UnitedHealthcare Insurance Company v. Regeneron Pharmaceuticals, Inc.

District Court, S.D. New York·Decided December 29, 2021·No. 7:20-cv-10664·Unknown

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------x UNITEDHEALTHCARE INSURANCE : COMPANY and UNITED HEALTHCARE : SERVICES, INC., : OPINION AND ORDER Plaintiffs, :

v. : 20 CV 10664 (VB) : REGENERON PHARMACEUTICALS, INC., : Defendant. : --------------------------------------------------------------x HUMANA INC., : Plaintiffs, : v. : 21 CV 6245 (VB) : REGENERON PHARMACEUTICALS, INC., : Defendant. : --------------------------------------------------------------x Briccetti, J.: Plaintiffs UnitedHealthcare Insurance Company and United Healthcare Services, Inc. (together, “United”), bring an action against defendant Regeneron Pharmaceuticals, Inc. (“Regeneron”), alleging Regeneron engaged in an illegal kickback scheme to promote a drug it manufactures called EYLEA. Plaintiff Humana Inc. (“Humana”) brings a separate action against Regeneron, making the same allegations. Now pending are Regeneron’s motions to dismiss or, in the alternative, to stay both actions pending resolution of United States v. Regeneron Pharmaceuticals, Inc., No. 20cv11217 (D. Mass. filed June 24, 2020) (the “DOJ Action”). (United Doc. #32; Humana Doc. #20).1 Although these cases are not formally consolidated, because Regeneron’s motions raise the same issues, the Court will address the motions together in the interest of judicial economy.

1 This Opinion and Order references filings in the United case by (United Doc. #__), in the Humana case by (Humana Doc. #__), and in the DOJ Action by (DOJ Doc. #__). For the following reasons, the motions to stay are GRANTED, and the motions to dismiss are TERMINATED without prejudice to refiling when the stays in these cases are lifted. The Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1332. BACKGROUND

Regeneron manufactures EYLEA, a drug that treats neovascular, or “wet,” age-related macular degeneration. EYLEA is administered by injection, and plaintiffs allege EYLEA must be administered “indefinitely” to be effective. (United Doc. #29 (“United Am. Compl.) ¶¶ 28, 31; Humana Doc. #1 (“Humana Compl.”) ¶¶ 21, 23). Plaintiffs insure and administer Medicare Advantage plans, also called Medicare Part C plans. Medicare is federally funded health insurance for seniors and people with certain disabilities, and Medicare Advantage plans “are offered by Medicare-approved private companies that must follow rules set by Medicare.” How Do Medicare Advantage Plans Work?, Medicare.gov, https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health- plans/medicare-advantage-plans/how-do-medicare-advantage-plans-work (last visited Dec. 28,

2021). Plaintiffs allege that, under Medicare rules, healthcare providers who submit claims to Medicare must “certify that each claim complies with all Medicare and/or Medicaid laws, regulations, and program instructions for payment including but not limited to the Federal anti- kickback statute.” (United Am. Compl. ¶ 60; Humana Compl. ¶ 48). Plaintiffs also contend it is a violation of the federal anti-kickback statute for a drug manufacturer to waive a Medicare enrollee’s cost-sharing obligations, that is, his or her “premiums, deductibles, co-pays, or co- insurance.” (United Am. Compl. ¶ 56). Plaintiffs allege Regeneron engaged in a years-long kickback scheme to promote EYLEA. Namely, plaintiffs allege Regeneron effectively waived patients’ co-pays for EYLEA via coordinated donations to a purportedly independent charity, the Chronic Disease Fund (“CDF”), that, in turn, provided grants to patients specifically to cover EYLEA co-pays in violation of the federal anti-kickback statute. Plaintiffs further allege Regeneron worked with a consulting firm, the Lash Group, to establish the “EYLEA4U program,” which publicized and

administered the grants offered by the CDF. According to plaintiffs, Regeneron’s conduct was designed to make EYLEA more attractive to patients than competitor drugs, even though it “is neither the most effective . . . drug, nor the least expensive.” (United Am. Compl. ¶¶ 30–38; accord Humana Compl. ¶¶ 23–27). In addition, plaintiffs allege Regeneron knew it was violating the federal anti-kickback statute and concealed its conduct from the public, as well as from plaintiffs. On June 24, 2020, the United States commenced the DOJ Action against Regeneron in the U.S. District Court for the District of Massachusetts, alleging Regeneron engaged in a kickback scheme to promote EYLEA in violation of the False Claims Act. (DOJ Doc. #1). Fact discovery closes in the DOJ Action on February 21, 2022, and expert discovery closes on July

14, 2022. (DOJ Doc. #99). United commenced its action against Regeneron in this District on December 17, 2020. United asserts Regeneron’s kickback scheme “tainted all or most of the claims submitted to United’s Medicare plans for EYLEA from 2013” onwards, amounting to fraud upon United and tortious interference with its Medicare Advantage insurance policies. (United Am. Compl. ¶ 235). United further contends that, by concealing the kickbacks, Regeneron was engaged in a racketeering scheme and deceptive business practices. The first amended and operative complaint was filed on March 25, 2021, asserting claims for fraud, fraudulent concealment, tortious interference with contract, aiding and abetting tortious conduct, federal civil RICO violations, conspiracy to commit federal civil RICO, unjust enrichment, and violations of state consumer-protection laws. Regeneron thereafter moved to dismiss or, in the alternative, stay the action pending resolution of the DOJ Action. Humana commenced its action against Regeneron in this District on July 22, 2021,

making the same allegations and asserting the same claims, as well as violations of state insurance-fraud law. Regeneron again moved to dismiss or, in the alternative, stay the action pending resolution of the DOJ Action. Discovery has not begun in either case. DISCUSSION I. Legal Standard “[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). To that end, courts have discretion to stay civil proceedings to “simplify the issues to be tried” and “promote economy of effort for all concerned.” Schiff v. Metzner, 331 F.2d 963, 964–65 (2d Cir. 1964).2

The party seeking a stay “bears the burden of establishing its need.” Clinton v. Jones, 520 U.S. 681, 708 (1997). Courts in this circuit generally consider the following five factors in deciding whether a stay is appropriate: (1) the private interests of the plaintiffs in proceeding expeditiously with the civil litigation as balanced against the prejudice to the plaintiffs if delayed; (2) the private interests of and burden on the defendants; (3) the interests of the courts; (4) the interests of persons not parties to the civil litigation; and (5) the public interest.

2 Unless otherwise indicated, case quotations omit all internal citations, quotation marks, footnotes, and alterations. Kappel v. Comfort, 914 F. Supp. 1056, 1058 (S.D.N.Y. 1996). When “it is efficient for a trial court’s docket and the fairest course for the parties, a stay is proper, even in cases where the issues in [other pending] proceedings are not necessarily controlling on the action before the court.” Sikhs for Just. v.

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UnitedHealthcare Insurance Company v. Regeneron Pharmaceuticals, Inc., (S.D.N.Y. 2021).

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