Arbitration Subpoena to Non-Party Allowed by U.S. District Court in Wisconsin


By Gregg Bertram


Whether an arbitrator may subpoena a non-party is murky, and the ambiguity sometimes requires litigation to clear up the extent of the arbitrator’s authority.

Recently, in Maine Community Health Options v. Walgreen Co., Case No. 18-0009 (USDC W.D. Wis. Dec. 20, 2018) the court approved a subpoena to Walgreens, a non-party in an arbitration proceeding between Health Options, an insurer based in Maine, and Navitus, a pharmacy benefits manager based in Wisconsin.

Health Options contends that Navitus asked for reimbursement for inflated pharmaceutical prices, and the arbitration panel subpoenaed Walgreens – a retail pharmacy in Navitus’ network in Maine – to produce the drug prices that it charged Navitus and that Health Options ultimately covered.

Walgreens’ opposition to the subpoena on the grounds that its headquarters were more than 100 miles from the arbitration forum was rejected by the court.  Instead, the court determined that Walgreens’ headquarters in Deerfield, Illinois were within 100 miles of the arbitration forum in Madison, Wisconsin “as the crow flies.

The Wisconsin district court also concluded that it held personal jurisdiction over Illinois-based Walgreens because Health Options’ assertion that it was injured by Walgreens’ acts in Wisconsin – alleged inflated prices to Navitus that Navitus submitted for reimbursement – was sufficiently related to Health Options’ arbitration claims. The court said that as Walgreens is contracted with Navitus, a Wisconsin-based company, it should have reasonably expected to be haled into a Wisconsin court. 

The court further denied Walgreens’ demand that Health Options pay its costs of compliance with the subpoena because it failed to provide an estimate of how much it would cost to gather the data and did not demonstrate that compliance would be unduly burdensome.

Cost is an important consideration when compelling a non-party to comply with a subpoena and courts are generally conscious that the added burden comes at a price. Non-parties should first estimate the time and expense associated with complying with the subpoena and provide that for the court’s review. The court may require the party asking for the discovery to pay for the collection and delivery of the information, or may deny the request altogether if complying puts an unreasonable financial or resource strain on the non-party.

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