Gaston Drugs, Inc. v. Metropolitan Life Insurance

653 F. Supp. 1104, 1986 U.S. Dist. LEXIS 23354
CourtDistrict Court, S.D. Ohio
DecidedJuly 1, 1986
DocketNo. C-3-85-402
StatusPublished
Cited by2 cases

This text of 653 F. Supp. 1104 (Gaston Drugs, Inc. v. Metropolitan Life Insurance) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gaston Drugs, Inc. v. Metropolitan Life Insurance, 653 F. Supp. 1104, 1986 U.S. Dist. LEXIS 23354 (S.D. Ohio 1986).

Opinion

[1106]*1106DECISION AND ENTRY OVERRULING PLAINTIFFS’ MOTIONS FOR PRELIMINARY INJUNCTION (DOC. # 25 AND #26); FINDINGS OF FACT AND CONCLUSIONS OF LAW; ENTRY SETTING CONFERENCE CALL

RICE, District Judge.

This case is before the Court on Plaintiffs’ Motions for a Preliminary Injunction (Doc. # 25 and # 26), which seek an order from this Court temporarily enjoining the Defendant from auditing Ohio pharmacies participating in the Defendant’s MediMET prescription drug insurance program and from terminating or threatening to terminate pharmacies refusing to repay alleged overpayments. A hearing in this matter was held before this Court on February 20, 1986. For the reasons set forth in the Court’s Findings of Fact, Conclusions of Law and Discussion, Plaintiffs’ Motion is hereby overruled.

I. Findings of Fact

(1) Plaintiff Martin James Mullaney operates two pharmacies, dba Mullaney’s Prescription Pharmacy and Mullaney’s Blue Ash Pharmacy, in Cincinnati. (Tr. 8).

(2) Plaintiff-Intervenor, Hanson Drug Service, Inc., operates seven pharmacies, dba. Aid-N-Save Pharmacies, throughout the northeastern area of Ohio, in the counties of Trumbell County, Lake County, Co-lumbiana County and Ashtabula County, and whose principal place of business is in Newton Falls, Ohio. (Tr. 38; Hanson’s Exh. 12).

(3) Defendant, Metropolitan Life Insurance Company, is an insurance company whose corporate headquarters is in New York City, New York. (Tr. 108).

(4) In 1969, General Motors, based upon a collective bargaining agreement between it and the United Auto Workers, retained the services of Metropolitan Life Insurance Company to administer a prescription drug plan. The program known as “MediMET” was established to provide the bargained-for benefits. (Tr. 98).

(5) Subsequently, other employers followed the lead of General Motors and contracted with Metropolitan for MediMET prescription drug coverage. (Tr. 98-99).

(6) In all cases, the terms of MediMET coverage are determined by the employers and the applicable collective bargaining units. (Tr. 98).

(7) Metropolitan has entered into agreements, known as the MediMET Agreements, with approximately 30,000 pharmacies throughout the nation, including those within the State of Ohio. (Tr. 102).

(8) Under a typical MediMET plan, a prescription for a covered drug is submitted by the patient to a pharmacist participating in the MediMET Program (“participating provider”) along with an identification card identifying the patient as eligible to receive benefits under the Program. The patient pays a small co-payment, or deductible, and the participating provider fills the prescription and bills Metropolitan via a universal claim form or via electronic means for payment under the terms of the MediMET Agreement. (Tr. 99).

(9) To participate in the MediMET program, participating providers request that Metropolitan execute a MediMET Prescription Drug Agreement (the “MediMET Agreement”). The terms of the Agreement are non-negotiable and participating providers voluntarily enter into the Agreement in order to service patients who might be eligible for benefits under the Program. (Tr. 9 & 79).

(10) Plaintiff Mullaney has entered into a MediMET Agreement with Metropolitan for both of his pharmacies. (Tr. 8).

(11) Hanson and Metropolitan have entered into MediMET Agreements for all seven of Hanson’s pharmacies. (Tr. 42).

(12) The terms of Plaintiff Mullaney and Plaintiff-Intervenor Hanson’s MediMET Agreements with Metropolitan are identical. (Compare Plaintiff’s Exh. 1 with Hanson Exh. 1).

(13) The MediMET Agreement contains the following payment provision:

[1107]*1107Metropolitan will pay Participating Provider an amount determined in accordance with Item F of the Schedule for Covered Drugs dispensed to Eligible Persons less the applicable co-payment amount set forth in Item D of the Schedule which co-payment amount is payable by the Eligible Person for each prescription or refill.

(Plaintiff’s Exh. 1 at 113).

(14) Each Schedule for Covered Drugs is determined between Metropolitan and the employer who has agreed to provide Medi-MET coverage for its employees. The terms of the Schedules vary slightly, but Item F, which provides the terms of payment to participating pharmacists, in all Schedules, except that for General Electric, bases payment on “Acquisition Cost Plus Dispensing Fee.” (Hanson Exh. 1 at C-K).

(15) The MediMET Agreement contains the following definition:

“Acquisition Cost” means the actual cost of a Covered Drug to Participating Provider as determined by Metropolitan, including trade and volume discounts and other allowances.

(Plaintiff’s Exh. 1 at 111(e)).

(16) The MediMET Agreement contains the following provision regarding inspection of records:

Metropolitan or its duly authorized agents shall have the right at reasonable intervals and during regular business hours of Participating Provider to review such business records and prescription files of Participating Provider as Metropolitan or its duly authorized agents deem necessary to assure compliance with the terms of this Agreement.

(Id. at 1110).

(17) The MediMET Agreement contains the following termination provision:

This Agreement shall remain in full force and effect until terminated by either party effective upon at least thirty (30) days written notice to the other, except that Metropolitan reserves the right to terminate, effective upon written notice by Participating Provider, for violation of this Agreement or for other good cause.

(Id. at 1111).

(18) The MediMET Agreement provides that it cannot be amended except in a writing signed by both parties:

This Agreement ... constitutes the entire understanding between the parties and shall not be altered or amended except in writing signed by both Metropolitan and Participating Provider.

(Id. at 1114).

(19) Upon presenting a prescription to a participating provider, patients covered under the MediMET Program sign a “Universal Claim Form” in which they agree to release information pertaining to the claim to Metropolitan. The participating provider then inserts information into the “Universal Claim Form” regarding the drugs dispensed and the cost of the drugs and, unless it participates in a tape-to-tape program, submits a copy of the form to Metropolitan for payment. A tape-to-tape program is a system that allows a participating pharmacy to send Metropolitan its claims in a form directly readable by Metropolitan’s computer. (Defendant’s Exh. B; Tr. 99, 101).

(20) Plaintiff Mullaney admitted that he does not indicate his actual acquisition cost of the drugs on the form, but rather that he indicates the “Average Wholesale Price” of such drugs. According to Mullaney, the price he submits to Metropolitan — Average Wholesale Price — is often not the actual cost he incurred. (Tr. 32).

(21) Plaintiff Hanson also admitted that Hanson also submits claims to Metropolitan at Average Wholesale Price, rather than at actual acquisition cost. (Tr. 47, 48, 51-52, 63, 75).

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

Related

Cite This Page — Counsel Stack

Bluebook (online)
653 F. Supp. 1104, 1986 U.S. Dist. LEXIS 23354, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gaston-drugs-inc-v-metropolitan-life-insurance-ohsd-1986.