Ongoing Independent Pharmacy Litigation Updates

Marc McCulloch

In the ongoing case involving independent pharmacies in Ventura County against OptumRx, Cardinal Health, AmerisourceBergen Brunswig, and Arete Pharmacy Network, there have been several updates we want to keep you apprised of.

The independent pharmacies had been ordered to arbitrate their claims before the American Arbitration Association. However, in April of 2020, an AAA arbitration panel subsequently returned two of the pharmacies back to the Ventura Superior Court, effectively removing them from the arbitration process.

OptumRx, a defendant in the case, would have preferred that these two pharmacies remained in arbitration (as arbitration often increases the chance of a favorable outcome for defendants) and filed a court motion to keep them there. However, on October 15, 2020, the Court denied OptumRx’s motion to return those two pharmacies back to arbitration.

The order from the Court even took a swipe at the defendant’s attempt to return the plaintiffs to arbitration. They said, “Having pressed so hard to compel arbitration, Optum can hardly be heard to complain about the arbitrators’ decision to exempt the Shilton plaintiffs from that process; that decision was properly vested in the arbitrators by the very arbitration agreements Optum has successfully enforced in this Court.”

At the same time that the Court denied the motion, they also agreed to stay further court proceedings between the independent pharmacies until the arbitration with the other pharmacies is complete. In rendering this decision, the Court said that, due to the commonality between the case that will be tried in court and the ongoing matters in arbitration, “the Court finds it would undermine the interests of justice and judicial economy to permit the Shilton plaintiffs and Optum to litigate this action in this Court while the remaining parties litigate the same issues and claims in the arbitral forum. That is a recipe for inconsistent outcomes and unnecessary expense to both the Shilton plaintiffs and Optum.”

A Status Hearing is scheduled for this case on April 22, 2020. The parties have been ordered to serve and file a Joint Status Conference Statement summarizing the status of the pending arbitration proceedings and other matters pertinent to the stay at least ten days before the hearing.

Understanding arbitration

Arbitration is the process of resolving disputes outside of court in a private process. In general, one or several individuals will be responsible for making a decision about a dispute after receiving evidence and hearing arguments from the plaintiff and the defendant. When arbitration is binding, the decision is final and enforceable by the court. Binding arbitration agreements can only be appealed on very narrow grounds.

Parties are required to go through arbitration to resolve any conflicts that may arise between them. An arbitration agreement is usually spelled out in an initial contract between two parties. While it is important to abide by the terms of arbitration agreements, it is also crucial to ensure that only the parties who have legally agreed to arbitration actually go through the process. One of the problems is that mandatory arbitration clauses regularly work in favor of a defendant, as opposed to the plaintiff.


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