Law Firms

Walgreens alleges Crowell & Moring engaged in 'unethical side-switching,' leading to $642M arbitration loss

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A $642 million arbitration award against Walgreens was obtained by “undue means” because of Crowell & Moring's "unethical side-switching," according to a May 19 amended petition seeking to vacate the award.

The petition alleges that Crowell & Moring advised Walgreens in 2008 and 2009 on whether a pharmacy savings club would affect the “usual and customary” prices that the pharmacy reported to insurers for reimbursement.

Then in 2017, Crowell & Moring sent a “pitch” document to Humana, a health insurance company, arguing that Walgreens and other pharmacies had overcharged the insurer because the savings club prices were not treated as usual and customary, according to the amended petition to vacate filed in Washington, D.C., federal court. Crowell & Moring was hired to pursue litigation for Humana and refused to withdraw after Walgreens requested it, the petition says.

“This arbitration began in betrayal and ended in a miscarriage of justice,” the petition says.

Law360 and Reuters have coverage.

Walgreens previously filed a lawsuit against Crowell & Moring in Washington, D.C., superior court alleging that the law firm breached its fiduciary duty to Walgreens, Law360 reported in 2021. The amended suit filed in April 2021 seeks legal fees and costs incurred by Walgreens as a result of the alleged breach, as well as indemnification for damages that Walgreens is ordered to pay.

Walgreens says resolution of its petition to vacate should be stayed pending a final resolution of the suit filed against Crowell & Moring in Washington, D.C.

Humana’s motion to confirm the award says the arbitrator “conducted one of the most thorough, comprehensive and deliberate arbitration proceedings known to any of the undersigned counsel” at Crowell & Moring.

Crowell & Moring commented in a statement emailed to Law360 by spokesperson Rebecca Carr.

“We are confident that the arbitrator’s thorough and well-reasoned award will be affirmed,” the statement said. “We have no conflict of interest in representing Humana, and we are confident that we will prevail in [other litigation] filed by Walgreens against Crowell in D.C. Superior Court. The meritless claim against Crowell is no basis for vacating Humana’s arbitration award against Walgreens.”

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