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Prime Aid Pharmacy Corp v. Express Scripts, Inc.

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

January 18, 2017




         This matter is before the Court on defendant's motion to dismiss three counts of plaintiff's first amended complaint, pursuant to Fed.R.Civ.P. 12(b)(6). Plaintiff has filed a response in opposition and the issues are fully briefed.

         I. Background

         Plaintiff Prime Aid Pharmacy Corp. has operated in New Jersey as a licensed pharmacy providing retail and specialty medications[1] since 2006. Defendant Express Scripts, Inc., is a pharmacy benefits manager that provides services to insurance companies in the processing and payment of prescription drug claims. Defendant also provides mail order delivery of drugs through its own specialty pharmacy, Accredo Health Group, Inc. Plaintiff has been a member of defendant's network since 2006 and has filled tens of thousands of specialty medications for patients insured through plans managed by defendant. On July 25, 2011, the parties entered into the Provider Agreement that is at issue in this case.

         In December 2013, new drugs for the treatment of Hepatitis C were introduced, to great patient demand. Plaintiff alleges that the introduction of these high-cost, high-profit-margin drugs “altered the relationship” between defendant and specialty pharmacies like plaintiff that were in competition with defendant's specialty pharmacy, Accredo. In April 2014, defendant audited plaintiff's records for the period between March 20, 2013 and April 1, 2014. Plaintiff produced its records for approximately 30, 000 prescriptions filled during the audit period. On July 31, 2014, defendant issued a discrepancy report, based on a finding that plaintiff had submitted reimbursement claims for more syringe kits than it had received from its supplier, resulting to $142, 845.72 in overpayments to plaintiff. At plaintiff's request, the supplier provided defendant with documentation supporting plaintiff's reimbursement claims.

         On August 8, 2014, defendant notified plaintiff that it was being terminated from the provider network, effective August 22, 2014, pursuant to the Provider Agreement's “immediate termination” provision, § 4.2.c.[2] According to the notice, the termination was warranted by “serious violations” of the provider agreement, including the $142, 845.72 discrepancy for syringe kits; plaintiff's failure to timely reverse seven reimbursement claims after patients failed to pick up prescriptions; and plaintiff's failure to notify defendant that it paid a $750 fine to the State of New Jersey in 2012.

         On August 13, 2014, plaintiff responded to the termination notice and refuted each of the alleged violations.[3] Plaintiff stated that defendant's attempt to immediately terminate it from the network violated New Jersey law and demanded a hearing and a stay of termination for 90 days. In addition, plaintiff demanded immediate payment of over $8 million in funds due and owing to plaintiff.

         In a letter dated September 12, 2014, counsel for defendant rejected plaintiff's assertion that it had not violated the provider agreement and denied plaintiff's request for a hearing and stay of termination. Furthermore, counsel stated that “[t]here are no additional monies being withheld by Express Scripts.” [Doc. # 33-5]. Based on defendant's representation that it did not owe plaintiff any additional funds, plaintiff downsized its operations and laid off pharmacists, nurses, and salespersons.

         On December 21, 2015, defendant forwarded plaintiff a check for $845, 002.04, “representing the balance due to” plaintiff on claims dating back to 2013. The letter accompanying the check stated that defendant was continuing to withhold $968, 233.56. [Doc. # 33 at ¶¶65-66, ¶68; Doc. # 35-3]. Defendant has refused plaintiff's request for an accounting of the funds.

         In the first amended complaint, plaintiff asserts the following claims: fraudulent misrepresentation (Count I); breach of contract (Count II); breach of covenant of good faith and fair dealing (Count III); violation of the Missouri Prompt Pay Act (Count IV); unjust enrichment (Count V); promissory estoppel (Count VI); and equitable accounting (Count VII). Plaintiff seeks an award of compensatory damages and punitive damages.

         Defendant moves to dismiss Counts I, IV, and VII.

         II. Legal Standard

         The purpose of a motion to dismiss under Rule 12(b)(6) is to test the legal sufficiency of the complaint. Fed.R.Civ.P. 12(b)(6). The factual allegations of a complaint are assumed true and construed in favor of the plaintiff, “even if it strikes a savvy judge that actual proof of those facts is improbable.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007) (citing Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 n.1 (2002)); Neitzke v. Williams, 490 U.S. 319, 327 (1989) (“Rule 12(b)(6) does not countenance . . . dismissals based on a judge's disbelief of a complaint's factual allegations.”); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (stating that a well-pleaded complaint may proceed even if it appears “that a recovery is very remote and unlikely”). The issue is not whether the plaintiff will ultimately prevail, but whether the plaintiff is entitled to present evidence in support of his claim. Scheuer, 416 U.S. at 236. A viable complaint must include “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see id. at 563 (stating that the “no set of facts” language in Conley v. Gibson, 355 U.S. 41, 45-46 (1957), “has earned its retirement”); see also Ashcroft v. Iqbal, 556 U.S. 662, 678-84 (2009) (holding that the pleading standard set forth in Twombly applies to all civil actions). “Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.

         III. Discussion

         A. Count I - Fraudulent misrepresentation

         Plaintiff claims that, in the September 12, 2014 letter, defendant fraudulently misrepresented that it was not withholding any additional monies that belonged to plaintiff. In reliance on the misrepresentation, plaintiff laid off several employees. Plaintiff alleges that defendant “had knowledge of, or was recklessly indifferent to, the falsity of” this statement when it was made. [Doc. # 33 at ¶75].

         To prevail on a fraudulent misrepresentation claim under Missouri law, a plaintiff must prove: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) the speaker's intent that it should be acted on by the person in the manner reasonably contemplated; (6) the hearer's ignorance of the falsity of the representation; (7) the hearer's reliance on the representation being true; (8) the hearer's right to rely thereon; and (9) the hearer's consequent and proximately caused injury. Stevens v. Markirk Constr., Inc., 454 S.W.3d 875, 880 (Mo. 2015).

         Rule 9(b) of the Federal Rules of Civil Procedure requires that a party alleging fraud “must state with particularity the circumstances constituting the fraud . . . Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.” ...

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