Ohio Jury Awards STRS $7.8M in Medco Trial

December 20, 2005 (PLANSPONSOR.com) - An Ohio state court jury has awarded the Buckeye State's teachers' retirement plan $7.8 million in damages against pharmacy benefit manager (PBM) Medco Health Solutions on charges of breach of contract and fiduciary violations.

According to a Web announcement, the damage award to the State Teachers’ Retirement System of Ohio (STRS) comes as part of a 2003 lawsuit by the state filed after officials said they turned up widespread wrongdoing in Medco’s handling of PBM duties for the STRS of Ohio’s Health Care Program (See  Ohio STRS Sues Medco ).

Medco allegedly overcharged STRS for certain prescription drugs and mail-order dispensing fees, and wrongfully withheld drugmakers’ rebates from STRS, the state claimed (See  Ohio Teachers Sue Pharmaceutical Contractor ). Officials said the state’s relationship with Medco   ended in 2001.  

Based on a jury verdict released Monday, Ohio STRS will receive $6.9 million for constructive fraud and $915,000 for breach of fiduciary duty.

Ohio state Attorney General Jim Petro said it is the largest single state verdict against Medco, which has faced similar lawsuits by other states and the first time a pharmacy benefits manager has been found by a court to have committed constructive fraud.

Petro said the jury was unable to reach a verdict on whether Merck and Medco should be forced to pay punitive damages to STRS for misconduct.  That issue will be the subject of another trial that has yet to be scheduled, he said.