United States ex rel. Spay v. CVS Caremark Corp.
| Decision Date | 22 September 2015 |
| Docket Number | CIVIL ACTION NO. 09-4672 |
| Parties | UNITED STATES OF AMERICA, ex rel. ANTHONY R. SPAY, Plaintiff, v. CVS CAREMARK CORPORATION; CAREMARK Rx, LLC (f/k/a CAREMARK Rx, Inc.); CAREMARK, LLC (f/k/a CAREMARK, INC.); SILVERSCRIPT, LLC (f/k/a SILVERSCRIPT INC.), Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Currently pending before the Court is (a) the Motion for Summary Judgment by Defendants CVS Caremark Corporation, Caremark Rx, LLC, Caremark, LLC, and Silverscript, LLC (collectively "Defendants" or "Caremark") and (b) the Motion for Partial Summary Judgment by Plaintiff/Relator Anthony R. Spay ("Plaintiff"). For the following reasons, Defendants' Motion is granted in its entirety and Plaintiff's Motion is denied in its entirety.
In 2009, Plaintiff/Relator Anthony R. Spay filed under seal the instant qui tam action on behalf of the United States government, alleging violations of the Federal False Claims Act. In June 2011, the United States declined to intervene in this action. Thereafter, on August 5, 2011, Plaintiff filed the First Amended Complaint ("FAC") contending that six different practices by Defendants resulted in false claims being presented by Defendants to the Centers for Medicareand Medicaid Services ("CMS") under the Medicare Part D Program.
Defendants filed a motion to dismiss on April 23, 2012, which the Court denied in its entirety. Fact discovery ran from March 13, 2013 until October 31, 2014, and expert discovery proceeded from November 1, 2014 to March 20, 2014, resulting in the production of over 1.4 million pages of documents, and the deposition of over thirty witnesses. Plaintiff now seeks damages and statutory penalties on behalf of the United States, including damages under the treble damages provision and civil penalty provision of the Federal False Claims Act.
Plaintiff Anthony R. Spay is a registered pharmacist (R.Ph) with approximately thirty-five years of diversified experience within the pharmacy industry. He is not only a licensed pharmacist, but has also been involved with pharmacy management, benefits management, long-term care, behavioral health, executive management, prescription drug fraud/abuse detection, auditing, and recovery for many of the nation's largest payers and pharmacy claims processors. In 1992, Plaintiff founded Pharm/DUR, Inc. ("Pharm/DUR"), which was an auditing company that performed principally retail pharmacy audits in the form of both desk audits and in-store audits.
For a desk audit, the company would send out letters to pharmacies for around twenty claims and request a copy of the prescription and signature log. A team would then go over the prescription and signature log for any discrepancies that were specified by each client, and Pharm/DUR would send out a letter to the pharmacy with the discrepancies found. The pharmacy would have thirty days to respond with any documentation, which would then be re-reviewed by Pharm/DUR for any remaining discrepancies. (Defs.' Mot. Summ. J., Ex. 11, Dep. of Claire Briggs ("Briggs Dep."), 25:23-26:20, April 15, 2014.) For in-store audits, Pharm/DUR would send a letter out to the pharmacy indicating the date it planned to visit, and would conduct the audit in the store, looking at copies of prescriptions and signature logs for about 200 claims. Any suspicious claims would be scanned into Pharm/DUR's system for a review team to look over, and a letter would be sent to the pharmacy listing any remaining discrepancies. The pharmacy then had thirty days to respond with documentation and, following several back and forth exchanges, a final list of discrepancies would be generated. (Id. at 26:21-28:11.) Audits were done on contingency fee, flat fee, or yearly rate bases, but the majority were contingency fee based. (Id. at 29:21-30:9.)
The Medicare Part D program began on January 1, 2006. In 2006, Medical Card System, Inc. ("MCS"), a large health administration and health insurance company in Puerto Rico, hired Pharm/DUR, on a contingency fee basis, to conduct an audit of the Medicare Part D pharmacy benefit manager ("PBM") and other services that Defendant SilverScript, LLC, or its affiliates, provided. Pharm/DUR audited MCS's paid pharmacy claims data for claims adjudicated by SilverScript between January 1, 2006 and December 31, 2006. Some of the claims in this case are identical to the findings Pharm/DUR made in its audit on behalf of MCS.
