Express Scripts 2011 Annual Report Download - page 35

Express Scripts 2011 Annual Report 33
Item 3 – Legal Proceedings
We and/or our subsidiaries are defendants in a number of lawsuits. We cannot ascertain with any certainty at this
time the monetary damages or injunctive relief that any of the plaintiffs may recover. We also cannot provide any
assurance that the outcome of any of these matters, or some number of them in the aggregate, will not be materially adverse
to our financial condition, consolidated results of operations, cash flows or business prospects. In addition, the expenses of
defending these cases may have a material adverse effect on our financial results.
These matters are:
Multi-District Litigation - On April 29, 2005, the Judicial Panel on Multi-District Litigation transferred a number
of previously disclosed cases to the Eastern District of Missouri for coordinated or consolidated pretrial
proceedings, including the following remaining cases: Lynch v. National Prescription Administrators, et al. (Case
No. 03 CV 1303, United States District Court for the Southern District of New York) (filed February 26, 2003);
Wagner et al. v. Express Scripts (Case No.04cv01018 (WHP), United States District Court for the Southern
District of New York) (filed December 31, 2003); Scheuerman, et al v. Express Scripts (Case No.04-CV-0626
(FIS) (RFT), United States District Court for the Southern District of New York) (filed April 27, 2004);
Correction Officers' Benevolent Association of the City of New York, et al. v. Express Scripts, Inc. (Case No.04-
Civ-7098 (WHP), United States District Court for the Southern District of New York) (filed August 5, 2004);
1978 Retired Construction Workers Benefit Plan (Nagle) v. Express Scripts, Inc. (Civil Action No. 4:06-CV01156
for the United States District Court Eastern District of Missouri) (filed August 1, 2006); Fulton Fish Market
Welfare Fund (Circillo) v. Express Scripts, Inc. (Civil Action No. 4:06-cv-01458 for United States District Court
for the Eastern District of Missouri) (filed October 3, 2006); Philadelphia Corporation for the Aging v. Benecard
Services, Inc., et al. (Civil Action No. 06CV2331 for the United States District Court Eastern District of
Pennsylvania) (filed June 2, 2006); Local 153 Health Fund, et al. v. Express Scripts Inc. and ESI Mail Pharmacy
Service, Inc. (Case No.B05-1004036, United States District Court for the Eastern 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), United States District Court for the Northern District of New York) (filed February 18, 2008) .
Under these cases, the plaintiffs assert that certain of our business practices, including those relating to our
contracts with pharmaceutical manufacturers for retrospective discounts on pharmaceuticals and those related to
our retail pharmacy network contracts, constitute violations of various legal obligations including fiduciary duties
under the Federal Employee Retirement Income Security Act (ERISA), common law fiduciary duties, state
common law, state consumer protection statutes, breach of contract, and deceptive trade practices. The putative
classes consist of both ERISA and non-ERISA health benefit plans as well as beneficiaries. The various
complaints seek money damages and injunctive relief. On July 30, 2008, the plaintiffs’ motion for class
certification of certain of the ERISA plans for which we were the PBM was denied by the Court in its
entirety. Additionally, the Company’s motion for partial summary judgment on the issue of our ERISA fiduciary
status was granted in part in Minshew v. Express Scripts, Inc., et al. (No. 4:02-cv-1503-HEA, United States
District Court for the Eastern District of Missouri) (filed December 12, 2001), which was subsequently dismissed
on July 21, 2011. The Court found that the Company was not an 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 rebates before the payment of the contracted client share. The Court, in
partially granting plaintiffs’ motion for summary judgment, found that the Company was an ERISA fiduciary only
with respect to the calculation of certain amounts due to clients under a therapeutic substitution program that is no
longer in effect. On December 18, 2009, ESI filed a motion for partial summary judgment on the remaining
ERISA claims and breach of contract claims on the cases brought against ESI on behalf of ERISA plans. On
February 16, 2010, in accordance with the schedule under the case management order, plaintiffs in the Correction
Officers and Lynch matters filed a motion for summary judgment alleging that National Prescription
Administrators (NPA) was a fiduciary to the plaintiffs and breached its fiduciary duty. Plaintiffs also filed a class
certification motion on behalf of self-funded non-ERISA plans residing in New York, New Jersey, and
Pennsylvania for which NPA was the PBM and which used the NPASelect Formulary from January 1, 1996
through April 13, 2002. On July 2, 2010, ESI filed a motion for partial summary judgment as to certain non-
ERISA claims being made in various cases. On January 28, 2011, NPA filed a cross motion for summary
judgment seeking a ruling that it was not a fiduciary under common law. We are awaiting the court’s ruling on
these pending motions.
Jerry Beeman, et al. v. Caremark, et al. (Case No.021327, United States District Court for the Central District of
California). On December 12, 2002, a complaint was filed against ESI and NextRX LLC f/k/a Anthem
Prescription Management LLC and several other pharmacy benefit management companies. The complaint, filed
by several California pharmacies as a putative class action, alleges rights to sue as a private attorney general under