MSP RECOVERY CLAIMS, SERIES LLC et al., v. PFIZER, INC. et al.
No. 22-cv-1419 (DLF)
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
March 30, 2024
Five limited liability companies—MSP Recovery Claims, Series LLC; MSP Recovery Claims PROV, Series LLC; MSPA Claims I, LLC; MAO-MSO Recovery II, LLC, Series PMPI; and MSP Recovery Claims Series 44, LLC—bring this action against Pfizer, Inc., Advanced Care Scripts, and the Patient Access Network Foundation for allegedly conspiring to increase the price and sales volume of three prescription drugs. Amend. Compl. ¶ 1, Dkt. 77. Before the Court are the defendants’ motions to dismiss and to strike. Dkts. 82, 83, 84. For the reasons that follow, the Court will grant the motions to dismiss and deny the motions to strike as moot.
I. BACKGROUND
A. Statutory & Policy Background
The federal Medicare Act offers health insurance to the elderly and disabled.1 See, e.g., Fischer v. United States, 529 U.S. 667, 671 (2000). Part C of the Act allows eligible patients to
Although Medicare Advantage and Medicare Part D plans can cover prescription drugs, they often require copayments. Id. ¶ 3 n.6. By requiring patients to cover part of their own healthcare costs, copayments discourage overconsumption of healthcare. Id. But they also mean that some patients with insurance cannot afford drugs they need. Id. ¶ 93. Enter “Patient Assistance Programs” (“PAPs“), charities that help patients access prescription drugs. Id. ¶ 94. Sometimes, pharmaceutical companies donate drugs directly to PAPs they create, which in turn distribute the drugs to patients. Id. In other cases, companies donate money to PAPs, which channel the money to patients, who use it to pay their copayments. Id. ¶ 95.
PAPs can be legitimate, but they are also subject to fraud and abuse. Abusive PAPs can “steer patients toward and lock them into a particular [drug] manufacturer‘s product, even when other equally effective and less costly alternatives are available.” Id. ¶ 105 (cleaned up). In addition, when a PAP subsidizes specific drugs, the subsidies “eliminat[e]” or limit the “price sensitivity” created by the copayment system—in other words, they encourage patients to purchase drugs they might not have bought otherwise. Id. ¶ 37. That, in turn, increases the volume of drugs sold and/or the price that a drug‘s manufacturer can charge per drug dose, with insurers and the Medicare program footing the bill. Id. ¶¶ 4, 30, 288–89.
In accordance with the Court‘s approach in MSP I, the Court “will not address the defendants’ argument that [the plaintiffs] may not ‘recast’ the allegations in a settlement agreement to state a claim,” as the Court will resolve this case on other grounds. Id. at *1 n.1.
This case alleges abusive use of a PAP. Pfizer sells three prescription medications: Sutent and Inlyta, which “treat renal cell carcinoma,” and Tikosyn, which “treats arrhythmia in patients with atrial fibrillation or atrial flutter.” Id. ¶ 1. The Patient Access Network Foundation (“PANF“) is a PAP. Id. ¶ 56. According to the First Amended Complaint, from 2009 and onwards, Pfizer “conspired with PANF to create and finance a fund for Medicare patients being treated for arrythmia with atrial fibrillation or atrial flutter.” Id. ¶¶ 12, 73, 202. Pfizer also made donations to PANF to enable it to cover Sutent and Inlyta copays and encouraged patients to receive those drugs through PANF rather than Pfizer‘s “existing free drug program.” Id. ¶ 181 (quoting Pls.’ Ex. C). Advanced Care Scripts (“ACS“), a specialty pharmacy, facilitated these activities by—among other things—coordinating patient referrals to PANF. Id. ¶¶ 8, 181.
In the plaintiffs’ telling, this scheme allowed Pfizer to “raise its prices to supra-competitive levels.” Id. ¶¶ 4–5. After all, “because ... patients ... were no longer incurring any cost” to purchase Pfizer‘s drugs, they had no incentive not to consume them. Id. ¶ 30. The upshot was that health insurers and the federal government paid “artificially increased prices” for Sutent, Inlyta, and Tikosyn and/or spent money on “an increased quantity of claims” for those drugs, id. ¶ 31, costing them “millions of dollars,” id. ¶ 10.
