Article: STRS vs Medco

From ORTA Quarterly, Winter 2006

The lawsuit involving STRS as the Plaintiff and Medco Health Solutions has reached its conclusion in Cincinnati. The suit alleged that Medco committed fraud, breach of contract and other state law violations by overcharging members $152 million. Charges included withholding rebates, charging excessive fees, and overpricing drugs from 1993 through 2003. STRS is suing for full repayment and punitive damages.

Lynn Hokanson, who headed the health care benefits for STRS before retiring in 2004, was the first witness and set the stage for how the suit came about. She said the system suspected that Medco was earning manufacturer’s rebates off the backs of retired teachers, but it wasn’t until 2001 that Medco admitted it. The system was earning rebates on member drug purchases, and at the same time Medco was earning rebates on overall volume. She said that she believed that each contract signed by Medco called for them to pass all rebates on to STRS, regardless of what names the company put on them.

On December 13, 2005, both sides rested their case and the verdict is in the hands of the jury. As of the date that this publication went to press, no decision was returned from the jury. Information on the final verdict can be learned by calling 1-800-926-7154. [Note from blogger: to see the latest posts on this subject, go to the search engine at the top left side of this page and type in "Medco." On the page that comes up, near the top/right, click on "Sort by date." KBB]

Hamilton Co. RTA President Pat Cordes and Vice President Diane Barth have monitored several of the court sessions, along with other ORTA members and staff.