Pharmacy accuses insurance claims processor Prime Therapeutics of squeezing it out of business

By Scott Holland | May 11, 2017

A family-owned pharmacy serving low-income Chicago residents says in an antitrust lawsuit filed May 9 in federal court in Chicago it’s being squeezed out of business by an insurance claims processor, allegedly to benefit Walgreens.

A family-owned pharmacy says in an antitrust lawsuit filed May 9 in federal court in Chicago it’s being squeezed out of business by an insurance claims processor, allegedly to benefit Walgreens.

Sharif Pharmacy, of Chicago, said it opened in 1995 with a goal of serving an elderly, low-income community mainly dependent on Medicaid and Medicare. It reported several acquisition advances by Walgreens in recent years, which it rejected because, it says, “six families” rely on the pharmacy for income and many Sharif customers would be otherwise be left unable to walk to the nearest Walgreens should Sharif close.

On Dec. 4, 2014, Sharif signed a contract with Prime Therapeutics, LLC, which processes claims and conducts audits for Blue Cross Blue Shield, as well as Medicaid and Medicare. Prime, based in Eagan, Minn., is owned by 13 Blue Cross Blue Shield companies, none incorporated in Illinois, and services 26 million customer accounts.

A 2016 eight-month audit Prime conducted revealed a discrepancy, which Sharif said was the first such finding in 22 years of business. That led to a Dec. 2, 2016, letter in which Prime told Sharif it owed $25,914.79. The pharmacy appealed, but Prime rejected the appeal in 11 days.

Sharif said the rapid turnaround denied it an opportunity to conduct its own audit or verify the information its suppliers provided to Prime. Sharif paid the fine — reasoning the audit and legal fees would cost more than the fine — stating in writing it was not admitting liability. On Feb. 7, Prime sent notice it was terminating Sharif’s contract as of May 15, “which is in effect shutting down the pharmacy,” per the complaint, as 75 percent of its customers use Medicare, Medicaid or BCBS.

According to the complaint, the timing of the audit is suspect as it relates to an Aug. 29, 2016, partnership announced between Walgreens and Prime to increase market share as a means of competing with CVS – as well as other pharmacies, like Sharif. The complaint further cites portions of Prime’s website identifying it as a mail order pharmacy, meaning it directly competes with Sharif in that regard, as well.

On March 6, Prime sent another letter retracting the Dec. 2 notice, and Sharif said that should force postponement of the scheduled May 15 contract termination. As such, it wants the court to issue a temporary restraining order and preliminary injunction to prevent Prime from terminating Sharif’s participation in the provider network.

Sharif said throughout the audit and appeal Prime “failed to respond or cooperate” with Sharif lawyer William Coughlin, despite “multiple telephone calls, letter and emails.” Coughlin ultimately “withdrew his representation of the Pharmacy as a result of Prime’s lack of response and cooperation,” per the complaint.

“Prime never disclosed the specific deficiencies found in the audit prior to denying the appeal,” the complaint stated, further arguing the Dec. 2 letter and subsequent retraction intentionally withheld information to get Sharif to pay the fine and accept liability, thereby justifying termination. Those omissions, it argued, “constitute false and fraudulent conduct on behalf of Prime.”

Sharif also contended Prime committed conversion when it improperly took $51,824.91 from submitted claims without consent based on a “unilateral determination” of contract breach tied to the audit.

Additional complaints include a violation of the Sherman Antitrust Act and interstate commerce rules and tortious interference with business relations. Sharif said Prime is encouraging customers to switch their pharmacy, though many have not because they are unable to reach a different outlet.

In addition to the injunction and restraining order, Sharif seeks a jury trial and compensatory, punitive, actual and statutory damages.

Representing Sharif in the matter is attorney M. James Salem, of Palos Heights.

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Prime Therapeutics LLC U.S. District Court for the Northern District of Illinois

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