Walgreens Ordered to Pay Nearly $1 Billion in Arbitration Award to PWNHealth
A federal judge in Delaware has ruled that Walgreens must pay a staggering $987 million as part of an arbitration award won by telemedicine provider PWNHealth, also known as Everly Health Solutions.
U.S. District Judge Richard Andrews dismissed Walgreens’ argument that the arbitrator’s decision in a contract dispute over COVID-19 testing was “egregious and improper.” Judge Andrews sided with PWNHealth and upheld the award, stating that there was no evidence of the arbitrator exceeding his authority or showing bias.
In response to the ruling, Fraser Engerman, senior director of media relations and issues management for Walgreens, expressed disappointment and stated that the company intends to seek a review of the decision through an appeal.
PWNHealth welcomed the judge’s confirmation of the award, citing a thorough multi-year arbitration process. The dispute stemmed from Everly accusing Walgreens of breaching a 2020 business contract during the COVID-19 pandemic.
According to court filings, Walgreens allegedly utilized Everly’s physician network to order COVID-19 tests requested by customers on its website. The relationship soured when Walgreens began using its in-house pharmacists to order tests, diverting them from the agreed workflow.
Walgreens argued that the $987 million award exceeded the contractual cap on damages by 12 times, making it the largest ever under a federal false advertising law protecting trademarks.
Judge Andrews ruled that the arbitrator had the authority to interpret the contract language and determine damages, finding no manifest disregard for the law in the calculations.
The Larger Trend
In a separate development, Walgreens announced plans to close 1,200 stores nationwide over three years, with 500 closures expected in 2025. The closures are part of cost-cutting efforts to shut down unprofitable locations.
Five stores in Los Angeles and Orange County, California, are set to close, potentially resulting in 93 job losses across various roles including pharmacists, technicians, cashiers, managers, and specialists.
Last year, Walgreens closed approximately 60 underperforming VillageMD clinics as part of a strategy to save $1 billion. Chief Medical Officer Dr. Sashi Moodley discussed these closures and the company’s healthcare initiatives in an interview with MobiHealthNews.
In 2021, Everlywell acquired PWNHealth and its subsidiary Home Access Health to form Everly Health, with PWNHealth rebranded as Everly Health Solutions. The company continues to operate as an independent subsidiary under the new parent company.
