State of West Virginia ex rel. Mark A. Hunt v. CaremarkPCS Health, L.L.C.

140 F.4th 188
Court of Appeals for the Fourth Circuit·Decided June 12, 2025·No. 24-1924·Published·Cited by 3 cases

Opinion

PUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 24-1924

STATE OF WEST VIRGINIA EX REL. MARK A. HUNT, In his capacity as Auditor,

Plaintiff – Appellee,

v.

CAREMARKPCS HEALTH, L.L.C., Defendant – Appellant,

and

ELI LILLY AND COMPANY; NOVO NORDISK INC.; SANOFI-AVENTIS U.S., LLC; EVERNORTH HEALTH, INC., f/k/a Express Scripts Holding Company; EXPRESS SCRIPTS, INC.; EXPRESS SCRIPTS ADMINISTRATORS, LLC; MEDCO HEALTH SOLUTIONS, INC.; ESI MAIL PHARMACY SERVICES, INC.; EXPRESS SCRIPTS PHARMACY, INC.; CVS HEALTH CORPORATION; CVS PHARMACY, INC.; CAREMARK RX, L.L.C.; CAREMARK, L.L.C.; UNITEDHEALTH GROUP, INC.; OPTUM, INC.; OPTUMRX, INC.; OPTUMINSIGHT, INC.,

Defendants.

Appeal from the United States District Court for the Northern District of West Virginia, at Wheeling. John Preston Bailey, District Judge. (5:24-cv-00143-JPB)

Argued: May 9, 2025 Decided: June 12, 2025

Before NIEMEYER, AGEE and THACKER, Circuit Judges.

Reversed by published opinion. Judge Agee wrote the opinion in which Judge Niemeyer and Judge Thacker joined.

ARGUED: Adam Joshua Podoll, WILLIAMS & CONNOLLY LLP, Washington, D.C., for Appellant. Anthony J. Majestro, POWELL & MAJESTRO, PLLC, Charleston, West Virginia, for Appellee. ON BRIEF: Steven R. Ruby, Raymond S. Franks II, Jordan Damron, CAREY DOUGLAS KESSLER & RUBY PLLC, Charleston, West Virginia; Enu Mainigi, Craig D. Singer, R. Kennon Poteat III, WILLIAMS & CONNOLLY LLP, Washington, D.C., for Appellant. Christina L. Smith, POWELL & MAJESTRO PLLC, Charleston, West Virginia, for Appellee.

AGEE, Circuit Judge:

Some States have raised complaints in recent years that the price of diabetes medication has increased exponentially for no lawful reason. West Virginia is the latest to file a complaint bringing only state law claims in state court against (among other defendants) CaremarkPCS Health, LLC, a pharmacy benefit manager (“PBM”), for allegedly driving up the cost of insulin through unlawful means. This appeal asks whether Caremark may remove such a suit to federal court under 28 U.S.C. § 1442(a)(1), the federal officer removal statute, based on its assertions that the conduct for which it is being sued— negotiating rebates—encompasses work it did for the United States. The district court here found that removal was unwarranted and remanded the suit to state court.

We are the third court of appeals to address some variation of this question. The first two sided with Caremark—the First Circuit in Government of Puerto Rico v. Express Scripts, Inc., 119 F.4th 174 (1st Cir. 2024), and the Ninth Circuit in California v. CaremarkPCS Health LLC, Nos. 23-55597, 23-55599, 2024 WL 3770326 (9th Cir. Aug. 13, 2024) (unpublished but argued). West Virginia does not attempt to distinguish these cases, but simply argues that they depart from Fourth Circuit law. Not so. Those decisions align with our federal officer removal jurisprudence, so we join our sister circuits in their sound reasoning.

In short, West Virginia’s complaint is connected to Caremark’s federal work such that its purely state law gloss and mid-litigation disclaimers do not preclude removal under § 1442(a)(1). And because Caremark has established that it is entitled to federal officer

removal on the present complaint, we reverse the district court’s remand decision and return this case to the district court for further proceedings.

I.

