In what is being hailed as a victory for employers' freedom to select health plans, a federal court jury in Philadelphia last week found U.S. Healthcare guilty of coercing pharmacies in its network to offer their employees U.S. Healthcare plans.
The jury found that Blue Bell, Pa.-based U.S. Healthcare violated antitrust laws and the Racketeer Influenced and Corrupt Organizations Act. A suit brought by Brokerage Concepts, based in King of Prussia, Pa., charged that U.S. Healthcare caused Brokerage Concepts to lose the business of a suburban Philadelphia pharmacy chain called I Got It At Gary's. The suit contends U.S. Healthcare threatened to drop Gary's from its network unless the chain offered its employees U.S. Healthcare insurance plans rather than coverage by Brokerage Concepts.
According to the complaint, U.S. Healthcare executives told the pharmacy chain the company "likes to do business with people who do business with us" and expected the chain's health insurance business.
The suit named as defendants U.S. Healthcare; its Pennsylvania HMO; its third-party administrator, Corporate Health Administrators; and three executives.
The jury awarded Brokerage Concepts $200,000 in compensatory damages, which could be tripled to $600,000 under RICO, as well as $1 million in punitive damages plus legal fees. Damages were awarded against all the defendants, said Richard Bazelon, Brokerage Concepts' attorney.
Testimony during the trial showed U.S. Healthcare had engaged in the same practices with other pharmacies in New Jersey and Pennsylvania, he said.
Brokerage Concepts asked the court to enter an injunction prohibiting U.S. Healthcare from linking participation in its network to offering its health products to pharmacy employees, Bazelon said.
U.S. Healthcare said it would appeal the verdict. David F. Simon, the company's principal legal officer, said in a written statement: Brokerage Concepts' "claim has no merit...The evidence clearly proved that Corporate Health Administrators was selected because it offered better benefits at a lower cost, not because of any inappropriate action."
He also said the court improperly instructed the jury on antitrust law.
Arnold Katz, Brokerage Concepts' chief executive officer, said the verdict shows "unrestrained freedom of choice in selecting a health plan is important to American business and is a right that deserves to be protected."