Golden, et al v. Kelsey Hayes Co, et al

Filing 600

ORDER granting 573 Motion for Contempt ; adopting 590 Report and Recommendation. Signed by District Judge Arthur J. Tarnow. (MLan)

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6504

Page 1 of 14

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

JOSEPH GOLDEN, ET AL.,
Case No. 93-cv-40530
Plaintiffs,
SENIOR U.S. DISTRICT JUDGE
ARTHUR J. TARNOW

v.
KELSEY HAYES CO, ET AL.,

U.S. MAGISTRATE JUDGE
ANTHONY J. PATTI

Defendants.
/

ORDER ADOPTING REPORT AND RECOMMENDATION [590]; OVERRULING
DEFENDANT TRW’S OBJECTIONS TO REPORT AND RECOMMENDATION [591];
GRANTING PLAINTIFFS’ MOTION FOR CONTEMPT [573]
The cases at issue arose from three separate class actions between Defendant
and some of its retirees, former employees and/or their surviving spouses.
Ultimately, settlement agreements were reached which guaranteed, inter alia, that
health care benefits would be fully paid by Defendant, and provided to Plaintiffs for
life. Defendant agreed to provide prescription drug benefits to the designated
recipients in accordance with the parties’ settlement agreements.
Before the Court is Plaintiffs’ Motion for Contempt [573] filed on May 1,
2019. Defendant TRW responded on May 15, 2019 and Plaintiffs replied on May
22, 2019. The Magistrate Judge held a hearing on the motion on July 11, 2019. On
Page 1 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6505

Page 2 of 14

September 20, 2019, the Magistrate Judge issued a Report and Recommendation
(“R&R”) [590] recommending that the Court grant Plaintiffs’ motion. Defendant
TRW filed Objections [591] to the R&R on October 4, 2019. Plaintiffs filed a
Response [592] to Defendant TRW’s objections on October 18, 2019.
For the reasons stated below, the R&R [590] is ADOPTED; Defendant
TRW’s Objections [591] are OVERRULED; and Plaintiffs’ Motion for Contempt
[573] is GRANTED.
FACTUAL AND PROCEDURAL BACKGROUND
The Court adopts the facts of this case as set forth in the R&R:
B. Certified Facts
1. This Court retains continuing jurisdiction over all parties in
this case “for the purposes of enforcing and administering the
Settlement Agreement.” (Golden DE 414; Fox DE 279; and
Colby DE 201; see also DE 586 at 79-80.)
2. Plaintiffs, the Golden, Fox and Colby Retiree Committees,
have moved for an order holding TRW in contempt of the
March 31, 2011 and November 8, 2016 injunctions (the “2011
Injunction” and “2016 Injunction,” respectively) issued by
this Court, which bar TRW from implementing and
maintaining prescription drug exclusion policies. (DE 573 at
2-3.)
3. The Golden, Fox, and Colby settlement agreements entitle
retirees and surviving spouses to lifetime health care benefits,
including prescription drug benefits, continuing at the same
standard agreed upon since its implementation on December
31, 1993. (DE 531, 573.)

Page 2 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6506

Page 3 of 14

4. The Court has previously found that TRW violated these
settlement agreements four times in Fox and three times in
Golden and Colby, enjoining them from activities in
furtherance thereof. (Fox DE 323, 349, 369, 420; Golden DE
458, 479, 531; Colby DE 265, 286, 336.)
5. The Court’s 2011 Injunction enjoins TRW from “materially
reduc[ing]” the extent of plan coverage based on “medical
necess[ity],” which the Court deems a “prior approval
process”:
The mere fact that each settlement agreement plan
only covers drugs that are medically necessary does
not mean that Medco’s new protocols – even though
grounded in its right to a medical necessity review
– cannot result in a material reduction of the level
of promised plan benefits.
In that regard, the Court deems the Defendant’s
imposition of a “prior approval” process for certain
drugs that were previously available without such a
coverage review to be a “new condition or
requirement” that materially reduces the level of
plan benefits. (DE 479 at 13-14.)
6. The 2011 Injunction then singles out other “new drug
protocols” that TRW cannot implement “to the extent that
they materially affect” coverage under the settlement
agreements:
[T]he Court deems the Defendant’s imposition of a
“prior approval” process for certain drugs that were
previously available without such a coverage
review to be a “new condition or requirement” that
materially reduces the level of plan benefits. The
Court has a similar view of Medco’s other new drug
protocols, which are not described in detail by the
Defendant but whose very names (e.g., “preferred
drug step therapy,” “quantity/duration reviews,”
and “prior authorization reviews”) suggest an
Page 3 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6507

