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United States of America, Ex Rel. Anthony R. Spay v. Cvs Caremark Corporation; Caremark Rx

April 23, 2013


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


Currently pending before the Court is the Motion by Plaintiff/Relator Anthony R. Spay ("Plaintiff" or "Relator") to Strike Defendants' Affirmative Defenses. For the following reasons, the Motion is granted in part and denied in part.


The present litigation is an action to recover damages and civil penalties on behalf of the United States of America arising from false and/or fraudulent records, statements, and claims made, used, and caused to be made, used, or presented by Defendants CVS Caremark Corporation, Caremark Rx, LLC (f/k/a Caremark Rx, Inc.), Caremark, LLC (f/k/a Caremark, Inc.), and Silverscript, LLC (f/k/a/ Silverscript, Inc.) (collectively "Defendants"). (Am. Compl. ¶ 1.) At the core of the Amended Complaint, filed on August 5, 2011, is the allegation that Defendants violated the False Claims Act, 31 U.S.C. § 3729, et seq. ("FCA"), in their roles as both a Pharmacy Benefit Manager ("PBM") and a Sponsor of the Medicare Part D Prescription Drug Program ("Part D Sponsor"), by engaging in a nationwide practice of fraudulently adjudicating and submitting improper Prescription Drug Event ("PDE") claims to the Center for Medicaid and Medicare Services ("CMS") under the Part D Program. Plaintiff also alleges that Defendants violated the FCA by falsely certifying that the PDE data submitted to CMS was truthful, accurate and complete.

Following the filing of the Amended Complaint, Defendants moved to dismiss the Amended Complaint on a multitude of grounds. Upon thorough consideration of the parties' extensive briefing, the Court issued a lengthy opinion denying the Motion in its entirety.*fn1

Thereafter, Defendants filed their Answer, together with thirty Affirmative Defenses, on February 1, 2013.

On February 21, 2013, Plaintiff filed the present Motion to Strike the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Twenty-Third, Twenty-Fifth, and Twenty-Eighth Affirmative Defenses. Defendants responded on March 19, 2013, and Plaintiff filed a Reply Brief on April 5, 2013. The matter is now ripe for judicial consideration.


Federal Rule of Civil Procedure 12(f) permits a court to "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). "An affirmative defense is insufficient if it is not recognized as a defense to the cause of action." Total Containment, Inc. v. Environ Prods., Inc ., No. Civ.A.91-7911, 1992 WL 208981, at *1 (E.D. Pa. Aug. 19, 1992) (quotations omitted). Although a court has considerable discretion with motions to strike, as a general rule they are not favored and "usually will be denied unless the allegations have no possible relation to the controversy and may cause prejudice to one of the parties, or if the allegations confuse the issues." River Road Devel. Corp. v. Carlson Corp., No. Civ.A.89-7037, 1990 WL 69085, at *2 (E.D. Pa. May 23, 1990) (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1382. 809-10, 815 (1969)). Striking a pleading is a "drastic remedy" and should be used sparingly by courts, partly because of the difficulty of deciding cases without a factual record. North Penn Transfer, Inc. v. Victaulic Co. of Am., 859 F. Supp. 154, 158--59 (E.D. Pa. 1994). The Third Circuit has cautioned that courts "should not grant a motion to strike a defense unless the insufficiency of the defense is 'clearly apparent.'" Cipollone v. Liggett Grp., Inc., 789 F.2d 181, 188 (3d Cir. 1986); see alsoLinker v. Custom-Bilt Mach., 594 F. Supp. 894, 898 (E.D. Pa. 1984) ("An affirmative defense can be stricken 'only if the defense asserted could not possibly prevent recovery under any pleaded set or inferable set of facts.'"). Thus, "[a] motion to strike will not be granted where the sufficiency of a defense depends on disputed issues of fact." Id. (citations omitted). Even when facts are not in dispute, a motion to strike is not the appropriate procedure to determine disputed or unclear questions of law. Id.