The plaintiffs are not health insurers or the federal government, however. Instead, they are Delaware LLCs created for litigation purposes. According to the plaintiffs, some of the defendants’ victims have assigned them the right to recover damages from the defendants’ scheme. Id. ¶¶ 2, 66, 69. The plaintiffs list five “Representative Assignors” in their Amended Complaint and provide excerpts of their assignment agreements. Id. at App‘x. They also purport to sue on behalf of other unnamed assignors. Id. ¶¶ 1–3.
II. LEGAL STANDARDS
Under
Under
For the following reasons, the Court concludes that it lacks jurisdiction over the plaintiffs’ claims brought on behalf of the Amended Complaint‘s unnamed assignors and over all of the plaintiffs’ state-law claims. The Court has jurisdiction over the named or representative assignors’ federal claims but will dismiss those claims under
A. Subject-Matter Jurisdiction
Whether the Court has subject-matter jurisdiction over the plaintiffs’ claims turns on whether the plaintiffs have standing to sue. As assignees of the entities whom the defendants allegedly injured, the plaintiffs have standing if (1) their assignors would have standing to sue and if (2) those assignors validly assigned their claims to the plaintiffs. Sprint Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 274–75 (2008); see, e.g., MSPA Claims 1, LLC v. Tenet Fla., Inc., 918 F.3d 1312, 1318 (11th Cir. 2019). The assignors have standing if they (1) suffered a concrete and tangible injury (2) caused by the defendants’ challenged conduct (3) that a favorable judicial decision could redress. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992); Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016).
“Standing is not dispensed in gross.” Town of Chester, N.Y. v. Laroe Estates, Inc., 581 U.S. 433, 439 (2017) (quoting Davis v. FEC, 554 U.S. 724, 734 (2008)). Rather, “a plaintiff must demonstrate standing for each claim he seeks to press and for each form of relief that is sought.” Id. (quoting Davis, 554 U.S. at 734). When “a case is at the pleading stage, [a] plaintiff must ‘clearly ... allege facts demonstrating’ each element of standing for each claim on which he seeks relief.” Spokeo, 578 U.S. at 338 (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)); see also Lujan, 504 U.S. at 561.
The plaintiffs assert standing to sue on behalf of five entities that they allege paid for Pfizer‘s drugs—SummaCare, Inc. (“Summacare“); Interamerican Medical Center Group, LLC (“Interamerican“); Preferred Medical Plan, Inc. (“Preferred“); Health First Health Plans, Inc. (“Health First“); and Centro de Pediatria y Medicina de Familia de Villalba, C.S.P. (“Centro“)—as well as other unnamed assignors. Amend. Compl. App‘x. The Court concludes that the plaintiffs lack standing to sue on behalf of the unnamed assignors. It also concludes that they lack standing to pursue their state-law claims on behalf of the five entities named in the Amended Complaint (the “named assignors“). They do, however, have standing to pursue the named assignors’ claims under federal law.
1. Unnamed Assignors
The plaintiffs cannot sue on behalf of the unnamed assignors because their complaint pleads no facts establishing that those assignors, specifically, would have standing to sue on their own. See, e.g., MSP Recovery Claims, LLC v. Actelion Pharm. US, Inc., No. 22-cv-07604, 2023 WL 5725517, at *8 (N.D. Cal. Sept. 5, 2023) (“At a minimum, Plaintiffs must plead some specific
2. Named Assignors’ State Law Claims
Similarly, the plaintiffs have not adequately alleged standing to pursue their state law claims on behalf of the named assignors. Although the Amended Complaint alleges that the plaintiffs collectively possess claims under several states’ consumer protection laws, it does not say which plaintiffs have been assigned which claims. See Amend. Compl. ¶¶ 431–582. A similar problem afflicts the Amended Complaint‘s discussion of the plaintiffs’ claims for unjust enrichment under state common law and for violations of the Florida Civil Remedies for Criminal Practices Act. Id. ¶¶ 583–620. Accordingly, the Court cannot find that any specific plaintiff has standing to sue under the laws of any specific state. Because the Court must dispense standing to specific plaintiffs and claims rather than groups of plaintiffs “in gross,” it follows that the Amended Complaint does not adequately demonstrate that any plaintiff has standing to assert any given state-law claim. Davis, 554 U.S. at 734; see Summers, 555 U.S. at 498–500.
