MSP Recovery Claims, Series LLC v. Warner Chilcott PLL

CourtDistrict Court, D. Massachusetts
DecidedMarch 22, 2019
Docket1:18-cv-10274
StatusUnknown

This text of MSP Recovery Claims, Series LLC v. Warner Chilcott PLL (MSP Recovery Claims, Series LLC v. Warner Chilcott PLL) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
MSP Recovery Claims, Series LLC v. Warner Chilcott PLL, (D. Mass. 2019).

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

MSP RECOVERY CLAIMS, SERIES LLC * et al., * * Plaintiffs, * * v. * Civil Action No. 18-cv-10274-ADB * WARNER CHILCOTT PLC et al., * * Defendants. * * *

MEMORANDUM AND ORDER ON DEFENDANTS’ MOTION TO DISMISS BURROUGHS, D.J. Plaintiffs assert that they are the holders, by assignment, of the right to recover for damages that certain Medicare Advantage Organizations (“MAOs”), Independent Practice Associations (“IPAs”), Management Service Organizations (“MSOs”), Health Maintenance Organizations (“HMOs”), and other entities suffered as a result of Defendants’ schemes to increase prescriptions for their pharmaceuticals by bribing doctors, making false efficacy claims, and manipulating the process for obtaining prior authorizations. [ECF No. 28 at 3–4 (“Second Amended Complaint” or “SAC”)]. Plaintiffs bring claims on behalf of two putative classes of entities1 that allegedly incurred costs as a result of Defendants’ violations of the Racketeer

1 Plaintiffs initially purported to represent a class of “[e]ntities that contracted directly with the Centers for Medicare and Medicaid . . . or their assignees pursuant to Medicare Part C, who purchased, paid, provided reimbursement, and/or possess the recover rights to reimbursement, for . . . Defendants’ Subsys . . .” [ECF No. 1 ¶ 290]. Subsys is not among Defendants’ products. Plaintiffs eliminated the reference to Subsys in their First Amended Complaint, and instead asserted a putative class of entities who paid for or hold claims related to the purchase of Warner Chilcott Products. [ECF No. 11 ¶ 213]. In their Second Amended Complaint, Plaintiffs replaced the Warner Chilcott Products class with two classes of entities that incurred costs for “Defendants’ blood glucose test strips.” [SAC ¶¶ 231–33]. Plaintiffs’ counsel acknowledges Influenced and Corrupt Organizations Act (“RICO”) (Count I), 18 U.S.C. §§ 1962(c) and (d), and violations of the consumer protection laws of Idaho, Texas, North Carolina, West Virginia, New York, Massachusetts, Indiana, Florida, Minnesota, and New Jersey (Count II),2 as well as for acts of common law fraud (Count III), and based on unjust enrichment (Count IV). [See SAC ¶¶ 241–473]. Before the Court is Defendants’ motion to dismiss pursuant to Federal Rule

of Civil Procedure 12(b)(6). [ECF No. 31]. For the reasons explained herein, the motion is GRANTED. Plaintiffs’ RICO claim is dismissed with prejudice, and the remaining state law claims are dismissed without prejudice. I. BACKGROUND The following facts are drawn from the Second Amended Complaint, the well-pleaded allegations of which are taken as true for purposes of evaluating Defendants’ motion to dismiss. See Ruivo v. Wells Fargo Bank, N.A., 766 F.3d 87, 90 (1st Cir. 2014). The Complaint spans 115 pages, and this summary is therefore restricted to pertinent facts. Plaintiffs MSP Recovery Claims, Series LLC; MSPA Claims 1, LLC; and MAO-MSO

