Corcoran et al v. CVS Health Corporation

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

Redacted Version of CVS Motion in Limine #5

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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 #5: 19 TO PRECLUDE EVIDENCE AND CVS Pharmacy, Inc., ARGUMENT ON NON-ACTIONABLE 20 CONDUCT 21 Defendant. Date: May 13, 2020 22 Time: 9:30 a.m. 23 Courtroom: 1 Judge: Hon. Yvonne Gonzalez Rogers 24 25 26 27 28 CVS MIL #5: TO PRECLUDE EVIDENCE CASE NO. 15-CV-03504-YGR AND ARGUMENT ON NON-ACTIONABLE CONDUCT 1 At trial, the Court should bar Plaintiffs from presenting evidence or arguing that CVS is liable 2 because of acts or omissions that are not actionable as a matter of law, namely: (1) any alleged failure 3 to disclose information to Class Members, or (2) any alleged representation that Class Members' 4 copayments were "accurate," "correct," or the like. Excluding category (1) is warranted because, as 5 the Court already has decided, CVS had no affirmative duty to disclose information to Class Members 6 concerning the Health Savings Pass ("HSP") program or usual and customary pricing. Excluding 7 category (2) is warranted because there is no evidence that CVS pharmacists made any statements to 8 customers concerning the "accuracy" of their copayments, which a pharmacy benefit manager 9 ("PBM") calculated and instructed the pharmacist to collect. This motion accordingly should be 10 granted under the law-of-the-case doctrine and Federal Rules of Evidence 402 and 403. 11 BACKGROUND 12 Plaintiffs allege that CVS reported inflated "usual and customary" or "U&C" prices to PBMs, 13 which caused them to pay inflated copayments to CVS for certain generic prescriptions. The U&C 14 price is one data element (among many) that a CVS pharmacy transmits to a PBM during "claims 15 adjudication." Adjudication is an electronic process whereby the PBM determines whether the 16 customer is an eligible member of the insurance plan; whether the drug is a covered benefit; and if so, 17 how the pharmacy's reimbursement for the drug shall be allocated between the member and the plan. 18 Adjudication happens at the "point of sale," while the member stands at the pharmacy counter; it takes 19 only seconds. 20 Whenever the member is responsible for a copayment, the amount is calculated by the PBM 21 according to the terms of the member's insurance policy. The amount of the copayment depends on 22 the particular policy terms, the price of the drug, and the member's historical payments. The PBM has 23 access to all of this information, but CVS does not.1 Once the PBM calculates the member's 24 25 26 1 The pharmacy is not privy to the member's insurance policy, nor to the member's prior payments (which may include products and services provided by other pharmacies or providers). Concerning 27 the price of the drug, the pharmacy knows and is the source of its U&C price, but that is only one of several prices the PBM may consider when calculating the copay (e.g., the drug's maximum allowable 28 cost ("MAC"), set by the PBM; the average wholesale price ("AWP"), set by the manufacturer), as well as any deductibles or out-of-pocket limits applicable to the member. CVS MIL #5: TO PRECLUDE EVIDENCE CASE NO. 15-CV-03504-YGR AND ARGUMENT ON NON-ACTIONABLE 1 CONDUCT 1 Because this case concerns affirmative misrepresentations of the U&C price, at trial, the Court 2 should preclude Plaintiffs from arguing or implying that CVS's liability could be premised on other 3 conduct—namely, (1) violating a supposed duty to disclose information to Class Members at the point 4 of sale, or (2) representing to Class Members that their copayments were "accurate," "correct," or the 5 like. As a matter of law, CVS was under no duty to disclose information concerning drug pricing to 6 Class Members; and, as a matter of fact, there is no evidence that CVS made a representation to any 7 Class Member concerning the accuracy a copayment. 8 I. Duty to Disclose 9 Early in this case, Plaintiffs asserted a cause of action based on a duty to disclose. Plaintiffs 10 sued for fraudulent concealment premised on CVS's failure to inform customers, at the point of sale, 11 about the HSP program, the HSP price, and CVS's practice of submitting a higher-than-HSP price as 12 the U&C price. Plaintiffs argued that "a duty [existed] on the part of CVS to disclose information 13 relevant to drug pricing." The Court dismissed that claim for lack of any authority to support such a 14 duty to disclose. Corcoran, 169 F. Supp. 3d at 989. The Court "decline[d] Plaintiffs' invitation to 15 impose a duty on pharmacists as a matter of law which encompasses matters of drug pricing." Id. 16 Plaintiffs did not appeal that ruling when they appealed from the prior judgment. 