Class action: Walgreens, CVS, Osco overcharging diabetics on Medicare for insulin pumps, supplies

By Scott Holland | Mar 7, 2017

A Geneva resident who says pharmacies are overcharging people with diabetes for medication is pursuing a class action complaint against some of the country’s largest retail drug stores in Chicago federal court, seeking at least $5 million. 

Robert Mayberry filed his complaint March 3, naming as defendants Walgreens, CVS Pharmacy and Osco Drug parents Albertsons and Supervalu. He accused each pharmacy of improperly processing claim payment and reimbursement of insulin pump supplies, which are supposed to fall under Medicare Part B, resulting in customers paying more than their intended share. 

Not only do these customers pay more out of pocket, the complaint continues, they also reach Medicare Part D limits faster, thereby incurring out-of-pocket expenses for other prescriptions that are supposed to fall under Part D, until they reach Medicare’s catastrophic coverage threshold. In 2016, Medicare participants were completely responsible for Part D drugs after reaching $3,310 in plan purchases until they’d spent $4,850 out of pocket. 

According to the complaint, Part B covers medical services required for people with diabetes as well as some preventive services for Medicare beneficiaries considered at risk for diabetes. Specifically, this includes external insulin pumps and insulin for those pumps. Part D covers anti-diabetic drugs, including insulin, and supplies needed for inhalation or ingestion. 

The distinction, per Mayberry’s complaint, is that “most health insurance plans, including Medicare and Medicaid” classify an insulin pump and supplies — which includes the drug itself — as durable medical equipment. He further alleges the pharmacies are motivated to misclassify these purchases in pursuit of profits because the Center for Medicaid Services has cut its rate of reimbursement for the products. The pharmacies make more money when patients pay out of pocket. 

Mayberry said he’s been on Medicare since 1996 and has had type 2 diabetes and used insulin to control blood glucose for about 35 years. He said for the last 15 years, he’s had a prescription for an insulin pump. On Feb. 23, 2016, his Part D coverage supplier, WellCare, sent him a denial of benefits notice regarding insulin, which is when he said he realized he’d been improperly paying out-of-pocket expenses for years. 

The complaint accuses the pharmacies of fraudulently concealing their claims reimbursement processes, depriving customers of the ability to learn they were paying too much and overextending their Plan D contributions. That concealment, Mayberry contends, tolls any statute of limitations defense. 

Formal allegations include a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, as well as similar laws of other states, common fraud by omission and unjust enrichment. 

The pharmacies, Mayberry alleges, “continuously and consistently failed to disclose to consumers … the defective claims process concerning insulin prescribed for use via pump (and) failed to make these disclosures despite opportunities through” employees, advertising, websites and sales literature. 

The class would include all Medicare or Medicaid plan participants who obtained an insulin pump from the named pharmacies from 2006 through the present. 

In addition to class certification and a jury trial, Mayberry’s complaint seeks restitution, compensatory damages, punitive, statutory and treble damages, as well as attorney fees and interest. He also wants the court to compel the pharmacies to establish a program to reimburse customers for Medicare claims related to insulin pumps that were previously denied or insufficiently paid. 

Representing Mayberry in the matter, and serving as putative class counsel, are attorneys with the Clifford Law Offices, of Chicago.

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Clifford Law CVS Health U.S. District Court for the Northern District of Illinois Walgreen Co.

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