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Walgreens, a prominent pharmacy chain, is facing a significant legal setback as it attempts to overturn a $642 million arbitration award. The award, obtained by what Walgreens claims were “undue means,” has brought attention to the alleged “unethical side-switching” by the law firm Crowell & Moring. The pharmacy giant recently filed an amended petition seeking to vacate the award, shedding light on the case details.
According to the petition, Crowell & Moring served as legal counsel to Walgreens in 2008 and 2009 regarding the impact of a pharmacy savings club on the reported “usual and customary” prices. These prices were crucial for the pharmacy to receive proper reimbursement from insurers. However, in 2017, Crowell & Moring sent a document to Humana, a health insurance company, arguing that Walgreens and other pharmacies had overcharged the insurer. The firm claimed that the savings club prices were not considered usual and customary. The amended petition alleges that Crowell & Moring engaged in a conflicting representation, as Humana hired them to pursue litigation against Walgreens. Despite Walgreens’ request, the law firm refused to withdraw from the case.
The petition strongly criticizes the arbitration process, claiming that it began with betrayal and ended as a miscarriage of justice. The filing seeks to highlight the alleged breach of fiduciary duty by Crowell & Moring, asserting that the law firm’s actions were responsible for the unfavorable arbitration outcome. In 2021, Walgreens had previously filed a lawsuit against Crowell & Moring in Washington, D.C., superior court, accusing the firm of breaching its fiduciary duty. The amended suit, filed in April of the same year, seeks legal fees, costs incurred by Walgreens, and indemnification for damages resulting from the alleged breach.
Walgreens, in its bid to overturn the arbitration award, is requesting a stay in resolution until the lawsuit against Crowell & Moring in Washington, D.C. is finally settled. The outcome of this parallel legal battle will likely have significant implications for the arbitration proceedings.
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On the other hand, Humana, in a motion to confirm the award, expressed confidence in the arbitrator’s thoroughness and fairness throughout the proceedings. According to their statement, the arbitrator conducted one of the most comprehensive and deliberate arbitration proceedings. Humana, represented by Crowell & Moring, firmly believes that the award should be upheld.
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Crowell & Moring, responding to the allegations, stated through spokesperson Rebecca Carr that they are confident the arbitrator’s award will be affirmed. The law firm emphasized that they have no conflict of interest in representing Humana and expressed confidence in their ability to prevail in the litigation filed against them by Walgreens in D.C. Superior Court. Crowell & Moring views Walgreens’ claims as meritless and insufficient grounds to vacate Humana’s arbitration award.
The ongoing legal battle between Walgreens, Crowell & Moring, and Humana highlights the complexities and challenges involved in high-stakes arbitration cases. As the petition to vacate the arbitration award unfolds and the lawsuit against Crowell & Moring progresses, the final resolution will have far-reaching implications for all parties involved. The outcome will determine the financial repercussions for Walgreens and potentially shape legal practices regarding fiduciary duties and conflicts of interest in the future.
