Physician Specialty Pharmacy, LLC v. Prime Therapeutics, LLC

Filing 75

ORDER ADOPTING REPORT AND RECOMMENDATION 62 . IT IS HEREBY ORDERED that Defendant's Motion to Dismiss Plaintiff's Amended Complaint 18 is GRANTED as to Count XVI Antirust Violations. The Court will defer ruling on the issue of supplemental jurisdiction over the remaining state law claims until such time as the motion for leave to file an amended complaint has been decided. (Written Opinion). Signed by Judge Michael J. Davis on 3/28/2019. (GRR)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Physician Specialty Pharmacy, LLC,
Plaintiff,
v.

ORDER
Civil No. 18-1044 (MJD/TNL)

Prime Therapeutics, LLC,
Defendant.

Adrienne Dresevic and Robert J Dindoffer, The Health Law Partners and
Elizabeth R. Odette and Kristen G. Marttila, Lockridge Grindal Nauen PLLP,
Counsel for Plaintiff.
Christine Lindblad, Meghan M.A. Hansen, Ellie J. Barragry and Alex L.
Rubenstein, Fox Rothschild LLP, Richard J. Malacko, Malacko Law Office,
Counsel for Defendant.
_______________________________________________________________________
I.

Introduction
The above matter comes before the Court upon the Report and

Recommendation of United States Magistrate Judge Tony Leung dated January
23, 2019. Both Plaintiff and Defendant have filed objections to the Report and
Recommendation.

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II.

Discussion
A.

Background

Plaintiff Physician Specialty Pharmacy, LLC (“PSP”) is a specialty
pharmacy located in Florida that has a substantial number of customers in
Alabama. Defendant Prime Therapeutics, LLC (“Prime”) is a pharmacy benefits
manager that manages the prescription drug benefits for Blue Cross and Blue
Shield of Alabama. For several years, PSP filled prescription claims for Prime’s
beneficiaries, but in 2015, Prime began to conduct a series of audits concerning
PSP’s claims to Prime for payment. While the audits were conducted, Prime
refused to pay PSP for any prescriptions it dispensed to a Prime member.
In April 2016, Prime rejected over $300,000 worth of claims submitted by
PSP for a number of reasons. Before PSP could appeal the results of the first
audit, and before the other audits were complete, Prime terminated PSP from its
pharmacy network. Later, Prime completed the remaining audits and rejected
another $500,000 worth of claims.
In April 2017, Prime announced the creation of AllianceRx; a joint venture
with Walgreens to provide specialty and mail-order pharmacy services.

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In April 2018, PSP brought this claim against Prime, asserting a number of
Minnesota and Florida state law claims, as well an antitrust claim under federal
law. Prime has moved to dismiss the amended complaint, and PSP has moved,
in limine, to exclude a settlement demand letter pursuant to Fed. R. Evid. 408.
B.

Report and Recommendation

Following briefing and oral argument, the Magistrate Judge issued a
Report and Recommendation recommending the Court grant the motion to
dismiss the antitrust claim and to decline to exercise supplemental jurisdiction
over the remaining state law claims. The Magistrate Judge further recommended
that the Court allow PSP the opportunity to submit an amended complaint. Both
parties have filed objections to portions of the Report and Recommendation.
C.

Objections

PSP objects to the Magistrate Judge’s conclusion that its claims under
Sections 1 and 2 of the Sherman Act and Section 3 of the Clayton Act be
dismissed without prejudice for failure to plausibly plead claims thereunder and
to the recommendation that this Court not exercise supplemental jurisdiction
over the state law claims.

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Prime objects to the Magistrate Judge’s recommendation that PSP be
allowed the opportunity to file an amended complaint. PSP has since filed a
motion for leave to file an amended complaint, and that matter will be heard by
the Magistrate Judge.
Pursuant to statute, the Court has conducted a de novo review of the
record. 28 U.S.C. § 636(b)(1); Local Rule 72.2(b). Based upon that review, the
Court agrees with the Report and Recommendation that PSP has failed to
plausibly plead antitrust claims under federal law and that PSP should be
allowed the opportunity to file an amended complaint. At this time, the Court
will decline to address whether to exercise supplemental jurisdiction over the
state law claims.
IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss Plaintiff’s
Amended Complaint (Doc. No. 18) is GRANTED as to Count XVI – Antirust
Violations. The Court will defer ruling on the issue of supplemental jurisdiction
over the remaining state law claims until such time as the motion for leave to file
an amended complaint has been decided.
Dated: March 28, 2019
s/ Michael J. Davis
MICHAEL J. DAVIS
United States District Court
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