3. Named Assignors’ Federal Claims
With respect to the named assignors’ claims under the federal RICO statute, however, the plaintiffs have established standing. Unlike the plaintiffs’ first complaint, Dkt. 1, the Amended Complaint alleges facts demonstrating that each named assignor has suffered injuries in fact caused
First—and unlike the plaintiffs’ first complaint in this action—the Amended Complaint alleges facts demonstrating that each named assignor has suffered a concrete injury. The Amended Complaint contends that the defendants’ misconduct “artificially inflated prices and quantities” of Sutent, Inlyta, and Tikosyn from 2009 through at least 2019. Amend. Compl. ¶¶ 202, 308; see, e.g., id. ¶ 184 (suggesting that payors continued to pay elevated prices for Sutent, Inlyta, and Tikosyn in 2019). In turn, Exhibit A to the Amended Complaint suggests that Summacare, Interamerican, and Health First purchased each of Sutent, Inlyta, and Tikosyn during that ten-year period, and that Centro and Preferred purchased Sutent during parts of that period (in 2014–15 and 2019, respectively).2 Putting two and two together, Summacare, Interamerican, and Health First spent more on Sutent, Inlyta, and Tikosyn than they otherwise would have spent because of Pfizer‘s donations to PANF. Centro and Preferred spent more on Sutent for the same reason. Those “pocketbook injur[ies]” are “prototypical form[s] of injury in fact,” Collins v. Yellen, 141 S. Ct. 1761, 1779 (2021), giving Summacare, Interamerican, and Health First concrete injuries as to as to each drug and Centro and Preferred concrete injuries as to Sutent.
Second, the Amended Complaint adequately alleges causation and redressability. Taking the allegations in the plaintiffs’ Amended Complaint as true, the named assignors’ pecuniary injuries are “fairly traceable” to the defendants’ conduct. Absent the defendants’ conspiracy, each assignor would have paid less for Pfizer‘s drugs or paid for fewer of them. See Lexmark Int‘l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 134 n.6 (2014); see also id. (“Proximate causation is not a requirement of Article III standing.“). And even a dollar in damages would help redress those injuries. Sprint, 554 U.S. at 286–87.
Third, and finally, the Amended Complaint adequately alleges that the named assignors assigned their claims to each plaintiff. According to the Amended Complaint, Summacare, Interamerican, Preferred, and Health First “irrevocably assigned . . . all [their] rights to recover against any liable third party . . . for payments made on behalf of [their] enrollees” to MSP Recovery LLC. Amend. Compl. App‘x at 132–35. MSP Recovery LLC then reassigned Summacare‘s claims to a designated series of plaintiff MSP Recovery Claims, Series LLC; Interamerican‘s claims to plaintiff MSPA Claims I, LLC; Preferred‘s claims to plaintiff MAO-MSO Recovery II, LLC; and Health First‘s claims to a designated series of plaintiff MSP Recovery Claims Series 44, LLC. Id. For its part, Centro assigned “all its rights to recovery against any liable entity . . . for payments made on behalf of its [e]nrollees pursuant to its Government Healthcare Program” directly to “a designated series of [p]laintiff MSP Recovery Claims PROV, Series LLC.” Id. at 136. Together with the text of the relevant assignment agreements, which the plaintiffs have provided to the Court, these allegations make it plausible that the named assignors assigned the claims at issue in this litigation to each of the plaintiffs. See Pls.’ Resp. to PANF‘s Mot. to Dismiss Ex. A, Dkt. 87-1.
