Mohr-Lercara v. Oxford Health Ins.

• Court: U.S. District Court — Southern District of New York
• Writing for the Court: VINCENT L. BRICCETTI, UNITED STATES DISTRICT JUDGE
• Decision Date: 22 February 2022
• Docket Number: 18 CV 1427 (VB)
• Citation: Mohr-Lercara v. Oxford Health Ins., 18 CV 1427 (VB) (S.D. N.Y. Feb 22, 2022)
• Parties: ANNA MOHR-LERCARA, individually and on behalf of all others similarly situated, Plaintiff, v. OXFORD HEALTH INSURANCE, INC.; OPTUM, INC.; and OPTUM RX, INC., Defendants.

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ANNA MOHR-LERCARA, individually and on behalf of all others similarly situated, Plaintiff, v. OXFORD HEALTH INSURANCE, INC.; OPTUM, INC.; and OPTUM RX, INC., Defendants.

No. 18 CV 1427 (VB)

United States District Court, S.D. New York

February 22, 2022

OPINION AND ORDER

VINCENT L. BRICCETTI, UNITED STATES DISTRICT JUDGE

Plaintiff Anna Mohr-Lercara brings this putative class action against defendants Oxford Health Insurance, Inc. (“Oxford”); Optum, Inc. (“Optum”) and Optum Rx, Inc. (“OptumRx”), alleging violations of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, and the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961.

Now pending is defendants' motion for summary judgment. (Doc #117).

For the following reasons, the motion is GRANTED.

The Court has subject matter jurisdiction under 28 U.S.C. § 1331.

BACKGROUND

The parties have submitted memoranda of law, declarations with exhibits, and statements of undisputed material facts pursuant to Local Civil Rule 56.1, which together reflect the following factual background.

I. Plaintiff's Plan

Plaintiff participated in an employer-sponsored health insurance plan subject to ERISA (the “plan”) from October 4, 2010, to December 31, 2014, and again from August 1, 2015, to August 31, 2016. The plan was offered and underwritten by Oxford. Optum was an affiliate of Oxford, and one of its subsidiaries, OptumRx, was Oxford's pharmacy benefit manager starting in October 2013.

A. 2010 to 2013 Plan

From 2010 to 2013, plaintiff's prescription drug coverage under the plan was outlined in a rider (the “Drug Rider”) to the plan's Certificate of Coverage. (Doc. #120-1 at ECF 103-11; Doc. #120-2, at ECF 117-22; Doc. #120-3 at ECF 115-20; Doc. #120-4 at ECF 115-20).^[1] The Drug Rider set forth plaintiff's payment obligations for covered outpatient prescription drugs, which differed depending on how plaintiff purchased them.

First, for covered prescription drugs purchased from a “Network Pharmacy, ” plaintiff was “responsible for paying the lower of”: (i) “the applicable Out-of-Pocket Expense, ” meaning the amount set forth in the plan's “Summary of Benefits”; or (ii) “the Network Pharmacy's Usual and Customary Charge, ” meaning “the usual fee that a pharmacy charges individuals for a Prescription Drug Product without reference to reimbursement to the pharmacy by third parties.” (Doc. #120-1 at ECF 103, 108; Doc. #120-2 at ECF 117, 122; Doc. #120-3 at ECF 115, 120; Doc. #120-4 at ECF 115, 120).

A “Network Pharmacy” was defined as a pharmacy that has:

• entered into an agreement with us or our designee to provide Prescription Drug Products to Members;

• agreed to accept specified reimbursement rates for dispensing Prescription Drug Products; and

• has been designated by us as a Network Pharmacy.

(Doc. #120-1 at ECF 107; Doc. #120-2 at ECF 121; Doc. #120-3 at ECF 119; Doc. #120-4 at ECF 119).

Second, for covered prescription drugs purchased from Oxford's mail order supplier, plaintiff was “responsible for paying the lower of”: (i) “the applicable Out-of-Pocket Expense”; or (ii) “the Prescription Drug Cost for that Prescription Drug Product, ” meaning the rate Oxford agreed to reimburse its Network Pharmacies (the “Pharmacy Rate”). (Doc. #120-1 at ECF 105, 108; Doc. #120-2 at ECF 119, 122; Doc. #120-3 at ECF 117, 120; Doc. #120-4 at ECF 117, 120).

In addition to the Certificate of Coverage and Drug Rider, from 2011 to 2013 Oxford also circulated a “Member Handbook” to plan members. Relevant here, the Member Handbook stated:

In-Network benefits are typically provided through arrangements with Network Providers. Network Providers have agreed to accept our contracted fees as payment in full for Covered Services. We reimburse the Network Provider directly when you receive Covered Services and you will not be responsible for any amount billed in excess of the contracted fee for the Covered Service.

(Doc. #120-2 at ECF 66; Doc. #120-3 at ECF 64; Doc. #120-4 at ECF 64 (emphasis added)).

For those years, “Network Provider” was defined in the Certificate of Coverage as:

A Physician, Certified Nurse Midwife, Hospital, Skilled Nursing Facility, Home Health Care Agency, or any other duly licensed or certified institution or health professional under contract with Us to provide Covered Services to Members. A list of Network Providers and their locations is available to you upon enrollment or upon request. The list will be revised from time to time by Us.

