A federal judge has ruled that Walgreens must pay more than $987 million to virtual care provider PWNHealth, now known as Everly Health Solutions, following an arbitration decision in a COVID-19 test contract dispute.

U.S. District Judge Richard Andrews in Delaware upheld the arbitration award in favor of PWNHealth, which had partnered with Walgreens to facilitate COVID-19 testing during the pandemic. PWNHealth, which was acquired by at-home health testing startup Everlywell in 2021, had accused Walgreens of breaching their agreement by continuing to use its branding while diverting tests away from its network.

At the onset of the pandemic, regulatory requirements mandated physician involvement in ordering COVID-19 tests. Walgreens contracted PWNHealth to provide physician oversight for test orders made through a jointly developed website. However, when regulations changed, Walgreens opted to have its in-house pharmacists authorize tests instead.

According to Everly Health’s court filings, Walgreens continued displaying PWNHealth’s branding on the website and falsely indicated that tests would be processed through PWN’s network, despite shifting them elsewhere.

In its defense, Walgreens argued that it had unintentionally failed to remove PWNHealth’s name from the website after switching to in-house testing and claimed there was no willful misconduct. However, Judge Andrews ruled in favor of PWNHealth, affirming the nearly $1 billion arbitration award.

This case highlights the complexities of healthcare partnerships during the pandemic and the legal ramifications of contract disputes in the evolving digital health landscape.