Via the present Motion, Plaintiff seeks dismissal of nineteen of Defendants' thirty Affirmative Defenses on one of three grounds. First, he asserts that the First, Second, Third, Tenth, and Eleventh Affirmative Defenses attempt to re-litigate issues which have already been decided by this Court in its December 20, 2012 Memorandum and Order. Second, he claims that the Twelfth, Twenty-Third, Twenty-Fifth, and Twenty-Eighth Affirmative Defendants are not available as a matter of law in claims brought on behalf of the United States Government. Finally, Plaintiff argues that the Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Fifteen, Sixteenth, Seventeenth, and Eighteenth Affirmative Defenses are not actually affirmative defenses, but rather mere denials of liability of the elements of Plaintiff's cause of action. Defendants, on the other hand, contend that the remainder of their Affirmative Defenses are valid and should not be stricken by the Court.*fn2 The Court now considers each of Plaintiff's challenges individually.

A. Issues Already Decided by the Court

Plaintiff initially argues that the First, Second, Third, Tenth, and Eleventh Affirmative Defenses were already adjudicated by the Court in the December 20, 2012 Memorandum and Order. Accordingly, he contends that the law of the case doctrine precludes reconsideration of these issues and requires that they be dismissed.

1. First and Second Affirmative Defenses

The First Affirmative Defense states that "The Amended Complaint and its purported causes of action fail to state facts sufficient to adequately plead a cause of action against Defendants." (Answer at Aff. Def. 1.) The Second Affirmative Defense asserts that, "The Amended Complaint and its purported causes of action fail to meet the pleading requirements of Federal Rules of Civil Procedure 8(a) and 9(b)." (Id. at Aff. Def. 2.) Plaintiff now contends that the Court expressly considered and rejected these precise affirmative defenses in denying Defendants' Motion to Dismiss, meaning that they may not be re-litigated in this case.*fn3

Federal Rule of Civil Procedure 12(b) provides that "[a] defense of failure to state a claim upon which relief can be granted may be made in any pleading permitted or ordered under Rule 7(a)." Fed. R. Civ. P. 12(b). Thus, "[t]he Federal Rules specifically permit an averment of failure to state a claim to be raised as an affirmative defense." Cintron Beverage Grp., LLC v. Depersia, No. Civ.A.07-3043, 2008 WL 1776430, at *2 (E.D. Pa. Apr. 15, 2008). "[I]t is well-settled that a party can set forth the defense of failure to state a claim as an affirmative defense in the answer." Id. (citing Greiff v. T.I.C. Enter., LLC, No. Civ.A.03-842, 2004 WL 115553, at *2

(D. Del. Jan. 9, 2004)); see also F.D.I.C. v. Modular Homes, Inc., 859 F. Supp. 117, 122 (D.N.J. 1994) (noting that "[s]ince there is a federal rule on point which recognizes that failure to state a claim upon which relief can be granted is a defense," the defendant will be permitted to raise this defense).

Where, however, a court has previously made a legal determination that a Plaintiff's complaint stated a claim for relief, a subsequent affirmative defense claiming failure to state a claim or to properly plead should be stricken. Nupro Indus. Corp. v. Lexington Ins. Co., No. Civ.A.08-4809, 2010 WL 2553698, at *3 (E.D. Pa. June 21, 2010); see also Trustees of Local 464A United Food & Comm. Workers Union Pension Fund v. Wachovia Bank, N.A., No. Civ.A.09-668, 2009 WL 4138516, at *2 (D.N.J. Nov. 24, 2009) ("The Court made a legal determination that Plaintiffs' complaint stated a claim for relief. Thus, Defendants are not permitted to reassert this argument, which the Court has already deemed insufficient, in the guise of an affirmative defense."); In re Modern Creative Serv., Inc. v. Dell, Inc., No. Civ.A.08-3591, 2008 WL 305747, at *3--4 (D.N.J. Jan. 28, 2008) (striking affirmative defenses already considered and rejected by the court on a motion to dismiss). Otherwise, defendants would have the opportunity to seek reconsideration of a court's legal finding through the vehicle of an affirmative defense.

In the present case, Defendants' previous Motion to Dismiss challenged almost every aspect of Plaintiff's pleading Amended Complaint under the FCA. Applying Federal Rules of Civil Procedure 8, 9, and 12(b)(6) as interpreted by the United States Supreme Court, this Court found that Plaintiff had adequately stated a False Claims Act cause of action upon which relief can be granted. Their argument under this standard having already been rejected, Defendants are not entitled to another bite at the apple to reassert-simply in an alternative format-the identical theory.

