KHK Client Settles Case Against Catamaran PBM for $680,000

We are pleased to announce that our client, Jajco, Inc. dba Anchor Drugs Pharmacy, has settled its federal court breach of contract and conversion case against Pharmacy Benefit Manager (“PBM”) Catamaran Inc and Catamaran PBM of Illinois, Inc. in exchange for $680,000.

The case concerned payments made to Anchor, and subsequent withdrawals made by, Catamaran, through Catamaran’s relationship with Anchor’s Pharmacy Services Administrative Organization (PSAO).  The PSAO contracted on Anchor’s behalf so that Anchor could service members of the Health Plan of San Mateo (“HPSM”).

Between 2009 and 2011, However, Catamaran alleged that is mistakenly paid (or overpaid) Anchor in claims for which it said it should not have paid at all.  Through its access to a “Central Pay” system administered by Anchor’s PSAO , Catamaran unilaterally withdrew more than $500,000 in funds from that Central Pay system, without authority or notice to Anchor Drugs.  (Catamaran calls its access of other companies’ money “recoupments.”)  Catamaran not only withdrew money it had paid into Anchor’s Central Pay account for Anchor’s servicing of HPSM patients, but also withdrew money paid to Anchor by other third party PBMs and insurance companies, all without authority, notice or agreement.

E-mails discovered during the litigation proceeding indicated that Catamaran’s CFO, Jeff Park, knew that Catamaran’s ability to unilaterally withdraw the funds would end (due to the end of Catamaran’s contract with HPSM), so he instructed Catamaran employees to “get the money.”  Other Catamaran employees made highly questionable statements to Anchor’s PSAO to get it to agree to release the funds withdrawn by Catamaran.

Detailed review of Catamaran’s spreadsheet summaries of alleged overpayments demonstrated significant questions about its data.  Its internal emails reinforced Anchor’s claims that Catamaran knew about the likely financial distress that Anchor would suffer from unilateral withdrawals of its money.

Anchor had to stop accepting HPSM members,  which led to the loss of patients to other pharmacies.  The case was settled with the aid of U.S. Magistrate Judge Donna Ryu.  For more information, contract Jonathan Allan Klein.