Saltzman v. Independence Blue Cross

634 F.Supp.2d 538

Mark SALTZMAN et al., Plaintiffs, v. INDEPENDENCE BLUE CROSS et al., Defendants.

Civil Action No. 08-3849.

United States District Court, E.D. Pennsylvania.

June 5, 2009.

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Judah I. Labovitz, Howard I. Langer, Langer & Grogan, PC, Robert S. Kitchenoff, Noah I. Axler, Weinstein Kitchenoff LLC, Philadelphia, PA, for Plaintiffs.

Daniel B. Huyett, E. Thomas Henefer, Stevens & Lee, Reading, PA, for Defendants.

MEMORANDUM RE: MOTION TO DISMISS AMENDED COMPLAINT

BAYLSON, District Judge.

Plaintiffs Mark Saltzman and Jan Meister initiated the current civil action against Defendants Independence Blue Cross ("IBC"), QCC Insurance Company ("QCC"), and Keystone Health Plan East, Inc. ("KHPE"), alleging violations of the Employee Retirement Income Security Act ("ERISA") and several state law claims. Presently before this Court is Defendants' Motion to Dismiss Plaintiffs' Amended Complaint (Doc. 20).

After an extensive review of the Plan documents, considering the Third Circuit's ERISA jurisprudence and the arguments of counsel, this Court concludes that the ERISA claim must be dismissed. Plaintiffs seek to recover benefits, in the form of prescription drug copayment charges (Am. Compl. ¶ 1), which would require a ruling that Defendants' setting the copay required for a specific drug, in this case Plavix, was improper under the terms of the Plan. Specifically, Plaintiffs assert that because the Plan documents state that Defendants will offer "comprehensive prescription drug coverage" at the "highest level of coverage," Defendants have breached their commitment in the Plan with regard to Plavix by charging the highest copay under the Plan.

The Court concludes that ERISA does not authorize a district court to award benefits by determining Defendants violated the Plan by requiring the highest level of copay for a particular drug. The Plan documents submitted on the Rule 12 Motion clearly give Defendants the right to determine what the copay will be for providing a drug such as Plavix, and the decided cases do not allow a district court to overrule that decision and award benefits to Plaintiffs. Plaintiffs have not cited any cases establishing their right to recovery.

As to Plaintiffs' common law counts, this Court will accede to Plaintiffs' request and dismiss those without prejudice for further proceedings in state court.

I. Background and Procedural History

A. Factual Background

The allegations in Plaintiffs' Amended Complaint concern their benefits as subscribers to medical insurance plans sold by IBC through its subsidiaries, QCC and KHPE. In accordance with the applicable standard of review, Plaintiffs' allegations in the Amended Complaint (Doc. 14) will be accepted as true for purposes of deciding Defendants' Motion.

IBC "markets, sells, and operates" health insurance and prescription drug plans throughout several Pennsylvania counties in the Philadelphia metropolitan area. (Am. Compl. ¶¶ 12-13). IBC offers these health insurance benefits and prescription drug benefits through separate plans. First, as to the health benefits, IBC primarily offers two health plans: the Personal Choice plan and the Keystone plan. (Am. Compl. ¶¶ 17-25). As an optional supplement to those health plans, IBC also "markets, sells, and operates" two prescription drug plans: the Standard Drug Program and the Select Drug Program. (Am. Compl. ¶¶ 26-28).

Plaintiffs (and the proposed class, which has not yet been certified) are subscribers to the Select Drug Program, which is the only prescription drug plan at issue in this litigation. (Am. Compl. ¶¶ 27-28). Plaintiff Jan Meister is an employee of Stanley Creations, Inc., which contracted with IBC, through QCC, to provide the Personal Choice health plan and the Select Drug Program for its employees. (Am. Compl. ¶¶ 66-70). Plaintiff Mark Saltzman was an employee of Gary Barbera Dodgeland from May 2005 until March 2007; Barbera contracted with IBC, through KHPE, to provide the Keystone Health Plan and the Select Drug Program to its employees. (Am. Compl. ¶¶ 81-86).¹

Plaintiffs focus their claims on the Select Drug Program's formulary.² The Formulary for the Select Drug Program provides that:

In an effort to continue our commitment to provide you with comprehensive prescription drug coverage, a formulary feature is included in your prescription drug benefit. A formulary is a list of select FDA-approved, prescription medications reviewed by the Futurescripts® Pharmacy and Therapeutics Committee. These prescription medications have been selected for their reported medical effectiveness, safety, and value while providing you with the highest level of coverage under your prescription program.

