Copper Bend Pharm. v. OptumRx
| Decision Date | 14 April 2023 |
| Docket Number | 5-22-0211 |
| Citation | 2023 IL App (5th) 220211 U |
| Parties | COPPER BEND PHARMACY, INC., d/b/a Copper Bend Pharmacy; MEMORIAL PILL BOX, INC., d/b/a John Kross Pharmacy; AMERICAN PHARMACY OF IL, INC., d/b/a Alwan Pharmacy; HUDSON PHARMACY GROUP, INC., d/b/a Hudson Drug Shop; KREMER PHARMACY, INC., d/b/a Kremer Pharmacy; MORTON ALWAN PHARMACY, LLC; PHARMACY PLUS, INC., d/b/a Pharmacy Plus Inc.-Carrollton, Pharmacy Plus, Inc.-Roodhouse, and Pharmacy Plus, Inc.-Whitehall; CARLINVILLE HEALTH & PRESCRIPTIONS, INC., d/b/a Sullivan Drugs; JONES DRUG STORE, INC., d/b/a Jones Drug Store; TWIN CITY PHARMACY, INC., d/b/a Twin City Pharmacy; DISCOUNT DRUGS OF MS, LLC, d/b/a Ackerman Discount Drugs; MISSISSIPPI DISCOUNT DRUGS, LLC, d/b/a Mississippi Discount Drugs and Mississippi Discount Drugs #2; MOSBY'S DRUG STORE, LLC, d/b/a Mosby's Drug Store; KEAVENY DRUG, INC., d/b/a Keaveny Drug; SOUTHPEAKE ENTERPRISES, INC., d/b/a Newman Family Pharmacy; REED PHARMACIES, LLC, d/b/a Oakwood Apothecary and Dicks Pharmacy; ADIRONDACK PHARMACY, INC., d/b/a Adirondack Pharmacy; H&H PHARMACY, INC., d/b/a Dr. Ike's Pharmacy #1; C. BROWNE, INC., d/b/a Browne's Pharmacy; ROPAT, INC., d/b/a East Hills Family Pharmacy; ELGIN DISCOUNT PHARMACY, INC., d/b/a Elgin Discount Pharmacy; FIVE POINTS PHARMACY OF COCOA, LLC, d/b/a Five Points Pharmacy and Wellness; RNE DRUGS, LLC, d/b/a Forshag's Drug Store; GRAND PLAZA PHARMACY, INC., d/b/a Grand Plaza Pharmacy; HAHNEMANN APOTHECARY, INC., d/b/a Hahnemann Apothecary; HARBOR DRUG, INC., d/b/a Harbor Drug #2; HIGH MOUNTAIN CORP., d/b/a Ludlow Pharmacy; MIKE'S FAMILY PHARMACY, INC., d/b/a Mike's Family Pharmacy; NEW CARE, INC., d/b/a New Care Pharmacy; RIVER STREET PHARMACY, INC., d/b/a River Street Pharmacy; SRUTHI SWAROOP PHARMACY, INC., d/b/a Rutland Pharmacy; SCHMIDT & SONS PHARMACY OF TECUMSEH, INC., d/b/a Schmidt & Sons Pharmacy of Tecumseh; SPRINGFIELD PHARMACY, INC., d/b/a Springfield Pharmacy; SUNSHINE PHARMACY, d/b/a Sunshine Pharmacy Services; MEDICINE CABINET OF MADISONVILLE, LLC, d/b/a The Medicine Cabinet; MISH, INC., d/b/a The Medicine Shoppe-Lebanon; KIMAR CORP., d/b/a The Medicine Store; TIOGA DRUGS CO., d/b/a Tioga Drug; VALENTINE PHARMACY, INC., d/b/a Valentine Pharmacy; 5 GUYS RX, LLC, d/b/a WellCreek Pharmacy-Bethalto; TOCANE, LLC, d/b/a Whitestone Pharmacy; WOLFE'S PHARMACY; WOODLYN PHARMACY, INC., d/b/a Woodlyn Pharmacy; PARIS CLINIC PHARMACY INC.; and PEARMAN PHARMACY INC., Plaintiffs-Appellees, v. OPTUMRX, Successor by Merger to Catamaran Corporation, and OPTUMRX, In Its Own Right, Defendant-Appellant. |
| Court | United States Appellate Court of Illinois |
This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from the Circuit Court of St. Clair County. No. 20-L-396 Honorable Heinz M. Rudolf, Judge, presiding.
ORDER
¶ 1 Held: The circuit court's order denying defendant's motion to compel arbitration is reversed where plaintiffs' claims are based on contracts containing arbitration clauses that are enforceable when unconscionable parts are severed.
¶ 2 Defendant, OptumRx, as successor to Catamaran Corporation and in its own right, (Optum) appeal the circuit court's order denying their motion to compel arbitration and to dismiss. We reverse.
