford.

Accepting rebates is legal, and “conspicuously absent [in the government's complaint] is any allegation that the ‘health plan’ did not provide the systems, services and other items of value for which it was paid, or that the systems and services provided were worth less than what Medco paid,” Medco says.


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