Corcoran et al v. CVS Health Corporation

Northern District of California, cand-4:2015-cv-03504

Redacted Version of CVS Motion in Limine #3

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1 Enu Mainigi (admitted pro hac vice) Grant A. Geyerman (admitted pro hac vice) 2 WILLIAMS & CONNOLLY LLP REDACTED VERSION OF 725 Twelfth Street, N.W. DOCUMENT SOUGHT 3 Washington, DC 20005 TO BE SEALED 4 Telephone: (202) 434-5000 Facsimile: (202) 434-5029 5 Edward W. Swanson (Cal. Bar No. 159859) 6 August Gugelmann (Cal. Bar No. 240544) 7 SWANSON & MCNAMARA LLP 300 Montgomery Street, Suite 1100 8 San Francisco, CA 94104 Telephone: (415) 477-3800 9 Facsimile: (415) 477-9010 10 Attorneys for Defendant CVS Pharmacy, Inc. 11 12 IN THE UNITED STATES DISTRICT COURT 13 FOR THE NORTHERN DISTRICT OF CALIFORNIA 14 OAKLAND DIVISION 15 16 Christopher Corcoran, et al., Case No. 15-cv-03504-YGR 17 Plaintiffs, CLASS ACTION 18 v. CVS'S MOTION IN LIMINE #3: 19 TO PRECLUDE EVIDENCE OR CVS Pharmacy, Inc., ARGUMENT THAT CVS AND THE 20 PBMS ALLEGEDLY CONSPIRED 21 Defendant. Date: May 13, 2020 22 Time: 9:30 a.m. Courtroom: 1 23 Judge: Hon. Yvonne Gonzalez Rogers 24 25 26 27 28 CVS MIL #3: TO PRECLUDE EVIDENCE CASE NO. 15-CV-03504-YGR OR ARGUMENT THAT CVS AND THE PBMS ALLEGEDLY CONSPIRED 1 CVS Pharmacy, Inc. ("CVS") submits this motion in limine to preclude Plaintiffs from 2 presenting evidence or argument to the effect that CVS and the pharmacy benefit managers ("PBMs") 3 "conspired," "schemed," or the like to inflate usual and customary ("U&C") prices. Evidence and 4 argument regarding an alleged "conspiracy," "scheme," or the like should be excluded under Federal 5 Rules of Evidence 401, 402, and 403 because they are irrelevant to Plaintiffs' claims, contrary to other 6 evidence, and would unfairly prejudice CVS and mislead jurors. 7 Plaintiffs claim that they were overcharged for certain generic prescriptions because CVS did 8 not submit its Health Savings Pass ("HSP") program price as its U&C price as it was allegedly 9 required to do under its contracts with five PBMs: Caremark, Express Scripts, Medco, MedImpact, 10 and OptumRx (collectively the "Five PBMs"). At the beginning of this case, Plaintiffs argument was 11 that all PBMs and third-party payors were deceived by CVS's conduct. But then each of the Five 12 PBMs testified during discovery that the PBM had always understood that CVS was not required to 13 14 submit its HSP price as its U&C price under its contract.1 Each of the Five PBMs further testified that 15 this conclusion was not unique to CVS; rather, the Five PBMs did not view any pharmacy's 16 membership program price as a U&C price, and that remains the Five PBMs' position today.2 The 17 Five PBMs testified that they reached this conclusion independently, based on their understanding of 18 the contracts, and their understanding of usual and customary prices, and the inherent difference 19 between the pharmacy's retail or "cash" price (i.e., the usual and customary price) and a price 20 available to someone enrolled in a membership program. 21 Because the evidence concerning the Five PBMs is entirely one-sided against Plaintiffs' theory 22 of the case, CVS is concerned that Plaintiffs, at trial, may seek to change their theory and argue that 23 the Five PBM's "conspired" with CVS and/or one another to interpret their contracts in a manner 24 25 26 1 See Ex. 1 ¶¶ 16–18 (Compton Decl., Express Scripts) (Nov. 21, 2016); Ex. 2 ¶¶ 20–21 (Lavin Decl., 27 Caremark) (Nov. 18, 2016); Ex. 3 ¶¶ 11, 13 (Strein Decl., Medco) (Nov. 18, 2016); Ex. 4 ¶¶ 6–7 (Spadaccino Decl., Medco) (Nov. 18, 2016); Ex. 5 ¶¶ 10–12 (Reichardt Decl., OptumRx) (Nov. 20, 28 2016); Ex. 6 at 26:13–33:19 (Barre Dep., MedImpact) (No. 17, 2016). 