Choctaw Nation Sues Insurers, Pharmacy Benefit Managers to Recover Reimbursements

The Choctaw Nation filed a complaint on Monday in the Eastern District of Oklahoma against a number of health insurance companies, hoping to recover reimbursement it believes it is entitled to.

According to the complaint, defendants Caremark PHC LLC, CaremarkPCS Health LLC, Caremark LLC, Caremark Rx LLC, Aetna Inc., Aetna Health Inc., OptumRx Inc., OptumRx Holdings LLC, Optum Inc., UnitedHealth Group Inc., and United Healthcare Services Inc. are on the hook for costs of health care services rendered to the Choctaw Nation, a federally recognized Native American nation. This is pursuant to a “financial recoupment mechanism” under the Indian Health Care Improvement Act (IHCIA) codified in the Recovery Act. These statutes authorize recognized tribes and nations to receive reimbursement from third-party health insurers.

The Choctaw Nation said it operates pharmacies under the IHCIA at which members of the nation are eligible for free health care provisions, including prescription drugs and other services. The pharmacies, however, must still pay for the cost of these provisions, so, pursuant to the Recovery Act, the Choctaw Nation has authorization to recover the incurred expenses “from any applicable insurance coverage the Member may have,” the complaint said.

The Choctaw Nation alleged that the defendants — known as pharmacy benefit managers (PBMs) — “unlawfully reject the Nation’s claims for reimbursement and/or hinder the Nation’s ability to recover its costs,” in violation of the Recovery Act. 

The nation argued that its pharmacies “began experiencing numerous and unprecedented claim denials” beginning in 2015, stemming from the PBMs that contract services on behalf of health insurance providers. The plaintiff claimed that the defendants’ reimbursement denials are “intentional” and “unjust” refusals that contravene federal statutes meant to protect Native Americans’ access to health care. This contravention lies at the heart of the PBM agenda, the complaint alleged.

“Defendants exemplify the way PBMs gobble up the various plans they manage (or vice versa) and impose cost-cutting, profit-driven burdens on their beneficiaries,” the complaint claimed. “In this regard, they have become the poster child for the conflicts plaguing the corporate practice of medicine in the U.S.”

The plaintiff argued that the IHCIA and Recovery Act should shield Native American nations from being subjected to the alleged conduct of PBMs as a whole, so the defendants’ purported claim denials directly violate these federal laws. In addition to alleging statutory liability, the Choctaw Nation brought claims of negligence per se and unjust enrichment, hoping to recover injunctive, declaratory, and monetary relief.

Whitten Burrage represents the Choctaw Nation.