Feldman's Med. Ctr. Pharmacy, Inc. v. CareFirst, Inc.

898 F.Supp.2d 883

FELDMAN'S MEDICAL CENTER PHARMACY, INC., Plaintiff,

v.CAREFIRST, INC., Defendant.

Civil No. SKG–10–254.

United States District Court, D. Maryland.

Sept. 28, 2012.

Neal Cormac Baroody, Thomas O'Toole, Baroody and O'Toole, Baltimore, MD, Anthony J. Paduano, Jordan D. Becker, Paduano and Weintraub, New York, NY, for Plaintiff.

Alan Dean Stocksdale, CareFirst, Bluecross, Blueshield, Baltimore, MD, Anthony Francis Shelley, Miller and Chevalier Chtd., Patrick P. De Gravelles, CareFirst Bluecross Blueshield, Washington, DC, for Defendant.

MEMORANDUM OPINION AND ORDER

SUSAN K. GAUVEY, United States Magistrate Judge.

This is an ERISA case. Pursuant to an Amended Memorandum Opinion and Order dated November 9, 2011,823 F.Supp.2d 307 (D.Md.2011), the Court entered judgment in this case on December 5, 2011. Thereafter, plaintiff filed its Motion for Attorney's Fees and Costs. (ECF No. 158). Briefing is complete. No hearing is necessary. Local Rule 105.6. For the reasons set forth in this opinion, the Court DENIES the motion.

I. History of the Dispute and Factual Record¹

Feldman's Medical Center Pharmacy, Inc. (“FMCP” or “Feldman's”) is a Maryland specialty pharmacy and during the relevant time period dispensed drugs used to treat hemophilia, von Willebrand disease, hepatitis, and HIV. (ECF No. 2, ¶ 1). The claims at issue here were for provision of factor drugs to patients with hemophilia—CareFirst's insureds. CareFirst is a Maryland health insurer and independent licensee of the Blue Cross Blue Shield Association. ( Id., ¶ 2).

FMCP submitted claims to, and was reimbursed by, CareFirst and its predecessors, starting from FMCP's inception in the mid–1980s, for certain durable medical equipment and prescription drugs. (SUMF, ECF No. 100–2, ¶ 52; Bostwick Decl., ECF No. 104, ¶ 33). Beginning in the 1990s, FMCP submitted certain prescription drug claims through CareFirst's “EPIC” contract. (White Decl., ECF No. 120–5, ¶ 4) (EPIC was a consortium of pharmacies to which FMCP was a party that joined together to obtain certain efficiencies). Thereafter, under a subscriber agreement dated August 12, 1997 (the “Participating” Professional Provider Agreement” or “PPP Agreement”), FMCP became a “participating” or “par” provider in CareFirst's network and secured its entitlement to direct payment for insurance claims submitted for “covered services.” (ECF No. 2, Ex. A); see also (Becker Decl., ECF No. 46–2, ¶ 5). Factor Health Management (“FHM”), a Florida company, purchased FMCP from its founder in October 2007. (Bostwick Decl., ECF No. 104, ¶ 20). After FMCP was purchased by FHM, it continued to dispense prescription drugs and DME, but also began to distribute “factor drugs” to patients with hemophilia. (White Decl., ECF No. 120–5). FMCP reports that the medication dispensed to patients in connection with the claims at issue in this case consisted of self-injectable synthetic recombinant clotting factor replacement medication, of which Advate is an example. (ECF No. 100–2, ¶ 140, Bostwick Decl., ECF No. 104, ¶ 87). FMCP asserts that it submitted claims to CareFirst directly for services that were not covered by the EPIC contract and that CareFirst paid FMCP directly for these claims pursuant to the PPP Agreement, or if there was no applicable contract, FMCP was paid as a nonparticipating provider at reimbursement rates set by CareFirst. (White Decl., ECF No. 120–5, ¶ 4). There is no dispute that CareFirst had paid FMCP for claims for factor drugs (ECF No. 104, ¶ 56) but CareFirst states that payment was inadvertent as a result of automated processing. See (Hanson Decl., ECF No. 116, ¶¶ 27–31).

In 2007, the Special Investigations Unit (“SIU”) of CareFirst began an investigation of FMCP's parent company, based on a fraud alert. (ECF No. 104–4, 9). Hanson, of SIU, asked that FMCP's claims be pended to allow SIU review. During this investigation, it was discovered that FMCP lacked proper licensure. (ECF No. 67, 4; ECF No. 104, Ex. 17, 3).