Although the plaintiffs’ Amended Complaint and exhibits do not specifically show how much each named assignor paid for Sutent, Inlyta, and Tikosyn during each year of the (alleged) conspiracy, the plaintiffs need not do so to survive a motion to dismiss under
True also, and irrelevant also, the Amended Complaint does not say whether the named assignors’ patients received copayment assistance from PANF. The Amended Complaint alleges that PANF‘s payouts raised prices for all consumers of Pfizer‘s drugs, regardless of whether those consumers received copayment assistance from PANF. Amend. Compl. ¶¶ 30, 37, 288–90. In conjunction with Exhibit A, it also alleges that the named assignors paid for Pfizer‘s drugs during the period that PANF provided copayment assistance. Id. Ex. A. As a result, it adequately pleads that the named assignors suffered injuries from the defendants’ conduct.
Nor does it matter that, according to government records, Interamerican and Centro are physician practices rather than health insurance companies. PANF‘s Mem. in Support of Mot. to Dismiss at 11, Dkt. 82-1. That reality might make it unlikely that either Interamerican or Centro overpaid for any drugs from 2009 through 2021, but “[w]hether” the two organizations “actually” spent money on patients’ drugs “is a question of fact” that the Court need not resolve on a motion
It is also true that the Amended Complaint “does not include language specifying what ‘claims’ were assigned” by the named assignors to the plaintiffs. Pfizer‘s Mem. in Support of Mot. to Dismiss at 19, Dkt. 83-1. But the Amended Complaint does not stand alone—the plaintiffs have also provided (redacted) copies of the named assignors’ assignment agreements with their briefing. Dkt. 87-1. The Court can consider those agreements in order to confirm its jurisdiction, Conf. of State Bank Supervisors, 313 F. Supp. 3d at 294, and the text of the agreements at least arguably covers the named assignors’ claims arising under federal law. To the extent that ambiguity remains as to which claims the assignment agreement assigns, “the interpretation of ambiguous contract language” presents “question[s] of fact” that the Court need not resolve on a motion to dismiss under
Last but not least, three plaintiffs—MSP Recovery Claims, Series 44, and Claims PROV—seek relief for claims assigned to their designated series. Courts have split on whether an LLC has standing to sue on behalf of a designated series in this manner. See MSP Recovery Claims, Series 44, LLC v. Quincy Mut. Fire Ins. Co., No. 22-cv-11271, 2023 WL 4107038, at *11 (D. Mass. June 21, 2023) (citing cases). In this case, the Court concludes that all three plaintiffs may. Recovery Claims and Claims PROV‘s operating agreements explicitly allow both LLCs to sue on their series’ behalf, and the Certificate of Designation for Series 44‘s series says much the same thing. MSP Recovery Claims, Series LLC Second Amend. & Restated LLC Op. Agmt. § 3.1(d) (Oct. 22, 2020), Dkt. 87-2; MSP Recovery Claims PROV, Series LLC LLC Op. Agmt. § 2.3 (Dec. 22, 2020), Dkt. 87-2; Series 44 Cert. of Designation at 2, Dkt. 87-1. Because Delaware law “give[s] the maximum effect to the principle of freedom of contract and to the enforceability of limited liability company agreements,” a Delaware court would likely honor this allocation of rights.
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For these reasons, Plaintiffs MSP Recovery Claims, MSPA Claims I, and Series 44 have standing to pursue their assignors’ federal claims arising out of their purchases of Sutent, Tikosyn, and Inlyta. Plaintiffs MAO-MSO and Recovery Claims PROV also have standing to pursue their federal claims arising out of their assignors’ purchases of Sutent. The Court will dismiss the plaintiffs’ claims on behalf of the unnamed assignors, their claims under state law, and any claims by MAO-MSO or Recovery Claims PROV arising out of purchases of Tikosyn and Inlyta for lack of jurisdiction.
