Risk Update

Conflicts Allegations — Walgreens Continues Fighting $642m Arbitration Award, Michigan Township Alleges Former Counsel Conflict

Posted Dan Bressler

“Walgreens fights ‘staggering’ $642 mln arbitration award to Humana” —

  • “National retail pharmacy giant Walgreen Co has asked a U.S. judge to vacate an arbitrator’s award of more than $642 million to Humana Health Plan Inc in a drug-pricing dispute, calling the ‘staggering’ sum the result of a ‘miscarriage of justice.'”
  • “Deerfield, Illinois-based Walgreens, a subsidiary of Walgreens Boots Alliance (WBA.O), argued in its filing that the arbitrator who issued the award in March “rewrote” its contracts with Humana. It also accused the arbitrator, from the JAMS arbitration forum, of using a flawed model to assess alleged damages.”
  • “In addition, Walgreens claimed that law firm Crowell & Moring should not have been allowed to represent Humana after previously advising Walgreens years earlier on drug pricing matters at the heart of Humana’s 2019 arbitration.”
  • “‘The result was that the arbitrator awarded a massive windfall to Humana,’ Walgreens’ attorneys at Reed Smith said in the court filing.”
  • “Walgreens separately sued Crowell in 2021 in District of Columbia Superior Court seeking, among other things, indemnification from any arbitral award, an injunction against Crowell and disgorgement of the firm’s profits from its work for Humana.”
  • “A judge denied Walgreens’ early effort to bar Crowell from representing Humana. Walgreens’ appeal is pending.”
  • “Washington, D.C.-based Crowell has denied any conflict of interest in representing Humana against the law firm’s former client Walgreens. A spokesperson for Crowell on Monday in a statement called Walgreens’ ethics claim ‘meritless’ and said the firm was ‘confident that the arbitrator’s thorough and well-reasoned award will be affirmed.'”

“Mich. Program Wants Miller Canfield DQ’d From Zoning Suit” —

  • “The Michigan Township Participating Plan pushed for the disqualification of Miller Canfield Paddock & Stone PLC attorneys representing wineries in a zoning suit against Peninsula Township, arguing on Tuesday that the law firm previously represented the municipal insurance program.”
  • “In a filing made in Michigan federal court, the Michigan Township Participating Plan claimed that Miller Canfield was its general counsel when the municipal insurance program was founded in 1985.”
  • “But their relationship allegedly ended in February after the insurance program asked the law firm about the conflict of interest between it representing the wineries and the insurance program being involved in insurance coverage for Michigan townships like Peninsula Township.”
  • “‘Plaintiffs’ claims for damages in this matter appear to date back to June 5, 1972, when Peninsula Township adopted its original zoning ordinance,’ the Michigan Township Participating Plan argued. ‘As such, Miller Canfield acted as general counsel to MTPP for 38 of the 51-year damages period that plaintiffs claim.'”
  • “‘If plaintiffs are awarded damages for this period, MTPP will be responsible to pay a portion of such damages on Peninsula Township’s behalf,’ the municipal insurance program continued. ‘Therefore, MTPP’s interests are directly in conflict with plaintiffs’ (and therefore Miller Canfield’s) and Miller Canfield has then engaged in representation of plaintiffs in direct conflict with [Michigan law].'”
  • “Peninsula Township told Miller Canfield about the potential conflict of interest, but the law firm responded in a ‘perplexing’ way by asking MTPP if there was a conflict of interest, the municipal insurer alleged.”
  • “MTTP claimed that Miller Canfield sent a ‘cryptic’ message about the situation and let go of the municipal insurance program as a client after the law firm was asked for clarification and guidance. The law firm allegedly stated that the relationship ended due to a conflict that happened after it was hired by MTTP, but the municipal insurer described this statement as ‘patently false.’ Similarly, MTTP alleged that Miller Canfield falsely stated that it never represented the municipal insurance program.”
  • “According to MTTP, Miller Canfield violated state law by not consulting with its longtime client after the law firm decided to represent the wineries in their zoning suit. MTTP further argued that an ‘objective disinterested lawyer’ would know that its decision to represent the wineries would impact its representation of the municipal insurance program.”
  • “‘The courts universally hold that a law firm will not be allowed to drop a client in order to resolve a direct conflict of interest, thereby turning a present client into a former client,’ MTTP argued, citing multiple court decisions such as Picker Int’l, Inc. v. Varian Assoc., Inc. from the Federal Circuit. ‘Pursuant to this universal rule, the status of the attorney/client relationship is assessed at the time the conflict arises, not at the time the motion to disqualify is presented to the court.'”