Accordingly, and in early 2008, CareFirst initiated the recredentialing process of FMCP as a par provider. In that process, CareFirst requested that FMCP provide a copy of its Residential Services Agency (“RSA”) license, (ECF No. 12, 20), which had been identified as a requisite for FMCP's participation. There was an email exchange between CareFirst and FMCP and internal email exchanges within FMCP on the RSA license requirement in the spring of 2008 with FMCP questioning—both internally, (ECF No. 121, 19), and with CareFirst—whether an RSA was required. (ECF No. 120–3, ¶ 8). On April 30, 2008, Janet Gardner, Senior Vice President of Clinical Operations for FMCP's parent, “spoke with Isabella Thornton at CareFirst and explained to her that Feldman's did not need an RSA because it did not provide home care to patients.” (Gardner Decl., ECF No. 120–3, ¶ 8). In his Declaration (ECF No. 163, ¶ 14), Patrick de Gravelles, in-house lawyer for CareFirst on this matter, stated that “[t]here is no record ... that either the Plaintiff or Plaintiff's counsel prior to filing suit ever claimed that Plaintiff did not need an RSA.” For purposes of this motion, the Court will assume that this Gardner–Thornton conversation occurred, as reported. There is, however, as Mr. de Gravelles indicates, no “record” of the conversation or its content. Moreover, Gardner's email of April 30 to FMCP staff suggests that there was some difference of opinion within FMCP as to the need for a RSA license. (ECF No. 121, 19). (“[I]f we continue to pursue the RSA (as of yesterday, Willard thought that we should.”)) While Gardner of FMCP states in her declaration that she told Thornton of CareFirst on April 30, 2008 that FMCP did not need an RSA, she shortly thereafter instructed Adams of her staff to direct a letter of inquiry to OHCQ on this exact question. Moreover, Ms. Adams of FMCP stated that at the time FMCP was not certain whether it needed an RSA. (ECF No. 121, 29). Janet Gardner was trying to figure out “whether we needed it” [an RSA]. (ECF No. 121, 33).

On May 12, 2008, Amy Adams of FMCP sent a letter to Barbara Fagan of the Office of Health Care Quality (“OHCQ”) of the Maryland Department of Health and Mental Hygiene (“DHMH”) asking whether it was necessary for FMCP, as a retail pharmacy which occasionally delivers durable medical equipment and supplies to patients, sometimes brings the items into the home and explains how to use the items, needs an RSA. (ECF No. 121, 46). The written state response, if there was one, is not in the factual record. Ms. Adams could not remember a response. (ECF No. 121, 31). However, Ms. Adams understood that the State of Maryland required FMCP to have an RSA. (ECF No. 121, 45). Fagan testified that an RSA would be necessary in these circumstances. (ECF No. 190–2, 4–10).

On May 23, 2008, another division of the State DHMH—Office of Health Services asked FMCP for its RSA, believing it was delivering DME and oxygen services to Medicaid beneficiaries in their residences, thus necessitating an RSA. (ECF No. 121, 49). FMCP responded on June 13 that while it did not provide such services in the residences, it was “currently working on obtaining our RSA license.” (ECF No. 121, 47).²On June 10, 2008, Chavarria of CareFirst emailed Gardner of FMCP that its credentialing documents were incomplete because, inter alia, no RSA was included. (ECF No. 121, 24). On June 18, 2008, Gardner responded that FMPC was in the “process of submitting RSA application and completing RSA requirements,” noting that “initially, the requirement for licensure was unclear as Feldman's Medical Center is a retail pharmacy.” (ECF No. 121, 23).

On July 22, 2008, Gardner sent to CareFirst the “letter previously sent to State regarding our inquiry as to whether or not RSA applies to us” and assured CareFirst that the RSA application will be submitted by July 31, 2008 (ECF No. 121, 25).³ On July 30, 2008, FMCP applied to OHCQ for an RSA license. (ECF No. 190–1, 2) ⁴ (ECF No. 121, 47).

CareFirst informed FMCP on August 22, 2008 that it could not reimburse claims for factor drugs because—according to CareFirst—FMCP did not have the correct type of contract with CareFirst. (ECF No. 100–2, ¶ 120; Bostwick Decl., ECF No. 104, ¶ 55 and Ex. 27). CareFirst informed FMCP that it needed a Home InfusionTherapy (“HIT”) contract in order to dispense factor drugs as a CareFirst participating professional provider and that FMCP only had a Durable Medical Equipment (“DME”) contract. (ECF No. 100–2, ¶ 120; Bostwick Decl., ECF No. 104, ¶ 55). CareFirst advised FMCP that it needed to obtain a Residential Services Agency (“RSA”) license to qualify for the HIT contract. (ECF No. 100–2, ¶ 124; Gardner Decl., ECF No. 12–3, ¶¶ 8 & 9; ECF No. 17, ¶ 6). (It had already been determined by the OCHQ that FMCP needed an RSA license for its delivery set-up and explanation regarding durable medical equipment and supplies, and as of this time, FMCP had already applied to OCHQ for an RSA license). Sometime in the summer of 2008, FMCP submitted an application to become a Home Infusion Therapy (“HIT”) provider (ECF No. 117–1, 25), and in that process, Judy Gilmore of CareFirst asked in an email to Joel Yerton of FMCP whether “you have been providing home infusion therapy services for CareFirst members based on your existing DME contract. Please provide clarification on this point.” ( Id.).

On August 21, 2008, FMCP's application was denied by the credentialing division “due to improper licensure.” (ECF No. 117–1, 24). The next day, August 22, Joel Yerton emailed Judy Gilmore that “I think we may have gotten confused on IV vs Med Specialty. FMCP pharmacy is not a traditional Home Infusion Company. They are more aligned with your Medical Specialty Agency.” (ECF No. 117–1, 13). Gilmore responded that “[i]t does make more sense ... I'll research for you.” (ECF No. 104, Ex. 27, 1–2). However, that same day, Onorato, Gilmore's superior in...