Upjohn Co. v. Ohio Dept. of Human Serv.

• Citation: 77 Ohio App.3d 827,603 N.E.2d 1089
• Decision Date: 24 October 1991
• Docket Number: No. 90AP-532,90AP-532
• Court: United States Court of Appeals (Ohio)
• Parties: UPJOHN COMPANY et al., Appellants, v. OHIO DEPARTMENT OF HUMAN SERVICES, Appellee.

Page 827

77 Ohio App.3d 827

603 N.E.2d 1089

UPJOHN COMPANY et al., Appellants, v. OHIO DEPARTMENT OF HUMAN SERVICES, Appellee.

No. 90AP-532.

Court of Appeals of Ohio, Tenth District, Franklin County.

Decided Oct. 24, 1991.

Emens, Hurd, Kegler & Ritter Co., L.P.A., William J. Brown, Roger P. Sugarman and Gene W. Holliker, Columbus, for appellants.

Lee I. Fisher, Atty. Gen., Susan M. Sullivan and M. Celeste Cook, Asst. Attys. Gen., for appellee.

PEGGY L. BRYANT, Judge.

Plaintiffs-appellants, Upjohn Company ("Upjohn") and Angela Thomas, appeal from a judgment of the Court of Claims granting the motion to dismiss of defendant-appellee, Ohio Department of Human Services ("ODHS"), as to all of Upjohn's claims and all of Thomas's claims except negligent processing.

Given the procedural posture of this case, we assume the factual allegations of plaintiffs' complaint to be true.

The Medicaid program established under Title XIX of the Social Security Act, Section 301, Title 42, U.S.Code, provides federal funds to reimburse states for medical assistance furnished to qualifying individuals based on medical and financial need. States receiving Medicaid funds may provide assistance to such individuals that differs in amount, scope, or duration based only on medical need. Section 1396a(a)(10)(B), Title 42, U.S.Code.

ODHS is authorized by R.C. 5111.02 to provide medical assistance under the Medicaid program and has adopted regulations pursuant to R.C. Chapter 119 to administer the program. Under Ohio Adm.Code 5101:3-9-02, ODHS established the Ohio Medicaid Drug Formulary, which lists drugs that qualify for automatic reimbursement. Drugs may be listed in the formulary if they satisfy cost-benefit criteria pursuant to Ohio Adm.Code 5101:3-9-02(C); drugs may be removed from the formulary pursuant to Ohio Adm.Code 5101:3-9-02(D) if they no longer satisfy these criteria.

Ohio Adm.Code 5101:3-9-02 thus establishes a two-tier system for prescription drug reimbursement: a provider is automatically reimbursed for drugs listed in the formulary, but is generally reimbursed for other drugs only if ODHS grants prior authorization. As a practical matter, a provider of drugs not listed in the formulary may delay filling prescriptions for such drugs until the provider is assured of reimbursement by prior authorization. Thus, the prior authorization procedure may delay an individual's receipt of a drug not listed in the formulary until ODHS authorizes payment, a process that can take several days or more.

Upjohn manufactures XANAX, an anti-anxiety drug of the chemical family benzodiazepene, which was listed in the formulary in 1985. Thomas is a Medicaid recipient whose stress-related disorder has been treated by her physician with XANAX since 1985. She was financially unable to obtain XANAX without assistance from the Medicaid program. Thomas's pharmacist was automatically reimbursed for filling her prescriptions for XANAX until ODHS removed XANAX from the formulary.

The Director of ODHS promulgated an amendment to Ohio Adm.Code 5101:3-9-12, effective April 20, 1989, that removed XANAX from the formulary. After the amendment became effective, Thomas attempted to have her monthly prescription for XANAX filled. Her pharmacist was no longer able to receive automatic reimbursement and did not fill the prescription until ODHS granted prior authorization, about eleven days later. Thomas did not have access to XANAX while waiting for the prescription to be filled; during this period, she suffered a stress-related injury that required hospitalization.

Plaintiffs brought suit seeking injunctive and declaratory relief, as well as damages, based upon constitutional claims arising from removal of XANAX from the formulary. They alleged that removal of XANAX from the formulary violated the Supremacy Clause of the United States Constitution because differential treatment of similarly situated Medicaid recipients was based on cost rather than medical need; and that removal of XANAX from the formulary violated both the due process and equal protection provisions of the United States and Ohio Constitutions because the decision to remove XANAX was irrational and unreasonable. They also brought damages claims arising out of ODHS's alleged negligence in removing XANAX from the formulary; and Thomas brought a damages claim for alleged negligence in processing prior authorization requests. Plaintiffs also sought certification of a class action whose class members consisted of Medicaid recipients injured by ODHS's negligence, with Thomas as class representative.

