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Time Ins. Co. v. Astrazeneca AB

United States District Court, E.D. Pennsylvania

October 1, 2014

TIME INSURANCE COMPANY, et al.
v.
ASTRAZENECA AB, et al

For TIME INSURANCE COMPANY, UNION SECURITY INSURANCE COMPANY, JOHN ALDEN LIFE INSURANCE COMPANY, BLUECROSS BLUESHIELD OF TENNESSEE, PRIORITY HEALTH, TUFTS ASSOCIATED HEALTH MAINTENANCE ORGANIZATION, INC., BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, BLUE CROSS AND BLUE SHIELD OF SOUTH CAROLINA, CAREFIRST OF MARYLAND, INC., doing business as CAREFIRST BLUECROSS BLUESHIELD, GROUP HOSPITALIZATION AND MEDICAL SERVICES, INC., doing business as CAREFIRST BLUECROSS BLUESHIELD, HEALTH CARE SERVICE CORPORATION, A MUTUAL LEGAL RESERVE COMPANY, CONNECTICUT GENERAL LIFE INSURANCE COMPANY, UNITED HEALTHCARE SERVICES, INC., BLUECROSS AND BLUESHIELD ASSOCIATION, GOVERNMENT EMPLOYEES HEALTH ASSOCIATION, INC., HEALTH NET, INC., BLUE CROSS & BLUE SHIELD OF RHODE ISLAND, BLUE CROSS BLUE SHIELD OF FLORIDA, INC., doing business as FLORIDA BLUE, EMBLEMHEALTH SERVICES COMPANY, LLC, BLUE CROSS AND BLUE SHIELD OF MASSACHUSETTS, INC., NORIDIAN MUTUAL INSURANCE COMPANY, doing business as BLUE CROSS BLUE SHIELD OF NORTH DAKOTA, HEALTHNOW NEW YORK INC., MVP SELECT CARE, INC., MVP HEALTH CARE, INC., BCBSMN, INC., doing business as BLUE CROSS BLUE SHIELD OF MINNESOTA, BLUE CROSS AND BLUE SHEILD OF NEBRASKA, HARVARD PILGRIM HEALTH CARE, INC., JOHN HOPKINS HEALTHCARE, LLC, AETNA INC., CAMBIA HEALTH SOLUTIONS, INC., ANTHEM BLUE CROSS LIFE AND HEALTH INSURANCE COMPANY, ANTHEM HEALTH PLANS, INC., ANTHEM HEALTH PLANS OF KENTUCKY, INC., ANTHEM HEALTH PLANS OF MAINE, INC., ANTHEM HEALTH PLANS OF NEW HAMPSHIRE, INC., ANTHEM HEALTH PLANS OF VIRGINIA, INC., ANTHEM INSURANCE COMPANIES, INC., ANTHEM LIFE & DISABILITY INSURANCE COMPANY, AMERIGROUP FLORIDA, INC., AMERIGROUP KANSAS, INC., AMERIGROUP LOUISIANA, INC., AMERIGROUP MARYLAND, INC., AMERIGROUP NEVADA, INC., AMERIGROUP NEW JERSEY, INC., AMERIGROUP COMMUNITY CARE OF NEW MEXICO, INC., AMERIGROUP NEW YORK, LLC, AMERIGROUP CORPORATION, AMERIGROUP OHIO, INC., AMERIGROUP TENNESSEE, INC., AMERIGROUP TEXAS, INC., AMERIGROUP WASHINGTON, INC., AMERIGROUP INSURANCE COMPANY, BLUE CROSS AND BLUE SHIELD OF GEORGIA, INC., BLUE CROSS BLUE SHIELD HEALTHCARE PLAN OF GEORGIA, INC., BLUE CROSS BLUE SHIELD OF WISCONSIN, BLUE CROSS OF CALIFORNIA, BLUE CROSS OF CALIFORNIA PARTNERSHIP PLAN, INC., CAREMORE HEALTH PLAN, CAREMORE HEALTH PLAN OF ARIZONA, INC., CAREMORE HEALTH PLAN OF COLORADO, INC., CAREMORE HEALTH PLAN OF GEORGIA, INC., CAREMORE HEALTH PLAN OF NEVADA, CLAIM MANAGEMENT SERVICES, INC., COMMUNITY INSURANCE COMPANY, COMPCARE HEALTH SERVICES INSURANCE CORPORATION, CAREMORE HEALTH SYSTEM, EMPIRE HEALTHCARE ASSURANCE, INC., EMPIRE HEALTHCHOICE HMO, INC., GREATER GEORGIA LIFE INSURANCE COMPANY, INC., HEALTHLINK HMO, INC., HEALTHKEEPERS, INC., HEALTHY ALLIANCE LIFE INSURANCE COMPANY, HMO COLORADO, INC., HMO MISSOURI, INC., Plaintiffs: BARBARA J. HART, LEAD ATTORNEY, PETER ST. PHILLIP, LOWEY DANNENBERG COHEN & HART, P.C., WHTIE PLAINS, NY; GERALD LAWRENCE, JR., LEAD ATTORNEY, LOWEY DANNENBERG COHEN PC, WEST CONSHOHOCKEN, PA; URIEL RABINOVITZ, LEAD ATTORNEY, PRO HAC VICE, LOWEY DANNENBERG COHEN & HART PC, WHITE PLAINS, NY.

