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Sorkin's RX Ltd. v. Express Scripts, Inc.

United States District Court, E.D. Missouri, Eastern Division

January 20, 2015

EXPRESS SCRIPTS INC., et al., Defendants.


JOHN A. ROSS, District Judge.

This matter is before the Court on Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction. (Doc. No. 5) The motion is fully briefed. Plaintiff Sorkin's Rx Ltd., d/b/a/CareMed Pharmaceutical Services ("CareMed") brings this action for violation of state and federal statutes governing anticompetitive behavior and healthcare regulations, as well as breach of contract and unjust enrichment, against Defendants Express Scripts, Inc. and Medco Health Solutions, Inc. ("Express Scripts") after receiving notice from Express Scripts that it was terminating CareMed from its network of pharmacies. CareMed contends that if Express Scripts is allowed to terminate their Provider Agreement, CareMed will be put out of business. CareMed seeks a temporary restraining order and preliminary injunction preventing its termination from Express Scripts' pharmacy network.


CareMed is a retail specialty pharmacy providing services to high-risk patients, which include the filling of prescriptions, delivery of medications, facilitating coverage of the medication by insurance companies, and assisting patients with the research of and application for co-payment assistance programs. (Compl. at ¶ 16) Express Scripts is a pharmacy benefit manager who, inter alia, administers and manages prescription drug programs for health maintenance organizations and insurance companies, which cover many of the specialty medications CareMed dispenses to its clients. (Id. at ¶ 17) CareMed is a member of Express Scripts' pharmacy provider network pursuant to a Provider Agreement and Provider Manual ("Agreement").

On or about October 28, 2014, CareMed received a letter from Express Scripts notifying it that the Agreement would be terminated based on the fact that CareMed's owner pled guilty to fraud and failed to notify Express Scripts of the plea in violation of Section 1.2 of the Provider Manual. (Doc. No. 13-4) At CareMed's request, Express Scripts agreed to extend the termination date to permit additional information to be submitted and reviewed regarding CareMed's settlement of a qui tam complaint filed under the federal False Claims Act, 31 U.S.C. §§ 3730 (b) - (h) and the New York False Claims Act, N.Y. State Fin. Law § 190(2). As part of the settlement entered into on October 9, 2014, CareMed admitted that certain of its employees made false statements to insurance companies when seeking prior authorizations during the period from January 1, 2009 through December 31, 2012.[1]

Express Scripts reviewed the additional information provided and, by letter dated November 14, 2014, notified CareMed that its termination would go forward on the grounds that CareMed did not abide "by key provisions in Provider's contract(s) with Express Scripts, including but not limited to Section 2.4 of the Network Provider Manual (requiring all information submitted to Express Scripts to be "accurate and complete"), Section 6.2 of the Network Provider Manual (prohibiting Provider from "knowingly making a false claim"), and Section 9.6 (agreeing that Provider will comply with the terms of the False Claims Act). In addition, Provider's admissions establish that Provider does not meet Express Scripts' standard terms and conditions for participation with Express Scripts." (Doc. No. 13-5)

Express Scripts postponed the termination twice more and, on December 22, 2014, finally notified CareMed that it would be terminated effective January 15, 2015. This action was filed on January 14, 2015, one day prior to the effective date of the termination. Express Scripts maintains that it no longer trusts that CareMed is suited to maintain the high standards of integrity required of pharmacies in its provider network and that the relationship between Express Scripts and CareMed is over.

Legal standard

"[T]he basis of injunctive relief in the federal courts has always been irreparable harm and inadequacy of legal remedies." Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 506-07 (1959). A district court has broad discretion when ruling on a request for injunction. Novus Franchising, Inc. v. Dawson, 725 F.3d 885, 893 (8th Cir. 2013). In determining whether a preliminary injunction should be issued, a district court must consider: (1) the threat of irreparable harm to the movant, (2) the balance between this harm and the harm to the other party if the injunction is granted, (3) the probability of movant's success on the merits, and (4) the public interest. Dataphase Sys., Inc. v. C.L. Sys., Inc., 640 F.2d 109, 114 (8th Cir.1981). Applications for preliminary injunctions and temporary restraining orders are generally measured against the same factors. See, e.g., Roberts v. Davis, 2011 WL 6217937, at *1 (E.D. Mo. Dec. 14, 2011); Schaefer v. Nixon, 2010 WL 3724848, at *2 n. 2 (E.D. Mo. Sept. 17, 2010).


A. Likelihood of success

In order to be entitled to injunctive relief, CareMed must establish a substantial likelihood of prevailing on the merits of its claims. Anheuser-Busch, Inc. v. VIP Products, LLC, 666 F.Supp.2d 974, 981-82 (E.D.Mo. 2008) (citing Planned Parenthood Minn. v. Rounds, 530 F.3d 724, 732 (8th Cir.2008) (en banc) ("If the party with the burden of proof makes a threshold showing that it is likely to prevail on the merits, the district court should then proceed to weigh the other Dataphase factors."). To succeed on the merits of its claim for wrongful termination of a contract, CareMed must prove it "substantially performed [its] part of the contract up to the time [it] was prevented from doing so" by termination of that contract." Gaines v. Jones, 486 F.2d 39, 52 (8th Cir. 1973).

CareMed alleges that Express Scripts' reasons for terminating the Agreement are pretextual and that its real purpose for terminating the Agreement is to divert thousands of patients from CareMed to Express Scripts' own specialty pharmacy as part of its continuing monopolization of the market. (Compl. at ¶¶ 52, 58) In its memorandum in support of its motion for injunctive relief, CareMed also contends that Express Scripts failed to comply with the dispute resolution procedure required under section 7.12 of their Agreement[2] by terminating CareMed without first engaging in the "Good Faith Discussions" required under the Agreement.

In response, Express Scripts points first to the limiting language of section 7.12 ("except as provided herein") as well as Section 4.2.c of the Agreement which provides for immediate termination without caveat. Next, Express Scripts argues that section 7.12 was not triggered by its notice of termination because such a notice is not a "legal action." Third, Express Scripts asserts that the parties have "met and conferred" on numerous occasions since the initial termination notice was sent on October 24, 2014. Specifically, Express Scripts extended the termination of CareMed several times to give it an opportunity to submit documentation to refute Express Scripts' ...

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