B. Failure to State a Claim
That leaves the plaintiffs’ claims under the federal RICO statute,
At the outset, the Amended Complaint‘s conclusory character makes it difficult for the Court to discern the factual allegations on which the plaintiffs’ RICO claims rest. The Amended Complaint is quite lengthy, containing more than 620 paragraphs spread across 139 pages. Even
Against that backdrop, and in view of the Court‘s understanding of the facts alleged in the Amended Complaint, the plaintiffs fail to state a claim under RICO‘s private right of action for two independent reasons. First, under the indirect purchaser rule, the plaintiffs did not suffer injuries “by reason of” the defendants’ RICO violations. Second, the Amended Complaint does not plausibly allege a pattern of racketeering activity. The Court will therefore dismiss the plaintiffs’ RICO claims under Federal Rule of Civil Procedure 12(b)(6).
RICO affords a private right of action to persons “injured in [their] business or property by reason of” a RICO violation.
One principle of proximate causation, known to antitrust lawyers as the Illinois Brick or “indirect purchaser” rule, is particularly relevant here. See Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977); Apple Inc. v. Pepper, 139 S. Ct. 1514, 1520 (2019) (describing Illinois Brick as resting on “principles of proximate cause“). Under Illinois Brick, only “immediate buyers” from a lawbreaking seller may sue for injuries to their business or property. Pepper, 139 S. Ct. at 1520 (quoting Kansas v. UtiliCorp United Inc., 497 U.S. 199, 207 (1990)). “[I]ndirect purchasers who are two or more steps removed from” the seller “may not sue.” Id. at 1521. For example, if wrongdoer A sells to B, who sells to C, B but not C may sue A. Id. The idea is that B—not C—is the direct victim of A‘s misconduct, and that any injuries C suffers based on B‘s response to A‘s activity (say, its choice to pass along A‘s higher prices to C) are too attenuated to support liability. Id. at 1520–21; cf. Hemi Group, LLC v. City of New York, 559 U.S. 1, 10 (2010) (“[T]he general tendency of the law, in regard to damages at least, is not to go beyond the first step.“) (quoting Holmes, 503 U.S. at 271–72).
The Supreme Court has recognized only two exceptions to Illinois Brick: an exception “when the direct purchaser and the indirect purchaser have entered into pre-existing cost-plus contracts,” and an exception “when the direct purchaser is owned or controlled by the indirect
Applied in this case, these principles raise three questions. Does the indirect-purchaser rule apply in civil RICO cases? If so, in view of the allegations in the Amended Complaint, do the plaintiffs’ named assignors qualify as “direct” or as “indirect” purchasers? And if the named assignors count as “indirect” purchasers, can they still seek refuge under the co-conspirator exception? The Court will answer each question in the defendants’ favor, meaning it must dismiss the plaintiffs’ civil RICO claims for failure to state a claim.
First, the Court concludes that Illinois Brick‘s indirect-purchaser rule applies in civil RICO cases. As a textual matter, RICO‘s private-right-of-action provision is almost identical to the Clayton Act provision that grounds Illinois Brick, suggesting that the two provisions should carry the same meaning. Holmes, 503 U.S. at 267–68; see, e.g., Northcross v. Bd. of Ed. of Memphis City Schs., 412 U.S. 427, 428 (1973). In addition, the indirect purchaser rule reflects principles of proximate causation that the Supreme Court has already said apply in the RICO context. Compare Pepper, 139 S. Ct. at 1520 (explaining that the indirect purchaser rule reflects “principles of proximate cause“), with Holmes, 503 U.S. at 267–68 (applying principles of proximate cause developed in antitrust cases to RICO actions). Consistent with all this, although the Supreme Court and D.C. Circuit have not opined on the point, “[e]very circuit to have considered the [issue] has held” that the indirect purchaser rule “applies to civil RICO actions.” Humana, Inc. v. Biogen, Inc., 666 F. Supp. 3d 135, 141 (D. Mass. 2023).