¶ 4 On July 24, 2020, plaintiffs, consisting of 48 independent pharmacies in 14 states, filed an eight-count first amended complaint against defendant Optum. Count I alleged breach of Provider Manual contracts (California and Illinois UCC). Count II alleged breach of contract-Provider Manuals. Count III alleged breach of good faith and fair dealing-MAC Appeals. Count IV claimed quantum meruit (in the alternative). Count V alleged violations of State MAC laws State Any Willing Provider Laws, and Laws Against Retroactive Adjustments. Count VI alleged unfair competition pursuant to Business &Professions Code §§ 17200 et seq. (California Pharmacies). Count VII alleged violation of Virginia Code § 38.2-3407.7 and § 38.2-3407.15.3 (Virginia Pharmacies). Count VIII alleged violation of Louisiana Rev. Stat. § 22:1863 et seq. (Louisiana Pharmacies).
¶ 5 The counts were based on how Optum, a pharmaceutical benefit manager (PBM), "unilaterally determines how much plaintiffs are paid for the generic drug prescriptions they provide to customers." Plaintiffs claimed that beginning on January 1, 2012, through the present, Optum set unreasonably low reimbursement rates called maximum allowable cost (MAC) price reimbursement rates for generic drug prescriptions dispensed by plaintiffs "based on irrelevant, inapplicable, and/or outdated pricing data, or, in some cases, no pricing data at all, in breach of the Provider Manual contract," thereafter listing seven specific reimbursement violations stemming from the Provider Manual (Provider Manual or PM).
¶ 6 A general explanation of the parties and their relationship, based on the complaint allegations, follows. Optum, as a PBM, contracts with various health insurance companies to administer drug benefit programs on behalf of the insurance company. The PBMs typically use intermediaries known as pharmacy services administrative organizations (PSAOs) to contract with the pharmacies to dispense prescription drugs to the plan members of those insurance companies. The PBM enters into a Provider Agreement (PA) with the PSAO. The PSAO then recruits pharmacies to enroll in the PBM network of providers. According to plaintiffs, "[o]nce enrolled, the Plaintiffs [are] allowed access to the Provider Manuals from [Optum], which governs the terms of the relationship between Plaintiffs and [Optum]." Plaintiffs noted that Optum annually updated the Provider Manuals and stated "[e]ach Plaintiff enrolled in [Optum's] network of pharmacies, received a Provider Manual from Catamaran and Optum, and began to participate in [Optum's] program for that PSAO's pharmacy members." Plaintiffs further stated that the PM "sets forth in writing the terms of the business relationship between Plaintiffs and [Optum] and functions as the contract, even though they are never signed by any Plaintiff." Plaintiffs further alleged that it was the PMs issued by Optum, as well as those issued by Catamaran Corporation (prior to merging with Optum on July 24, 2015), that were the basis of plaintiffs' complaint. Portions of the 2012 and 2013 Catamaran PMs and the 2016 and 2020 OptumRx PMs addressing the MAC were attached to the complaint.
¶ 7 On August 21, 2020, Optum filed a motion to compel arbitration as well as a motion to dismiss plaintiffs' first amended complaint pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2020)) or, in the alternative, section 2-619 of the Code (id. § 2-619). The motion to compel addressed plaintiffs' reliance on the PMs as the basis for their complaint and stated each PM contained an arbitration provision expressly requiring that "any and all issues and/or disputes" between the parties be submitted to mandatory arbitration. Optum further alleged that in addition to the PM arbitration clause, the PAs also contained a mandatory arbitration clause to arbitrate "any and all issues and/or disputes" between the parties or "any disputes" that arise during the term of the agreement. Optum urged the circuit court to compel arbitration pursuant to the Federal Arbitration Act because under both documents, plaintiffs "unequivocally agreed to arbitrate each of the causes of action" asserted in the first amended complaint.
¶ 8 On August 24, 2020, Optum filed a memorandum of law in support of its motion to compel arbitration and motion to dismiss. With regard to the motion to compel arbitration, Optum again argued that plaintiffs alleged the PM was a contract between them and Optum and that the PMs mandated arbitration of all claims asserted in the complaint as did the PAs. The memorandum was supported by the declaration of Josh Van Ginkel, a senior director of network contracting at Optum, which provided: (1) the affiliations of each plaintiff to each PSAO, (2) which plaintiffs contracted directly with Optum, and (3) copies of the arbitration clauses for the applicable PA and PMs for this matter. The declaration further stated that each PM was incorporated into the PA, and that in the event of a conflict between the PM and the PA, the PM prevailed. Van Ginkel's declaration further provided that the governing law was California for the Optum PM and Illinois for the Catamaran PMs, that the 2013 and 2014 Catamaran PMs contained no arbitration clauses, and that the Catamaran and Optum PMs contained arbitration clauses after 2015.
¶ 9 Citing 9 U.S.C. § 2, defendant's memorandum argued that the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq. (2018)) governed the claim, and pursuant to the FAA, an arbitration clause in a contract "shall be valid, irrevocable, and enforceable, save upon grounds as exist at law or in equity for the revocation of any contract." The remainder of the memorandum cited federal law addressing any doubts regarding arbitration and the resolution in favor of arbitration. Optum further noted that it would be inequitable to allow plaintiffs to rely on the PM for the basis of their complaint but deny the arbitration agreement contained therein. The memorandum clarified that the PAs involving Catamaran and TriNET or Optum and AmeriSource Bergen did not have arbitration agreements; however, the PMs for the pharmacies involved with those PAs did contain an arbitration clause. No PA could be found for Tioga Drugs Co., but Tioga Drugs had a PM with an arbitration clause.
¶ 10 On November...
To continue reading
Request your trial