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Doreen Rhodes v. Independence Blue Cross

February 9, 2012


The opinion of the court was delivered by: DuBOIS, J.



In this case, plaintiff claims that defendants-Independence Blue Cross and its subsidiary, QCC Insurance Company (collectively, "IBC defendants"), and defendant Wellmark, Inc., ("Wellmark") the Iowa Blue Cross affiliate-must pay an insurance claim for hemophilia medicine that plaintiff ordered through T. Zenon Pharmaceuticals, LLC, an Iowa mail-order pharmacy doing business as Pharmacy Matters ("Pharmacy Matters"). Presently before the Court is Defendants' Joint Motion to Stay Proceedings and Transfer Matter to the Civil Suspense Docket, in which defendants ask the Court to stay the case pending the resolution of an Iowa state court case ("the Iowa case") between Pharmacy Matters and Wellmark. For the reasons stated below, the Court grants the motion and stays the proceedings pending resolution of the Iowa case.


A.Plaintiff's Complaint and Defendants' Responses

Plaintiff, a Pennsylvania resident, filled prescriptions for her son Quamir's expensive blood-clotting-factor hemophilia medicine ("Factor") through Pharmacy Matters, an Iowa specialty pharmacy licensed to ship medicines to patients in other states.*fn1 (Am. Compl. ¶¶ 1, 8-9.) Pharmacy Matters provided two shipments of Factor to plaintiff and submitted claims for those two shipments to Wellmark for payment.*fn2 (Id. ¶ 12.) The total amount of the two claims was $697,651. (Id. ¶ 13.) Pharmacy Matters submitted the claims to Wellmark, which is the Blue Cross Blue Shield ("BCBS") association affiliate in Iowa, where Pharmacy Matters is located. (Id. ¶ 10.) Plaintiff alleges the prescription Pharmacy Matters filled was covered by the Blue Cross health insurance policy issued by the IBC defendants, but defendants refused to pay Pharmacy Matters's claims. (Id. ¶¶ 13, 15.) Wellmark stated that it denied the claims because Pharmacy Matters breached its provider agreement with Wellmark, and the IBC defendants took the position that they did not have to pay the claims because they were subject to a dispute between Pharmacy Matters and Wellmark, which was the BCBS affiliate responsible for "coordinat[ing]" payment. (See id. ¶ 12; Letter from Katherine Katchen to Lori Vinciguerra, Am. Compl. Ex. D, at 1.) Plaintiff received all of the medicine for which she seeks "reimbursement" and was covered by the IBC policy at all times in question, although she is no longer insured by the IBC defendants. (Def.'s Jt. Mot. Stay Proceedings and Transfer Case Civ. Suspense Docket ("Jt. Mot. Stay") 14; IBC Defs.' Reply Br. ("Defs.' Reply") 3.) Significantly, Pharmacy Matters has not sought payment of the claims from plaintiff.

Plaintiff contends that defendants are contractually obligated to pay the claims and that their failure to do so exposes her to liability to Pharmacy Matters for the nearly $700,000 balance on the Factor bill. (Am. Compl. ¶ 22.) In her Amended Complaint, plaintiff alleges: in Counts I--III, that the IBC defendants violated the Employee Retirement and Security Income Act ("ERISA") by wrongfully denying her benefits; in Count IV, that the IBC defendants violated the Pennsylvania Quality Health Care Accountability and Protection Act; and in Count V, that Wellmark tortiously interfered with plaintiff's contractual relations with the IBC defendants.

