United States District Court, D. Maryland
Chemist Corner, Inc.
Epic Pharmacy Network, Inc.
reviewed the Motion to Dismiss Defendant's Amended
Counterclaims (“the Motion”), ECF 37, filed by
Counter-Defendants Chemist Corner, Inc. d/b/a Medex Medicine
Express (“MedEx”), Monsey Family Drug Store,
L.L.C. d/b/a Maple Pharmacy (“Maple”), Maple Rx,
L.L.C. d/b/a Westgate Pharmacy (“Westgate”),
Madison Rx L.L.C. d/b/a Madison Pharmacy
(“Madison”) and Refuah Rx L.L.C. d/b/a Refuah
Pharmacy (“Refuah”) (collectively
“Counter-Defendants”). I have also reviewed the
opposition filed by Counter-Plaintiff Epic Pharmacy Network,
Inc. (“Epic”), ECF 46, and the
Counter-Defendants' reply, ECF 47. No. hearing is
necessary. See Loc. R. 105.6 (D. Md. 2018). For the
reasons set forth herein, the Motion will be denied.
Amended Counterclaim in question consists of twenty counts,
which amount to four substantive causes of action alleged
separately against each of the five Counter-Defendants:
Declaratory Judgment (Counts I-V); Breach of Contract (Counts
VI-X); Unjust Enrichment (Counts XI-XV); and Indemnification
(Counts XVI-XX). Each count implicates the Pharmacy
Participation Agreements (“PPAs”) between Epic
and each of the Counter-Defendants. To summarize a highly
complex factual background for the purposes of this motion,
Epic is a network of independent pharmacies joined together
for the purposes of participating, as a larger entity, in
pharmacy benefit plans. See ECF 35-2 at 4. In May,
2018, Epic entered into an agreement with Caremark, a large
Pharmacy Benefit Manager (“PBM”), under which
Epic had to reimburse tens of millions of dollars to satisfy
a deficiency claimed by Caremark. Id. at 10-11.
Caremark and Epic reached a settlement, under which Epic
agreed to pay Caremark $34, 800, 000 to satisfy the
deficiency in full (“2018 GER Deficiency”).
Id. at 11. Because the 2018 GER Deficiency arose
from overpayments that Caremark had made to Epic's member
pharmacies throughout 2018, Epic now seeks reimbursement of
certain sums from each of its member pharmacies, to
compensate for its share of the payment Epic made to
Declaratory Judgment counts, Epic seeks a declaration, in
relevant part, (1) that each Counter-Defendant is obligated
under its PPA to pay Epic for the portion of the 2018 GER
Deficiency, paid to Caremark, that was attributable to
overpayments made to that particular Counter-Defendant, and
(2) that Epic can withhold funds collected until each
Counter-Defendant's liability is paid. See,
e.g., ECF 35-2 at 12-13. The Counter-Defendants argue
that Caremark must be joined as a necessary party to the
Declaratory Judgment counts of the Complaint. ECF 37-1 at
4-6. I disagree. The requests for declaratory relief do not
require the Court to make any findings regarding the contract
between Caremark and Epic. The dispute between Epic and
Caremark regarding the 2018 GER Deficiency has been resolved,
and the only questions presented in this litigation are
whether and how Epic can recoup any of the settlement funds
it paid to Caremark from the Counter-Defendants. See
ECF 35-2 at 11 (stating EPIC and Caremark entered into
settlement agreement to satisfy the 2018 GER Deficiency).
Thus, the prospective judgment in this case will not
prejudice or affect Caremark in any sense, and the
Counter-Defendants have not established that Caremark is a
necessary or indispensable party to the litigation. See
Am. Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d
83, 92 (4th Cir. 2005) (“The burden of proof rests on
the party raising the defense . . . to show that the person
who was not joined is needed for a just adjudication.”)
argue that the breach of contract claims should be dismissed
because Epic does not identify specific contractual
provisions in the PPA that Plaintiffs allegedly breached.
37-1 at 12. In making that argument, however,
Counter-Defendants only cite the more general language in
each individual count, ECF 37-1 at 8-10, ignoring the fact
that the counts also adopt by reference the specific factual
allegations made in earlier paragraphs of the Amended
Counterclaim. ECF 35-2 ¶¶ 69, 73, 77, 81, 85. Those
earlier paragraphs contain specific reference to the
contractual provisions that Epic alleges have been breached.
Id. ¶¶ 19, 32. For instance, according to
the Amended Counterclaim, section 2.F of the PPA provides
that Plaintiffs shall repay EPIC for any amounts paid to the
pharmacies in error. See ECF 35-2 at 5.
Counter-Defendants also challenge Epic's calculation of
the overpayment amounts. ECF 37-1 at 10. However, determining
whether the calculation is proper is an issue that would be
resolved at trial. For present purposes, taking the
allegations in the Amended Counterclaim as true to consider
the motion to dismiss, Epic has sufficiently pled its claim.
Counter-Defendants' efforts to argue for dismissal of the
unjust enrichment claims are unsuccessful. First, at the
motion to dismiss stage, a party may maintain both claims for
breach of contract and claims for unjust enrichment, although
ultimately, equitable relief is unavailable if the
parties' rights are governed by contract. See Swedish
Civil Aviation Admin. v. Project Mgmt. Enters., 190
F.Supp.2d 785, 792 (D. Md. 2002) (“[A]lthough
[plaintiff] may not recover under both contract and
quasi-contract theories, it is not barred from pleading these
theories in the alternative where the existence of a contract
governing the subject matter is in dispute.”). Second,
if taken as true, Epic has pled that Counter-Defendants have
retained the GER overpayments with knowledge of facts that
would make it inequitable for them to retain the benefit. For
instance, the amended Counterclaim alleges that Plaintiffs
have been aware that the burden of repayments would fall on
other member pharmacies. Furthermore, the parties'
agreement to permit Plaintiffs to retain the payments during
the pendency of the litigation, in exchange for the posting
of a bond, does not have any effect on the parties'
ultimate legal rights to ownership of the funds.
Counter-Defendants suggest that Epic's Indemnification
claims must be dismissed, because the indemnification
provisions in the PPA only require indemnification for
“liabilities arising out of or related to any Pharmacy
Service or the sale, compounding, labeling, or dispensing of
any drug or item by Pharmacy.” ECF 37-1 at 7 (citing
PPA at 2(I)). Counter- Defendants allege that because the
liability Epic seeks to recover arises out of its contract
with Caremark, it does not arise out of or relate to pharmacy
services. Id. Epic counters that the sale of drugs
by its member pharmacies generated the GER deficiency in the
first place, and thus the indemnification provision applies.
ECF 46 at 18-22. Viewing the facts in the light most
favorable to Epic, as I must at this stage, dismissal is not
warranted, because Epic has pled a factual nexus between the
provision of pharmacy services and the GER deficiency for
which reimbursement is sought.
reasons set forth above, Counter-Defendants' Motion to
Dismiss the Amended Counterclaim, ECF 37, is DENIED. Despite
the informal nature of this letter, it should be flagged as
an Opinion and docketed as an Order.
Stephanie A. Gallagher, United ...