In re Express Scripts, Inc. PBM Litig.
| Decision Date | 31 March 2014 |
| Docket Number | Master Case No. 4:05md1672HEA |
| Court | U.S. District Court — Eastern District of Missouri |
| Parties | In re EXPRESS SCRIPTS, INC. PBM LITIGATION This Document Relates to: Wagner- 4:05cv01081HEA Scheuerman-- 4:05cv831HEA Brynien - 4:08cv00627HEA COBA - 4:05cv01082HEA Lynch - 4:05cv828HEA |
This matter is before the Court on Defendants Express Scripts, Inc., ESI Mail Pharmacy Service, Inc. And National Prescription Administrators, Inc.'s (collectively, ESI), Motion for Summary Judgment on the Claims of Plaintiffs Wagner, Scheuerman, Brynien, Lynch, and Correction Officers' Benevolent Association of the City of New York, Inc., (COBA), [Doc. No. 424]. Plaintiffs oppose the Motion. For the reasons set forth below, the Motion is granted.
Defendant ESI is a Pharmacy Benefits Manager (PBM).
Defendant ESI Mail is a wholly owned subsidiary of Express Scripts, Inc.
Defendant NPA is a PBM which was acquired by Express Scripts, Inc. in 2002. ValueRx was acquired by Express Scripts, Inc. as a subsidiary in 1998.
The New York State Department of Civil Service ("DCS") administers the New York State Health Insurance Program ("NYSHIP"). NYSHIP administers several health and drug benefit plans that provide medical and drug coverage for active and retired State and local government employees and their dependents. The largest NYSHIP plan is the Empire Plan, which provides coverage to more than one million active and retired State and local government employees and their dependents.
DCS entered into a series of contracts with Connecticut General Life Insurance Company ("CGL" or "CIGNA") to provide and insure the Empire Plan's prescription drug program, covering the period 1998-2003. CGL subcontracted with ValueRx, which was subsequently acquired by ESI, to serve as the PBM for the plan.
Plaintiffs in Wagner, Scheuerman and Brynien received health care benefits through NYSHIP and the Empire Plan. The Empire Plan and other plans administered by DCS are governmental plans that are not subject to the Employee Retirement Income Security Act of 1974 ("ERISA").
On August 4, 2004, the New York Attorney General ("NY AG") brought a lawsuit against Express Scripts, Inc., ESI Mail Pharmacy Service, Inc., Connecticut General Life Insurance Company and CIGNA Life Insurance Company of New York, (collectively CIGNA). The NY AG brought its Lawsuit on behalf of: (1) the People of the State of New York; (2) the State of New York, and (3) the NY DCS, the administrator of NYSHIP and the Empire plan. The NY AG Lawsuit did not make any allegations regarding the conduct of NPA, the PBM provider for COBA and the PBA Funds. The NY AG brought his lawsuit pursuant to three statutory bases:
The AG Lawsuit alleged, inter alia, that ESI and CIGNA, not NPA engagedin the following conduct in performing PBM services for the Empire Plan and other health benefit plans in the State of New York: Retaining rebates and money that allegedly belonged to the plans; "Artificially inflating" pass-through prices of generic drugs and manipulating its pharmacy pricing "spread"; Selling plan data; Manipulating the "MAC" pricing used in its generic drug substitution programs; and Fraudulently operating its "drug preference" and drug "switching" programs.
The AG Lawsuit alleged that ESI's alleged conduct "often result in higher drug costs for the Empire Plan and other government employee benefit plans and their members," and that ESI, not NPA, "unjustly enriched itself at the expense of" the Empire Plan, its members, DCS, and the State.
The AG Lawsuit also alleged that ESI's drug preference and drug "switching" programs "fail[ed] to take into account patient health and safety."
The AG asserted various causes of action against ESI and CIGNA including alleged: breach of contract claims on behalf of DCS and the NYSHIP/Empire Plans; unjust enrichment; breach of duty of good faith and fair dealing; breach of fiduciary duty; fraudulently or negligently inducing DCS to enter into a contract to administer the NYSHIP Plans; indemnification (CIGNA only); violations of Executive Law § 63(12), based upon alleged fraudulent or illegal business activity; violation of GBL § 349, based upon alleged deceptive acts or practices(ESI only); and violation of New York Education Law (ESI only).
In its Lawsuit, the AG sought, inter alia, the following relief: Injunctive relief enjoining ESI from the activities alleged in the Lawsuit, "insofar as those activities relate to the Empire Plan, other non-ERISA health and prescription drug benefit plans of the State and its political subdivisions, and the members of such plans;" Damages to DCS and the State, with respect to claims arising from the Empire Plan's contract with ESI; Id. at Requested Relief No. 2-4; "Directing defendants to pay restitution and damages to injured members of the Empire Plan and other non-ERISA health and prescription drug benefit plans of the State and its political subdivisions."
On July 25, 2006, the supreme court in the AG Lawsuit entered an order granting ESI's motion to dismiss the AG's claim for breach of fiduciary duty, holding that the parties entered into an arms-length business relationship which does not give rise to a fiduciary duty, as a matter of law. The court also dismissed the State's claims for negligent misrepresentation and claims under the New York Education Law. In its Decision and Order, the court denied ESI's motion to dismiss the AG's claim under GBL § 349, holding that defendants' conduct was "consumer oriented and any alleged breach of the contract would have a direct effect on a large number of consumers."
On July 25, 2008, the State of New York entered into a Consent Order and Judgment ("Consent Judgment") with defendants ESI, ESI Mail, and CGL ("Defendants"). The Consent Judgment recites that it was entered into by the Plaintiffs in the AG Lawsuit, which it defines as "the People of the State of New York, the New York State Department of Civil Service, and the State of New York." The Consent Judgment binds "ESI," which is defined to include "Express Scripts, Inc. and ESI Mail Pharmacy Service, Inc, and their respective past and present subsidiaries, affiliated companies, corporate predecessors, successors and assigns."
Pursuant to the Consent Judgment, the Defendants agreed to pay $27 million "to the State, in full and complete settlement of all causes of action asserted in the Complaint in this matter." ESI also agreed to specific injunctive relief that will inure to every Client Plan and Consumer in New York. The Consent Judgment broadly defines "Client Plan," to mean "the Empire Plan and any other pharmacy benefit plan with its principal place of business in New York State for which Defendants either provide or administer a pharmacy benefit plan in New York State." The definition exempts (I) federal government entities and programs, and (ii) any state other than New York, including any agencies or subdivisions of such other states. 27. The Consent Judgment defines "Consumer"as any "person who receives prescription drug benefits under a plan sponsored by a Client Plan."
In addition, the Plaintiffs agreed not to bring any civil action against ESI:
The Plaintiffs [in the AG suit] covenant and agree that they shall not proceed with or institute any civil action or proceeding, either individually or collectively, against the Released Persons, including but not limited to an action or proceeding seeking restitution, injunctive relief, fines, penalties, attorney fees, or costs, for any conduct undertaken or omissions, up through and including the Effective Date of this Judgment, relating to the Covered Conduct.
The Consent Judgment "is not an admission or denial by Defendants of any wrongdoing or violation of law or contract whatsoever."
Plaintiffs1 in Wagner et al. v. Express Scripts, Inc. and ESI Mail Pharmacy Service, Inc., and Scheuerman et...
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