Star Disc. Pharmacy, Inc. v. Medimpact Healthcare Sys., Inc.
| Decision Date | 10 September 2014 |
| Docket Number | Civil Action Number 5:11-cv-02206-AKK |
| Parties | STAR DISCOUNT PHARMACY, INC., et al., Plaintiffs, v. MEDIMPACT HEALTHCARE SYSTEMS, INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of Alabama |
Plaintiffs Star Discount Pharmacy, Inc., Propst Discount Drugs, Inc., C & H Pharmacy, Inc., and Darden Heritage pursue this claim against MedImpact Healthcare Systems, Inc., Michael Struhs, and Nicole Adams for violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962, violation of Alabama's antitrust laws, Ala. Code. §§ 6-5-60 and 8-10-1, et seq., and negligence, wantonness, unjust enrichment, and intentional interference with a business relationship, pursuant to Alabama common law. The defendants move for summary judgment on all of the plaintiffs' claims, doc. 113, and the motion is fully briefed and ripe for review, docs. 115, 123, and 125. Additionally, the defendants move to strike the plaintiffs' supplemental evidentiary submissions, doc. 130, and that motion isfully briefed as well, docs. 132 and 133. Based on a review of the evidence and the law, the court finds that the plaintiffs have failed to present sufficient evidence to support their RICO, antitrust, and unjust enrichment claims and, consequently, the defendants' motion for summary judgment on those claims is due to be granted. Because the plaintiffs' remaining negligence, wantonness, and intentional interference with a business relationship claims are governed by Alabama law, the court will remand those claims to the Circuit Court of Madison County, Alabama.
Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." "Rule 56[] mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (alteration in original). The moving party bears the initial burden of proving the absence of a genuine issue of material fact. Id. at 323. The burden then shifts to the nonmoving party, who is required to "go beyond the pleadings" to establish that there is a "genuine issue for trial." Id. at 324 (citation and internal quotation marks omitted). A dispute about a material fact is genuine "if the evidence is such that a reasonablejury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The court must construe the evidence and all reasonable inferences arising from it in the light most favorable to the non-moving party. Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970); see also Anderson, 477 U.S. at 255 (). Any factual disputes will be resolved in the non-moving party's favor when sufficient competent evidence supports that party's version of the disputed facts. See Pace v. Capobianco, 283 F.3d 1275, 1276, 1278 (11th Cir. 2002) (). However, "mere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion." Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005) (per curiam) (citing Bald Mountain Park, Ltd. v. Oliver, 863 F.2d 1560, 1563 (11th Cir. 1989)). Moreover, "[a] mere 'scintilla' of evidence supporting the opposing party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party." Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citing Anderson, 477 U.S. at 252)).
The following is an account of the facts necessary to resolve the present matter viewed in a light most favorable to the plaintiffs.1 Alabama's Public Education Employees' Health Insurance Plan ("PEEHIP") provides health insurance benefits to the state's public educators. Doc. 1-1 at 3. In early 2010, "defendant MedImpact2 entered into an agreement to serve as the third party administrator . . . of PEEHIP's prescription medication program." Id. Subsequently, MedImpact "began directly contacting pharmacies and requesting that the pharmacies enter into specific contracts [for reimbursement] with MedImpact." Id. at 4. Many Alabama pharmacy networks, ranging from major chains to independent associations, agreed to the terms of these contracts by August 2010. Doc. 152-6 *SEALED* at 65-80. MedImpact assumed the duties of administering the PEEHIP network on October 1, 2010. Doc. 129-5 *SEALED* at 109.
The plaintiffs in this lawsuit are Darden Heritage and the pharmacies he owns and operates in Madison County, Alabama. Doc. 1-1 at 2. In the fall of 2010, MedImpact extended contract terms to the plaintiffs' pharmacy association, AmericanPharmacy Network Solutions ("APNS"), which APNS declined. Doc. 152-6 *SEALED* at 81-85. MedImpact and APNS ultimately reached a temporary agreement that allowed APNS pharmacies, including the plaintiffs' pharmacies, to continue servicing PEEHIP beneficiaries until January 1, 2011. Id. at 93. MedImpact and APNS were unable to reach a long-term agreement during their 2010 negotiations, id. at 96, and on December 7, 2010, the PEEHIP Board voted to remove APNS from its retail pharmacy network, effective January 1, 2011, doc. 129-75 *SEALED* at 1-2. In December 2010, anticipating the January 1, 2011 cutoff, MedImpact sent a letter to the plaintiffs' patients explaining that all Alabama pharmacies except those affiliated with APNS agreed to MedImpact's reimbursement rates and that the rates demanded by APNS were approximately twenty-five percent more expensive to PEEHIP than those demanded by other pharmacy networks. The letter directed the patients to nearby pharmacies in the PEEHIP network. Id.
