As his earlier similar lawsuit faces the threat of dismissal, a Palos Heights lawyer has lodged another antitrust action demanding Walgreens, Prime Therapeutics and the parent company of Blue Cross Blue Shield shell out $1.5 billion for allegedly conspiring to drive small “mom-and-pop” neighborhood drug stores out of business by cutting off their access to reimbursement under Medicaid, Medicare and Blue Cross.
On Sept. 21, attorney M. James Salem filed suit in Chicago federal court, this time on behalf of named plaintiff J&S Community Pharmacy, a retail pharmacy, located in the 700 block of S. Pulaski Road, in Chicago’s North Lawndale neighborhood on the city’s West Side.
Defendants named in the action include Deerfield-based Walgreens; Chicago-based Health Care Service Corporation, which operates Blue Cross and Blue Shield of Illinois; and Eagan, Minn.-based Prime Therapeutics, a company owned by 13 Blue Cross Blue Shield organizations, including BCBS Illinois, which processes clams and conducts audits for BCBS organizations. Prime services 26 million customer accounts.
In the lawsuit, J&S alleges it was among what it believes to be a group of small, independent drug stores targeted in recent months by Prime, which, it alleges, is seeking to drive such stores out of business to increase market share for Walgreens under its newly minted strategic partnership with the huge national retail pharmacy chain, engaged in fierce competition with its chief rival, CVS.
According to the complaint, Prime and Walgreens joined forces in 2016.
Soon after, J&S alleges Prime suddenly announced it had detected a $39,000 discrepancy in an audit it conducted of J&S’s claims, purportedly the first time such a discrepancy was detected.
J&S said it contested the audit’s findings, but was denied. Prime then allegedly told J&S’s customers by mail they would no longer be able to use their insurance to purchase prescription drugs at J&S, and instead directing them to a Walgreens store.
The complaint asserts more than 70 percent of J&S’s customers rely on Medicaid, Medicare and BCBS, and rely on Prime to process those claims. Cutting them off from J&S would likely result in J&S going out of business, and would force the store’s existing customers, who J&S says are largely poor and elderly, to travel farther to a Walgreens store out of walking distance to obtain their medicine.
The complaint accuses Prime of conspiring with Walgreens and HCSC against them, in violation of federal antitrust laws. Prime is further accused of wrongly seizing more than $45,000 from J&S ostensibly to settle the audit discrepancy, even though J&S said Prime has no authority either by contract or under the law to take that money.
“Prime wrongfully took this money, which is a significant amount that would typically shut down a small pharmacy like the Plaintiff’s,” J&S argued. “This was a concerted effort to shut down the Pharmacy without the need to terminate it from Prime’s provider network.”
The lawsuit asks the court to order Prime and the other defendants to award unspecified compensatory damages, but also to pay $1.5 billion in punitive damages to “deter these Defendants” and other large insurers and pharmacy chains from similarly seeking to shut down other small community drug stores.
The lawsuit is substantially similar to another action Salem filed in May against the same defendants. That complaint was filed on behalf of Sharif Pharmacy, also a small, independent pharmacy operating in the 2000 block of N. Pulaski Road, in Chicago’s Hermosa neighborhood on the city’s Northwest Side.
That lawsuit similarly accuses Prime of using an alleged audit discrepancy to cut off that drug store’s access to reimbursement under Medicaid, Medicare and BCBS and then directing customers to a nearby Walgreens store.
Prime, which is represented by attorneys with the firm of Quarles & Brady LLP, of Chicago, has asked the court to dismiss that lawsuit, arguing the antitrust claims don’t hold up under scrutiny, as Prime asserts it acted unilaterally without concern for Walgreens or its market share.
The Sharif lawsuit “includes a series of vague references to Prime and Walgreens (and others) working together to do various and sundry things that are not illegal and do not establish that Prime’s decision to terminate was anything other than a unilateral act,” Prime wrote in a July court filing asking the court to reject Salem’s and Sharif’s attempt to amend their original lawsuit to similarly demand $1.5 billion in damages.
U.S. District Judge Jorge L. Alonso has yet to rule on Sharif’s request to amend the original lawsuit, which also faces a motion to dismiss filed by Prime in June.
In May, Alonso had denied Sharif’s request for a temporary restraining order, which the plaintiff had requested to block Prime from continuing with its actions to cut off Sharif from its services.