Recovery II, Series PMPI (collectively “Plaintiffs”) claim to hold, by assignment, the rights to recover damages for fraudulently-submitted prescriptions paid for by numerous MAOs, IPAs, MSOs, HMOs, and other Medicare downstream entities across the United States. [SAC ¶¶ 1–3]. The Second Amended Complaint identifies Fallon Community Health Plan, Inc., SummaCare,

that she forgot to replace the words “blood glucose test strips” with “Warner Products,” and wishes to maintain a class action for damages associated with Defendants’ products. [ECF No. 30 at 1 n.1]. The first putative class includes MAOs and related entities who incurred costs “pursuant to Medicare Part C and D contracts offering Medicare Part D services,” while the second putative class includes “MAO MA-PD, or PDP sponsors and related entities” who incurred costs “pursuant to Medicare Part D contracts.” [SAC ¶¶ 232–33]. 2 Tex. Bus. & Com. Code §§ 17.41 et seq.; N.C. Gen. Stat. § 75-1.1; W.V. Code § 46A-6-101; N.Y. Gen. Bus. Law § 349; Mass. Gen. Laws ch. 93A; Ind. Code § 24-5; Fla. Stat. §§ 501.201 et seq.; Minn. Stat. §§ 325d.43-48, 325f.68 et seq.; N.J. Stat. §§ 56:8-1 et seq. Inc., Interamerican Medical Center Group, LLC, and Preferred Medical Plan, Inc. (collectively, “Assignors”) as entities that assigned claims “whether based in contract, tort, [or] statutory right” to MSP Recovery LLC. [Id. ¶¶ A1–A4].3 The Assignors allegedly incurred costs for Warner Chilcott Products pursuant to agreements with the Centers for Medicare and Medicaid Services (“CMS”) or agreements with non-government entities that had taken on the risk of

pharmaceutical costs from CMS. [Id. ¶¶ 26, 36; see also ECF No. 33 at 15]. Defendants Warner Chilcott PLC, Warner Chilcott Sales (US), LLC (together, “Warner Chilcott”), Allergan USA, Inc., Allergan Sales, LLC, Allergan GI, Corp., and Allergan plc (collectively, “Defendants”)4 are companies engaged in the discovery, development, manufacturing, marketing, and/or distribution of parametrical products in the United States and abroad. [SAC ¶¶ 4–11]. Defendants engaged in illegal schemes to increase purchases of their products, including Actonel, Atelvia, Asacol (400 mg), Asacol HD, Doryx, Enablex, Estrace Cream, Loestrin, and Lo Loestrin products (collectively, “Warner Chilcott Products”). [Id. at 3– 4]. Actonel and Atelvia are osteoporosis drugs, [id. ¶ 95]; Asacol HD treats moderately active

ulcerative colitis, which is a bowel disease, [id. ¶ 77]; Doryx treats certain bacterial infections and is used to prevent malaria, [id. ¶ 116]; Enablex treats overactive bladder, [id. ¶ 124]; Estrace Cream treats certain vaginal conditions, [id. ¶ 81]; and Loestrin and Lo Loestrin are contraceptives, [id. ¶ 81].

3 Defendants have altered the asserted assignors through amendments without corresponding updates to their assertions and the exhibits. [See ECF No. 1-2; ECF No. 11 ¶¶ A1–77]. It is not clear that MSP Recovery’s contract with Interamerican Medical Center Group, LLC includes this language, [see ECF No. 34 at 16–28], but the Court does not reach questions concerning the scope of the assignments. 4 Plaintiffs also brought claims against Warner Chilcott Corporation, Warner Chilcott (US), LLC, and Actavis Pharma, Inc. Those entities (or former entities) have not appeared under those names. According to the Second Amended Complaint, Actavis acquired Warner Chilcott and Allergan, Inc., and has renamed itself Allergan. [SAC ¶ 4]. Warner Chilcott utilized three schemes to promote prescription of its drugs: (1) kickbacks through its Medical Education, or “MedEd,” events and other gifts to reward and encourage the prescribing of Warner Chilcott Products; (2) manipulation of prior authorizations for Atelvia and Actonel, and (3) fraudulent promotion of Actonel as “clinically superior” to generics. [Id. ¶¶ 65– 195]. Plaintiffs claim that Warner Chilcott engaged in these schemes to increase prescriptions of

Warner Chilcott Products for both approved uses and unapproved or “off-label” uses. [Id. ¶¶ 40– 50, 80, 115, 161, 177]; see 21 U.S.C. §355(a). On March 30, 2011, two former employees of Warner Chilcott, James Goan and Lisa Alexander, filed a False Claims Act qui tam action on behalf of the United States as relators. See Complaint, United States ex rel. Alexander v. Warner Chilcott PLC, No. 11-cv-10545-RGS (D. Mass. Mar.

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