For AMGP GEORIGIA MANAGED CARE COMPANY, INC., RIGHTCHOICE INSURANCE COMPANY, UNICARE LIFE & HEALTH INSURANCE COMPANY, Plaintiffs: BARBARA J. HART, LEAD ATTORNEY, LOWEY DANNENBERG COHEN & HART, P.C., WHTIE PLAINS, NY; URIEL RABINOVITZ, LEAD ATTORNEY, PRO HAC VICE, LOWEY DANNENBERG COHEN & HART PC, WHITE PLAINS, NY; PETER ST. PHILLIP, LOWEY DANNENBERG COHEN & HART, P.C., WHITE PLAINS, NY.

For ROCKY MOUNTAIN HOSPITAL AND MEDICAL SERVICE, INC., UNICARE HEALTH INSURANCE COMPANY OF THE MIDWEST, UNICARE HEALTH PLAN OF KANSAS, INC., UNICARE HEALTH PLANS OF TEXAS, INC., UNICARE HEALTH PLAN OF WEST VIRGINIA, INC., WELLPOINT INSURANCE SERVICES, INC., WELLPOINT PARTNERSHIP PLAN, LLC, Plaintiffs: BARBARA J. HART, LEAD ATTORNEY, LOWEY DANNENBERG COHEN & HART, P.C., WHTIE PLAINS, NY; GERALD LAWRENCE, JR., LEAD ATTORNEY, LOWEY DANNENBERG COHEN PC, WEST CONSHOHOCKEN, PA; URIEL RABINOVITZ, LEAD ATTORNEY, PRO HAC VICE, LOWEY DANNENBERG COHEN & HART PC, WHITE PLAINS, NY; PETER ST. PHILLIP, LOWEY DANNENBERG COHEN & HART, P.C., WHITE PLAINS, NY.

For ASTRAZENECA AB, AKTIEBOLAGET HASSLE, ASTRAZENECA LP, Defendants: RAYMOND MCGARRY, LEAD ATTORNEY, WYNN MCGARRY LLC, KING OF PRUSSIA, PA; DANE H. BUTSWINKAS, WILLIAMS AND CONNOLLY, WASHINGTON, DC; JAMES M. MCDONALD, PRO HAC VICE, WILLIAMS & CONNOLLY LLP, WASHINGTON, DC; JOHN E. SCHMIDTLEIN, WILLIAMS & CONNOLLY LLP, WASHINGTON, DC.

For RANBAXY LABORATORIES LIMITED, RANBAXY INC., Defendants: DANIELLE R. FOLEY, J. DOUGLAS BALDRIDGE, PRO HAC VICE, VENABLE LLP, WASHINGTON, DC; LISA JOSE FALES, PRO HAC VICE, VENABLE, LLP, WASHINGTON, DC; NEILL C. KLING, HARKINS CUNNINGHAM LLP, PHILADELPHIA, PA; RAYMOND MCGARRY, WYNN MCGARRY LLC, KING OF PRUSSIA, PA.

For TEVA PHARMACEUTICAL INDUSTRIES, LTD., TEVA PHARMACEUTICALS USA, INC., Defendants: JONATHAN D. JANOW, LEAD ATTORNEY, PRO HAC VICE, KIRKLAND & ELLIS, WASHINGTON, DC; RAYMOND MCGARRY, LEAD ATTORNEY, WYNN MCGARRY LLC, KING OF PRUSSIA, PA; JOSEPH E. WOLFSON, STEVENS & LEE, KING OF PRUSSIA, PA.