(Am. Compl. ¶¶ 74, 86). The formulary's relationship to the prescription drug benefits will be more thoroughly discussed below. However, it is important to note here that Plaintiffs' prescription drug coverage, through the Select Drug Program Formulary, places all available prescription drugs into three different "tiers" for purposes of assigning a copayment ("copay") amount to be paid by the insured. (Am. Compl. ¶ 78). "A copayment is a specified dollar amount or a percentage of a contracted fee amount which IBC requires its subscribers to pay for certain medical services, including prescription drug purchases, pursuant to the IBC contracts." (Am. Compl. ¶ 77). The formulary assigns prescription drugs into the following tiers for purposes of the copay:

• Tier 1—individuals pay the lowest copayment amount for generic drugs, whether listed on the formulary or not.

• Tier 2—individuals pay a greater copayment for brand name drugs that are listed in the formulary.

• Tier 3—individuals pay the highest copayment for brand name drugs that are not listed in the formulary.

(Am. Compl. ¶ 78). The Rider then establishes the copayments for Meister and Saltzman, which are set at $10 for Tier 1 drugs, $20 for Tier 2 drugs, and $35 for Tier 3 drugs. (Am. Compl. ¶¶ 80, 87). The exclusive method of assigning brand name drugs to a tier and a copay is through the formulary.

In bringing this lawsuit, Plaintiffs take issue with IBC's handling of the prescription drug Plavix in the context of this formulary. Plavix is an antiplatelet drug that is allegedly the most effective and successful antiplatelet drug on the market; the drug is particularly useful for individuals with a high risk of heart attack, stroke, and serious circulation problems. (Am. Compl. ¶¶ 88-96). From November 1997 until January 1, 2007, Plavix was listed as a Tier 2 drug since there was no generic equivalent on the market. (Am. Compl. ¶ 124).

Around August 2006, however, a generic version of Plavix was put on the market. (Am. Compl. ¶ 125). In response and conforming with standard practice, IBC reclassified Plavix as a Tier 3 drug and placed the generic in Tier 1, effective January 1, 2007. (Am. Compl. ¶¶ 126-131). On August 31, 2006, after the generic company produced a six-month supply of the Plavix generic, Judge Sidney Stein of the District Court for the Southern District of New York entered an order instituting a preliminary injunction in favor of Sanofi-Aventis, the owner of the Plavix patent, prohibiting the production of the generic due to patent infringement; a later order, entered on June 19, 2007, granted a permanent injunction. (Am. Compl. ¶¶ 132-138); Sanofi-Synthelabo v. Apotex, Inc., 488 F.Supp.2d 317 (S.D.N.Y.2006) (granting motion for preliminary injunction); Sanofi-Synthelabo v. Apotex, Inc., 492 F.Supp.2d 353 (S.D.N.Y.2007) (granting requested permanent injunction). Despite this change precluding the availability of the Plavix generic, IBC did not change its classification of Plavix, and Plavix is still maintained as a Tier 3 prescription drug. (Am. Compl. ¶¶ 139-140).

Both Saltzman and Meister take Plavix for their medical conditions. Saltzman has been taking Plavix from February 2007 to the present. (Am. Compl. ¶ 141). Saltzman was covered by IBC's prescription plan from when he started taking Plavix until March 2008, when his COBRA coverage lapsed a year after he ended employment with Gary Barbera Dodgeland. (Am. Compl. ¶¶ 142-144). Meister started taking Plavix in May 2008 and continues taking the medication to this day. (Am. Compl. ¶ 145). Both Saltzman and Meister paid the Tier 3 copayment for all of their purchases of Plavix due to the January 1, 2007 reclassification of the drug. (Am. Compl. ¶¶ 144, 146).

On the basis of these allegations, Plaintiffs contend that the classification of Plavix as a Tier 3 drug violates the terms of their insurance plans. (Am. Compl. ¶ 147). In particular, Plaintiffs bring three claims against Defendants. First, in Count I, Plaintiffs bring a claim under § 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B), arguing that classifying Plavix as a Tier 3 drug, rather than a Tier 2 drug, amounts to a denial of benefits due under the "terms" of the "plan." (Am. Compl. ¶ 179). Next, in Count II, Plaintiffs contend, on behalf of members of a proposed class who contracted with IBC directly instead of through an employer, that the alleged acts amount to a breach of contract and a breach of the implied covenant of good faith and fair dealing. (Am. Compl. ¶¶ 184-189). Finally, in Count III, again on behalf of members of the proposed class who contracted with IBC directly, Plaintiffs argue that the acts amount to unjust enrichment. (Am. Compl. ¶¶ 190-196). Plaintiffs seek monetary, declaratory, and equitable relief.

B. Procedural History

On August 13, 2008, Mark Saltzman filed the initial complaint in this civil action against IBC and QCC. (Doc. 1). On October 10, 2008, Defendants IBC and QCC filed a Motion to Dismiss the Complaint. (Doc. 11). In response, Mark Saltzman, now joined by Jan Meister, filed the current Amended Complaint on November 25, 2008. (Doc. 14). Defendants again filed a Motion to Dismiss the Amended Complaint o...