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Feldman's Medical Center Pharmacy, Inc. v. CareFirst, Inc.

United States District Court, Fourth Circuit

August 7, 2013

CAREFIRST, INC., et al., Defendants.


William D. Quarles, Jr., United States District Judge.

Feldman's Medical Center Pharmacy, Inc. ("Feldman's") and Pharmacy Management Associates, LLC ("PMA") (collectively, the "Plaintiffs") sued CareFirst, Inc. ("CareFirst") and others (collectively, the "Defendants")[1] in the Circuit Court for Baltimore City, Maryland, alleging intentional interference with economic relations and other state claims. Independence and QCC removed the lawsuit to this Court, arguing that the Plaintiffs' claims were completely preempted by the Employee Retirement Income Security Act of 1974 ("ERISA")[2]. Feldman's Med. Ctr. Pharmacy, Inc. v. CareFirst, Inc., No. WDQ-12-0613, 902 F.Supp.2d 771, 779 (D. Md. 2012). This Court disagreed and, on October 5, 2012, remanded the action. Id. at 783. On October 31, 2012, the Association filed a second notice of removal. ECF No. 1. No hearing is necessary. See Local Rule 105.6 (D. Md. 2011). For the following reasons, the Plaintiffs' motion to remand will be granted, their motion for sanctions will be denied, and the action--and all other pending motions--will be remanded to the Circuit Court for Baltimore City. .

I. Background[3]

A. Factual Background

The Defendants are health insurers. See Am. Compl. ¶¶ 3-6, 76. The Association is a national federation that licenses 39 locally operated Blue Cross and Blue Shield companies, including CareFirst, a Maryland corporation, and Independence, a Pennsylvania corporation. Id. ¶¶ 4-6, 76.[4] QCC, a Pennsylvania corporation, is a wholly-owned subsidiary of Independence. Id. ¶ 6.

Feldman's is a Maryland corporation. Am. Compl. ¶ 1. In the 1970s, it began operating a retail pharmacy that dispensed specialty drugs. Id. ¶¶ 1, 35, 69.[5]Feldman's regularly submitted reimbursement claims to CareFirst for the drugs that it dispensed to patients insured by CareFirst and Independence. Id. ¶ 69.[6]

In October 2007, PMA, a Maryland limited liability company, purchased Feldman's. Am. Compl. ¶¶ 2, 60. The pharmacy became "increasingly focused" on dispensing specialty drugs to treat hemophilia, [7] such as synthetic factors that aid in blood clotting. See Id . ¶¶ 14, 36, 52. Synthetic factors, which are injected into the bloodstream, cost "tens of thousands of dollars a month" because of the "time it takes to manufacture the drugs, the small number of hemophilia patients in the United States, and the frequency of the required injection treatments." Id. ¶ 14.[8]

Before dispensing factor drugs to CareFirst patients, Feldman's "checked the patients' benefits" and "received [an oral] precertification for the prescription from CareFirst." Am. Compl. ¶ 315. Feldman's began "submitting [reimbursement] claims for relatively large numbers of hemophilia patients" as its "business grew substantially in a short . . . time." Id. ¶¶ 71, 128.

Sometime after PMA acquired Feldman's, CareFirst stopped paying the pharmacy's reimbursement claims.[9] On October 26, 2007, Calvin Sneed, an antifraud consultant for the Association, asked the Association's antifraud managers to contact the Association's licensee in Louisiana with any information about "exposure to" FCS Pharmacy ("FCS"), which is affiliated with PMA. Am. Compl. ¶¶ 147-48. After Sneed's October 2007 request, the Association and the special investigation units of its licensees formed a "strike force" to coordinate their investigations of FCS and other pharmacies dispensing synthetic factors. Id. ¶ 150. On December 5, 2007, CareFirst investigator Jaime Hanson emailed another investigator about CareFirst's "serious exposure" to FCS that "warrant[ed] investigation." Id. ¶ 151 (internal quotation marks omitted).

On February 6, 2008, Sneed coordinated a conference call for medical directors of the Association's licensees. Am. Compl. ¶ 154. Before the conference call, Sneed distributed a memorandum about "whether it was possible to establish coverage and/or payment restrictions on [f]actor drugs due to the high cost of such drugs." Id. On February 12, 2008, Sneed asked all Association licensees for "data relating to the amount of payments made to pharmacies dispensing [synthetic factor]." Id. ¶ 157. The request "specifically excluded patients who received factor[s] from large, national[, ] or institutional providers." Id.

CareFirst "regularly" told other Association licensees and law enforcement officials that Feldman's was committing fraud. Am. Compl. ¶ 186. The Food and Drug Administration (the "FDA") investigated allegations by the Association and its licensees that Feldman's was "dispensing more [f]actor medicine than a patient needed" and diverting it to a gray market[10] where Feldman's sold the medicine for cash. Id. ¶¶ 190-94.

