Cupp Drug Store, Inc. v. Blue Cross & Blue Shield of Louisiana, Inc.

161 So. 3d 860, 2015 La. App. LEXIS 1, 2015 WL 78783
CourtLouisiana Court of Appeal
DecidedJanuary 7, 2015
DocketNo. 49,482-CA
StatusPublished
Cited by9 cases

This text of 161 So. 3d 860 (Cupp Drug Store, Inc. v. Blue Cross & Blue Shield of Louisiana, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cupp Drug Store, Inc. v. Blue Cross & Blue Shield of Louisiana, Inc., 161 So. 3d 860, 2015 La. App. LEXIS 1, 2015 WL 78783 (La. Ct. App. 2015).

Opinions

DREW, J.

|]Blue Cross and Blue Shield of Louisiana, Inc., Louisiana Health Service and [863]*863Indemnity Company, Inc., HMO Louisiana, Inc., and RxBlue (collectively referred to as “Blue Cross”), appeal a judgment and supplemental judgment awarding damages and attorney fees for unfair trade practices in violation of the Louisiana Unfair Trade Practices and Consumer Protection Law (“LUTPA”). Cupp Drug Store d/b/a Corner Drug Store (collectively referred to as “Cupp”) has answered the appeal seeking an increase in the damages award of $185,000 and attorney fees award of $110,000, as well as additional attorney fees for this appeal.

We affirm the final judgment awarding damages, award $5,000 in attorney fees to Cupp for this appeal, vacate the supplemental judgment awarding attorney fees and costs, and remand.

FACTS

Gil Birch was the owner, chief executive officer, and pharmacist of Cupp in Ruston for nearly 35 years. Cupp had standard walk-in customers, but it also had a significant number of customers in institutional settings such as nursing homes and group homes. Birch thought Cupp was the largest independently owned drug store in Ru-ston in 2007.

Cupp was a provider pharmacy for Blue Cross insureds. Express Scripts, Inc. (“ESI”) was the third-party administrator of Blue Cross’s pharmacy plan.

Investigation

Scot Simmons is the owner of Sterling Pharmacy in Ruston. In the |2spring of 2007,1 Simmons called Kandyce Cowart, a senior fraud investigator for Blue Cross, concerning allegations against Cupp. On May 15 and 16, Cowart, along with Andrea Lopez, an investigator for ESI, and Ray-land Trisler, an investigator with the Louisiana Board of Pharmacy (“BOP”), conducted an inspection of Cupp.

The inspection of Cupp led Trisler to file complaints with the BOP against Birch and Cupp on July 23. The complaints alleged violations of Louisiana and federal laws. Some of the charges related to Birch and Cupp: (1) not reversing claims for returned medicines, (2) redispensing returned medicines, (3) billing insurers for medications that were not dispensed, (4) having missing drugs, including Hydroco-done, (5) dispensing multiple prescriptions for controlled dangerous substances that were not authorized, (6) allowing pharmacy techs to process and dispense prescriptions outside the supervision of a pharmacist; (7) permitting unsanitary conditions in a storage building where boxes of new prescription vials and nursing home medication blister packs were kept, and (8) keeping improper daily report records.

Lawsuit

On May 17, the pharmacy director of Blue Cross wrote to Birch that effective the next day, Cupp would no longer be considered a participating pharmacy for Blue Cross.

On May 29, Cupp sued Blue Cross and ESI for damages and injunctive relief regarding the termination of Cupp as a participating | (¡pharmacy.2 The trial court granted ESI’s motion to stay and to compel arbitration, but denied Blue Cross’s motion to stay pending the outcome of arbitration.

Walgreens comes to town

Walgreens announced in 2007 that it was opening a store in Ruston. As explained by William Grayson, regional vice-president of store operations for Walgreens from 2003 until July of 2008, Walgreens’ strategy [864]*864when entering small markets was to acquire local pharmacies in order to jumps-tart their new stores.

In 2007, Birch received a letter from Walgreens inquiring about whether he would be interested in selling Cupp. Birch’s attorney, Bill Jones, began negotiating with Walgreens in July.3

On September 14, Jones sent an email to Russell Lehman, a pharmacy acquisitions specialist for Walgreens, that outlined the key elements of an asset purchase agreement in principle.4 The deed for Cupp was faxed from Jones to Lehman on September 24.5 -

14Ricky Indovina, a pharmacy supervisor for Walgreens, met with Birch and Jones at Cupp on September 26. Birch remembered that Indovina asked about Cupp’s files (prescription records) and inventory, and his business practices.

Jones sent an email to Lehman on October 5 in which he disclosed the pending lawsuit and the BOP complaints. Three days later, Jones sent an email to Mary Jen Fisher, a Walgreens paralegal involved with acquisitions, and to Lehman that summarized a telephone conversation that Jones and Fisher had that day. The email listed items that Jones wanted changed or added to the asset purchase agreement. The email also mentioned the pending BOP complaints.

On October 17, Jones wrote to Lehman about his agreement to changes and additions to the asset purchase agreement. Jones also stated that he understood that his email disclosures of litigation were satisfactory. Jones finished by stating that he would have Birch execute two signature pages and then fax and mail the originals to Lehman, signifying Birch’s formal consent to the asset purchase agreement as amended.

On October 23, Fisher emailed Jones asking him to provide details of the pending legal proceedings that had been disclosed on exhibit G of the asset purchase agreement. Jones replied the next day, describing the pending legal proceedings as the pending suit against Blue Cross and ESI for terminating Cupp as a pharmacy provider, the BOP complaints, and a claim against Cupp’s insurer from a customer who claimed he received the wrong prescription.

|5On October 29, Fisher emailed Jones, asking for documentation on each of the pending legal proceedings listed on exhibit G. This email was also sent to Josephine Kramer and Cheryl Creek of Walgreens. Kramer was the senior pharmacy acquisitions coordinator. Creek was the manager of pharmacy acquisitions.

On October 30, Jones wrote a letter to Fisher in which he attached the petition in the suit against Blue Cross and ESI, the BOP complaints, and a demand letter alleging the misfiled prescription. Jones also wrote a short summary of each pro[865]*865ceeding. Regarding the BOP complaints, he wrote that at the proper time, Birch would respond and refute the charges. He also added that it was important to recognize that the charges were the result of a competitor’s complaint.

On November 1, Jones wrote to Lehman concerning how many prescription drugs had been purchased from Cupp’s suppliers during a one-year period. The next day, Jones emailed Lehman about drug purchases from another supplier.

Change of plans

In the month of November, Walgreens began reconsidering the terms of the agreement. On November 13, Marc Metz, the pharmacy acquisitions implementation coordinator, wrote that Indovina believed the business was legitimate and wanted to move forward with the buyout. However, the price would be lower because no inventory would be purchased and Birch would not be hired. Walgreens would retain some of Cupp’s institutional customers, but not the nursing home customers. Metz also wrote that once 1 fiLehman was able to confirm the average number of prescriptions per day, Walgreens could proceed with renegotiating the price and terms. Metz followed up with Indovina in another email that day which said that Walgreens would restructure the holdback in addition to adjusting the purchase price based on retention.

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161 So. 3d 860, 2015 La. App. LEXIS 1, 2015 WL 78783, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cupp-drug-store-inc-v-blue-cross-blue-shield-of-louisiana-inc-lactapp-2015.