In addition to defendants' motion to stay, pending before the Court are the IBC Defendants' Motion to Dismiss Amended Complaint, Wellmark's Motion to Dismiss, and plaintiff's Motion to Strike an affidavit filed with Wellmark's Motion to Dismiss. Although the IBC defendants and Wellmark raise several grounds for dismissal or, in the alternative, for a transfer of venue, their motions rely on the same theory of the case: Wellmark properly refused to pay Pharmacy Matters's claim for plaintiff's son's Factor because Wellmark was investigating possible Factor billing fraud with the assistance of the national Blue Cross Blue Shield association, other BCBS state providers, and government investigators. (Correspondence, Pl.'s Mem. Law Opp'n Def. Wellmark's Mot. Dismiss ("Pl.'s Wellmark Resp."), Exs. A--E.) The IBC defendants contend that plaintiff cannot be financially liable to Pharmacy Matters and has suffered no harm, and thus this case is nothing more than a contractual dispute between Wellmark and Pharmacy Matters. (See, e.g., Mem. L. Supp. IBC Defs.' Mot. Dismiss Pl.'s Am. Compl. ("IBC Defs.' Mem. L. Mot. Dismiss") 1--2.)

B.The Iowa Case and Other Pending Cases

In May 2009, Pharmacy Matters filed suit against Wellmark in the Iowa District Court of Johnson County in the case of T. Zenon Pharmaceuticals v. Wellmark, Inc., No. 06521 LACV070675 ("the Iowa case"). (Am. Compl. ¶ 12 & n.2.) In the Iowa case, Pharmacy Matters seeks from Wellmark, inter alia, payment of the same two claims that are at issue in this case. (Jt. Mot. Stay 2.) Wellmark denied the claims and argued in Iowa that Pharmacy Matters violated, inter alia, an anti-assignment provision in its Wellmark contract by serving as an Iowa proxy for an out-of-state pharmaceutical drug provider, Factor Health Management, LLC. (Id. at 2--3.) The parties have made substantial progress in discovery in the Iowa case with over 200 documents filed, 44,000 pages of documents produced, and at least fifteen depositions taken. (Id. at 3; see also Iowa Docket Entries, T. Zenon Pharms. v. Wellmark, Inc., No. 06521 LACV070675 (D. Ct. Johnson Cnty., IA), available at (last accessed Feb. 8, 2012).) The Iowa case is set for trial on November 6, 2012. (Iowa Docket Entries 1.)

The Iowa case also involves claims that underlie cases filed across the country, including at least six cases in federal district courts and one case in North Carolina state court. (Jt. Mot. Stay 4--8; Pl.'s Mem. L. Opp'n Defs.' Jt. Mot. Stay ("Pl.'s Opp'n") 4--5.) Each of these cases is in a slightly different posture. As of the date of this Memorandum, no court has decided the merits of either the case before it or the Wellmark--Pharmacy Matters dispute. The only court to rule on a motion to stay granted the motion pending conclusion of the Iowa case, applying the Colorado River doctrine, which is discussed infra. See Brown v. Blue Cross & Blue Shield of Fla., Inc., No. 11-cv-80390, at *22 (S.D. Fla. Aug. 8, 2011) (order denying motion to strike, denying motion to disqualify counsel, and granting stay).*fn3 A motion to stay is pending in the case in the District of Idaho. See Rotondo v. Blue Cross of Idaho, No. 11-cv-893 (D. Idaho).

C. Parties' Arguments

Defendants argue that a stay pending the outcome of the Iowa state case is appropriate under two doctrines: (1) Colorado Riverabstention, under which exceptional circumstances require abstention due to a pending state court case, see Colo. River Water Conservation Dist. v. United States, 424 U.S. 800 (1976); and (2) the Court's inherent authority to control its docket to promote economy of time and effort, see Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). (Jt. Mot. Stay 9--10.) According to defendants, the Court should grant a stay because "[b]oth this case and the Iowa [c]ase are based in the same dispute, i.e., whether Wellmark properly denied Pharmacy Matters's claims under the Wellmark Provider Agreement for factor medication allegedly dispensed to members of Blue Cross welfare benefit plans, including plaintiff." (Jt. Mot. Stay 10.) Plaintiff responds only that abstention under Colorado River is inappropriate; she does not respond to defendants' request for a stay under the Court's inherent authority. (Pl.'s Opp'n 7--28.) ...

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