Long Term Care Pharmacy Alliance v. UnitedHealth Group, Inc.

498 F. Supp. 2d 187, 2007 U.S. Dist. LEXIS 54695, 2007 WL 2172793
CourtDistrict Court, District of Columbia
DecidedJuly 30, 2007
DocketCivil Action 06-01221 (ESH)
StatusPublished
Cited by10 cases

This text of 498 F. Supp. 2d 187 (Long Term Care Pharmacy Alliance v. UnitedHealth Group, Inc.) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Long Term Care Pharmacy Alliance v. UnitedHealth Group, Inc., 498 F. Supp. 2d 187, 2007 U.S. Dist. LEXIS 54695, 2007 WL 2172793 (D.D.C. 2007).

Opinion

MEMORANDUM OPINION

ELLEN SEGAL HUVELLE, District Judge.

Long Term Care Pharmacy Alliance (“LTCPA”) and American Society of Consultant Pharmacists (“ASCP”) have sued UnitedHealth Group, Inc., seeking a declaration that defendant has violated contracts and federal law by failing to reimburse plaintiffs’ member pharmacies for co-payments that the pharmacies needlessly paid on behalf of indigent nursing home residents. Defendant has moved to dismiss for lack of standing and for failure to state a claim upon which relief may be granted. For the reasons set forth herein, the Court concludes that plaintiffs lack standing to bring these claims and will therefore dismiss the case pursuant to Federal Rule of Civil Procedure 12(b)(1).

BACKGROUND

In December 2003, Congress enacted the Medicare Prescription Drug Improvement and Modernization Act, which provides prescription drug coverage to Medicare beneficiaries. (Am.ComplJ 11.) Various private prescription drug plans (“PDPs”), including plans sponsored by defendant’s subsidiaries, have contracts with the Centers for Medicare and Medicaid Services (“CMS”) to administer the program, commonly referred to as Medicare Part D. (Id. ¶¶ 11-12; Def.’s Mem. at 6.) The PDPs, in turn, have contracts with the many pharmacies that dispense the drugs. (Am.Compl^ 21.) After a pharmacy dispenses drugs to a beneficiary, it bills the PDP for reimbursement pursuant to the contract. (Id. ¶ 12.)

Some Medicare beneficiaries, commonly known as “dual eligibles,” are covered by both Medicare and Medicaid. (Id. ¶ 15.) Those who qualify under the Act as “institutionalized full-benefit dual-eligibles”— dual eligibles who are “inpatient[s] in a medical institution or nursing facility for which payment is made under Medicaid”— are not required to make any co-payments for covered medications obtained through their PDPs. 42 C.F.R. § 423.773. (See Am. *189 Compl. ¶ 18.) Many of these patients receive their drugs from long-term care pharmacies, which serve nursing home residents and are not open to the general public. (Id. ¶ 9.)

The Medicare Part D program went into effect on January 1, 2006. (Id. ¶ 21.) According to the complaint, defendant’s subsidiary PDPs, along with most other PDPs, failed to recognize that a number of institutionalized full-benefit dual eligibles were not required to make co-payments to the pharmacies, and thus improperly reduced the reimbursement to the pharmacies by the standard co-payment amount. (Id.) This problem apparently arose because of errors in the data that CMS had supplied to PDPs regarding the subsidy status of beneficiaries. (See Def.’s Mem. at 8; Pis.’ Opp’n at 5.) Defendant claims that because PDPs can only process claims in accordance with CMS data, if CMS data indicates that a particular beneficiary owes a co-payment, the PDP has no choice but to reduce the reimbursement to the pharmacy by the amount of the co-payment. (Def.’s Mem. at 7.) The PDPs thereby accumulated millions of dollars of erroneously withheld co-payments, while the pharmacies incurred a corresponding amount of debt. (Am.ComplA 23.)

Plaintiffs, who represent long term care pharmacies and pharmacists, 1 worked with CMS and the PDPs to try to find a solution to the problem. (Id. ¶¶ 22-23.) CMS began correcting its, data, and between April and May of 2006, it issued three guidance documents instructing the PDPs to make reimbursements directly to the long term care pharmacies where appropriate. (Id. ¶¶ 23-26.) Plaintiffs allege that defendant took no action to reimburse the pharmacies. (Id. ¶24.) In response, defendant claims that the contracts between its PDPs and the pharmacies have provisions that set forth a process by which claims must be resubmitted after a denial of payment and also set out the time frame in which claims must be resubmitted. (Def.’s Mem. at 8.) Plaintiffs’ pharmacies, defendant claims, refused to resubmit their claims in accordance with the contractual provisions. (Id. at 9.) An April 18, 2006 CMS policy guidance instructed pharmacies to submit “a spreadsheet with claim information to the prescription drug plan” for reimbursement (Am.ComplA 23), but the same guidance also noted that processes for reimbursement “may vary between plans” and “Hollowing the drug plans’ directions may ensure timely reimbursements.” 2 (Def.’s Mem. Ex. 5.) Plaintiffs claim that defendant’s subsidiaries, *190 unlike other PDPs, insisted that the pharmacies reverse and re-bill the original transactions (Am.ComplJ 27), whereas defendant insists that this procedure was necessary to ensure that an adequate audit trail existed to support the PDPs’ claims for reimbursement from CMS. (Def.’s Mem. at 9.) When the pharmacies tried to follow these instructions, however, defendant’s PDPs allegedly rejected the claims. (Am.ComplY 27.)

Defendant notified LTCPA in June 2006 that its PDPs were preparing to send individual reimbursement checks for each of the improperly withheld co-payments directly to the individual Medicare Part D beneficiaries, rather than to the pharmacies. (Id. ¶ 28.) Defendant claims that in the absence of claims resubmissions provided for under the PDPs’ contracts with the pharmacies, the PDPs are obligated by CMS regulations to pay co-payment adjustments directly to the Medicare Part D beneficiaries. (Def.’s Mem. at 8 (citing 42 C.F.R. § 423.800(c)).) When this lawsuit was filed in July 2006, plaintiffs first sought a temporary restraining order and preliminary injunction barring defendant from sending the checks. (Pis.’ Mot. for TRO and Prelim. Inj.) Defendant agreed at that time to wait to send those checks. (Am.Compl^ 30.) The parties then informed the Court that they had settled the case, and the case was conditionally dismissed without prejudice so that the parties could finalize the terms of their settlement agreement. Long Term Care Pharmacy Alliance v. UnitedHealth Corp., No. 06-01221, Order (D.D.C. Nov. 16, 2006). Settlement negotiations apparently failed, however, and plaintiffs renewed their motion for a temporary restraining order and preliminary injunction. The renewed motion was denied on March 29, 2007, on the basis that plaintiffs had not made the requisite showing of irreparable injury because any injury could be addressed by money damages. Long Term Care Pharmacy Alliance, Minute Order (Mar. 29, 2007); see Tr. of Mar. 29, 2007 Hr’g at 27. Plaintiffs subsequently filed an amended complaint, which is the subject of the instant motion to dismiss.

Defendant’s motion to dismiss argues that plaintiffs lack standing to bring this action (Def.’s Mot. to Dismiss at 11), that defendant is not a party to the contracts at issue, which are between its subsidiaries and the pharmacies (id. at 19), that plaintiffs cannot sue to enforce the contract

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Bluebook (online)
498 F. Supp. 2d 187, 2007 U.S. Dist. LEXIS 54695, 2007 WL 2172793, Counsel Stack Legal Research, https://law.counselstack.com/opinion/long-term-care-pharmacy-alliance-v-unitedhealth-group-inc-dcd-2007.