Walgreens Fight Against its Former Firm Crowell Gets Early Win

Walgreens Boots Alliance Inc. earned a victory with an appeals court advancing its claim that a health insurer improperly helped the retailer’s former law firm, Crowell & Moring, break its fiduciary duty.

The Illinois Appellate Court’s First Judicial District ruled Sept. 29 that Walgreens’ claim can proceed, finding that a trial court last year erred in dismissing it.

Walgreens in 2022 claimed that Health Care Services Corp. helped Crowell breach its fiduciary duty by retaining the law firm for a case involving a prescription drug program Crowell once advised Walgreens on.

The appeals decision resuscitates a fiercely litigated dispute tied to the Washington-headquartered law firm, which last year had nearly 600 lawyers in 13 US offices, according to American Lawyer data. The firm’s major corporate clients have included General Motors Co., UnitedHealth Group Inc. and Amazon.com Inc.

Health Care Services Corp., represented by lawyers from Crowell, in 2021 sued Walgreens for alleged fraud, claiming that the retailer artificially inflated prices for its members and caused hundreds of millions of dollars in excess reimbursements.

Walgreens argued in a counterclaim that advice Crowell gave to Walgreens more than a decade prior should have precluded the firm from representing the insurer. Health Care Services willfully aided the ethics breach by continuing to retain the firm, Walgreens argued.

A trial court last December dismissed the suit, calling it “nothing more than a motion to disqualify” Crowell from representing the insurer. But the appeals court found Walgreens pled “sufficient facts” regarding Crowell’s alleged conflict for the case to proceed.

The case now goes back to a Cook County Circuit Court for further proceedings.

Walgreens declined to comment. Crowell, which has previously denied committing any ethics breaches, and Health Care Services did not immediately return requests for comment on Monday.

The case is Health Care Services Corp. v. Walgreen Co. 1JD-Ill. Appellate Court, No. 1-23-0020, 9/29/2023