Page 4 of 14

exploratory, pre-screening process requirement that
each participant must undertake before the
Defendant will pay for the drug. (DE 479 at 14.)
7. Medco had been TRW’s prescription benefit manager (PBM)
when the 2011 Injunction was imposed. A 2012 merger of
Medco and ExpressScripts, Inc. (ESI) led to ESI becoming and
remaining TRW’s PBM to date. (DE 479 at 7; DE 586 at 10.)
8. On January 1, 2014, TRW chose to implement a drug exclusion
policy ESI proposed known as the 2014 National Preferred
Formulary (NPF) which, as of 2016, grew to encompass a list of
fifty-three drugs. (DE 531 at 6-7.)
9. On March 28, 2014, TRW filed a motion for an “Order
Clarifying and Declaring TRW’s Rights and Responsibilities
Relative to the Delivery of Prescription Drug Benefits Mandated
by the Settlement Agreements.” (DE 480.)
10. Six days later, on April 3, 2014, Plaintiffs filed a motion for
contempt based on TRW adopting ESI’s NPF despite the 2011
Injunction. (DE 481.)
11. In the associated court proceedings, TRW admitted that the 2011
Injunction enjoined TRW “from implementing the prior
authorization coverage review, ‘preferred drug step therapy,’
‘quantity/duration reviews,’ and ‘prior authorization reviews’
that were at issue at that time.” (DE 531 at 7-8; see also DE 516
at 5.) TRW’s motion for a clarifying order was subsequently
denied by the Court on November 8, 2016. (DE 531.) The Court
also denied the motion for contempt, expressing its concern that
its previous order was not definite and specific in its exclusion of
the 2014 change instituted by TRW. (Id. at 14.) The Court did,
however, indicate that TRW “may have violated an ambiguous
order.” (Id at 15.)
12. The Court’s second injunction, the 2016 Injunction dated
November 8, 2016, reiterates that TRW is enjoined from
implementing ESI’s policies that “unilaterally institute
preapproval procedures for previously covered prescriptions,”
Page 4 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6508

Page 5 of 14

and further specifies that TRW is enjoined from “exclud[ing]
previously covered prescription drugs, subject to a preauthorization procedure.” (DE 531.)
13. On July 19, 2018, the parties came before the Court for a
hearing, placing on the record a stipulation as to a Motion to
Compel discovery requested by Plaintiffs. ESI agreed to produce
written communications from TRW in regard to plan and benefit
changes for prescription drug coverage pertaining to class
members. (DE 568.)
14. A “2015 PBM Agreement Service Addendum” was produced in
discovery. This Addendum, effective January 1, 2015, between
TRW and ESI “directs [ESI] to implement the selected programs
attached on the Clinical Programs schedule” as of its effective
date. (DE 573-4 at 2, ESI 59.) The Clinical Programs schedule
explicitly indicates that ESI will “Add” “Prior Authorization” to
249 drugs and “duration/quantity management” restrictions on
21 drugs and 35 medical conditions. (DE 573-4 at 5-9, ESI 6266.) The 2015 Addendum applies to Golden, Fox, and Colby
class members because their TRW contract numbers – 177010
and 40280 – obtained from the first column entitled
“CONTRACT NUMBER” in the table attached to Plaintiffs’
brief as Exhibit E, are listed on the second page of the 2015
Addendum. (DE 573-6 at 2-8, ESI 201-07; DE 573-4 at 4, ESI
61.)
15. Also obtained in discovery was the “2016 PBM Agreement
Service Addendum.” This contains a prior approval list which
keeps “In Place” the “Prior Authorization,” “Drug Quantity
Management,” and “Limited Step Therapy” lists, the first two of
which were implemented in the 2015 Service Addendum. (DE
573-5 at 7-8, ESI 231-32.) Moreover, the 2016 Service
Addendum contains a “Prior Authorization” (PA) list titled
“Compound Management PA” list, which includes Gabapentin
powder (Gabapentin). (DE 573-5 at 7, ESI 231.)
16. Gabapentin is a prescription drug denied to Mr. N.P., a Fox
Class Member, on November 15, 2016. Mr. N.P., had been
obtaining this drug through a prescription from 2012 through
Page 5 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6509

