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Wegmans files lawsuit against California firm

Rochester Business Journal
March 14, 2014

A former contractor it hired to manage workers’ compensation cases charged it at least $450,000 in spurious fees over a seven-year period, Wegmans Food Markets Inc. claims in a lawsuit.

The lawsuit was filed Feb. 12 in state Supreme Court in Monroe County and was moved to U.S. District Court in Rochester last week at the request of defendant CorVel Healthcare Corp. Wegmans accuses CorVel of charging unauthorized fees in the last seven years of its 11-year relationship with the California firm.

Its review of CorVel’s billings is ongoing and could uncover more overcharges, Wegmans states in the action.

Wegmans hired CorVel Corp. (Nasdaq: CRVL), a $433 million national provider of workers’ comp management services, to do case management of workers’ comp claimants and utilization review. The supermarket chain claims in the filing that three years into the agreement, CorVel started slipping an extra, unauthorized charge into invoices.

According to Wegmans’ court papers, it first hired CorVel in 2002, signing a two-year, automatically renewing agreement. A 2012 audit showed that in 2005 CorVel started tacking an extra fee.

The alleged extra fee—equal to 30 percent of savings CorVel said it wrung out of Wegmans’ workers’ comp costs—was recorded as an enhanced bill review charge, a service Wegmans maintains it never signed up for or agreed to.

Wegmans twice asked for a refund. CorVel refused to pay, and Wegmans terminated its agreement with the California firm in 2013.

CorVel attorney Robert Bohner, a litigator in Sedgwick LLP’s Los Angeles office, did not respond to a request for comment.

3/14/14 (c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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