2 See id. CVS MIL #3: TO PRECLUDE EVIDENCE CASE NO. 15-CV-03504-YGR OR ARGUMENT THAT CVS AND THE 1 PBMS ALLEGEDLY CONSPIRED 1 contrary to what (Plaintiffs say) the contracts required. For multiple reasons, Plaintiffs should be 2 precluded from arguing any such theory of "conspiracy" to the jury. 3 First, there is no evidence that the Five PBMs' position on generic membership programs was 4 the result of a conspiracy. See Holder v. Anderson, 2018 WL 4956757, at *2 (M.D. Fla. May, 30 5 2018) (precluding reference to defendant as intoxicated or under the influence during the accident 6 because no evidence of impairment); Wise v. C.R. Bard, Inc., 2015 WL 541933, at *10 (S.D. W.Va. 7 Feb. 10, 2015) (precluding evidence and argument that product caused cancer as irrelevant and likely 8 to cause unfair prejudice where no evidence that plaintiff had cancer). Rather, all of the evidence of 9 record shows that the Five PBMs reached their conclusions about their respective contracts 10 independently, after conducting their own internal analyses,3 in some cases even before CVS had even 11 launched its HSP program in November 2008.4 Plaintiffs have not disclosed any evidence that any of 12 the Five PBMs (or all of them) and CVS conspired or schemed to interpret their contractual definitions 13 14 of U&C price to exclude generic membership program prices, because no such evidence exists. 15 What is more, the record shows that the Five PBMs' understanding of membership program 16 prices is not unique. At least two other PBMs reached the same conclusion: 17 18 19 20 21 Several third-party payors (as distinct from PBMs) held the 22 same view: 23 24 25 3 Ex. 6 at 29:23–30:11 (Barre Dep.); Ex. 7 at 104:19–107:6 (Lavin Dep., Caremark) (Jan. 5, 2017); Ex. 8 at 20:14–22:4 (Compton Dep., Express Scripts) (Dec. 16, 2016); Ex. 3 ¶ 9 (Strein Decl.); Ex. 9 at 26 201:22–203:4, 206:22–207:16 (Reichardt Dep., OptumRx) (Dec. 20, 2016). 4 27 Ex. 7 at 100:5–102:3, 105:22–107:6 (Lavin Dep.); Ex. 10 (Caremark Document entitled "Troubleshooting Set Price Generic Programs"). 28 CVS MIL #3: TO PRECLUDE EVIDENCE CASE NO. 15-CV-03504-YGR OR ARGUMENT THAT CVS AND THE 2 PBMS ALLEGEDLY CONSPIRED 1 and (2) Aetna concluded that 2 membership program prices did not constitute U&C prices on Aetna claims and "CVS did not need to 3 submit the HSP program price as its U&C price."8 Even public payors like state Medicaid agencies 4 agreed: As one official said, "[b]ecause it's an enrollment [program] . . . we are told it cannot be 5 considered a discount program. . . . And the rest of the story. . . it's not audited as U/C."9 This 6 evidence shows that the Five PBMs' understanding on membership programs was not a unique 7 position produced by a conspiracy, but rather a position shared widely by other major PBMs and 8 payors throughout the United States. 9 Second, it is far too late for Plaintiffs to be asserting a brand new theory of liability. The 10 Complaint does not contain any allegation of a conspiracy among the Five PBMs and CVS, and 11 Plaintiffs have never provided notice to CVS that they intend to pursue such a theory. Plaintiffs and 12 CVS pursued extensive discovery in this case to address the theory of the Complaint, that CVS 13 14 violated its contracts with PBMs. Plaintiffs' have attacked the Five PBMs' testimony as "unverified 15 hearsay and speculation" and not supported by "contemporaneous documentation," but have never 16 taken the position that it was the result of a "conspiracy" with CVS. See Pls.' Opp'n to CVS's Mot. 17 for Summ. J. 8–9, Dkt. 304. Allowing Plaintiffs to raise a "conspiracy" theory at trial would unfairly 18 prejudice CVS because CVS had no notice during discovery or summary judgment proceedings that it 19 would need to respond to such a claim. See Catipovic v. Turley, 68 F. Supp. 3d 983, 998–99 (N.D. 20 Iowa 2014) (precluding plaintiff from referring to "fraud," "conspiracy," "collusion," "breach" of any 21 agreement, or similar characterizations as unduly prejudicial because it would invite the jurors to 22 decide the case on the basis of alleged misconduct not properly at issue); see also Campbell v. Emory 23 Clinic, 166 F.3d 1157, 1162 (11th Cir. 1990) (in context of motion to amend pleadings to add a claim, 24 25 26 8 Ex. 14 ¶¶ 11–13 (Zavalishin Decl,, Aetna) (Feb. 22, 2017). 