Page 6 of 14

2015. (DE 573 at 16.) According to Defendant, Mr. N.P.’s
Gabapentin prescription was (apparently) flagged and rejected
pursuant to an unidentified protocol. (DE 586 at 39-41; DE 5735, ESI 231.) TRW acknowledges that this denial “may have, in
fact, violated the 2011 order[,]” but seeks to excuse the violation
by noting that it only “occurred seven days after the November
8, 2016 clarifying order.” (DE 586 at 53, 49.)1 However, the 2016
Injunction “may be” irrelevant to Mr. N. P., since the preapproval
had already been enjoined in 2011, and TRW admits that, “if he
was getting it all along, then he probably shouldn’t have been
denied it under the status of the settlement agreement.” (Id. at 54,
52; see also id at 51.) Ultimately, despite being challenged well
in advance on this very point, defense counsel was unable to say
at the hearing whether Mr. N.P.’s prescription was denied
because of a prior authorization or safety issue. (Id. at 42-43.)2
17. It is uncontested that the “Advantage Plus PA List” from the
2016 Service Addendum also includes Xarelto. (DE 573 at 2122.) Xarelto is a prescription drug that had originally been denied
to Ms. C.A., the wife of a Golden Class Member, on the basis of
a “prior authorization” being needed. (DE 546-5.) TRW
characterized this as a “medical necessity” review in its brief, but
conceded at oral argument that “[i]t could be based” on a step
therapy, which would be a violation of the 2011 Injunction. (DE
581-2 at 2; DE 586 at 56-57.)
18. It is undisputed that the issues of prescription drug denial
regarding Mr. N.P. and Ms. C.A. were fully resolved by TRW in
2017. (DE 581 at 2.)
TRW attributes this to “human error[,]” but when asked at the hearing if the denial was, “if not
in violation of the earlier injunction . . .in violation of the November 8, 2016 clarifying order, albeit
only by seven days[,]” defense counsel agreed that, “I think that's probably correct, Judge, yes.”
(DE 586 at 51.) Apparently, “this program is one that depends a lot upon human beings getting it
right” and “maybe that’s the answer to understanding that something else has to occur...in writing,
as to how these [protocols, appearing in ESI 231] are implemented.” (Id. at 35, 48-49 (emphasis
added).)
2
In making my findings with respect to contempt, I find no basis for assigning fault to defense
counsel. It is my distinct impression that she has her hands full with this client, having to explain
and defend against its unilateral actions or inactions, through no fault of her own.
1

Page 6 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6510

Page 7 of 14

19. TRW has provided an e-mail dated October 2, 2017 in its
response brief, indicating that ESI resolved Ms. C.A.’s denial by
contacting her prescribing doctor in order to obtain “medical
necessity” assurances, and that once such assurances were
received the prescription was approved. (DE 581-2.)
STANDARD OF REVIEW
The Court’s review of objections to a Magistrate Judge’s R&R on a
dispositive motion is de novo. 28 U.S.C. § 636(b)(1)(c). “‘[O]bjections disput[ing]
the correctness of the magistrate’s recommendation but fail[ing] to specify the
findings . . . believed in error’ are too general.” Novak v. Prison Health Services,
Inc., No. 13-11065, 2014 WL 988942, at *3 (E.D. Mich. Mar. 13, 2014) (quoting
Miller v. Currie, 50 F.3d 373, 380 (6th Cir. 1995)). Ordinarily, objections that lack
specificity do not receive de novo review. Mira v. Marshall, 806 F.2d 636, 637 (6th
Cir. 1986). In addition, the Court may accept, reject, or modify any or all of the
Magistrate Judge’s findings or recommendations. FED. R. CIV. P. 72(b)(3).
“A litigant may be held in contempt if his adversary shows by clear and
convincing evidence that ‘he violate[d] a definite and specific order of the court
requiring him to perform or refrain from performing a particular act or acts with
knowledge of the court's order.’” NLRB v. Cincinnati Bronze, Inc. 829 F.2d 585, 591
(6th Cir. 1987) (citation omitted). To be held in contempt, the prior Order must be
clear and unambiguous, with ambiguities being resolved in favor of the party