West Virginia 1 sued Caremark 2 in state court for its role in an alleged scheme to increase the price of insulin to the state’s detriment through its payment of health care benefits for state employees. Caremark is a PBM that “work[s] in concert” with drug manufacturers “to dictate the availability and price of [insulin] for most of the U.S. market” by “establish[ing] national formulary offerings (i.e., approved drug lists) that . . . set the baseline for which diabetes medications are covered and which are not.” J.A. 39–40. The formularies drive drug supply and demand nationwide, so PBMs allegedly “wield enormous influence over drug prices.” J.A. 40. Manufacturers pay rebates and other fees to PBMs like Caremark, which keep a portion of them before passing the rest off to health insurance plans. Among those plans are those that cover West Virginia state employees.

1

John B. McCuskey filed the suit in his capacity as West Virginia’s State Auditor on behalf of the state. While this appeal was pending, Mark Hunt was elected to and assumed the same office.

2

Other Defendants include numerous other PBMs and drug manufacturers. We refer only to Caremark because it is the party that removed the case and is the appellant currently before us. A single defendant may unilaterally remove a complaint under § 1442(a)(1). Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1253 (9th Cir. 2006); see 14C Charles Alan Wright & Arthur D. Miller, Federal Practice and Procedure § 3726 (4th ed. 2024) (“Removal . . . is possible [under § 1442] despite the fact that none of the other defendants in the action join in the removal notice.”). So when we discuss removal, we focus on Caremark only.

West Virginia alleges that it was overcharged for insulin due to Caremark and the other defendants’ alleged scheme. According to the state, PBMs like Caremark and the drug manufacturers engaged in “opaque and undisclosed dealings,” including “rebate negotiations,” that resulted in “agreements” that “caused . . . precipitous price increases for” insulin. J.A. 47; J.A. 129; J.A. 148. The complaint brings four state-law claims against Caremark which are as follows: (1) civil conspiracy; (2) unjust enrichment; (3) fraud; and (4) breach of contract. It was filed in the Circuit Court of Marshall County, West Virginia.

Caremark removed the complaint to the Northern District of West Virginia under the federal officer removal statute, asserting that West Virginia’s “sweeping allegations challenge conduct that Caremark . . . carries out under a federal officer.” J.A. 12. The basis of Caremark’s removal theory is that it negotiates rebates with manufacturers of insulin and other drugs jointly on behalf of all its clients. Those clients include federal clients, whose plans are governed by the Federal Employees Health Benefits Act (“FEHBA”). FEHBA, in turn, deputizes the Office of Personnel Management (“OPM”) to administer FEHBA, and authorizes OPM to contract with private carriers for federal employees’ benefits. OPM’s agreements with these carriers are governed by a standard FEHBA contract, which explicitly “contemplates that contracts between PBMs and FEHBA carriers will include” payments to include “rebates.” J.A. 14. Those rebates are subject to “various requirements on FEHBA carriers and PBMs” imposed by OPM. J.A. 14; see J.A. 14–17 (listing these requirements). When Caremark conducts rebate negotiations with manufacturers, it does so at one time on behalf of all its clients—federal, state, and private alike. Therefore, Caremark alleges, West Virginia’s challenge to its conduct in rebate

negotiations is necessarily a challenge to conduct it undertook for FEHBA carriers, which was governed by OPM.

West Virginia moved to remand the case to state court. It argued that it “[wa]s not seeking relief relating to any federal program or any contract related to a federal program,” and in fact “expressly disclaim[ed] any federal claims.” J.A. 347.

The district court granted West Virginia’s motion on two grounds. It first found that Caremark failed to satisfy any of the elements required for federal officer removal under § 1442(a)(1). Alternatively, it found federal officer removal improper because West Virginia “disclaimed any cause of action or remedy under federal law.” West Virginia ex rel. McCuskey v. Eli Lilly & Co., No. 5:24-cv-143, 2024 WL 4357749, at *8 (N.D. W. Va. Sept. 6, 2024).

Caremark timely appealed the district court’s remand decision, and we have jurisdiction to review it under 28 U.S.C. § 1447(d).

II.

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State of West Virginia ex rel. Mark A. Hunt v. CaremarkPCS Health, L.L.C., 140 F.4th 188 (4th Cir. 2025).

140 F.4th 188 (State of West Virginia ex rel. Mark A. Hunt v. CaremarkPCS Health, L.L.C.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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