Eufaula Drugs, Inc. v. TDI Managed Care Services, Inc.

250 F.R.D. 670, 2008 U.S. Dist. LEXIS 48857, 2008 WL 2568453
CourtDistrict Court, M.D. Alabama
DecidedJune 25, 2008
DocketNo. 2:05-CV-293-MEF
StatusPublished

This text of 250 F.R.D. 670 (Eufaula Drugs, Inc. v. TDI Managed Care Services, Inc.) is published on Counsel Stack Legal Research, covering District Court, M.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eufaula Drugs, Inc. v. TDI Managed Care Services, Inc., 250 F.R.D. 670, 2008 U.S. Dist. LEXIS 48857, 2008 WL 2568453 (M.D. Ala. 2008).

Opinion

MEMORANDUM OPINION AND ORDER

MARK E. PULLER, Chief Judge.

This cause is before the Court on Plaintiffs Motion to Certify Class (Doc. #88), filed January 25, 2008. Named Plaintiffs are two pharmacies that have brought breach of contract claims against Defendants TDI Managed Care Services, Inc. (“TDI”) and Eckerd Health Services (“EHS”). Plaintiffs allege that Defendants failed to properly reimburse pharmacies for the drugs they dispensed to patients in accordance with the terms of their contract. Plaintiffs seek to certify a class of pharmacies that had similar contracts with Defendants. For the reasons stated below, this Court finds that Plaintiffs’ [674]*674Motion to Certify Class is due to be GRANTED.

I. FACTS AND PROCEDURAL HISTORY

The two defendants named in this action are actually a single entity owned by J.C. Penney, Inc. and known during the early 1990s as TDI. In 1994, J.C. Penney acquired Eckerd Drugs, Inc., and “Eekerd Health Services” became the trade name under which TDI conducted business. This Court will therefore refer to Defendants collectively as EHS.

EHS is a pharmacy benefits manager (“PBM”) that contracts with insurers, managed care organizations, and employers to administer their prescription benefit plans. As part of its administration duties, EHS contracts with chain and independent pharmacies (“network pharmacies”) to dispense prescription drugs to people covered by the plans that EHS administers (“end users”). When an end user goes to a network pharmacy to fill a prescription, the pharmacy submits a request for approval to dispense the prescription and obtain reimbursement from EHS; this request is known as a “claim.” Such claims are transmitted to EHS instantaneously and electronically. When EHS approves a claim, it transmits back to the pharmacy the total reimbursement amount, which includes the amount to be paid by EHS and the amount to be paid by the end user, for that prescription.

EHS calculates the amount it will pay the pharmacy for the prescription using the Average Wholesale Price (“AWP”). EHS typically reimburses brand drug prescriptions based on a percentage discount from AWP for each brand drug prescription filled by the pharmacy. EHS generally utilized a standard form contract, called the Pharmacy Network Agreement (“the Agreement”), to contract with its network pharmacies. The Agreement defined “AWP” as “the current average wholesale price of a Covered Drug listed in First Databank’s Bluebook or other nationally recognized price source designated by [EHS].” Every brand drug has a unique AWP that is made available through certain drug database publishers. Furthermore, because AWP values fluctuate, PBMs receive periodic updates for each brand drug’s AWP from these publishers.

EHS received AWP updates from the drug database publisher Medi-Span. Medi-Span offers AWP update services on a daily, weekly, or monthly basis. Daily updates would yield the shortest amount of time between a change in AWP, and when a PBM’s database would reflect the new AWP. Monthly updates would have the longest lag time in updating a PBM’s AWP. Until October 28, 2003, EHS received weekly AWP updates from Medi-Span. After October 28, 2003, EHS switched to daily updates.

During the proposed class period, EHS contracted with approximately 10,000 pharmacies throughout the United States. Plaintiff Eufaula Drugs owns and operates a retail pharmacy in Eufaula, Alabama and entered into a contract with EHS to be a network pharmacy. Plaintiff ScotMUook owns and operates a retail pharmacy in Dothan, Alabama and entered into a contract with EHS to be a network pharmacy.

Plaintiffs filed this action in the Circuit Court of Barbour County on February 14, 2005. Defendants filed a Notice of Removal in this Court on March 30, 2005. Finding that it had subject matter jurisdiction, this Court denied Plaintiffs’ Motion to Remand on April 14, 2006.

II. JURISDICTION AND VENUE

This Court has already held that it has subject matter jurisdiction over this action pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d) (“CAFA”). See Eufaula Drugs, Inc. v. TDI Managed Care Servs., Inc., No. 05-cv-293, 2005 WL 3440635 (M.D.Ala. Dec. 14, 2005) (holding that this action “commenced” after the effective date of CAFA); id. (Apr. 14, 2006) (holding that $5,000,000 amount in controversy requirement under CAFA was satisfied); see also Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., 455 F.Supp.2d 1317 (M.D.Ala.2005) (Fuller, C.J.) (holding CAFA applied to class [675]*675action filed under nearly identical factual circumstances).1

The parties do not contest venue, and the Court finds an adequate factual basis for venue in this Court.

III. DISCUSSION

Plaintiffs claim that EHS’s use of weekly AWP updates breached the Agreement, which defined AWP as “the current average wholesale price of a Covered Drug.” (emphasis added). Plaintiffs contend that this provision required EHS to use the most frequent AWP updates available, which would have been daily updates. Due to EHS’s use of weekly AWP updates, Plaintiffs allege that network pharmacies have lost approximately $16.1 Million in reimbursements that they would have received if EHS had used daily updates.

Plaintiffs are seeking certification under Federal Rule of Civil Procedure 23(b)(3) of a class defined as:

All pharmacies and/or other similar entities who entered into a contract which provided for reimbursement of prescriptions according to a formula which included the Average Wholesale Price (“AWP”) with Defendant and/or its predecessors in interest, their successors in interest, and/or their subsidiaries and/or their related entities on or after February 14, 1999.

In order to be certified as a class action, the named plaintiffs must have standing,2 and the putative class must meet each of the requirements specified in Rule 23(a), as well as at least one of the requirements set forth in Rule 23(b). Busby v. JRHBW Realty, Inc., 513 F.3d 1314, 1321 (11th Cir. 2008). The burden of proof to establish the propriety of class certification rests with the advocate of the class. Id.

In this ease, EHS does not challenge that the numerosity requirement of Rule 23(a) is satisfied. The Court will address each of EHS’s challenges to the remaining Rule 23 requirements below.

A. Typicality — Rule 23(a)(3)

The typicality requirement measures whether a sufficient nexus exists between the claims of the named representatives and those of the class at large. Busby, 513 F.3d at 1322. All putative class members are not required to have identical claims, and factual differences among the claims of the putative class members do not defeat certification. Cooper v. S. Co., 390 F.3d 695, 714 (11th Cir.2004). However, the named plaintiffs’ claims must still share the same essential characteristics as the claims of the class at large. Id.

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Bluebook (online)
250 F.R.D. 670, 2008 U.S. Dist. LEXIS 48857, 2008 WL 2568453, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eufaula-drugs-inc-v-tdi-managed-care-services-inc-almd-2008.