449 F.3d 1035 (9th Cir. 2006), 04-56369, Beeman v. TDI Managed Care Services, Inc.

Docket Nº:04-56369, 04-56384.
Citation:449 F.3d 1035
Party Name:Jerry BEEMAN and Pharmacy Services, Inc., dba Beeman's Pharmacy; Charles Miller, dba Medicine Shoppe; Anthony Hutchinson and Rocida, Inc., dba Finley's Rexall Drug; Jim Morisoli and American Surgical Pharmacy, Inc., dba American Surgical Pharmacy; Bill Pearson and Pearson and House, on behalf of themselves and all others similarly situated and on b
Case Date:June 02, 2006
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1035

449 F.3d 1035 (9th Cir. 2006)

Jerry BEEMAN and Pharmacy Services, Inc., dba Beeman's Pharmacy; Charles Miller, dba Medicine Shoppe; Anthony Hutchinson and Rocida, Inc., dba Finley's Rexall Drug; Jim Morisoli and American Surgical Pharmacy, Inc., dba American Surgical Pharmacy; Bill Pearson and Pearson and House, on behalf of themselves and all others similarly situated and on behalf of the general public, dba Pearson's Medical Group Pharmacy, Plaintiffs-Appellants,

v.

TDI MANAGED CARE SERVICES, INC., dba Eckerd Health Services; Medco Health Solutions, Inc.; Express Scripts, Inc.; Advance PCS, Defendants-Appellees.

Anthony Hutchinson, and Rocida, Inc., dba Finley's Rexall Drug; Charles Miller, dba Yucaipa Valley Pharmacy; Jim Morisoli, and American Surgical Pharmacy, Inc., dba American Surgical Pharmacy; Bill Pearson, and Pearson and House, dba Pearson's Medical Group Pharmacy, on behalf of themselves and all others similarly situated and on behalf of the general public; Jerry Beeman, and Pharmacy Services, Inc., dba Beeman's Pharmacy, Plaintiffs-Appellants,

v.

Anthem Prescription Management, Inc.; Argus Health Opinion Systems, Inc.; Benescript Services, Inc.; FFI Rx Managed Care; First Health Services Corporation, dba Virginia First Health Services Corp.; Managed Pharmacy Benefits, Inc.; Mede America Corp.; National Medical Health Card Systems, Inc.; Pharmacare Management Services, Inc.; Prime Therapeutics; Restat Corporation; Rx Solutions, Inc.; Tmesys, Inc.; WHP Health Initiatives, Inc., Defendants-Appellees.

Nos. 04-56369, 04-56384.

United States Court of Appeals, Ninth Circuit.

June 2, 2006

Argued and Submitted April 3, 2006

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Michael A. Bowse and Allan Browne, Browne Woods & George, LLP, Beverly Hills, CA, Alan M. Mansfield, John W. Hanson, and Hallen D. Rosner, Rosner Law & Mansfield, San Diego, CA, Bonny E. Sweeney, Lerach Coughlin Stoia Geller

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Rudman & Robbins, LLP , San Diego, CA, for the appellants.

Thomas N. Makris, Andrea L. Courtney, Pillsbury Winthrop Shaw Pittman LLP, Sacramento, CA, Daniel A. Johnson, Richard T. Williams, Holland & Knight, Los Angeles, CA, Richard S. Goldstein, Heller Ehrman LLP, New York, NY, John M. Landry, Joshua D. Taylor, Richard S. Goldstein, Heller Ehrman White & McAuliffe, LLP, Los Angeles, CA, Gail E. Lees, Christopher Chorba, Gibson Dunn & Crutcher, LLP, Los Angeles, CA, Angela S. Quinn, Husch & Eppenberg, LLC, St. Louis, MO, Lawrence P. Riff, Steptoe & Johnson, Los Angeles, CA, Martin D. Schneiderman, Steptoe & Johnson, LLP, Washington, DC, for the appellees in No. 04-56369.

Molly Moriarty Lane, Richard Odom, Morgan Lewis & Bockius, LLP, San Francisoco, CA, Michael Katz, Charles E. Patterson, Morrison & Foerster, Los Angeles, CA, C. Lee Ann McCurry, Troutman Sanders, Atlanta, GA, Kent A Halkett, Musick Peeler & Garrett, LLP, Los Angeles, CA, Lawrence P. Riff, Jason Levin, Steptoe & Johnson, Los Angeles, CA, Thomas N. Makris, Andrea L. Courtney, Pillsbury Winthrop Shaw Pittman LLP, Sacramento, CA, Brian D. Martin, Pillsbury Winthrop Shaw Pittman LLP, San Diego, CA, Robert F. Schoular, David S. Alverson, Sonnenschein Nath & Rosenthal, LLP, Los Angeles, CA, James W. Mercer, Santa Monica, CA, Neil R. O'Hanlon, Hogan & Hartson L.L.P., Los Angeles, CA, Nicholas P. Roxborough, Craig S. Pynes, Roxborough, Pomerance & Nye, LLP, Woodland Hills, CA, Alex R. Baghdassarian, Holland & Knight LLP, Los Angeles, CA, J. Kevin Snyder, Dykema Gossett LLP, Los Angeles, CA, Sean M. Sherlock, Snell & Wilmer L.L.P., Costa Mesa, CA, Robert A. Muhlbach, Kirtland & Packard, El Segundo, CA, Kurt C. Peterson, Lisa M. Baird, Reed Smith, LLP, Los Angeles, CA, Robert P. Mallory, Mathew Oster, McDermott Will & Emery, LLP, Los Angeles, CA, for the appellees in No. 04-56384.

Appeal from the United States District Court for the Central District of California; Virginia A. Phillips, District Judge, Presiding. D.C. No. CV-02-01327-VAP, D.C. No. CV-04-00407-VAP.

Before: Mary M. Schroeder, Chief Judge, Myron H. Bright, [*] and Harry Pregerson, Circuit Judges.

OPINION

BRIGHT, Circuit Judge.

Plaintiffs-Appellants Pharmacies brought suit against Defendants-Appellees Pharmacy Benefit Managers ("PBMs") based on violations of California Civil Code §§ 2527 and 2528. The district court dismissed the Pharmacies' claims due to lack of "injury in fact" sufficient to confer Article III standing. We reverse and remand.

I

This case involves the relationship between PBMs (referred to in California Civil Code §§ 2527 and 2528 as "Prescription Drug Claims Processors"), pharmacies, and third-party payors (for example, health insurance companies, self-insured employer groups, and union health and welfare plans). A customer goes to a pharmacy with a prescription and presents both an insurance card and a co-pay to get the prescription. The pharmacy fills the prescription from inventory. The pharmacy then submits a claim to a PBM for reimbursement.

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The pharmacy usually has a contractual relationship with various PBMs to assist in performing claims processing services. A PBM coordinates certain aspects of the reimbursement relationship between pharmacies and third-party payors. The PBM processes the pharmacy's claim for reimbursement and pays the pharmacy reimbursements in the amount it unilaterally sets. The PBM, which handles claims for several third-party payors, then submits the claim to the payor and gets paid.

In 1981, the California Pharmacists Association introduced a bill which would require PBM reimbursements at customary charges made by pharmacies rather than the rates unilaterally set by PBMs. However, the bill that passed merely required PBMs to conduct or obtain the results of bi-annual studies of a statistically significant sample of California pharmacies' retail drug pricing for...

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