On February 20, 2008, the FDA closed its investigation after finding "no evidence of the suspected diversion." Am. Compl. ¶ 196. CareFirst continued to assert that Feldman's was diverting synthetic factors to the gray market, and denied payments to Feldman's. Id. ¶¶ 197.

On March 13, 2008, CareFirst's pharmacy director, Winston Wong, told CareFirst's antifraud investigators that the company "had not found any real problems with Feldman's." Am. Comp. ¶ 160.

In April 2008, the National Health Care Antifraud Association hosted its annual pharmacy conference, where an agent with the Federal Bureau of Investigation ("FBI") asked anyone "dealing with hemophiliacs to contact him." Am. Compl. ¶ 162. Hanson, CareFirst's investigator, attended the conference and contacted the FBI agent. Id. "[T]he FBI was not impressed with [Hanson's] information, " and "never pursued a formal investigation of Feldman's." Id. ¶ 163.

On June 2, 2008, Independence asked Feldman's for "information and documents, " and thereafter stopped paying Feldman's claims. Am. Compl. ¶ 108.

On June 19, 2008, CareFirst "officially" opened an investigation of Feldman's. Am. Compl. ¶ 164. CareFirst, Independence, and the Association interviewed "numerous" Feldman's employees and patients, and advised patients to "consider a switch" to pharmacy services operated by CareFirst's pharmacy benefit managers. Id. ¶¶ 261, 263.[11] Many patients left Feldman's. Id. ¶ 264.

On June 26, 2008, CareFirst investigators conducted an on-site audit of Feldman's. Am. Compl. ¶ 169. Although the audit revealed no wrongdoing, CareFirst put a "hold" on all claims for reimbursement. Id. ¶ 170. CareFirst did not inform Feldman's of the hold, but advised other Association licensees not to pay Feldman's. Id. ¶¶ 177, 319. On "numerous occasions, " CareFirst told Independence that it was denying claims because Feldman's had "improper licensure." Id. ¶ 178.

On August 21, 2008, CareFirst refused to renew its contract with Feldman's because it lacked a Residential Service Agency license (an "RSA license"). Am. Compl. ¶ 233. An RSA license is required under Maryland law to provide health care services in a patient's home. See id. ¶ 219. On August 22, 2008, a PMA employee emailed CareFirst to explain that Feldman's did not provide services in patients' homes and, thus, did not require an RSA license. Id. ¶ 234. CareFirst continued to give Feldman's precertification for factor medicine claims, but denied reimbursement claims. See Id . ¶¶ 240, 317-18.

On October 6, 2008, Hanson sent an email to CareFirst colleagues about Sneed "talking to FDA and FBI agents in Texas [about] a possible diversion case." Am. Compl. ¶ 198. On October 29, 2008, representatives of Sneed, CareFirst, and Independence attended a strike force meeting in Pennsylvania. Id. ¶ 182.[12]

On December 11, 2008, Feldman's obtained an RSA license because of "CareFirst's insistence, " but CareFirst continued to deny reimbursement claims. Am. Compl. ¶¶ 236-37, 240.

On February 12, 2 009, Hanson told Independence investigators that Feldman's lacked the proper license for dispensing factor drugs. Am. Compl. ¶ 298. On February 13, 2009, Independence told Feldman's that it had been rejecting claims because of CareFirst's determination that Feldman's "did not have the appropriate licensing." Id. ¶ 108. Independence told other Association licensees that Feldman's lacked necessary licenses. Id. ¶ 227.

On March 25, 2009, Hanson wrote a memo to Stacy Breiden-stein, CareFirst's associate director of network management, requesting that CareFirst investigators "be included in the decision whether to extend a new contract to Feldman's." Am. Compl. ¶ 214. Hanson cited "'possible diversion' as the reason for the scrutiny." Id.

On April 30, 2009, Hanson told Sneed in an email that "CareFirst had decided not to offer Feldman's a new contract and . . . was just looking for the strongest ex post justification for its denial." Am. Compl. ¶ 215.

After PMA acquired Feldman's, accounts receivable "ballooned" from $430, 000 to more than $3 million. Am. Compl. ¶ 252. In March 2009, Feldman's "began to wind down its business." Am. Compl. ¶ 72. On April 16, 2009, Hanson told other Association licensees during a conference call that Feldman's was "a problem company." Am. Compl. ¶¶ 304-05.

By July 2009, accounts receivable at Feldman's had grown to $3.95 million, and Feldman's defaulted on its bank loans. Am. Compl. ΒΆ 252. On August 7, 2009, Hanson told an investigator with the Association's Louisiana licensee that Feldman's had filed for bankruptcy. ...

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