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Cystic Fibrosis Pharmacy, Inc. v. Express Scripts, Inc.

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

January 22, 2018




         This diversity case is before the Court on the motions of Defendant for summary judgment on Counts I, II, III, V, and VII of the First Amended Complaint of Plaintiff; and the Motion to exclude the expert testimony of Jed Grennan, [Doc. No.'s 76, 96, and 94, respectively]. Plaintiff opposes the motions.[1]

         Facts and Background

         Defendant is a pharmacy benefits manager. In this role, Defendant contracts with insurance carriers, health plan administrators, and other third-party payors "to facilitate delivery of prescription drugs to health plan members or other beneficiaries." This facilitation is effectuated, in part, by the creation of networks established with various pharmacies that agree to fill prescriptions for the members. Plaintiff was one such pharmacy. In May 2014, Defendant entered into a Pharmacy Provider Agreement (the "Agreement") with Plaintiff. This Agreement defined "Pharmacy" as one which met its definition of "Retail Provider": "[A] pharmacy that primarily fills and sells prescriptions via a retail, storefront location ...” A '"Retail Provider' [did] not include mail order ... " Also, Provider shall, and shall cause its personnel to, be bound by and comply with the provisions of this Agreement and all applicable laws, rules and regulations, including ... applicable state boards of pharmacy's, other applicable governmental bodies' laws, rules and regulations, and all required federal, state and local licenses, certificates and permits that are necessary to allow the Provider, the Pharmacy, and pharmacist (as applicable) to dispense Covered Medications to Members ... If the Provider "cease[d] to be licensed by the appropriate licensing authority" or if Defendant "determine[d] that the Provider was dispensing Covered Medications in violation of any applicable law, rule and/or regulation, " the Agreement could be immediately terminated by Defendant. Defendant's Provider Manual (the "Manual") is incorporated into the Agreement and also requires the Provider to "maintain valid non-resident licenses in all states to which it mails/ships/delivers Covered Medications." If a Provider violates any terms of the Agreement, including the Manual, the Provider is deemed noncompliant and is subject to further action, including termination, at Defendant's sole discretion.

         The Agreement authorized Defendant to audit a Provider and allowed for the Provider to appeal any results. This audit could include reviewing documentation verifying that the Provider has pharmacy and pharmacist licenses, "including licenses/permits/registrations required by states in which legend prescriptions are shipped/mailed." The initial audit report and a deadline for appeal of such are given the Provider. After review by the post-audit team, a final report and deadline for grieving the report is given the Provider. Any discrepancies identified are reviewed and any appropriate adjustments are then made.

         On May 19, 2016, an auditor for Defendant conducted an audit of Plaintiff. As a result of the audit, Defendant learned that Plaintiff had shipped and/or delivered one or more prescriptions into at least Louisiana, North Carolina, Nebraska, Ohio, and Virginia. Plaintiff did not have non-resident licenses for these states.

         On June 29, 2016 Defendant sent the initial audit results to Plaintiff which detailed the claims that were mailed into states in which Plaintiff was not licensed. The dates of the prescriptions sent to states in which Plaintiff did not have a license ranged from April 1, 2015 through May 15, 2016.

         Defendant informed Plaintiff by letter of June 10, 2016 that Defendant was terminating its Agreement with Plaintiff and, effective July 18, 2016, would no longer consider Plaintiff to be a member of Defendant's provider network. This letter cited two reasons for the termination. First, Plaintiff had failed to maintain its required status as a "Retail Provider" and was instead primarily conducting a mailorder business. Second, Plaintiff was "regularly mailing drugs to members in states without the appropriate licensure." Plaintiff does not dispute that it was mailing drugs to states for which it had no active non-resident license or that those states require such. Rather, Plaintiff argues it was in the process of applying for the needed licenses and it should have been, but was not, given an opportunity to correct the lack of licenses. Plaintiff further argues that the real reason for its termination from the network was Defendant's desire to gain market share by diverting high-priced pharmaceuticals to a mail-order enterprise, Accredo Health Group, Inc. ("Accredo"), [2] that is a wholly-owned subsidiary of Defendant.

         Plaintiff seeks redress for Defendant's alleged (1) breach of the Agreement by terminating Plaintiff from the network of participating pharmacies (Count I); (2) breach of the implied duty of good faith and fair dealing (Count II); (3) unjust enrichment (Count III); and (4) breach of contract by failing to pay Plaintiff monies owed (Count VII). Plaintiff also seeks a declaratory judgment defining the parties' rights and responsibilities under the Agreement (Count V).

         Defendant seeks summary judgment on these five remaining counts.

         Summary Judgment Standard

         The Court may grant a motion for summary judgment if the movant shows that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The substantive law determines which facts are critical and which are irrelevant. Only disputes over facts that might affect the outcome will properly preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is not proper if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id.

         A moving party always bears the burden of informing the Court of the basis of its motion. Celotex, 477 U.S. at 323. Once the moving party discharges this burden, the nonmoving party must set forth specific facts demonstrating that there is a dispute as to a genuine issue of material fact, not the mere existence of some alleged factual dispute. Anderson, 477 U.S. at 247. The nonmoving party may not rest upon mere allegations or denials of its pleadings. Anderson, 477 U.S. at 256.

         In passing on a motion for summary judgment, the Court must view the facts in the light most favorable to the nonmoving party, and all justifiable inferences are to be drawn in its favor. Anderson, 477 U.S. at 255. The Court's function is not to weigh the ...

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