666 F.Supp.3d 135
D. Mass.2023Background
- Humana (health insurer and Medicare Part C/D plan sponsor) sued Biogen and Advanced Care Scripts (ACS), alleging a scheme where Biogen funneled grants to patient-assistance foundations (TAF, CDF) and used ACS to move patients into copay programs so expensive MS drugs (Avonex, Tysabri, Tecfidera) would be paid by insurers/Medicare.
- Humana alleges the scheme increased both volume and reimbursement amounts for Biogen’s MS drugs and that Humana paid over $1.9 billion (2011–2019), with ACS-related claims near $350 million.
- Procedurally Humana filed on Sept. 24, 2021, asserting substantive RICO (Count 1), RICO conspiracy (Count 2), and 52 state-law claims (Counts 3–10 across 30 states); defendants moved to dismiss for time-bar and failure to state a claim.
- Key legal focal points were (1) accrual/statute-of-limitations and fraudulent concealment; (2) whether Humana — an insurer that paid pharmacies (not Biogen) — has RICO standing under the indirect-purchaser rule; and (3) whether RICO predicate acts (mail/wire fraud) were pleaded with the particularity required by Rule 9(b).
- The court dismissed Counts 1 and 2: (a) holding Humana lacks RICO standing as an indirect purchaser (applying the majority rule), and (b) alternatively finding the mail/wire fraud predicates inadequately pleaded under Rule 9(b); the court declined supplemental jurisdiction and dismissed the state-law claims without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of limitations / accrual & fraudulent concealment | Claims did not accrue until DOJ settlement was unsealed (Dec 17, 2020); fraudulent concealment tolled limitations | Alleged wrongful acts concluded by 2015–2016; Humana was or should have been on inquiry notice earlier | Court declined to dismiss on limitations (accrual is fact-intensive); fraudulent-concealment allegation fails Rule 9(b) particularity requirement |
| RICO standing / indirect-purchaser rule | Humana as the economic payor suffered direct injury and may sue under RICO | Humana is an indirect purchaser/end-payor (paid pharmacies, not manufacturer) and thus lacks standing under Illinois Brick and subsequent RICO applications | Court followed majority circuits and dismissed substantive RICO claim for lack of standing as an indirect purchaser |
| Adequacy of RICO predicates (mail/wire fraud; Rule 9(b)) | Plaintiffs pointed to certifications to Humana and Exhibit A examples of copay subsidies as representative predicate communications | Allegations are generalized; Exhibit A fails to identify specific mail/wire communications, times, senders, or content; no interstate-wire allegations | Court found mail/wire fraud predicates insufficiently particular under Rule 9(b) and dismissed RICO counts alternatively on that ground |
| Supplemental jurisdiction over state-law claims | Humana sought to litigate state claims in federal court alongside RICO claims | Defendants moved to dismiss federal claims; urged dismissal of nonfederal claims if federal claims fall | With federal claims dismissed, court declined to exercise supplemental jurisdiction and dismissed state-law claims without prejudice |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must be plausible)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard and reasonable inferences)
- Rotella v. Wood, 528 U.S. 549 (discovery rule: accrual when plaintiff knew or should have known of injury)
- Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143 (RICO statute-of-limitations guidance)
- Illinois Brick Co. v. Illinois, 431 U.S. 720 (indirect-purchaser rule in antitrust; standing limitations)
- Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (RICO requires but-for and proximate causation)
- Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (no first-party reliance required for mail-fraud-based RICO; proximate-cause discussion)
- In re Neurontin Mktg. & Sales Pracs. Litig., 712 F.3d 21 (1st Cir.; insurer RICO claim in pharma context addressing proximate causation)
- McCarthy v. Recordex Serv., Inc., 80 F.3d 842 (3d Cir.; holds indirect-purchaser rule applies to RICO)
- Trollinger v. Tyson Foods, Inc., 370 F.3d 602 (6th Cir.; applies indirect-purchaser rule to RICO)