9 27 Ex. 15 at CVSC-0405903 (Email from Suzette Bridges) (June 27, 2012); see also Ex. 16 at CVSC- 0405882 (Email from Charles Sandler) (Nov. 30, 2009) (explaining that requiring "a fee to belong to 28 [a club program to] get the special prices. . . makes their special prices exempt from a U/C because that price is not available to the general public" (emphasis added)). CVS MIL #3: TO PRECLUDE EVIDENCE CASE NO. 15-CV-03504-YGR OR ARGUMENT THAT CVS AND THE 3 PBMS ALLEGEDLY CONSPIRED 1 finding "[p]rejudice and undue delay are inherent in an amendment asserted after the close of 2 discovery and after dispositive motions have been filed, briefed and decided"). 3 Third, any unsupported allegation of conspiracy or agreement would unfairly prejudice CVS, 4 would confuse the jury, and would waste time because CVS would have responded to such an 5 allegation at summary judgment. Characterizing CVS's and the Five PBMs' conduct as conspiratorial 6 would be inflammatory and would lead jurors to conclude (in the absence of any evidence) that CVS 7 engaged in criminal conduct. See Council on American–Islamic Relations Action Network, Inc. v. 8 Gaubatz, 306 F. Supp. 3d 165, 176 (D.D.C. 2018) (prohibiting the use of the words "conspiracy," 9 "scheme," "plot," and "aid and abet" because "this type of terminology implies a legal conclusion and 10 its use is prejudicial"); see also Highland Capital Mgmt., L.P. v. Schneider, 551 F. Supp. 2d 173, 193 11 (S.D.N.Y. 2008) (prohibiting use of the terms "'securities fraud,' 'illegal,' 'insider trading,' 'inside 12 information,' and 'market manipulation'" because the probative value of these inflammatory terms 13 14 was outweighed by unfair prejudice and their misleading nature). And, because Plaintiffs have stated 15 no claim for conspiracy, any suggestion that CVS and the Five PBMs "conspired" may mislead and 16 confuse the jury into believing that conspiracy is a basis for finding CVS liable in this case. It would 17 also waste this Court's and the jurors' time because CVS would be compelled to spend time rebutting 18 the argument and explaining why it has no bearing on Plaintiffs' claims. 19 For these reasons, the Court should preclude Plaintiffs from presenting any evidence or 20 argument to the effect that CVS and the Five PBMs conspired, schemed, or the like that HSP prices 21 are not U&C prices. 22 23 24 25 26 27 28 CVS MIL #3: TO PRECLUDE EVIDENCE CASE NO. 15-CV-03504-YGR OR ARGUMENT THAT CVS AND THE 4 PBMS ALLEGEDLY CONSPIRED 1 Dated: April 15, 2020 Respectfully submitted, 2 3 By: /s/ Grant A. Geyerman ______________ 4 Enu Mainigi (admitted pro hac vice) 5 Grant A. Geyerman (admitted pro hac vice) WILLIAMS & CONNOLLY LLP 6 725 Twelfth Street, N.W. Washington, DC 20005 7 Telephone: (202) 434-5000 8 Facsimile: (202) 434-5029 9 Edward W. Swanson (Cal. Bar No. 159859) 10 August Gugelmann (Cal. Bar No. 240544) 11 SWANSON & MCNAMARA LLP 300 Montgomery Street, Suite 1100 12 San Francisco, CA 94104 Telephone: (415) 477-3800 13 Facsimile: (415) 477-9010 14 Attorneys for Defendant CVS Pharmacy, Inc. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CVS MIL #3: TO PRECLUDE EVIDENCE CASE NO. 15-CV-03504-YGR OR ARGUMENT THAT CVS AND THE 5 PBMS ALLEGEDLY CONSPIRED