Court grants Express Scripts' motion to dismiss

By Tomas Kassahun | Jan 3, 2019

The US District Court Eastern District of Missouri Eastern Division has granted defendant Express Scripts, Inc.'s motion to dismiss complaint in a lawsuit against Heartland Medical, LLC.

ST. LOUIS — The U.S. District Court for the Eastern District of Missouri, Eastern Division, has granted defendant Express Scripts's motion to dismiss a complaint in a lawsuit brought by Heartland Medical.

In the ruling on Dec. 27, the court said Heartland had no federal right of action, and the court lacks jurisdiction over it's declaratory judgement claim.

According to the district court, Heartland alleged that ESI wrongfully terminated its contract to distribute over-the-counter diabetic testing supplies to individuals covered by employer-sponsored and third-party health insurance plans managed by ESI.

“ESI informed Heartland that the termination was based on Heartland's failure to properly document its purchases from wholesalers and other violations of the contract,” the opinion stated.

Heartland argued that ESI's audit of Heartland's records was a pretext for terminating the contract's terms so ESI could capture Heartland's customer base for its own pharmacy, according to the district court. 

“Heartland advances state-law claims of breach of contract, unjust enrichment, breach of the implied covenant of good faith and fair dealing and tortious interference with business relations,” the opinion stated.

The district court added that Heartland also sought a declaratory judgment that ESI's termination violated state and federal law, specifically the "Any Willing Pharmacy" (AWP) mandate. 

After the court granted ESI's motion to dismiss Heartland's intentional-interference claim, ESI filed a motion and argued that the court lacks subject-matter jurisdiction over Heartland's suit, the district court said. 

“ESI argued that there is no diversity jurisdiction because the parties each have a corporate member incorporated in Delaware,” the opinion stated.

The district court said Heartland amended its complaint to drop its allegation of diversity, then argued that the court has federal-question jurisdiction based on its claim for declaratory judgment that ESI violated the federal AWP requirement.

“Heartland asks the court to extend supplemental jurisdiction over its intertwined state-law claims,” the opinion stated. “ESI responds that federal-question jurisdiction requires the existence of a private right of action in the underlying federal statute and that the AWP mandate does not create one.”

According the court, Heartland's central assertion is that ESI violated the terms of its own contract by terminating their agreement without cause.

The district court said “that is a factual assertion rooted in state contract law and requires little, if any, interpretation of federal statute.”

“Put simply, the underlying cause of action is a state-law breach of contract claim,” the opinion stated.

The district court added that Heartland's AWP argument is derivative of the underlying contractual claim because the AWP requirement only applies to pharmacies that "meet the terms and conditions under [ESI's] plan."

“That issue is entirely determined based on the disputed contract; there is no independent federal injury to consider,” the opinion stated. 

The court concluded that Heartland "can prove no set of facts in support of its claim of jurisdiction." 

“Even accepting the facts as alleged, Heartland has no federal right of action and therefore the court lacks jurisdiction over its declaratory judgment claim,” the opinion stated.

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Express Scripts U.S. District Court for the Eastern District of Missouri Eastern Division

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