Primary Care Pharmacy, LLC v. Express Scripts, Inc.

Decision Date30 September 2019
Docket NumberNo. 4:17-CV-795 RLW,4:17-CV-795 RLW
CourtU.S. District Court — Eastern District of Missouri

408 F.Supp.3d 1034


No. 4:17-CV-795 RLW

United States District Court, E.D. Missouri, Eastern Division.

Signed September 30, 2019

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Jonathan E. Levitt, Lucas William Morgan, Steven L. Bennet, Pro Hac Vice; Todd Mizeski, Pro Hac Vice; Frier and Levitt, LLC, Pine Brook, NJ, for Plaintiff.

Abraham James Spung, Christopher A. Smith, Ashley M. Rothe, Erica A. Doerhoff, Husch Blackwell, LLP, St. Louis, MO, for Defendant.



This matter is before the Court on Primary Care's Motion for Summary Judgment (ECF No. 83) and Defendant Express Scripts, Inc.'s Motion for Partial Summary Judgment (ECF No. 85). These matters are fully briefed and ready for disposition.


Express Scripts is a pharmacy benefit manager ("PBM") that contracts with third-party payors and health plan administrators—such as insurers, HMOs, and employers—to facilitate the delivery of prescription drugs to members of health plans and their beneficiaries. Express Scripts maintains a network of retail pharmacies that agree to fill prescriptions for health plan members in accordance with the provisions set forth in Express Scripts' retail pharmacy contracts. Primary Care Pharmacy, LLC ("Primary Care") was a member of this retail network beginning in December 2014. Primary Care and Express Scripts' relationship was governed by an agreement consisting of a Provider Agreement and a Provider Manual (collectively, the "Contract"). Under the Contract, Primary Care would purchase pharmaceutical supplies and then bill Express Scripts for the supplies Primary Care purchased and provided to members of Express Scripts' client health plans.

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Express Scripts determined through purchase verification that it paid Primary Care a total amount of $520,042.83 (the "Total Discrepancy Amount") for claims that Primary Care's supplier data did not substantiate. For the majority of the Total Discrepancy Amount ($328,035.66), Primary Care's suppliers provided no supporting documentation. For the remaining portion ($192,007.17), Express Scripts found that Primary Care did not have sufficient records, and the records provided by Primary Care's suppliers suggested that Primary Care made purchases from gray market1 suppliers who were not authorized by the manufacturer to distribute the product. Express Scripts claims Primary Care was unable to provide basic origination information and lot numbers (hereinafter, "pedigree information") substantiating these product purchases when Express Scripts requested it.

On May 11, 2016, Express Scripts requested pedigree information for certain purchases to ensure the products could be traced back to their manufacturers. Express Scripts received no response to this letter. On May 26, 2016, Express Scripts sent a letter explaining the Total Discrepancy Amount, affording Primary Care the opportunity to contest it, and notifying Primary Care that Express Scripts would recoup the discrepancy amount pursuant to its rights under the Contract if Primary Care did not dispute the amount. On June 29, 2016, Primary Care responded through counsel that Express Scripts should have credited the materials received from the allegedly authorized suppliers for the minority portion of the Total Discrepancy Amount and attaching various documents. On July 15 and July 18, 2016, Express Scripts replied to Primary Care's letter, stated that the Total Discrepancy Amount stood, and recouped the amount. Express Scripts exercised its right to terminate the Contract, effective August 12, 2016.

Primary Care brought this action seeking payment from Express Scripts for an amount it alleges is due under the Contract with Express Scripts. Primary Care brought claims for Breach of Contract (Count One), Unjust Enrichment (Count Two), Breach of the Implied Covenant of Good Faith and Fair Dealing (Count Three). (Complaint, ECF No. 1).

