In re HIV Antitrust Litigation

Background

The court had previously granted Defendants’ motion to dismiss BCBSA. The EPPs then sought leave—permission—to file a motion asking the court to reconsider that decision. The order addresses Docket No. 1347.

The earlier dismissal rested on the court’s conclusions that the disputed funds belonged to the Office of Personnel Management (OPM), not BCBSA, and that any possible future financial risk to BCBSA or the Local Blues was too remote because the relevant account had never been exhausted. The earlier order did not decide whether OPM had authorized BCBSA to sue or had delegated that authority to BCBSA.

Standard for Reconsideration

Civil Local Rule 7-9(b) requires a party seeking leave to request reconsideration of an interlocutory order to show reasonable diligence and one of three circumstances: a material difference in fact or law that was previously unknown despite diligence; new material facts or a change in law; or the court’s manifest failure to consider material facts or dispositive legal arguments previously presented. The EPPs relied on the third circumstance.

Arguments Concerning the Prior Decision

The EPPs argued that the court had decided the ownership of the funds by relying on the Ninth Circuit’s decision in Goncalves v. Rady Children’s Hospital San Diego, rather than on the evidence in this case. The court disagreed. It stated that it had considered evidence about the payment process for pharmaceutical benefits, on which the parties agreed, as well as testimony from BCBSA’s designated witness.

The court also explained that its earlier order had not expressly held that BCBSA or the Local Blues could not bear risk as an underwriter. Instead, it had concluded that BCBSA had not shown a sufficient likelihood of future harm because there had been no shortfall during the more than sixty years of the Federal Employees Health Benefits Program and BCBSA had acknowledged that insufficient funding was not expected in 2022. The court therefore denied leave to seek reconsideration to the extent the request was based on the court’s references to Goncalves.

Authority to Sue on OPM’s Behalf

The EPPs argued that the court had wrongly characterized the funds as OPM’s because the federal government contributed only part of the money and federal employees contributed the rest. They also cited a statute defining “federal health care program.” The court found no manifest failure because the EPPs had not previously cited that statute, its relevance was questionable, and the parties had previously framed the issue as whether the money was government money or BCBSA money.

The court nevertheless granted leave to seek reconsideration on the question whether BCBSA could bring suit on behalf of OPM even if the Federal Employees Health Benefits Program (FEP) could not be part of the class. The court then considered the merits of that issue and reviewed the statutes, regulations, and provisions of the OPM/BCBSA contract cited by the EPPs.

The court concluded that the cited materials did not establish BCBSA’s authority to file this lawsuit on OPM’s behalf. A regulation concerning carriers’ subrogation and reimbursement recoveries did not apply because those terms concern recovering payments connected to an individual’s illness or injury. Contract provisions concerning erroneous payments also did not apply because the defendants were drug manufacturers rather than members or providers, and the alleged conduct involved fraud or abuse.

A contract provision concerning detection of fraud and abuse was potentially relevant, but the court was not persuaded that it gave BCBSA a unilateral right to sue on OPM’s behalf. Materials concerning referrals to OPM’s Office of Inspector General suggested that a carrier did not have an initial right to file suit independently. The court did not rule out the possibility that OPM’s Office of Inspector General could authorize a carrier to sue, but found no record evidence that such authorization had occurred. The EPPs had not alleged that a case notification was sent, how the Office of Inspector General responded, or similar facts. The court found that OPM’s awareness of the lawsuit and the challenges to BCBSA’s standing was not enough to establish implied authorization.

Disposition

The court granted in part and denied in part the EPPs’ motion for leave to file a motion for reconsideration. To the extent leave was granted, the court denied the motion for reconsideration on the merits. The order states that the evidence was insufficient to support the EPPs’ position that BCBSA had been authorized to file suit on behalf of the FEP, and it disposes of Docket No. 1347.

Judge Edward M. Chen signed the order.