Medimpact Healthcare Sys., Inc. v. State
| Decision Date | 03 June 2022 |
| Docket Number | 2021 CA 1367 |
| Citation | 343 So.3d 705 |
| Parties | MEDIMPACT HEALTHCARE SYSTEMS, INC. v. State of Louisiana, DIVISION OF ADMINISTRATION, Jay Dardenne, in His Official Capacity as Commissioner of Division of Administration, State of Louisiana, Office of Group Benefits, State of Louisiana, Office of State Procurement |
| Court | Court of Appeal of Louisiana — District of US |
343 So.3d 705
MEDIMPACT HEALTHCARE SYSTEMS, INC.
v.
State of Louisiana, DIVISION OF ADMINISTRATION, Jay Dardenne, in His Official Capacity as Commissioner of Division of Administration, State of Louisiana, Office of Group Benefits, State of Louisiana, Office of State Procurement
2021 CA 1367
Court of Appeal of Louisiana, First Circuit.
Judgment Rendered: JUNE 03, 2022
J. Wendell Clark, Mark L. Barbre, Baton Rouge, LA, Counsel for Defendant/Appellant, State of Louisiana, Office of Group Benefits
Sean T. Porter, Baton Rouge, LA, Counsel for Defendant/Appellant, State of Louisiana, Division of Administration and Jay Dardenne, in His Official Capacity as Commissioner of Division of Administration
Carlos A. Romanach, Baton Rouge, LA, Counsel for Defendant/Appellant, State of Louisiana, Office of State Procurement
Larry Demmons, Metairie, LA, and A.J. Herbert III, Jennifer Warden Herbert, New Orleans, LA, Counsel for Intervenor/Appellant, CaremarkPCS Health, LLC
Christopher K. LeMieux, Donald C. Douglas, Jr., Johanna Elizabeth Lambert, New Orleans, LA, Counsel for Plaintiff/Appellee, Medlmpact Healthcare Systems, Inc.
BEFORE: WHIPPLE, C.J., PENZATO AND HESTER, JJ.
WHIPPLE, C.J.
Defendants-appellants, State of Louisiana, Division of Administration ("DOA"), Jay Dardenne, in his official capacity as Commissioner of Division of Administration ("the Commissioner"), State of Louisiana, Office of Group Benefits ("OGB"), and State of Louisiana, Office of State Procurement ("OSP") (collectively "the State Defendants"), and intervenor-appellant, CaremarkPCS Health, LLC ("CVS"), appeal the July 16, 2021 judgment, as amended by the March 26, 2022 judgment, of the district court, acting in an appellate capacity in response to a petition for judicial review filed on behalf of a rejected proposer, plaintiff-appellee, MedImpact Healthcare Systems, Inc. ("MedImpact"). The district court's judgment reversed the decision of the Commissioner, which upheld OGB's award of a state contract for pharmacy benefits manager ("PBM") services to CVS, and ordered that the "proposed contract award to ... [CVS] ... be reversed
and cancelled." For the following reasons, we reverse.
FACTS AND PROCEDURAL BACKGROUND
On February 21, 2020, OGB issued Request for Proposals No. 3000014397 ("the RFP") for a two-year term from January 1, 2021 through December 31, 2023, regarding PBM services for certain self-funded health plans offered by OGB. Since 2014, MedImpact had been the incumbent provider of OGB's PBM services; however, those contracts were set to expire on December 31, 2020.
Pursuant to Section 1.28 of the RFP, the evaluation of proposals was to be accomplished by an evaluation committee ("Evaluation Team" or "Evaluation Committee"). Section 1.28 permitted the Evaluation Team to "consult subject matter expert(s) to serve in an advisory capacity regarding any proposer or proposal," and provided that "[s]uch input may include, but not be limited to, analysis of Proposer financial statements, review of technical requirements, or preparation of cost score data."
As to the evaluation and review of proposals, Section 3.1 of the RFP stated that proposals passing the mandatory requirements review would "be evaluated based on information provided in the Proposal" according to the following criteria:
| CRITERIA | MAXIMUM SCORE |
| PHASE I: TECHNICAL APPROACH | |
| Approach and Methodology | 325 |
| Corporate Experience and Staff Qualifications | 205 |
| TECHNICAL APPROACH SCORE | 530 |
| Hudson/Veteran Small Entrepreneurship Program (up to 100 points reserved for Hudson-certified vendors; up to 120 points reserved for Veterans-certified vendors; if no Veterans-certified vendors propose, 120 those 20 points are not awarded; see Section 1.9.G for details) | 120 |
| HUDSON/VETERAN SCORE | 120 |
| PHASE 2: COST PROPOSAL | |
| Pharmacy Network Discounts, Rebate Guarantees, Administrative Services. Clinical Management Fees, and Credits & Allowances | 350 |
| COST PROPOSAL SCORE | 350 |
| TOTAL SCORE | 1,000 |
Section 3.1 further provided that the Evaluation Team would "evaluate each criterion within the Technical Proposal and assign scores based upon information submitted in the proposal content for Approach and Methodology and Corporate Experience and Staff Qualifications." Approach and Methodology included "[d]emonstrated effectiveness of Proposer's approach and methodology to performing the various services outlined in Section 2, Scope of Services and Attachment III; Technical Questionnaire." Cost proposals for all proposers would be evaluated and an absolute score calculated. Points for cost proposals would be "assigned for cost using a calculation-based evaluation process based on the costs from the pricing submitted by each proposer on Attachment XIII: Cost Proposal Template and Attachment XVI: Credits & Allowances," and "[p]roposers [were obligated to] complete Attachment XII: Cost Proposal Questionnaire."