Page 7 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6511

Page 8 of 14

charged with contempt. Liberte Capital Grp., LLC v. Capwill, 462 F.3d 543, 551
(6th Cir. 2006).
Plaintiffs have a heavy burden of evidence to show “by more than a mere
preponderance of the evidence” that Defendants violated the injunction.
Consolidation Coal Co. v. Local Union No. 1784, United Mine Workers of Am., 514
F.2d 763, 766 (6th Cir. 1975). “Willfulness is not an element of civil contempt, so
the intent of a party to disobey a court order is irrelevant to the validity of [a]
contempt finding.” Rolex Watch U.S.A., Inc. v. Crowley, 74 F.3d 716, 720 (6th Cir.
1996) (citation omitted).
Once Plaintiffs have met their burden, “a defendant must show ‘categorically
and in detail’ why he or she is unable to comply with the court's order.” Id. at 720.
When evaluating a defendant’s failure to comply, the Court also considers “whether
the defendants took all reasonable steps within their power to comply with the court's
order.” Peppers v. Barry, 873 F.2d 967, 969 (6th Cir. 1989).
ANALYSIS
Objection 1: The Magistrate Judge makes an “unfounded assumption” that
Defendant continues to maintain non-compliant preapproval protocols. (ECF No.
591, PageId. 6350-51).

Page 8 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6512

Page 9 of 14

Objection 3: The R&R incorrectly concluded that the “2015 and 2016 Service
Addenda violate the Court’s 2016 Injunction in largely the same way that the 2011
Injunction was violated.” (ECF No. 591, PageId. 6355).
Objection 6: The Magistrate Judge incorrectly based contempt on the assumption
that the two individuals who were denied medications were “unlikely . . . the only
ones.” (ECF No. 591, PageId. 6358; ECF No. 590, PageId. 6346).
Because Objections 1, 3 and 6 pertain to the R&R’s analysis of the extent of
Defendant’s liability, the Court analyzes them together. Defendant argues that the
R&R assumes, without supporting evidence, that improper coverage denials are on
going, despite there only being evidence of two such denials, which were promptly
corrected. (ECF No. 590, PageId. 6351, 6359).
The Court finds that the R&R makes no such assumptions regarding the extent
of TRW’s denials of coverage. In fact, it states that “[i]t is unclear at this point
whether the denial of benefits to the two class members identified thus far are merely
isolated incidents or two tips of the larger iceberg.” (Id. at 6344). Under the current
system, which automatically places class members into prohibited protocols, ongoing violations are a possibility, but neither the Magistrate Judge nor the Court
comes to a conclusion on the matter. Defendant correctly points out that Plaintiff
currently lacks evidence of further denials; however, the Court finds that this is the
result of Defendant’s failure provide the necessary records needed to discover
Page 9 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6513

Page 10 of 14

further denials. (ECF No. 573, PageID. 5938-39). Accordingly, the Magistrate Judge
recommended discovery to determine the extent of the denials, but only for the
purposes of determining sanctions, not contempt. (ECF No. 590, PageID. 6347). The
Court agrees with this recommendation.
Regardless of possible denials waiting to be discovered, the prescription drug
denials to Mr. N.P. and Ms. C.A. alone are sufficient to support a finding of
contempt. Upon finding that TRW unilaterally modified its plans to exclude certain
drugs from coverage, the 2011 Order enjoined TRW from implementing prescription
drug protocols with an agreement between parties. (ECF No. 479, PageID. 3489,
3495). Afterwards, TRW’s 2015 and 2016 Addenda incorporated the very same
protocols the 2011 Order prohibited. And although there is disagreement regarding
the 2011 Order’s clarity, the 2016 Order is clear.
TRW cannot unilaterally institute preapproval procedures for
previously covered prescriptions, and TRW is enjoined from
continuing to implement these procedures that exclude previously
covered prescription drugs, subject to a pre-authorization procedure.
This type of change must be the subject of a negotiated agreement
between the parties, and subject to final approval by the Court.
(ECF No. 531, PageID. 4388). The directive to TRW is simple: it cannot create a
new hoop for Plaintiffs to jump through in order to obtain a drug that previously had
no obstacles. Defendant violated this directive through its 2016 Service Addendum
which recognized a prohibited preapproval process that lead to prescription drug
denials to Mr. N.P. and Ms. C.A. (ECF No. 573-5; 546-2; 546-5).
Page 10 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6514

Page 11 of 14

Defendant also argues that the R&R overlooked Defendant’s success in
resolving the two denials. It does not. While recognizing Defendant’s efforts in
correcting the mistakes, the R&R notes that “TRW did take a reasonable step
towards compliance ex post facto; however, all reasonable steps must be taken to
comply with the Court order in the first instance.” (Id. at 6342). Because the Court
finds evidence that TRW did not, in the first instance, comply with the settlement
agreements and the applicable court orders, objections 1, 3, and 6 are overruled.

