- Associated Press - Thursday, December 24, 2015

IOWA CITY, Iowa (AP) - Iowa’s largest health insurer improperly refused to reimburse a pharmacist for expensive life-saving drugs he dispensed to patients with a rare blood disease, an appeals court says.

Wellmark Blue Cross and Blue Shield searched for any proper justification to deny claims for drugs used to treat hemophilia, an inherited condition in which patients suffer excessive bleeding, the Iowa Court of Appeals ruled Tuesday. When that failed, Wellmark breached its contract with Iowa City pharmacist Michael Stein by refusing to reimburse him for 114 valid claims for drugs dispensed to 24 patients, mostly children, around the country, the court ruled.

The medicine at issue, so-called factor drugs, is injected by patients at home so they don’t bleed to death. They can cost more than $1 million per patient annually.

Des Moines-based Wellmark, which insures more than 2 million people in Iowa and South Dakota, said it disagreed with the ruling and would ask the Iowa Supreme Court for review. The high court has discretion on whether to grant the appeal.

If the ruling stands, a judge will calculate how much in damages Wellmark owes Stein; court records suggest the amount could be around $9 million, including interest.

Stein’s long-running dispute with Wellmark nearly landed him in prison and put his pharmacy out of business. He said the ruling is “a victory for pharmacy and a victory for patient advocacy.”

“This is a case of an insurance company trying to force its will on anyone in its path,” he said. “It’s shocking what they will do.”

One of his attorneys, Anthony Paduano, called the ruling “one of the most significant decisions in the pharmacy law context issued by any court in the country.”

Stein said most of the damages, if awarded, would go to pay off debts to a defunct Florida-based wholesaler that provided his pharmacy with the drugs. That company, FHM, went out of business after Wellmark and other insurers started denying claims.

Stein’s pharmacy sued Wellmark in 2009 after the insurer refused to pay claims worth $7 million. As an Iowa judge was preparing to rule on the case in 2013, federal prosecutors in Des Moines - with Wellmark’s backing - indicted Stein for health care fraud over the same claims.

Prosecutors and Wellmark argued Stein’s pharmacy did little work in dispensing those drugs and was a “pass-through entity” for FHM, which wanted access to customers covered through Blue Cross and Blue Shield. Stein’s attorneys argued the case was a contract dispute and that the prosecution was unjustly driven by Wellmark. Jurors quickly acquitted Stein.

The appeals court ruled 3-0 that Stein dispensed drugs that should have been covered under his Wellmark contract.

It noted Wellmark officials came up with a “strategy” to deny Stein’s claims for lack of documentation, then searched for other reasons when proper records were provided. In one case, a Wellmark investigator met with the parents of one patient and pressured them to switch to a less-expensive pharmacy, Caremark. Wellmark’s pharmacy director had emailed the investigator, writing, “if you can get them to move to Caremark willingly I would definitely owe you lunch!!”


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