Express Scripts filed a Counterclaim, seeking to recover amounts "due to discrepancies identified in a field audit." (ECF No. 21, Counterclaim, ¶2). Express Scripts brought claims for Breach of Contract (Count I) and Unjust Enrichment (Count II). (ECF No. 21, Counterclaim).



A. Standard of Review

The Court may grant a motion for summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c) ; Celotex Corp. v. Citrate , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Torgerson v. City of Rochester , 643 F.3d 1031, 1042 (8th Cir. 2011). The substantive law determines which facts are critical and which are irrelevant. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Only disputes over facts that might affect the outcome will properly preclude summary judgment. Id. Summary judgment is not proper if the evidence is such that a reasonable

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jury could return a verdict for the nonmoving party. Id.

A moving party always bears the burden of informing the Court of the basis of its motion. Celotex Corp. , 477 U.S. at 323, 106 S.Ct. 2548. Once the moving party discharges this burden, the nonmoving party must set forth specific facts demonstrating that there is a dispute as to a genuine issue of material fact, not the "mere existence of some alleged factual dispute." Fed. R. Civ. P. 56(e) ; Anderson , 477 U.S. at 248, 106 S.Ct. 2505. The nonmoving party may not rest upon mere allegations or denials of his pleading. Id.

In passing on a motion for summary judgment, the Court must view the facts in the light most favorable to the nonmoving party, and all justifiable inferences are to be drawn in his favor. Celotex Corp. , 477 U.S. at 331, 106 S.Ct. 2548. The Court's function is not to weigh the evidence but to determine whether there is a genuine issue for trial. Anderson , 477 U.S. at 249, 106 S.Ct. 2505. " ‘Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.’ " Torgerson , 643 F.3d at 1042 (quoting Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ).

A. Primary Care's Motion for Summary Judgment (ECF No. 83) and Defendant Express Scripts, Inc.'s Motion for Partial Summary Judgment (ECF No. 85)

1. Primary Care's Claim for Breach of Contract

To state a claim for breach of contract under Missouri law, Primary Care "must establish the existence of a valid contract, the rights of plaintiff and obligations of defendant under the contract, a breach by defendant, and damages resulting from the breach." Gillis v. Principia Corp. , 832 F.3d 865, 871 (8th Cir. 2016) (citing Lucero v. Curators of Univ. of Mo. , 400 S.W.3d 1, 5 (Mo. Ct. App. 2013) ).

Express Scripts asserts it is entitled to summary judgment on Primary Care's Breach of Contract claim because Primary Care cannot establish its own performance under the Contract or any breach by Express Scripts. Express Scripts argues that Primary Care did not perform the following obligations under the Contract: (1) failed to maintain required records; (2) contacted Express Scripts' clients' members without Express Scripts' consent; (3) failed to operate as a retail pharmacy as required; (4) falsely represented that it purchased from authorized and reputable suppliers; and (5) billed improper claims to Express Scripts in violation of the Contract.

Express Scripts further claims that Primary Care cannot establish any breach of the Contract by Express Scripts. Express Scripts maintains it had the contractual right to initiate and conduct the Purchase Verification, as well as the right to exercise its "sole discretion" to recoup the Total Discrepancy Amount. For the majority—$328,035.66—of the Total Discrepancy Amount, neither Primary Care nor its suppliers provided any supporting documentation. Because Primary Care failed to provide any documentation to substantiate that amount, Express Scripts asserts it was entitled to exercise its discretion to reverse and recoup that amount. For the remainder of the Total Discrepancy Amount attributable to claims for products purchased from unauthorized suppliers—$192,07.17—Express Scripts also claims it acted under its rights under the Contract. Thus, Express Scripts claims that it properly exercised its "sole discretion" to recoup amounts paid to it and Primary Care cannot show any breach by Express Scripts in exercising its rights.2

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The Court holds that Primary Care has not established that it performed under the Contract. Primary Care has not provided any evidence of its performance. Instead, Primary Care states it was not required to provide pedigree information for non-drug products such as diabetic supplies...

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