COUNTY OF MONMOUTH v. RITE AID CORPORATION

District Court, E.D. Pennsylvania·Decided March 31, 2023·No. 2:20-cv-02024·Unknown

Opinion

INTHEUNITEDSTATESDISTRICTCOURT FORTHEEASTERNDISTRICTOFPENNSYLVANIA

COUNTYOFMONMOUTHandDIANE SCAVELLO,IndividuallyandonBehalfof AllOthersSimilarlySituated, Plaintiffs, CivilAction v. No. 20-cv-2024 RITEAIDCORPORATION,etal., Defendants.

MEMORANDUMOPINION Goldberg,J. March31,2023 The County of Monmouth, New Jersey (“Monmouth”) and Diane Scavello have brought a

putativeclassactionforfraudandrelatedclaimsallegingthatDefendantRiteAidCorporationand associatedentities(collectively“RiteAid”)madefalserepresentationswhensubmittinginsurance claims for prescription drugs. Monmouth sponsors a health plan that allegedly covered drug pur- chases from Rite Aid pharmacies, and Scavello is a Rite Aid customer who is insured, but not by Monmouth. Rite Aid has moved to dismiss Monmouth’s claims only. In a separate motion, Rite Aid

hasalsomovedtocompelScavellotoarbitrateherclaims. Thisopinionaddressesonlythemotion todismiss. RiteAid’sprincipalargumentfordismissalisthatMonmouth’sfactualallegationsarecon- tradicted by the terms of two contracts between Monmouth and non-party Express Scripts, Inc., who Rite Aid claims acted as an intermediary between Monmouth and Rite Aid. Although the Monmouth–Express Scripts contracts are not attached to or referenced anywhere in Monmouth’s complaint, Rite Aid argues that they are judicially noticeable either because the complaint implic-

itlyreliesonthemorbecauseMonmouth isapublicentityanditscontractsarepubliclyavailable. Monmouth opposes consideration of the Monmouth–Express Scripts contracts at this stage of the proceedings. For the reasons explained below, I find that even assuming the existence of the Mon- mouth–Express Scripts contracts is judicially noticeable, the factual inferences Rite Aid seeks to draw from them are not. I further conclude that Rite Aid’s remaining arguments for dismissal

also implicate factual issues that cannot be resolved at this stage of the litigation. I will therefore denyRiteAid’smotiontodismiss. I. FACTSTAKENFROMTHECOMPLAINT A. AllegedMisrepresentations Rite Aid is a pharmacy that sells prescription drugs. When an insured customer makes

a purchase, Rite Aid transmits information about the purchase to the customer’s insurer or the insurer’s agent. The insurer (or its agent) will then send a message back “indicating whether the drugandconsumerarecoveredand,ifso,theamountthepharmacymustcollectfromtheconsumer asacopayment,coinsurance,ordeductibleamount.”(AmendedComplaint¶¶6-7,11,36.) According to Monmouth, Rite Aid uses an industry-wide standard form to transmit infor- mation to customers’ insurers. One of the fields in that standard form contains the pharmacy’s (in this case Rite Aid’s) “usual and customary” price for the drug being sold. Monmouth alleges that

“usualandcustomary”iswidelyunderstoodintheindustrytomean“thecashpricechargedtothe general public, exclusive of sales tax or other amounts claimed.” (Amended Complaint ¶¶ 35-36, 39-40.) ThegistofMonmouth’sfraudandothermisrepresentationclaimsisthatRiteAidsubmitted

“usualandcustomary”pricestoinsurersthatwerenotactuallythepricesRiteAidwouldchargethe generalpublicforthesamedrugs. AccordingtoMonmouth,RiteAidoffereduninsuredcustomers discountsonprescriptiondrugs,availabletoallcash-paying(i.e.uninsured)customers. (Amended Complaint ¶¶ 48-51, 54.) Monmouth refers to the category of drugs for which Rite Aid offered discountsas“RSPDrugs”(referringtoRiteAid’s“RxSavingsProgram”). Monmouthassertsthat theRSPDrugs’discountedprices—nottheirlistedprices—wereRiteAid’s“usualandcustomary”

pricesforthosedrugs. Butwhensubmittinginformationtoacustomer’sinsurer,RiteAidallegedly reported a price that was much higher than the discounted price a cash-paying customer would pay. According to Monmouth, this report was false, and, because Rite Aid was aware that the prices it reported were not accurate, Monmouth alleges that these misrepresentations were made fraudulently. (Id.¶¶55,60,123-26.)

