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Southeastern Pennsylvania Transportation Authority v. Caremarkpcs Health

November 25, 2008

SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY, PLAINTIFF,
v.
CAREMARKPCS HEALTH, L.P., DEFENDANT.



The opinion of the court was delivered by: L. Felipe Restrepo United States Magistratejudge

MEMORANDUM AND OPINION

Before the Court is Defendant, CaremarkPCS Health, L.P.'s ("Caremark") Motion to Bar Plaintiff, Southeastern Pennsylvania Transportation Authority ("SEPTA") from introducing claims or evidence contained in Sections V (A), (D), and (F) of SEPTA's expert report; or, in the alternative, to require SEPTA to amend its First Amended Complaint, to extend discovery, and to order cost-shifting to allow Caremark more time to prepare to defend these claims.*fn1 See Def.'s Mot. 1, 16-17 (Doc. No. 93). Also before the Court is SEPTA's Opposition Brief (Doc. No. 97) to the aforementioned Motion to Bar, and Caremark's Reply Brief (Doc. No. 102). For the reasons stated below, Caremark's Motion to Bar is denied, its request that the Court require SEPTA to amend the First Amended Complaint is denied, its request to extend discovery is granted, and its request to shift the costs of additional discovery to SEPTA is denied.

I. PROCEDURAL HISTORY

SEPTA and Caremark entered into a contract in January 2002 upon which Caremark agreed to provide "Prescription Drug Benefits" to SEPTA. Pl.'s Opp. Br. Ex. 1. By agreement the contract was extended for one year in 2004. Id. Ex. 2. SEPTA contends that the contract created the obligation for Caremark to "manage the pharmacies that would dispense prescriptions to SEPTA members and to adjudicate prescription claims pursuant to certain requirements set forth in the [c]ontract." See Pl.'s Opp. Br. 2. The contract contained, inter alia, provisions concerning copayments and specialty drug prices. See Pl.'s Opp. Br. Ex. 1 at SEPTA 010373-76, 010467 n. 1. In February 2005, SEPTA began requesting claims data in order to perform an audit of Caremark's compliance with the provisions as stated in the contract. Pl.'s Opp. Br. 2-3. Apparently, the parties engaged in approximately 16 months of discussions regarding the production of the data that was necessary to perform this audit. Id. at 3; Ex. 4.

SEPTA filed the current breach of contract action, through a praecipe to issue summons, in state court on January 26, 2007. Pl.'s Opp. Br. Ex. 7. Caremark removed the case to federal court on July 16, 2007. See Notice of Removal dated 7/16/07 (Doc. No. 1). Throughout this process, SEPTA unsuccessfully attempted to reach an agreement with Caremark to toll the statute of limitations while SEPTA performed an audit of Caremark's performance under the contract. Pl.'s Opp. Br. 3; Ex. 11. On September 17, 2007, SEPTA filed its First Amended Complaint (Doc. No. 39). Discovery was originally scheduled to close on May 30, 2008, see Sched. Order dated 2/14/08 (Doc. No. 77), but the schedule was extended to permit discovery until August 15, 2008 with rebuttals to expert reports to be submitted by September 22, 2008. Pl.'s Opp. Br. 4; see also Stip. for Re-Setting Case Mgmt. Sched. dated 7/21/08 (Doc. No. 87).

SEPTA filed a Motion seeking an extension of the deadline for submission of its expert report until August 29, 2008 and submitted its report on that day during the pendency of the Motion. Pl.'s Opp. Br. 5; Ex. 14. On that same day, August 29, 2008, Caremark filed a Response to SEPTA's Motion for an extension of time and sought "adjustments to the balance of the case schedule." See Def.'s Resp. 1 (Doc. No. 91). After an exchange of lengthy letters to this Court, a hearing was held on September 25, 2008, at which the Court heard argument concerning, amongst other things, the instant Motion to Bar (Doc. No. 93), which was filed on September 19, 2008.

II. DISCUSSION

Caremark claims in its Motion to Bar that SEPTA should not be permitted to introduce claims or evidence concerning invalid prescriber identifications, copayment compliance, and specialty drug pricing. See Def.'s Mot. 1. Caremark, citing Federal Rule of Civil Procedure 8(a), contends that all three of these "claims" are beyond the scope of the First Amended Complaint and fail to put Caremark on notice of the precise legal claims it must defend against. Id. at 6, 13, 15. In its First Amended Complaint, SEPTA alleges the following:

10. In breach of its contractual and fiduciary obligations, Caremark engaged in a wide-spread course of self-dealing by placing its own interests ahead of SEPTA's interests. Among other things upon information and belief:

a. Caremark failed to provide its contracted discount rates for brand-name drugs dispensed through Caremark's retail pharmacy networks;

b. Caremark failed to provide its contracted rates for generic drugs dispensed through Caremark's retail pharmacy networks;

c. Caremark failed to provide the contracted rates for brand-name drugs dispensed through third-party mail order facilities;

d. Caremark failed to provide the contracted rates for generic drugs dispensed through third-party mail order facilities;

e. Caremark wrongfully created and retained pricing spreads on ingredient costs for prescription drugs dispensed through ...


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