Express Scripts 2009 Annual Report Download - page 41

Express Scripts 2009 Annual Report
39
Item
3
-
L
egal Proceeding
s
W
e and/or our subsidiaries are defendant
s
in a n
u
m
be
r
o
f la
wsu
it
s.
W
e cannot ascertain with any certainty at this
t
ime the monetary damages or injunctive relief that any of the p
l
aintiffs may recover
.
We
al
so
c
annot provide an
y
assurance that the outcome of any of these matters, or some numbe
r
o
f them in the aggregate, will not be materially adverse
t
o our financial condition, consolidated results of operations, cash flows or business prospects. In addition, the expenses
of
defending these cases may have a material a
dve
r
se
effec
t
o
n
our
finan
c
ial r
esu
lt
s.
Th
ese
matt
e
r
s
ar
e:
M
u
lti
-
District Litigation
-
The
J
udicial Panel on Multi
-
District Litigation on April 29, 2005 transferred a numbe
r
o
f previously disclosed cases to the Eastern District of Missouri for coordinated or consolidated pretrial
proceedings including the following:
Minshew v. Express Sc
ripts
(
Case No.Civ.4:0
2
-
CV
-
1503
,
United States
District Court for the Eastern District of Missouri
)
(
filed December 12, 2001
)
;
Lynch v. National Prescription
Administrators, et al.
(
Case No
.
03 CV 1303
,
United States District Court for the Southern Distric
t
of New York
)
(filed February 26, 2003);
Mixon v. Express Scripts, Inc.
(
Civil Action No. 4:03CV1519, United States District
C
ourt for the Eastern District of Missouri
)
(
filed October 23, 2003
)
;
Wagner et al. v. Express Scripts
(
Case
No.04cv01018
(
WHP
)
,
U
n
ited States District Court for the Southern District of New York
)
(
filed December 31,
2003
)
;
Scheuerman, et al v. Express Scripts
(
Case No.0
4
-
CV
-
0626
(
FIS
)
(
RFT
)
, United States District Court fo
r
t
he Southern District of New York) (filed April 27, 2004);
C
orrection
O
fficers' Benevolent Association of the
City of New York, et al. v. Express Scripts, Inc.
(
Case No.0
4
-
C
i
v
-
7098
(
WHP
)
, United States District Court fo
r
t
he Southern District of New York) (filed August 5, 2004);
U
nited Food and
C
ommercial
W
orkers
U
nions and
Employers Midwest Health Benefits Fund, et al v. National Prescription Administrators, Inc., et al.
(
Case No.0
4
-
CV
-
7472, United States District Court for the Southern District of New York) (filed September 21, 2004);
C
entral
Laborers'
W
elfare Fu
nd, et al v. Express Scripts, Inc., et al
(
Case No.B0
4
-
1002240
,
United States District Court
for the Southern District of Illinois) (filed September 27, 2004);
New England Health Care Employees Welfare
F
u
n
d
(Brown)
v. Express Scripts, Inc.
(
Case No.4:0
5
-
c
v
-
1081
,
United States District Court for the Easter
n
District of Missouri
)
(
filed October 28, 2004
)
;
Local 153 Health Fund, et al. v. Express Scripts Inc. and ESI Mail
Pharmacy Service, Inc.
(
Case No.B0
5
-
1004036
,
United States District Court for the Easte
r
n
District of Missouri
)
(filed May 27, 2005
)
;
and
Brynien, et al. v. Express Scripts, Inc. and ESI Mail Services, Inc.
(
Case No. 1
:
08
-
cv
-
323
(
GLS/DRH
)
,
U
nited States District Court for the Northern District of New York) (filed February 18, 2008)
w
a
s
tran
s
f
e
rr
ed
in 2008
.
The plaintiffs assert that certain of our business practices, including those relating to ou
r
c
ontracts with pharmaceutical manufacturers for retrospective discounts on pharmaceuticals and those related to
o
ur retail pharmacy network cont
r
acts
,
constitute violation
s
o
f various legal obligation
s
i
ncluding fiduciary duties
under the Federal Employee Retirement Income Security Act (ERISA), common law fiduciary duties, state
c
ommon law, state consumer protection statutes, breach of contract, a
n
d deceptive trade practices. The putative
c
la
sses
co
n
s
i
s
t
o
f
bo
th ERI
S
A and no
n
-
ERISA health benefit plans as well as beneficiaries. The various
c
omplaints seek money damages and injunctive relief. On July 30, 2008, the plaintiffs’ motion for class
ce
rt
i
fication of certain of the ERISA plans for which we were the PBM was denied by the Court in its
entirety
.
A
dditionally, the Company’s motion for partial summary judgment in the Min
s
h
ew
an
d
B
r
own
c
a
ses
on
t
he issue of our ERISA fiduciary status was grant
e
d in part
.
The Court found that the Company was not a
n
ERISA fiduciary with respect to MAC (generic drug) pricing, selecting the source for AWP (Average Wholesale
Price) pricing, establishing formularies and negotiating rebates, or interest earned on reba
t
es before the payment
o
f th
e
co
ntra
c
t
ed
c
li
e
nt
s
har
e.
The Court, in partially granting plaintiffs’ motion for summary judgment, found
t
hat the Company was an ERISA fiduciary only with respect to the calculation of certain amounts due to clients
u
n
de
r a t
h
erapeutic substitution program that is no longer in effect. On December 18, 2009, ESI filed a motion fo
r
partial summary judgment on the remaining ERISA claims and breach of contract claims on the cases brought
against ESI on behalf of ERISA plans. We a
r
e awaiting the Court’s decision on this motion. On February 16,
2010
,
i
n accordance with the schedule under the case management order, Plaintiff
s
in th
e
C
orrection
O
fficer
s
an
d
Lynch
m
atters filed a motion for summary judgment alleging that National Pre
s
c
ription Administrators (NPA)
was a fiduciary to the Plaintiffs and breached its fiduciary duty. Plaintiffs also filed a class certification motion o
n
behalf of self
-
ff
f
u
n
ded
n
on
-
ERISA plans residing in New York, New Jersey, and Pennsylvania f
o
r
w
hi
c
h NPA
w
a
s
PBM and which used the NPASelect Formulary from January 1, 1996 through April 13, 2002
.
Jerry Beeman, et al. v. Caremark, et al.
(
Case No.021327, United States District Court for the Central District of
C
alifornia). On December 12, 2002, a complaint was filed against E
S
I and NextRX LL
C
f/k/a Anthe
m
Prescription Management LLC and
s
everal other pharmacy benefit management companies. The complaint, filed
by several California pharmacies as a putative class action, alleges rights to sue as a private atto
r
ney general unde
r
C
alifornia law. The complaint alleges that we, and the other defendants, failed to comply with statutor
y
o
bligations under California Civil Code Section 2527 to provide our California clients with the results of a bi
-