For DR. REDDY'S LABORATORIES, LTD., DR. REDDY'S LABORATORIES, INC., Defendants: JOHN J. O'DONNELL, LEAD ATTORNEY, LAVIN, O'NEIL,CEDRONE & DISIPIO, PHILADELPHIA, PA; RAYMOND MCGARRY, LEAD ATTORNEY, WYNN MCGARRY LLC, KING OF PRUSSIA, PA; JONATHAN BERMAN, STEPHANIE L. RESNIK, PRO HAC VICE, JONES DAY, WASHINGTON, DC; KEVIN D. MCDONALD, JONES DAY, WASHINGTON, DC.

Page 706

MEMORANDUM

Gerald Austin McHugh, United States District Judge.

I. Factual Background

This is an antitrust action brought under a variety of state statutes in which the issue presently before me is the propriety of federal jurisdiction. Plaintiffs are health insurance companies who ultimately paid for Nexium prescriptions purchased by individuals who maintained insurance coverage. Defendants are Astrazeneca, the patent-holding pharmaceutical company that produces name-brand Nexium, as well as three generic drug manufacturers who sought to produce generic Nexium.

Under the regulatory framework for pharmaceuticals, companies maintain exclusive patents on their drugs for a set period of time. However, the Hatch-Waxman

Page 707

Act, which amended the Food, Drug, and Cosmetics Act, 21 U.S.C. § § 301-392, and other legislation, have created incentives for generic manufacturers to seek generic approval prior to the expiration of the patent. The patent-holder then files an infringement suit in order to prevent entrance of the generics to the market. This ensures an efficient system in which patent-holders are not abusing the patenting system to maintain a monopoly. First-filing generic manufacturers receive a 180-day window in which no other generic brands may sell on the market with the exception of any generic produced by the patent-holder. This provides strong incentive to challenge the validity of patents.

Plaintiffs allege that after the three generic manufacturers challenged the Nexium patents, and were subsequently sued for patent infringement in the District of New Jersey, Astrazeneca entered into reverse payment settlement agreements with them through which Astrazeneca provided compensation in exchange for stipulations that the Nexium patents were valid and promises not enter the market until the expiration of those patents. The generic companies did not receive direct payments, but allegedly received compensation in the form of outsized payments for other services and nullification of potential liabilities to Astrazeneca.

Currently, other suits based on these same agreements have been aggregated as multi-district litigation within the District of Massachusetts. The Plaintiffs filed this action in the Philadelphia Court of Common Pleas based entirely on state law antitrust claims. The Defendants removed the action on the basis that: (1) resolution of the state law antitrust claims will necessarily involve litigation of the validity of the Nexium patents; (2) any such litigation will involve a collateral attack on the federal consent judgments entered by the District of New Jersey; and (3) The Class Action Fairness Act (CAFA) requires that this action be combined with a related action filed in state court and removed here, Cariten v. Astranzeneca,[1] as a " mass action" capable of conferring federal jurisdiction.[2]

II. Remand on Ground that Resolution of Plaintiffs' Claims does not Necessarily Involve Litigation of Patent Issues

Complete diversity does not exist amongst the Plaintiffs and the Defendants in this action--therefore, diversity jurisdiction is not proper. The Plaintiff-insurance companies assert their antitrust claims in the form of six state law causes of action, and the Defendant-pharmaceutical companies have removed based on a federal question theory. Federal question jurisdiction under 28 U.S.C. § 1331 provides federal courts with jurisdiction over " all civil actions arising under the Constitution, laws, or treaties of the United States."

It is firmly established that " [t]he presence or absence of federal question jurisdiction is governed by the 'well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); see also Louisville & Nashville R. Co. v. Mottley,

Page 708

211 U.S. 149, 152, 29 S.Ct. 42, 53 L.Ed. 126 (1908). Defenses that may be raised are not a part of the plaintiff's well-pleaded complaint. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). " [A] case may not be removed to federal court on the basis of a federal defense, . . . even if the defense is anticipated in the plaintiff's complaint, and even if both parties admit that the defense is the only question truly at issue in the case." Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 14, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). Furthermore, federal jurisdiction extends " only to those cases in which a well-pleaded complaint establishes either that federal patent law creates the cause of action, or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims." Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 809, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988).

Plaintiffs' claims are brought under the antitrust laws of many separate states. As Defendants point out,[3] and Plaintiffs do not dispute, these claims all seem to involve very similar elements that can be reduced to two components. An antitrust plaintiff must demonstrate (1) the existence of anticompetitive conduct by the defendant and (2) that the conduct caused the plaintiff's alleged injuries. In this case, on the issue of remand, the key question is whether Plaintiffs can assert a theory in which they can ...


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