Xerox is the successor to Pharm/DUR. Pharm/DUR was acquired by Affiliated Computer Services ("ACS") in July of 2009 and, in February of 2010, ACS was acquired by Xerox. As a result of these acquisitions, Pharm/DUR was no longer in existence at the time of the corporate designee depositions in this case. Nonetheless, both corporate designees—Claire Briggs and Kelly O'Brien—were former Pharm/DUR employees.
In 2006-2007, Defendant Caremark Rx LLC was one of the largest pharmacy benefit managers ("PBMs") in the United States. On March 22, 2007, Caremark Rx LLC merged with CVS Corporation to form Defendant CVS Caremark Corporation. The Defendants are various subsidiaries of Defendant CVS Caremark Corporation ("CVS Caremark"). Since January 1, 2006, a number of different subsidiaries of Caremark Rx LLC (and, as of March 22, 2007, of CVS Caremark), including Defendant Silverscript, LLC ("Silverscript"), have provided PBM services to various types of clients. In the 2006 to 2007 time period, Defendant SilverScript contracted with thirty-nine Sponsors to provide PBM services and those Sponsors entered into eighty-five different Part D contracts with the Centers for Medicare and Medicaid Services to offer Part D plans. Defendants generated 114,125,392 unique prescription drug event ("PDE") records for their Part D Sponsor-clients in 2006-2007.
Generally, pharmacists are licensed under state law to dispense prescription medications. While the requirements for the contents of prescriptions for pharmaceuticals vary from state to state, such prescriptions generally detail the name of the patient, date of birth, address, name of the drug, dosage form, strength, quantity to dispense, dosing instructions, and refill information. State laws define what constitutes a valid prescription, although federal law and regulations impact prescriptions for controlled substances. See 21 U.S.C. § 829. Pharmacists bearresponsibility under state law for validating a prescription to ensure that it is written by an authorized provider.
Since the 1990s, most state pharmacy codes have required pharmacists to perform concurrent drug utilization review ("DUR") prior to dispensing any prescription drug, although pharmacists do not alone have this responsibility. DUR is a process by which a patient's prescribed drug therapy is evaluated for safety and appropriateness. DUR can take several forms: (1) the pharmacist makes his or her own personal consideration of the prescribed therapy for the patient; (2) electronic edits supplied by a pharmacy's own DUR software supplement a pharmacist's manually-performed DUR; and (3) electronic edits supplied by a PBM supplement the pharmacist's manually-performed DUR. Once the pharmacist determines that the medication is safe to dispense, he or she physically prepares the prescription by selecting the product, checking the expiration date on the packaging, counting the number of dosage units needed to fill the order, and placing the counted medication into a prescription vial. The pharmacist then performs a final check of the prescription, counsels the patient when appropriate, and records the dispensing transaction.
Although there is no single uniform process for filling prescription drugs under an insurance plan, a common method is that the pharmacist submits certain information about the patient and the prescription—the "pharmacy claim"—to the insurer for a coverage and payment determination via a process called "claims adjudication." If a patient has no insurance or otherwise opts to pay for the entire cost of the prescription out-of-pocket, a pharmacy claim might not be submitted for adjudication.
In 2006-2007, all electronic claims were submitted by pharmacies for adjudication using the HIPAA-mandated National Counsel for Prescription Drug Programs ("NCPDP"). Some data fields on the NCPDP Version 5.1 pharmacy claim were mandatory, meaning that the claim would be rejected if the field was not populated with a properly-formatted value. Other fields were optional.
Generally, the pharmacy initiates the adjudication process by submitting the pharmacy claim to an online platform called an "adjudication platform." Adjudication platforms are generally operated by third-party administrators, such as PBMs, who handle claims processing on behalf of payers. Although not uniform among platforms, the adjudication platform typically performs a series of checks on the pharmacy claim to verify that all mandatory fields are populated and/or conform to certain formatting requirements, determines the eligibility of the patient, confirms that the drug is covered by the plan's formulary and that the prescription complies with the plan's benefit design, determines whether a prior authorization is necessary, and determines if the prescription complies with the plan's benefit design. The claims adjudication platform also performs concurrent DUR and may apply a set of DUR "edits" to the pharmacy claim information (such as patient or drug information). The adjudication platform further calculates the patient's deductible or co-pay, calculates the reimbursement to the pharmacy, and transmits a response to the pharmacy that includes either a payable or rejected claim code.
These processes take place virtually instantaneously, and the average Version 5.1...
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