Cardinal Health Loses Multiple "Product Return" Lawsuits Against Pharmacy Customers and Pays Attorneys' Fees to Settle Sanctions Motion for Frivolous Litigation

Health Law Alliance has secured the dismissal of three lawsuits filed by Cardinal Health against its own customers for breach of the distributor's drug return program.

MILLBURN, N.J., Sept. 16, 2026 /PRNewswire/ -- Health Law Alliance, a national healthcare defense firm, announces that multiple federal lawsuits filed in Texas and New York federal courts by Cardinal Health against independent pharmacies and their owners recently were dismissed. Together with an Ohio federal lawsuit that was dismissed in July of last year, Cardinal is now a three-time loser on its claims that customers returned "ineligible" products. In addition, Cardinal paid $17,500 in attorneys' fees to settle a sanctions motion filed against the distributor.

On August 13, 2026, the Honorable Fernando Rodriguez, Jr., U.S. District Court Judge, Southern District of Texas, dismissed Cardinal's breach of contract claims against numerous pharmacies and their guarantors relating to the "Prefund Program," which permitted customers to return unsold pharmaceutical products to the distributor in exchange for immediate credit. Cardinal, in turn, would obtain reimbursement from the original manufacturers of the goods.

Judge Rodriguez found that the alleged terms of Cardinal's return program were too vague and ambiguous to enforce: "Absent any contractual provision that defines the parameters of what pharmaceutical products represented legitimate 'Returnable Goods,' Cardinal Health cannot demonstrate that any Pharmacy submitted product that fell outside of those parameters. In other words, Cardinal Health cannot show that any Pharmacy breached the contract." See Case No. 25-CV-191 (S.D. Tx), ECF No. 56.

Immediately after its case was dismissed in Texas, Cardinal moved to dismiss a "copycat" lawsuit it had filed in New York against a different set of pharmacies and their guarantors. In that case, however, the Honorable Jessica G.L. Clarke, U.S. District Court Judge, Southern District of New York, observed that Cardinal's maneuver did not resolve a pending motion for sanctions against the distributor for frivolous and vexatious litigation. See Case No. 26-CV-1467 (S.D.N.Y.), ECF No. 72. Cardinal paid $17,500 to resolve the motion, and on September 10, 2026, the sanctions motion was withdrawn.

Both Texas and New York dismissals were preceded by the dismissal of a prior lawsuit filed by Cardinal in Ohio state court, where the distributor is headquartered. Health Law Alliance removed that lawsuit to Ohio federal court, where it was dismissed on June 23, 2025. See Case No. 25-CV-152 (S.D. Oh.), ECF No. 54.

HLA vigorously defended each matter, filing multiple motions to dismiss demonstrating that Cardinal's claims lacked legal and factual merit. Rather than cure those defects, Cardinal repeatedly sought leave to amend, resulting in at least six amended complaints across the three courts. HLA nevertheless continued to expose the fundamental deficiencies in Cardinal's allegations, ultimately establishing that further amendment could not salvage the claims and that dismissal was the only remedy.

It bears note that Cardinal is a Fortune 20 company with over $200 billion in revenue, but nonetheless sued its own customers to recover credits that amount to 0% of the company's revenue. It is further shocking that Cardinal filed these cases even though it was investigated by the Department of Justice for similar, "pre-funded" programs, including a $13 million settlement to resolve allegations that it had bribed physician practices with illegal, upfront "pre-bates" for the purchase of oncology drugs.

Anthony Mahajan, HLA's founding partner and former federal prosecutor, stated: "Cardinal should be grateful that we put an early end to its litigation before even more facts emerged concerning its sham prefund program. The amount Cardinal paid to resolve a sanctions motion pales in comparison to Cardinal's true exposure."

About Health Law Alliance

Health Law Alliance is a national healthcare defense firm that specializes in defending business executives and healthcare providers in audits, investigations, administrative proceedings, and civil and criminal enforcement actions. The firm's attorneys include former federal and state prosecutors, payor auditors and investigators, and licensed clinicians, who draw on their experience in government enforcement, payor oversight, and healthcare operations, to help clients respond strategically when reimbursement, licensure, or reputation is at risk.

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SOURCE Health Law Alliance