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Express Scripts, Inc. v. Pharmland, LLC

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

December 29, 2017

EXPRESS SCRIPTS, INC. and MEDCO HEALTH SOLUTIONS Plaintiff,
v.
PHARMLAND, LLC D/B/A LIFECARE PHARMACY, et al., Defendants.

          OPINION, MEMORANDUM AND ORDER

          HENRY EDWARD AUTREY UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendants' Motion to Dismiss Count IV of Plaintiff's Second Amended Complaint, [Doc. No. 51]. Plaintiff opposes the Motion. For the reasons set forth below, the Motion is granted.

         Facts and Background

         Plaintiff's Second Amended Complaint alleges:

         Express Scripts is a Pharmacy Benefit Manager (“PBM”) offering a range of services to clients that include managed care organizations, health insurers, third-party administrators, employers, union-sponsored benefit plans, workers' compensation plans, and government health programs. Express Scripts helps clients improve healthcare outcomes for their members while helping plan sponsors address access and affordability concerns resulting from rising drug costs.

         Prescription drugs are dispensed to members of the health plans Express Scripts serves through networks of retail pharmacies under non-exclusive contracts with Express Scripts.

         The integrity and reputation of Express Scripts' pharmacy provider network is critical, so Express Scripts maintains an ongoing network provider quality assurance, audit, and investigation program.

         Lifecare was a member of one or more Express Scripts pharmacy networks pursuant to an Express Scripts, Inc. Pharmacy Provider Agreement (“Agreement”). The Agreement between Lifecare and Express Scripts was, at all relevant times, a valid contract and supported by adequate consideration. When Lifecare agreed to participate in the Express Scripts pharmacy networks, it agreed to abide by the Agreement.

         For years, Lifecare reported to Express Scripts and Medco that it operated a traditional retail pharmacy, with less than 5% of its business devoted to dispensing compounded medications. However, upon information and belief, this representation was untrue. After identifying multiple suspect claims submitted by Lifecare, Express Scripts initiated an investigation in early December 2014 based on suspicion of fraudulent activity.

         On or about December 31, 2014, Express Scripts notified Lifecare that its investigation had uncovered “multiple discrepancies, ” and that Express Scripts intended to withhold payments to Lifecare until the investigation was complete.

         On the same date, Express Scripts wrote to Lifecare requesting documentation to verify that certain prescriptions were actually prescribed and dispensed between May and November of 2014. Lifecare was to provide the verification documentation by no later than January 7, 2015. No documentation was ever provided. Instead, Lifecare abruptly and without any explanation reversed $1, 311, 618.78 in claims already paid by Express Scripts to Lifecare, leaving Lifecare's account with a $1, 308, 958.50 balance due to Express Scripts.

         At the same time, Lifecare closed its retail operations, ceased all pharmacy operations, and sold its location to Walgreens.

         Under normal conditions, amounts reversed by a provider like Lifecare would be offset against future payments. However, because Lifecare closed and ceased submitting new claims to Express Scripts, Express Scripts was prevented from recouping the amount of the reversed claims.

         Despite multiple requests for payment, Lifecare never paid Express Scripts the amount owed. On March 5, 2015, Express Scripts provided written notification that it was terminating Lifecare as an Express Scripts pharmacy provider for failure to cooperate in the audit and investigation.

         On March 7, 2015, Express Scripts provided Lifecare with written notification of an additional $702, 014.08 in uncontested discrepancies arising out of the investigation initiated in December 2014. Lifecare was to remit payment by March 23, 2015. Lifecare never paid Express Scripts for the discrepant claims.

         Under the Agreement, Express Scripts is entitled to recover funds from Lifecare associated with claims that were not ...


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