B. MonmouthCounty’sHealthPlan “Monmouth ... operates a self-funded health insurance plan and workers’ compensation plan for its employees and retirees ... .” This plan covers a share of the cost of its insureds’ pre- scriptiondrugs,andsomeofthoseinsuredspurchasedRSPDrugsfromRiteAid—thatis,drugsfor which Rite Aid would offer cash discounts to uninsured customers. Monmouth alleges that Rite Aidmisrepresentedtheusualandcustomarypricesofthesedrugs. (AmendedComplaint¶¶17-18,

123, 125.) Monmouth further alleges that Rite Aid submitted claims for these purchases “to ... Monmouth,” that Rite Aid “charged” Monmouth for these drugs, and that Rite Aid “made such misrepresentations...toPlaintiffs,”thusincludingMonmouth,(Id.¶38,78,106,125,135,309.)1 Monmouth’s complaint lists fifteen examples of purchases of RSP Drugs by Monmouth’s insureds. For each purchase, Monmouth reports the price it paid for the drug alongside Rite Aid’s

cashdiscountpriceforthatdrug. Monmouthcharacterizesthedifferencebetweenthesetwoprices asan“overpayment.”(AmendedComplaint¶61.) According to Monmouth’s complaint, “[t]he facts that Rite Aid misrepresented ... were material to the decisions of ... Monmouth ... about whether to pay for Rite Aid’s RSP Drugs ... .” (Amended Complaint ¶ 312.) Specifically, “[h]ad Plaintiffs”—presumably including Monmouth—“known Rite Aid was reporting to and charging them inflated and false amounts,

they would not have proceeded with the transactions.” (Id. ¶ 124.) Thus, Monmouth alleges, it “paidmoreforRSPDrugsthanitwouldhaveabsentRiteAid’smisconduct.”(Id.¶18.) II. FACTSNOTINTHECOMPLAINT In support of its motion to dismiss, Rite Aid asks me to take judicial notice of five docu-

ments (Rite Aid’s Exhibits A through E). None of these documents nor the facts that follow are referencedinMonmouth’scomplaint. I initially note that Monmouth does not object to judicial notice of Rite Aid’s Exhibits A, B, and C. Exhibit A purports to be a news posting on Monmouth’s website informing employees that “Monmouth County’s prescription drug plan is administered by Express Scripts.” Exhibits B and C purport to be resolutions by Monmouth’s Board of Chosen Freeholders (the term for the

1 In a footnote, Monmouth adds that an insurer “may utilize the services of a pharmacy benefit manager(‘PBM’)”andthataPBM“serve[s]asanintermediarybetweenthird-partypayorsandthe restofthehealthcareindustry.”(AmendedComplaint¶36.) Monmouthdoesnotallegewhetherit utilized the services of a PBM with respect to the claims at issue in this case nor what effect the involvementofaPBMwouldhaveonthesubmissionofpricestoMonmouth. governing body of New Jersey counties) authorizing Monmouth to contract with Express Scripts to provide “pharmacy benefit management services,” with the first contract covering January 1, 2015throughDecember31,2017,andthesecondJanuary1,2018throughDecember31,2020.

Monmouth does object to the Court taking judicial notice of Rite Aid’s Exhibits D and E, which Rite Aid certifies it obtained through a request under New Jersey’s Open Public Records Act. These exhibits purport to be contracts between Monmouth and Express Scripts for the pro- vision of pharmacy benefit management services. The contracts state that Express Scripts will be the “exclusive” provider of pharmacy benefit management services for Monmouth. (See Ex. D, “Recitals,”¶C;Ex.E,Preamble.)

Rite Aid points to specific provisions of the Monmouth–Express Scripts contracts that it contends are relevant to the plausibility of Monmouth’s claims in this case. First, both contracts provide for Express Scripts to establish a “network” of “participating” pharmacies. Monmouth, in turn, was to pay Express Scripts in amounts described as “reimbursement amounts” and “other administrative fees.” (Ex. D §§ 2.2(a), 3.1; Ex.

Free access — add to your briefcase to read the full text and ask questions with AI

COUNTY OF MONMOUTH v. RITE AID CORPORATION, (E.D. Pa. 2023).

COUNTY OF MONMOUTH v. RITE AID CORPORATION (COUNTY OF MONMOUTH v. RITE AID CORPORATION) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Bell Atlantic Corp. v. Twombly
550 U.S. 544 (Supreme Court, 2007)
Ashcroft v. Iqbal
556 U.S. 662 (Supreme Court, 2009)
Denise Bohus v. Stanley A. Beloff
950 F.2d 919 (Third Circuit, 1991)
Walter Chruby v. Annette Kowaleski
534 F. App'x 156 (Third Circuit, 2013)
Berrier v. Simplicity Manufacturing, Inc.
563 F.3d 38 (Third Circuit, 2009)
Alan Schmidt v. John Skolas
770 F.3d 241 (Third Circuit, 2014)
Commonwealth v. Golden Gate Nat'l Senior Care LLC
194 A.3d 1010 (Supreme Court of Pennsylvania, 2018)
Dittman, B., Aplt. v. UPMC
196 A.3d 1036 (Supreme Court of Pennsylvania, 2018)
Aaron Hope v. Warden Pike County Corr
972 F.3d 310 (Third Circuit, 2020)
Meyer v. Community College of Beaver County
93 A.3d 806 (Supreme Court of Pennsylvania, 2014)