747 F.Supp.3d 1203
E.D. Mo.2024Background
- Victoria Pharmacy, a New York pharmacy, participated in Express Scripts’ pharmacy network under a Provider Agreement and Manual beginning in 2019.
- Express Scripts is a Pharmacy Benefits Manager (PBM) with broad rights under the agreement to terminate participating providers suspected of fraud or abuse.
- In December 2023, Express Scripts notified Victoria of its intent to terminate it from the network for suspected contract violations and informed Victoria’s customers.
- Victoria sued Express Scripts and Medco Health Solutions for breach of contract and several other claims, seeking injunctive and declaratory relief.
- The case presented a motion to dismiss, addressing the sufficiency of Victoria’s amended complaint under Rule 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of Law | New York law should govern due to plaintiff’s location and business. | Missouri law applies under contract unless plaintiff is a NY managed care org, which wasn’t alleged. | Missouri law governs. |
| Declaratory Judgment | Sought declaration of no fraud and reinstatement. | Claim duplicative of breach of contract claim and unnecessary. | Dismissed as duplicative. |
| Breach of Contract | Termination based on suspicion was a breach; contract should protect pharmacy. | Provider Manual expressly allows termination on suspicion of fraud. | Victoria failed to allege plausible contract breach. |
| Implied Duty of Good Faith | Termination was not in good faith. | No violation where explicit contract terms allow actions taken. | Dismissed; express terms control. |
| Tortious Interference | Express Scripts interfered with business relationships with customers. | Economic loss doctrine bars tort claims for contract-based injuries. | Dismissed under economic loss doctrine. |
| NY GBL § 349 | Express Scripts’ actions harmed pharmacy’s customers; violation of consumer protection. | Statute does not apply to private contract/business disputes. | Dismissed; no standing or valid claim. |
| Federal AWP Law | AWP requirements are incorporated into contract and create rights. | No private cause of action under AWP and not incorporated into the contract. | Dismissed; no claim under AWP. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Rule 12(b)(6) plausibility standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (Rule 12(b)(6) facial plausibility and pleading standards)
- Park Irmat Drug Corp. v. Express Scripts Holding Co., 911 F.3d 505 (no breach of implied covenant where contract permits challenged conduct)
- Goshen v. Mut. Life Ins. Co., 98 N.Y.2d 314 (GBL § 349 scope focuses on consumer-directed acts)
- Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris USA Inc., 3 N.Y.3d 200 (standing and derivative injury under § 349)
- Roe v. St. Louis Univ., 746 F.3d 874 (Missouri breach of contract elements)