The firm recently achieved a victory for client Express Scripts in the U.S. Court of Appeals for the Ninth Circuit, affirming the dismissal of a complaint that sought treble damages and attorneys’ fees from Express Scripts and a co-defendant under the Racketeer Influenced and Corrupt Organizations Act (“RICO”).
The plaintiff, Blue Oak Medical Group, was a network of medical clinics that primarily treated workers injured on the job and obtained reimbursement from California workers’ compensation insurers, including Express Scripts’ co-defendant, the State Compensation Insurance Fund. Although it was fully aware that Express Scripts was State Fund’s exclusive provider, Blue Oak nevertheless continued to dispense medications directly to its patients, citing purported difficulties in confirming the availability of medications at Express Scripts-network pharmacies. It then filed a complaint alleging that State Fund’s routine denials of its out-of-network claims were part of a conspiracy with Express Scripts to perpetrate an alleged fraud against Blue Oak and run it out of business. After the district court dismissed Blue Oak’s complaint, Express Scripts retained Quinn Emanuel to defend its initial victory in front of the Ninth Circuit.
On appeal, Quinn Emanuel sought to lay out a straightforward blueprint for affirmance. The firm argued that Blue Oak’s real grievance was simply State Fund’s predictable denial of its out-of-network claims in accordance with its announced policies. Even on the face of its complaint, Quinn Emanuel argued, Blue Oak was fully aware of those policies, and urged the court to also consider the authorization letters referenced in (but not attached to) the complaint, which repeatedly and conspicuously warned Blue Oak that it would not be reimbursed if it dispensed medications itself. That strategy paid off. The Court followed the straightforward roadmap laid out in the firm’s brief, in a summary affirmance, holding that Blue Oak failed to allege any scheme to defraud. Adopting the firm’s primary argument, the Court agreed that Blue Oak was well apprised that State Fund had entered into an exclusive and lawful pharmacy network arrangement with Express Scripts: “Under these circumstances, Blue Oak has not alleged any scheme to defraud or false statements to the effect that Blue Oak would be reimbursed for medications it provided.”
The court’s summary affirmance will help to protect insurers and pharmacy benefits managers like Express Scripts from similar nuisance claims that seek to transform disagreements with ordinary (and appropriate) insurance decisions into treble-damages claims under RICO.