OGB received proposals from MedImpact, CVS, Express Scripts, Inc., OptumRx, Inc., and Clutch Health. The proposal submitted by Clutch Health did not conform to the cost proposal requirement and was deemed non-responsive.
The following process was used to evaluate and score the proposals. As a preliminary review, the RFP Coordinator examined the proposals for proper form and cost elements. The Evaluation Team first discussed the strengths and weaknesses of each proposal for the criterion under consideration. OGB's actuarial consultant, Buck Global, LLC ("Buck"), prepared a presentation dated May 11, 2020, which outlined the pros and cons of the technical proposals. In response to question CIO in the "Cost Proposal Questionnaire," which asked whether the proposer utilized a "Rebate Aggregator," MedImpact answered "Yes." In outlining the "Pros" and "Cons" of each proposal, Buck's presentation listed MedImpact's use of a rebate aggregator under "Cons" and noted "[u]tilizing a rebate aggregator limits third party audit abilities."
The scoring was by consensus, and the Evaluation Team filled out technical evaluation scoring sheets, which were developed utilizing the criteria specified in the RFP. OptumRx, Inc.’s proposal did not meet the minimum 265 points (50%) of the total available points in the categories of Approach and Methodology and Corporate Experience and Qualifications and accordingly, did not proceed.
The Evaluation Team submitted oral presentation invitations, instructions, and agenda to the three proposers deemed reasonably susceptible of receiving the award, namely: CVS, Express Scripts, Inc., and MedImpact. Oral presentations were held, and once concluded, the Evaluation Team submitted written follow ups for oral presentations and requests for Best and Final Offers ("BAFO") to the three proposers.
The Evaluation Team assembled on June 5, 2020 to award points for proposers’ oral presentations and follow up responses. Once again, strengths and weaknesses were identified, and the Evaluation Team adjusted preliminary scoring points using consensus scoring based on the strengths and weaknesses identified. Buck prepared a presentation dated June 5, 2020, which outlined the post-BAFO technical proposal results and cost proposal results.
The Evaluation Team chose to submit another Best and Final Offer ("BAFO II") request to the three remaining proposers. The Evaluation Team reconvened on June 12, 2020 to adjust scoring points based on the three proposers’ BAFO II responses. Buck prepared a presentation dated June 12, 2020, which outlined the post-BAFO II total costs and scores of each cost proposal.
After considering the submissions received, the Evaluation Team recommended awarding the contract to CVS. The evaluations and recommendations of the Evaluation Team were presented to the Chief Executive Officer; the Evaluation Team's recommendation was to award the contract to the highest scored proposer. On June 22, 2020, OGB submitted a selection memorandum1 to the OSP, which included an outline of the foregoing process used to evaluate and score the proposals, among other information. Thereafter, OGB announced the award of the PBM services contract to CVS.
On July 23, 2020, MedImpact2 filed a protest of the award of the PBM contract to CVS with the Chief Procurement Officer ("CPO"), pursuant to LSA-R.S. 39:1671. On July 23, 2020, the CPO acknowledged receipt of the protest and issued a Stay of Award. MedImpact filed a supplemental protest on September 4, 2020, arguing, in part, there was an absence of materials from the Evaluation Committee relative to how the final scores were derived, which rendered the evaluation process fatally flawed; there was a substantial error in the assignment of MedImpact's technical proposal administration score; and there were mathematical errors in the scoring of MedImpact's cost proposal. MedImpact also objected to OGB's alleged negotiation of an "emergency" contract with CVS for the same services included in the RFP. The CPO denied MedImpact's protest on January 8, 2021.
On January 15, 2021, MedImpact appealed the CPO's decision denying its protest to the Commissioner, pursuant to LSA-R.S. 39:1671(E) and LSA-R.S. 39:1683. On February 18, 2021, the Commissioner denied MedImpact's appeal and affirmed the decision of the CPO awarding and reinstating the PBM contract to CVS.
Thereafter, MedImpact filed a petition...
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