Objection 2: The R&R’s prima facie finding of contempt is not reasonable,
therefore, the burden does not shift to the Defendant to show its inability to comply
with the Court’s Orders. (ECF No. 591, PageId. 6354).
For the reasons stated above, the R&R’s finding of contempt was reasonable
in light of the Defendant’s continued use of protocols in at least two class member’s
plans. Therefore, Defendant has the burden to prove why it was unable to comply
with the Courts orders. Objection 2 is overruled.

Objection 4: The R&R incorrectly states that Defendant’s Motion for a Clarifying
Order [480] was denied by the 2016 Order. (ECF No. 591, PageId. 6356).
On March 28, 2014, Defendant filed a Motion for a Clarifying Order [480].
Defendant argues that this motion was not denied, but was merely denied as moot
Page 11 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6515

Page 12 of 14

by the 2016 Order because the order itself provided the clarity Defendant sought
regarding the prohibition of preapproval procedures for previously covered
prescriptions. (ECF No. 591, PageID. 6357). The Court agrees with Defendant’s
assessment that the 2016 Order clarified the 2011 Order. However, although the
R&R did not explicitly state that the Defendant’s motion as denied as moot, it does
explain that the 2016 Order gave clarity by recognizing that the 2011 Order was
ambiguous: “The Court’s second injunction, the 2016 Injunction dated November 8,
2016, reiterates that TRW is enjoined from implementing ESI’s policies that
‘unilaterally institute preapproval procedures for previously covered prescriptions,’
and further specifies that TRW is enjoined from ‘exclud[ing] previously covered
prescription drugs, subject to a pre-authorization procedure.’” (ECF No. 590,
PageID 6328; ECF No. 531). Because the R&R’s explanation of the 2016 Order
shows that it was not misleading or incorrect due to being incomplete, objection 4 is
overruled.

Objection 7: The R&R incorrectly requires TRW to institute a “failsafe approach”
in order to avoid contempt. (ECF No. 591, PageId. 6360).
The R&R does not require TRW to adopt a failsafe approach to avoid
contempt. It does, however, suggest that TRW should implement such an approach
so that preapproval protocols are no longer applied to class members. The Court
Page 12 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6516

Page 13 of 14

joins the R&R in this suggestion. Under the current system, TRW instructs ESI to
follow an addendum which applies prohibited protocols to class members, trusting
that ESI will remember, without clear written guidance, not to follow the
addendum’s instructions and instead opt out all of the class members. This leaves
only the elderly class members themselves to be a back stop for policing TRW’s
violations. A failsafe approach would be simple: issue a new addendum which
removes class members from prohibited protocols. Short of imputing nefarious
financial motives on to TRW, the Court is unsure why moving an X from the “In
Place” column to the “Remove” column is an “unachievable standard,” as Defendant
states. (ECF No. 591, PageID. 6360-61). The settlement agreements and subsequent
orders are clear. Defendant must once and for all remove barriers to full healthcare
coverage for Plaintiffs as promised. Objection 7 is overruled.
CONCLUSION
For the reasons stated above, the R&R [590] is ADOPTED; Defendant
TRW’s Objections [591] are OVERRULED; and Plaintiffs’ Motion for Contempt
[573] is GRANTED.
Accordingly,
IT IS ORDERED that the R&R [590] is ADOPTED.
IT IS FURTHER ORDERED that Defendant’s Objections [591] are
DENIED.
Page 13 of 14

Case 2:93-cv-40530-AJT-APP ECF No. 600 filed 05/26/20

PageID.6517

Page 14 of 14

IT IS FURTHER ORDERED that Plaintiffs’ Motion for Contempt [573] is
GRANTED.
IT IS FURTHER ORDERED that Plaintiff is GRANTED ADDITIONAL
DISCOVERY as outlined in the R&R. (ECF No. 590, PageID. 6345-46).
SO ORDERED.

Dated: May 26, 2020

s/Arthur J. Tarnow
Arthur J. Tarnow
Senior United States District Judge

Page 14 of 14