After the 2010 negotiations between MedImpact and APNS failed, many APNS member pharmacies contracted directly with MedImpact to continue serving PEEHIP beneficiaries. See, e.g., doc. 152-11 *SEALED* at 1-9. On December 28, 2010, MedImpact extended contract terms to Heritage, who rejected them. Doc. 152-4 *SEALED* at 122. MedImpact again extended contract terms to Heritage on February 14, 2011. Id. at 126. Via an email written by his attorney on February 18, 2011, Heritage indicated he was willing to negotiate with MedImpact, id. at 135, but,according to the plaintiffs, MedImpact failed to respond, doc. 129-71 *SEALED* at 67-68.
The contract between PEEHIP and MedImpact contains the following provision:
Direct Member Reimbursement ("DMR"). MedImpact or Client shall provide an Eligible Member with a MedImpact (and Client approved) claim form for use for submitting non-electronic Claims for reimbursement for Covered Benefits provided by a Participating or non-Participating Pharmacy. When such a Claim is submitted on the approved form, MedImpact shall process the Claim according to the Eligible Member's Benefit Plan and in the amount agreed to by the Client for payment, and payment will be made to the Eligible Member by MedImpact as required by applicable Law.
Doc. 129-6 *SEALED* at 13. After PEEHIP removed APNS from its network, Heritage encouraged his customers to pay full price for their prescription medication and then seek reimbursement from MedImpact via DMR. Doc. 129-65 *SEALED* at 20-21. Although it appears that MedImpact briefly reimbursed the plaintiffs' patients who submitted DMR requests, it soon began refusing to do so.3 Id. at 22, 44, 64. Additionally, MedImpact sent letters to the plaintiffs' patients who sought reimbursement via DMR explaining that "the PEEHIP prescription drug plan has always had an exclusion to disallow drug coverage if members use a non-participating pharmacy in the state of Alabama even if they file a paper claim," andthat "the PEEHIP plan will no longer be able to reimburse you for future prescriptions filled at non-participating Alabama pharmacies." Doc. 129-6 at 117. The letter also contained instructions for locating nearby participating pharmacies. Id.
On June 8, 2011, after the plaintiffs initiated this lawsuit4, APNS reached an agreement with MedImpact. Doc. 152-6 *SEALED* at 98. The plaintiff pharmacies, who were still members of APNS, received the opportunity to participate under the APNS-MedImpact contract, but declined and withdrew from APNS on June 9, 2011. Doc. 152-4 *SEALED* at 67-68; id. at 136-37.
The plaintiffs allege claims pursuant to the RICO act and Alabama law for antitrust violations, negligence, wantonness, unjust enrichment, and intentional interference with a business relationship. The defendants contend they are due summary judgment on all of the plaintiffs' claims. The court will examine each claim in turn.
In Count Five, the plaintiffs allege that the defendants engaged in a pattern of racketeering activity in furtherance of a "scheme to create a closed and[/]or limited access network of pharmacies in contravention of Alabama Law, in restraint of trade,and in an effort to control the provision of pharmaceutical services and prescription medications to [PEEHIP] beneficiaries," in violation of the RICO Act. Doc. 1-1 at 8, 11-12.
[T]o state a prima facie civil RICO claim under 18 U.S.C. § 1964(c), a plaintiff must establish three essential elements: first, that the defendant committed a pattern of RICO predicate acts under 18 U.S.C. § 1962; second, that the plaintiff suffered injury to business or property; and, finally, that the defendant's racketeering activity proximately caused the injury.
Simpson v....
To continue reading
Request your trial