(Doc. #120-2 at ECF 115; Doc. #120-3 at ECF 113; Doc. #120-4 at ECF 113).

B. 2014 to 2016 Plan

From 2014 to 2016, plaintiff's prescription drug coverage was outlined in the plan's Certificate of Coverage, not a rider. The “Prescription Drug Coverage” section of the Certificate set forth plaintiff's payment obligations for covered outpatient prescription drugs, which again differed depending on how plaintiff purchased them.

First, for covered prescription drugs purchased from a “Participating Pharmacy, ” plaintiff was “responsible for paying the lower of:” (i) “[t]he applicable Cost-Sharing”; or (ii) “[t]he Participating Pharmacy's Usual and Customary Charge (which includes a dispensing fee and sales tax) for the Prescription Drug.” (Doc. #120-6 at ECF 8; Doc. #120-8 at ECF 18; Doc. #120-10 at ECF 18).

Plaintiff's “applicable Cost-Sharing” amount was set out in the “Schedule of Benefits.” (Doc. #120-6 at ECF 7-8; Doc. #120-8 at ECF 17-18; Doc. #120-10 at ECF 17-18).

A “Participating Pharmacy” was defined as:

A pharmacy that has

• Entered into an agreement with Us or Our designee to provide Prescription Drugs to Members;

• agreed to accept specified reimbursement rates for dispensing Prescription Drugs; and

• has been designated by Us as a Participating Pharmacy.

(Doc. #120-6 at ECF 15; Doc. #120-8 at ECF 25; Doc. #120-10 at ECF 26).

Second, for covered prescription drugs purchased from Oxford's mail order supplier, plaintiff was “responsible for paying the lower of”: (i) “the applicable Out-of-Pocket Expense”; or (ii) “the Prescription Drug Cost for that Prescription Drug Product.” (Doc. #120-6 at ECF 10; Doc. #120-8 at ECF 20; Doc. #120-10 at ECF 20).

A separate section of the Certificate of Coverage stated that, in the case of co-payments:

Except where stated otherwise, after You have satisfied the annual Deductible . . ., You must pay the Copayments, or fixed amounts, in the Schedule of Benefits . . . for Covered Services. However, when the Allowed Amount for a service is less than the Copayment, You are responsible for the lesser amount.

(Doc. #120-5 at ECF 47 (emphasis added); accord Doc. #120-7 at ECF 58; Doc. #120-8 at ECF 57).

For “Participating Providers, ” the “Allowed Amount” was defined as “the amount [Oxford] ha[s] negotiated with the Participating Provider.” (Doc. #120-5 at ECF 48; Doc. #120-7 at ECF 59; Doc. #120-8 at ECF 58).

“Participating Provider” was defined through the following series of definitions.

First, a “Participating Provider” was defined as “[a] Provider who has a contract with Us to provide services to You.” (Doc. #120-5 at ECF 40; Doc. #120-7 at ECF 49; Doc. #120-9 at ECF 46).

Second, a “Provider” was defined as “[a] Physician (M.D. - Medical Doctor or D.O. -Doctor of Osteopathic Medicine), licensed Health Care Professional or Facility licensed, certified or accredited as required by state law.” (Doc. #120-5 at ECF 41; Doc. #120-7 at ECF 50; Doc. #120-9 at ECF 47).

Third, “Facility” was defined as:

A Hospital; ambulatory surgery Facility; birthing center; dialysis center; rehabilitation Facility; Skilled Nursing Facility; hospice; home health agency or home care services agency certified or licensed under Article 36 of the New York Public Health Law; a comprehensive care center for eating disorders pursuant to article 27-J of the public health law; an institutional Provider of mental health of chemical dependence and abuse treatment operating under Article 31 of the New York Mental Hygiene Law and/or approved the Office of Alcoholism and Substance Abuse Services, or other Provider certified under Article 28 of the New York Public Health Law (or other comparable state law, if applicable).

(Doc. #120-5 at ECF 37-38; accord Doc. #120-7 at ECF 46-47; Doc. #120-9 at ECF 43-44).

II. Procedural History

Plaintiff commenced this action on February 16, 2018.

Plaintiff alleges defendants violated the terms of the plan by overcharging her for prescription drugs. Specifically, plaintiff claims she purchased covered prescription drugs from Network and Participating Pharmacies and, pursuant to the plan, she should have paid the “lesser-of-three” amounts: (i) her cost-sharing obligation such as, for example, a co-payment; (ii) the Usual and Customary Charge for that drug; or (iii) the Pharmacy Rate. Plaintiff alleges instead she was charged the “lesser-of-two” amounts for covered prescription drugs: (i) her copayment; or (ii) the Usual and Customary Charge.

According to plaintiff, the Pharmacy Rate was lower than her co-payments or the Usual and Customary Charge, and she was thus consistently overcharged for covered prescription drugs. Further, plaintiff asserts defendants conspired together and with the pharmacies to overcharge her, to conceal their scheme from plan members, and ultimately to pocket the overcharges for themselves.

In her amended and operative complaint (Doc. #47), plaintiff asserted two categories of claims.

First on behalf of a putative subclass of all enrolled in a health plan issued or administered by Oxford and subject to ERISA and who overpaid for prescription drugs, she asserted six ERISA claims: (i) a claim for benefits pursuant to ERISA § 502(a)(1)(B) (Count I); (ii) causing a prohibited...