17 It is now law of the case that CVS had no duty to disclose to Class Members information about 18 HSP or U&C pricing, and how such pricing might affect copayments. Arizona v. California, 460 U.S. 19 605, 618 (1983) (explaining that the law-of-the-case doctrine "posits that when a court decides upon a 20 rule of law, that decision should continue to govern the same issues in subsequent stages in the same 21 case"). Courts commonly exclude arguments at trial that contradict prior legal rulings in the case. 22 See, e.g., Fahmy v. Jay Z, 2015 WL 5680299, at *10 (C.D. Cal. Sep. 24, 2015) (precluding plaintiff 23 from presenting evidence or argument that would contradict court's prior rulings on applicability of 24 certain legal doctrines); UMG Recordings, Inc. v. Escape Media Grp., Inc., 2015 WL 1873098, at *4 25 (S.D.N.Y. Apr. 23, 2015) (noting parties cannot "re-litigate at trial issues that were conclusively 26 determined in the [summary judgment decision]"). Because it is law of the case, the Court should bar 27 Plaintiffs from arguing or implying to the jury that CVS's liability can be premised on a duty to 28 disclose information at the point of sale. CVS MIL #5: TO PRECLUDE EVIDENCE CASE NO. 15-CV-03504-YGR AND ARGUMENT ON NON-ACTIONABLE 3 CONDUCT 1 In addition, the Court may exclude the same arguments under Federal Rules of Evidence 402 2 and 403. Because CVS owed Class Members no duty to disclose information about drug pricing, and 3 because no pending claim is based on an omission, arguments about duties of disclosure would be 4 irrelevant, unfairly prejudicial, and confusing to the jury. 5 II. "Accuracy" or "Correctness" of Copayments 6 It is undisputed that a PBM (1) calculates the amount of an insured customer's copayment; (2) 7 informs the pharmacy by electronic means during adjudication of the amount of the copayment; and 8 (3) contractually restricts CVS from collecting from the customer any amount except the exact amount 9 communicated by the PBM. Thus, CVS collects copayments from insured customers, but it does not 10 calculate them, nor does it know whether the PBM's calculation is accurate under the terms of the 11 customer's insurance policy. See, e.g., Ex. 9 to Plfs. Am. Class Cert. Mot. ¶¶ 18, 28, Dkt 274-7 12 (pharmacies are instructed by the PBM in adjudication to "collect the cost share/copayment from 13 Members based upon contract provisions"); id. ¶ 28 n.29 ("[T]he pharmacy does not know the details 14 of a given payor's reimbursement methodology[.]"); Ex. 23 at 7 (Ed McGinley Expert Report) ("The 15 pharmacist usually has no insight into the calculation of. . . the patient's copayment."). Unlike the 16 PBM, CVS is not aware of or privy to the terms of the customer's insurance policy. Given this, CVS 17 could not possibly have "represented" to Class Members that their copayments were "accurate" or 18 "correct"; whatever the "right" amount is under the individual's plan is not something the pharmacy 19 knows or can determine. Under Rules 402 and 403, then, the Court should preclude Plaintiffs from 20 arguing or suggesting to the jury that CVS made representations to Class Members to the effect that 21 their copayments were "accurate," "correct," or the like, or that the customers "receive[d] the benefit 22 of their insurance." Pls. Opp'n to CVS's Mot. for Summ. J. at 1, 10–11, 17, Dkt. 304. 23 CONCLUSION 24 For the foregoing reasons, the Court should bar Plaintiffs from arguing or implying that CVS's 25 liability may arise from (1) a failure to disclose information to Class Members or (2) any affirmative 26 representation to Class Members concerning the accuracy of their copayments. 27 28 Dated: April 15, 2020 Respectfully submitted, CVS MIL #5: TO PRECLUDE EVIDENCE CASE NO. 15-CV-03504-YGR AND ARGUMENT ON NON-ACTIONABLE 4 CONDUCT 1 By: /s/ Grant A. Geyerman 2 Enu Mainigi (admitted pro hac vice) 3 Grant A. Geyerman (admitted pro hac vice) 4 WILLIAMS & CONNOLLY LLP 725 Twelfth Street, N.W. 5 Washington, DC 20005 Telephone: (202) 434-5000 6 Facsimile: (202) 434-5029 7 8 Edward W. Swanson (Cal. Bar No. 159859) August Gugelmann (Cal. Bar No. 240544) 9 SWANSON & MCNAMARA LLP 10 300 Montgomery Street, Suite 1100 San Francisco, CA 94104 11 Telephone: (415) 477-3800 Facsimile: (415) 477-9010 12 13 Attorneys for Defendant CVS Pharmacy, Inc. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CVS MIL #5: TO PRECLUDE EVIDENCE CASE NO. 15-CV-03504-YGR AND ARGUMENT ON NON-ACTIONABLE 5 CONDUCT