On April 9, 1990, the Court of Claims in part granted ODHS's motion to dismiss the amended complaint, determining that the court had no jurisdiction to hear claims for declaratory and injunctive relief or for constitutional violations, and that the allegation that ODHS was negligent in removing XANAX from the formulary did not state a claim upon which relief could be granted. In an amended entry filed April 20, 1990, the Court of Claims dismissed all of Upjohn's claims and all of Thomas's damages claims except her claim for negligent processing of her prior authorization request. The court overruled plaintiffs' motion to certify a class consisting of persons injured by ODHS's negligent removal of XANAX from the formulary and reserved decision on the motion to certify a class consisting of persons injured as a result of negligent processing of prior authorization requests.

Plaintiffs appeal, assigning the following errors:

"1. The Court of Claims erred in ruling that it did not have jurisdiction over plaintiffs' claims for injunctive and declaratory relief and in dismissing those claims.

"2. The Court of Claims erred in ruling that it did not have jurisdiction to decide plaintiffs' claims for damages arising under the Ohio Constitution and the United States Constitution and in dismissing those claims.

"3. The Court of Claims erred in ruling that it did not have jurisdiction to decide plaintiffs' claims for injunctive relief arising under the Ohio Constitution and the United States Constitution and in dismissing those claims.

"4. The Court of Claims erred in dismissing plaintiffs' claim for damages resulting from defendant's negligent removal of XANAX from the Ohio Medicaid Drug Formulary.

"5. The Court of Claims erred in overruling plaintiffs' motion to certify a class of all persons who were injured as a result of defendant's negligent removal of XANAX from the Ohio Medicaid Drug Formulary."

As a threshold matter, we must determine whether the order of the Court of Claims, which did not adjudicate all of the claims of all of the parties, is a final appealable order, because we lack jurisdiction to review an order that is not final and appealable. Chef Italiano Corp. v. Kent State Univ. (1989), 44 Ohio St.3d 86, 90, 541 N.E.2d 64, 68.

An order that adjudicates one or more but fewer than all of the claims of a party is final and appealable if it satisfies the requirements of both R.C. 2505.02 and Civ.R. 54(B). General Acc. Ins. Co. v. Ins. Co. of N. Am. (1989), 44 Ohio St.3d 17, 21, 540 N.E.2d 266, 270. The trial court's order clearly complies with the Civ.R. 54(B) requirement that an order adjudicating "fewer than all of the claims or parties" is appealable only if it includes a determination that "no just reason for delay" exists. Thus, we need determine only whether the order meets the requirements under R.C. 2505.02.

Under R.C. 2505.02, we must first determine whether the order affects a substantial right, defined as "a legal right * * * protected by law." (Citation omitted.) Gen. Acc., supra, at 21, 540 N.E.2d at 271. If so, we must consider whether the order either was made in a special proceeding, or was made in an action which in effect determines the action and prevents a judgment. However, notwithstanding compliance with the foregoing requirements of R.C. 2505.02, an order is final only if it disposes of an entire claim arising from a single set of facts. Aldrete v. Foxboro Co. (1988), 49 Ohio App.3d 81, 82, 550 N.E.2d 208, 209; see, also, Clark v. Upper Arlington Bd. of Edn. (Aug. 2, 1990), Franklin App. No. 89AP-1495, unreported, 1990 WL 110269. A claim, in this context, is a "set of facts which gives rise to legal rights, not * * * the various legal theories of recovery which may be based upon those facts." Aldrete, supra.

As to the first requirement of R.C. 2505.02, the order dismissing plaintiffs' claims for damages, declaratory relief, and injunctive relief based on ODHS's improper removal of XANAX from the formulary deprives plaintiffs of remedies that they otherwise would possess; it therefore affects a substantial right of theirs. See Chef Italiano, supra, 44 Ohio St.3d at 88, 541 N.E.2d at 67.

Moreover, although Thomas potentially could recover money damages on her remaining claim for negligent processing of her prior authorization request, the order of the Court of Claims precludes both Upjohn and Thomas from obtaining any relief based on ODHS's improper removal of XANAX from the formulary. Because the order determines an entire claim arising out of the same set of facts and prevents a judgment in plaintiffs' favor on this claim, the dismissal of all of plaintiffs' claims arising out of the removal of XANAX from the formulary is a final order.

Finding the trial court's order to be final and appealable, we address plaintiffs' assigned errors.

Plaintiffs' first four assignments of error assert basically two points: (1) that the trial court erred in finding it lacked jurisdiction over plaintiffs' damages claims as well as their claims for declaratory and injunctive relief, and (2) that the trial court erred in determining that plaintiffs' claims for damages failed to state a claim for relief. Inasmuch as lack of jurisdiction and failure to state a claim are somewhat interrelated in connection with the Court of Claims, see Nacelle Land & Mgt. Corp. v. Ohio...