Defendants' efforts to resuscitate these Defenses are unavailing. First, Defendants contend that in the Motion to Dismiss the Court was required to accept as true all of Plaintiff's factual allegations, while, at this point, Plaintiff's facts are no longer deemed true and Plaintiff bears the burden of showing that the defense asserted could not possibly prevent recovery under any pleaded set or inferrable set of facts. This argument, however, merely creates a distinction without a difference. Even pursuant to its Affirmative Defenses, Defendants still must establish that the Amended Complaint, taken as true, fails to state a claim upon which relief may be granted under Federal Rule of Civil Procedure 12(b)(6) and the standards described in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). As the Court has already ruled that Defendants cannot meet this standard, re-asserting this argument via an Affirmative Defense is futile. Nor is the previous Memorandum's use of language such as "at this early stage of the litigation" and "as this case progresses" suggestive that the ruling under 12(b)(6) was anything other than conclusive. As noted in an analogous case, "[t]he fact that this Court may have used language such as 'at this time' or 'at this stage of the litigation' in allowing such tort claims to proceed, was not done so as to give Defendant the ability to renew arguments which have been squarely addressed and decided by this Court as a matter of law. Rather, such language was used merely to reflect the fact that Plaintiff's ability to ultimately meet its burden of proof as to its various tort claims remains to be seen." Modern Creative Servs., 2008 WL 305747, at *4.*fn4

Likewise, Defendants' efforts to liken this Court's previous ruling in The Knit With v. Knitting Fever, Inc., No. Civ.A.08-4221, 2009 WL 973492 (E.D. Pa. Apr. 8, 2009) are meritless. In that case, the plaintiff argued that the defendants' affirmative defense of failure to state a claim upon which relief may be granted was not raised in the original motion to dismiss and thus could not be later presented via an affirmative defense. Id. at *7. The court disagreed with plaintiff's position and declined to strike the affirmative defense, noting that it had not yet had the opportunity to consider whether the RICO claim at issue was properly pled, making the defense still viable, and would not do so within the context of a motion to strike. Id. By contrast, in this case, Defendants already raised, via a comprehensive Motion to Dismiss under Rule 12(b)(6), all of the various reasons why they believed the Amended Complaint failed to state a complaint upon which relief may be granted. The Court squarely rejected these arguments, thereby requiring that the identical Affirmative Defenses be stricken.

In short, the First and Second Affirmative Defenses have been conclusively determined by the Court. As such, the Motion to Strike these affirmative defenses is granted.

2. Third Affirmative Defense

Plaintiff also seeks to strike Defendants' Third Affirmative Defense. This Defense states that "Plaintiff's action is barred by 31 U.S.C. § 3730(e)(4) because it is based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administration, or Government [General] Accounting Office report, hearing, audit, or investigation, or from the news media; and Plaintiff is not an original source as that term is defined b § 3730(e)(4)(b)." Plaintiff contends that Defendants raised this precise defense in their Motion to Dismiss and the Court rejected their argument on the grounds that there was no public disclosure. Accordingly, he asserts that because the Court has already determined this issue as a matter of law, Defendants should not be entitled to re-litigate it via an Affirmative Defense.

The Court agrees in part. In their Motion to Dismiss, Defendants argued that there were two sources of public disclosure triggering the FCA's jurisdictional public disclosure bar: (1) Caremark's filing of the identical PDE data report on which the audit was based directly with CMS and (2) the disclosure in discovery in the 2007 MCS-Caremark Litigation (and related efforts to amend the pleadings) of precisely the same six audit findings that Plaintiff raised in this case. With respect to the first allegation, this Court outright rejected Defendants' argument, finding that simple disclosure of PDE reports to CMS was not equivalent to public disclosure. Spay, 2012 WL 6645537, at *47. We went on to note that the PDE data was not even minimally available to the public until 2008 and, after that period of time, disclosure of the data was restricted to certain entities, for certain ...

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