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Case Number: 3:16-cv-01702
Judge: Jeffrey A. Meyer
Court: United States District Court for the District of Connecticut (New Haven County)
Brian C. Gudmundson.
Rosen Sarraf, and
Description: New Haven, Connecticut employment law lawyers represented Plaintiff who sued Defendants on a wrongful failure to pay E.R.I.S.A. benefits.
This was a putative class action involving allegations that defendant Cigna Health and Life Insurance Company ("Cigna") fraudulently schemed to overcharge millions of people for prescription drugs in violation of the terms of their health plans. We are now at the class certification stage, and plaintiffs seek to certify classes and sub-classes under the Employee Retirement Income Security Act ("ERISA") and the Racketeer Influenced and Corrupt Organizations Act ("RICO").
I will deny plaintiffs' motion for class certification. Because it is evident that there are material differences in language among the thousands of health plans at issue in this action that govern whether the plaintiffs have suffered the same injury or any injury at all, I conclude that plaintiffs cannot carry their burden to show that there are questions of law or fact that are common to the class (much less that common questions will predominate over questions that require individual-specific resolution). As to the related pending motions, I will grant in part and deny in part plaintiffs' motion to strike, and I will deny Cigna's motion to preclude plaintiffs' expert for class certification purposes.
The basic background of this case is set forth in my prior ruling on Cigna's partial motion to dismiss. See Negron v. Cigna Health and Life Ins. Co., 2020 WL 5216518 (D. Conn. 2020). The prescription drug transactions at issue here implicate four contractual relationships between: (1) an employee and his or her employer that provides prescription drug benefits under a health plan; (2) the employer and a health insurance company that underwrites and/or administers those benefits; (3) the health insurance company and a pharmacy benefit manager ("PBM") that assists in administering the benefits; and (4) the PBM and the pharmacy that fills prescriptions covered under the plan. Id. at *1.
Plaintiffs' health plans describe what they must pay for prescription drugs in copayments and deductibles, while the PBM-pharmacy contracts at issue in this case state what a pharmacy must charge patients, the fee that the PBM will pay the pharmacy for filling a prescription, and the difference or "spread" between the patient charge and the pharmacy fee that the PBM will "claw back" for remittance to the health insurance company. Ibid.
According to plaintiffs, "all Cigna plans uniformly stated that Cigna would provide prescription drug coverage for 'Covered Expenses,' which are 'expenses for charges made by a Pharmacy, for Medically Necessary Prescription Drugs.'"1 Plaintiffs use the term "Pharmacy Rate" to refer to these "charges made by a Pharmacy."2
Plaintiffs also allege that all Cigna plans uniformly state that members "may be required to pay a portion of the Covered Expenses," which plaintiffs allege is expressly defined to include copayments and deductibles.3 Plaintiffs interpret this language to mean that "copayment and deductible payments were limited to a 'portion' of (i.e., no more than the total) 'charges made by a Pharmacy,'"4 regardless of other terms in the individual plans.
Plaintiffs characterize the "clawbacks" of the difference or "spread" between the member charge and the pharmacy fee as illegal "overcharges," because their pharmacies charged them drastically more for prescription drugs than they were required to pay under their health plans, which plaintiffs argue capped their copayments and deductibles at the pharmacies' transaction fee. See Negron, 2020 WL 5216518, at *1. They say that Cigna and its PBMs conspired to leverage their market power to contractually require pharmacies to charge these exorbitant and unauthorized amounts, in part by threatening to cut them out of Cigna's network if they refused. Ibid.
For its part, Cigna argues that the design of these plans is the result of a "choice that each employer makes."5 In Cigna's telling, employers usually pay for prescription drug benefit costs, including PBM services, through either "traditional pricing" or "pass-through pricing." For "pass-through pricing," the plan sponsor's prescription drugs costs are "typically equal to the pharmacy reimbursement rates," but the fees for the plan's administrative services are paid on a separate recurring basis.6 For "traditional pricing," or "spread pricing," employers "negotiate predictable drugs costs for the plan year and pay for PBM services through a differential or 'spread' between the employer's negotiated cost and the amount of the PBM's (or its vendor's) network pharmacy reimbursement."7 Cigna essentially argues that plaintiffs are seeking a "pass- through" pricing arrangement for plans with terms designed for a "traditional" or "spread" pricing arrangement.
Plaintiffs seek to certify two classes, an ERISA class and a RICO class, each with a subclass.8 Under plaintiffs' amended class definitions, the Classes all include individuals residing in the United States and its territories who were enrolled in a Cigna or Cigna-affiliate-issued or -administered health benefit plan or policy that:
provided that a member "may be required to pay a portion of the Covered Expenses"; and provided that "Covered Expenses" are where an individual "incurs expenses for charges made by a Pharmacy"; and with respect to deductible payments, did not provide that the "Deductible payment" "will be based on the plan's Prescription Drug Charge."9
The Subclasses all include individuals residing in the United States and its territories who were enrolled in a Cigna or Cigna-affiliate-issued or -administered health benefit plan or policy that further provided that "in no event will the Copayment . . . exceed the amount paid by the plan to the Pharmacy."10 According to plaintiffs, the ERISA Class and Subclass contain all plan members with ERISA-governed plans that include this language, and the RICO Class and Subclass contain all plan members with ERISA or non-ERISA plans that include this language.11
The Classes also require each class member to have:
paid a copayment or deductible payment to purchase prescription drugs pursuant to such plan or policy where according to the transaction data produced by Cigna in this action: the copayment or deducible payment exceeds the amount the pharmacy agreed with Cigna or the pharmacy benefit manager to accept for such drugs on a transaction-by-transaction basis; and the excess amount is credited or transferred to Cigna or the pharmacy benefit manager.12
The Subclasses require almost the same second condition as the Classes, except that they only include individuals who paid a copayment to purchase prescription drugs, not those who paid a copayment or a deductible payment as for the Classes.13
Plaintiffs interpret the Subclass plans' additional language to provide a "second uniform contractual agreement that Class Members would never pay a copayment more than the amount that Cigna paid to the pharmacy."14 They put forth a purportedly simple way to identify which plans fall into the Classes or Subclasses: plans with this exact operative language are in the Class or Subclass, and any plans without this language are not.15
Cigna opposes plaintiffs' motion for class certification,16 and also moves to preclude the declaration and testimony of plaintiffs' expert, Launce B. Mustoe, offered in support of plaintiffs' motion.17 Plaintiffs in turn seek to strike certain arguments made by Cigna in its opposition to plaintiffs' motion for class certification and its motion to preclude.
Outcome: 08/22/2023 496 ORDER granting 495 Motion to Continue Stay of Deadlines in Light of Settlement. Signed by Judge Jeffrey A. Meyer on 8/21/2023. (Lewis, D) (Entered: 08/22/2023)
08/22/2023 497 ORDER DISMISSING CASE.
The parties have reported that this action has been settled (Doc. # 495 ). Rather than continue to keep the case open on the docket, the Clerk is directed to administratively close the file without prejudice to reopening on or before September 22, 2023. If the parties wish to file a stipulation of dismissal (for approval by the court or simply for inclusion in the court's file), they may do so on or before September 22, 2023. The dates set forth in this order may be extended for good cause pursuant to a motion filed in accordance with Local Rule 7. It is so ordered.
Signed by Judge Jeffrey A. Meyer on 8/22/2023.(Lewis, D) (Entered: 08/22/2023)
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(Lewis, D) (Entered: 08/22/2023)