Second, the Amended Complaint does not plausibly allege that the named assignors count as direct rather than indirect purchasers. According to the Amended Complaint, the defendants’ conspiracy boosted demand for Sutent, Tikosyn, and Inlyta, allowing Pfizer to sell more of those drugs and/or to charge higher prices for them. Amend. Compl. ¶¶ 30–31. But the Amended Complaint does not allege that any of the named assignors purchased anything from Pfizer. Instead, it says that they made payments to “dispensing pharmacies,” including but not limited to defendant ACS. Id. ¶ 222; see, e.g., id. ¶¶ 20 & n.8, 203, 240, 263. A report attached to the Amended Complaint clarifies that drug manufacturers “typically sell their prescription medications to wholesale distributors, which in turn sell products to pharmacies, hospitals, doctors, and other entities that deliver medications to patients.” House Cmte. on Oversight & Reform, Drug Pricing Investigation Majority Staff Report 8-9 & Fig. 1 (Dec. 10, 2021), Dkt. 79.5 That paints a “textbook indirect-purchaser” picture, as the Third Circuit has recognized: Pfizer sold to distributors, who sold to pharmacies, who sold to doctors and patients, who triggered the named
Third, any co-conspirator exception to Illinois Brick would not help the plaintiffs.6 The plaintiffs allege that the named assignors sometimes paid ACS for Pfizer‘s drugs and that ACS participated in Pfizer and PANF‘s racketeering enterprise.7 Amend. Compl. ¶¶ 9, 15-16, 222. Even so, they do not allege that ACS made pricing, volume, or other equivalent sales decisions with Pfizer and PANF, as any co-conspirator exception would require. Rather, ACS sits behind Pfizer in the plaintiffs’ casual chain: ACS facilitated Pfizer‘s donations to PANF, which boosted demand for Pfizer‘s drugs, which altered Pfizer‘s volume and pricing decisions, which filtered through Pfizer‘s wholesalers to pharmacies (including ACS again) to the named assignors. That places ACS‘s alleged misconduct many steps away from the plaintiffs’ injuries, making clear that the named assignors count as indirect purchasers and that this case is not a co-conspirator case. Putting the point differently, the co-conspirator exception applies when a co-conspirator functions as a “seller,” but ACS‘s (alleged) conspiratorial conduct had little to do with its sales. See Marion Healthcare, LLC v. Becton Dickson & Co., 952 F.3d 832, 839 (7th Cir. 2020).
In the alternative, the plaintiffs emphasize that the injuries they suffered are not “derived from” another “third party‘s direct injury.” Pls.’ Mem. in Opp. to Def.‘s Mot. to Dismiss at 14. But if the defendants’ conspiracy allowed Pfizer to boost prices for its drugs, Pfizer‘s distributors paid those increased prices first and suffered injury as a result. Illinois Brick, 431 U.S. at 728–29. More importantly, the indirect-purchaser rule is not a no-more-direct-injury rule. Rather, the rule supplants inquiry into who within a value chain has suffered a direct injury first—that is, into whether a seller‘s illegal overcharges injured direct purchasers, downstream consumers, or both. Pepper, 139 S. Ct. at 1521.
In a last-ditch effort to avoid the indirect-purchaser rule, the plaintiffs urge this Court to expand the co-conspirator exception further. The Court will not. The Supreme Court has warned lower courts against “litigat[ing] a series of exceptions” to Illinois Brick, a warning this Court must heed. UtiliCorp, 497 U.S. at 217.
2. Racketeering Activity
The plaintiffs’ RICO claims also fail for another, independent reason: the Amended Complaint does not plausibly allege a pattern of racketeering activity.
Under
“[R]acketeering activity” includes “any act ‘chargeable’ under several generically described state criminal laws” and “any act ‘indictable’ under numerous federal criminal provisions.” Id. at 481 (quoting
State bribery statutes. “As used in” RICO, “racketeering activity” includes “any act or threat involving . . . bribery . . . which is chargeable under State law and punishable by imprisonment for more than one year.”
The Court need not decide whether
The plaintiffs’ contrary authorities do not say otherwise. It is true that, in some cases, “arrangements involving ‘kickbacks‘” under state law and/or violations of the Federal Anti-Kickback Statute can “constitute ‘bribery.‘” United States v. Gross, 370 F. Supp. 3d 1139, 1150 (C.D. Cal. 2019). Those cases, however, involve “illegal monetary incentives meant to induce a person, often a doctor, to use his or her position of trust to influence another, often the patient, for the purpose of financially benefitting a third party.” Id. (emphasis added); see, e.g., United States ex rel. Travis v. Gilead Scis., Inc., 596 F. Supp. 3d 522, 538 (E.D. Pa. 2022) (describing scheme “to funnel money to” doctors); United States v. Rogers, 389 F. Supp. 3d 774, 793 (C.D. Cal. 2019) (kickback scheme directed at doctor). Here, by contrast, the plaintiffs do not adequately allege that PANF occupied an equivalent position of trust. United States v. Babaria does not change this conclusion; Babaria deals with the position-of-trust enhancement contained in the Sentencing Guidelines, which sweeps more broadly than the duty-of-fidelity requirement for bribery. Id. at 596–97; cf. United States v. Adam, 70 F.3d 776, 482 (4th Cir. 1995); United States v. Liss, 265 F.3d 1220, 1229 (11th Cir. 2001) (similar).
For these reasons, the Amended Complaint does not plausibly allege that the defendants committed or conspired to commit “act[s] of bribery . . . chargeable under State law and punishable by imprisonment for more than one year.”
Travel Act. RICO also says that violations of the federal Travel Act,
Unlawful activities include “bribery . . . in violation of the laws of the State in which committed or of the United States.” Id.
Wire and mail fraud. Finally, RICO makes violations of the federal mail and wire fraud statutes acts of racketeering. See
Both statutes require “specific intent to defraud“—e.g., that a fraudster make statements he knows to be false or misleading. United States v. Philip Morris USA Inc., 566 F.3d 1095, 1118 (D.C. Cir. 2009) (per curiam). In pleading fraud, including under RICO, a plaintiff must satisfy “the heightened pleading standards of Federal Rule of Civil Procedure 9(b).” Ambellu v. Reʼese Adbarat Debre Selam Kidist Mariam, 406 F. Supp. 3d 72, 78 (D.D.C. 2019). “Relevant circumstances of mail and wire fraud subject to this heightened standard include ‘the time, place, and contents of [any] false representations.‘” Id. (quoting Johnson v. Comput. Tech. Servs., Inc., 670 F. Supp. 1036, 1039–40 (D.D.C. 1987)). A defendant‘s knowledge of falsity, however, “may be alleged generally.”
The Amended Complaint does not plausibly allege fraud within the contours of
Meanwhile, although the Amended Complaint says that the defendants lied to the Department to obtain its advisory opinions, it does not identify the “content” of those lies and thus fails to plead fraud with particularity. Ambellu, 406 F. Supp. 3d at 78; see Amend. Compl. ¶¶ 123-24, 153. To obtain its first advisory opinion in 2005, PANF certified (among other things) that “[n]o drug manufacturer or donor exer[ted] any direct or indirect influence over” it, that it acted “in a truly independent manner,” that it “provide[d] assistance based on a reasonable, verifiable, and uniform measure of financial need,” and that it did not provide data to drug manufacturers “that would allow the manufacturer to substantiate the amount of its donations with the number of subsidized prescriptions for its products.” Amend. Compl. ¶ 116. To obtain subsequent advisory opinions, it sang a similar tune. See, e.g., id. ¶¶ 150–54. Although the plaintiffs allege generally that those certifications were false, they do not explain which ones were false or why.11 See, e.g.,
Although the Amended Complaint pleads that the defendants knew that some of their statements were false, see, e.g., id. ¶¶ 17, 60, 294, that is not enough. Without “some facts to support” claims of knowledge, the complaint “‘stops short of the line between possibility and plausibility of entitlement to relief.‘” Ambellu, 406 F. Supp. 3d at 80 (quoting Ashcroft, 556 U.S. at 678). For similar reasons, it does not matter that fraudulent intent is typically a question of fact that can be inferred from surrounding circumstances or from a defendant‘s modus operandi. Philip Morris, 566 F.3d at 1118; United States v. Sum of $70,990,605, 4 F. Supp. 3d 189, 202 (D.D.C. 2014). Even granting the premise, the Amended Complaint does not plead enough facts to suggest that the defendants possessed an intent to defraud.
More promisingly, the Amended Complaint does allege that PANF provided Pfizer with data and “information . . . to enable it to conduct ROI calculations.” Amend. Compl. ¶ 17. Connecting the dots, that evidence might suggest that PANF could not have truthfully told the Department that it did not provide drug data to Pfizer that allowed it “to substantiate the amount of its donations with the number of subsidized prescriptions for its products.” Id. ¶ 116. But that theory faces several problems, even assuming that the Amended Complaint pleads a degree of coordination with adequate clarity. For one, the Amended Complaint does not support the
The plaintiffs’ remaining arguments fare no better. The Amended Complaint alleges that by 2016 Pfizer knew that PANF used Pfizer‘s money to cover copayments for Pfizer‘s drugs and that it “used [PANF] as a conduit.” Amend. Compl. ¶¶ 181–82. But the plaintiffs fail to explain why that knowledge rendered specific representations by Pfizer false or fraudulent. The Amended Complaint also alleges that, as part of a settlement between PANF and the Department, the Department agreed that it would not “rescind or terminate” one of PANF‘s advisory opinions—an action the Department could take “only where relevant and material facts were not fully, completely, and accurately disclosed to” it. Id. ¶ 191 & n.49;
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For these two, independent reasons—the named assignors’ status as indirect purchasers and the Amended Complaint‘s failure to plausibly allege acts of racketeering activity—the Court will dismiss the plaintiffs’ RICO claims for failure to state a claim. In doing so, the Court joins at least three other district courts that have dismissed similar claims by MSP plaintiffs under Federal Rule of Civil Procedure 12(b)(6). See Lundbeck, 664 F. Supp. 3d at 651–52, 657–58; United Therapeutics, 2024 WL 1256266, at *5–8; MSP Recovery Claims, Series LLC v. Caring Voice Coal., Inc., No. 21-21317, 2022 WL 3155035, at *9–12 (S.D. Fla. July 21, 2022), report & recommendation adopted, 2022 WL 4448256 (S.D. Fla. Sept. 23, 2022).
Finally, the Court will defer ruling on whether the plaintiffs may file a third Amended Complaint. The Court recognizes that it did not reach the merits of the plaintiffs’ claims in its prior opinion granting the defendants’ motions to dismiss, see Dkt. 67, and that the plaintiffs could cure some of the deficiencies outlined in this opinion, see, e.g., Firestone v. Firestone, 76 F.3d 1205, 1209 (D.C. Cir. 1996) (per curiam) (“[L]eave to amend is almost always allowed to cure deficiencies in pleading fraud.“) (cleaned up). Still, “this is far from [the plaintiffs‘] first rodeo.” AIG Prop. Cas. Co., 2021 WL 1164091, at *15 (denying leave to amend). The plaintiffs have “brought many of these cases across the country” and have “already amended [their] complaint against these [d]efendants once.” Id. In addition, the defendants’ voluminous memoranda in support of their first round of motions to dismiss gave “notice from the outset” that the issues considered in this opinion—including the indirect purchaser rule and the circumstances surrounding the defendants’ alleged bribery and fraud—“would be front and center” in future litigation. MAO-MSO Recovery II, LLC v. State Farm Mut. Auto. Ins. Co., 935 F.3d 573, 582 (7th Cir. 2019) (affirming denial of leave to amend). The Court is thus skeptical that the plaintiffs can overcome the pleading deficiencies identified here and by multiple other courts. Should the plaintiffs seek leave to amend their complaint for a third time, the Court will carefully scrutinize whether any such attempt would be futile, see
For these reasons, the Court will dismiss the plaintiffs’ claims under state law and on behalf of their unnamed assignors for lack of jurisdiction under
March 30, 2024
DABNEY L. FRIEDRICH
United States District Judge