Mohr-Lercara v. Oxford Health Insurance, Inc.

Background

Anna Mohr-Lercara brought a proposed class action against Oxford Health Insurance, Inc., Optum, Inc., and Optum Rx, Inc. She alleged that the defendants violated the Employee Retirement Income Security Act (ERISA) and the Racketeer Influenced and Corrupt Organizations Act (RICO) by overcharging her for covered prescription drugs under an employer-sponsored health plan.

Mohr-Lercara participated in the plan during periods from October 4, 2010, through December 31, 2014, and from August 1, 2015, through August 31, 2016. Oxford offered and underwrote the plan. Optum was an Oxford affiliate, and Optum Rx became Oxford’s pharmacy benefit manager in October 2013.

For 2010 through 2013, the plan’s drug rider required payment of the lower of the applicable out-of-pocket amount or the network pharmacy’s usual and customary charge for drugs bought from network pharmacies. For drugs bought from Oxford’s mail-order supplier, the plan separately allowed payment of the lower of the applicable out-of-pocket amount or the prescription drug cost, which the opinion identifies as the pharmacy rate.

For 2014 through 2016, the plan required payment of the lower of the applicable cost-sharing amount or the participating pharmacy’s usual and customary charge for drugs bought from participating pharmacies. The plan separately addressed the pharmacy rate for drugs bought from Oxford’s mail-order supplier.

Claims and Motion

Mohr-Lercara alleged that the plan instead required a “lesser-of-three” calculation: her cost-sharing amount, the pharmacy’s usual and customary charge, or the pharmacy rate. She alleged that the defendants used only a “lesser-of-two” calculation and thereby overcharged her. She also alleged that the defendants conspired with pharmacies to conceal the overcharges and keep the disputed amounts.

Her amended complaint asserted six ERISA claims and three RICO claims. The ERISA claims included a claim for plan benefits, prohibited-transaction claims, fiduciary-duty claims, co-fiduciary liability, and knowing participation in a fiduciary breach. The RICO claims alleged racketeering by Oxford and Optum and a conspiracy involving all defendants.

The defendants moved for summary judgment under Rule 56. Summary judgment is appropriate when the evidence shows no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law.

ERISA Ruling

The court applied New York contract law because the plan contained a New York choice-of-law provision. It interpreted the written plan according to its ordinary meaning and considered the plan as a whole, giving effect to each provision.

For the 2010-to-2013 plan, the court held that the drug rider did not require payment of the pharmacy rate for drugs bought from network pharmacies. The rider expressly provided for the pharmacy rate in its mail-order provision but did not include that rate in the separate network-pharmacy provision. The court concluded that this difference showed that the plan did not offer network-pharmacy members the pharmacy rate.

The court rejected Mohr-Lercara’s argument that a member handbook changed that result. The handbook referred to network providers, but the plan separately defined network providers and network pharmacies. The court also concluded that the handbook’s general language could not override the specific drug-rider provision.

For the 2014-to-2016 plan, the court similarly held that Mohr-Lercara was not entitled to the pharmacy rate for drugs bought from participating pharmacies. The court rejected her argument that a provision referring to the “Allowed Amount” required a lesser-of-three calculation. Reading that provision as she proposed would make the specific participating-pharmacy pricing provision effectively meaningless. The court also rejected her contention that participating pharmacies were participating providers or facilities under the plan’s definitions.

Because the defendants had complied with the plan terms, the court ruled that there was no underlying ERISA violation. It dismissed the benefit claim, the fiduciary-duty and prohibited-transaction claims, and the derivative claim for knowing participation in a fiduciary breach.

RICO Ruling

The court held that Mohr-Lercara’s RICO claims also failed. Her RICO theory depended on the assertion that she was entitled to the pharmacy rate and that the defendants therefore defrauded her by charging more and concealing the alleged scheme. Because the court found that she was not entitled to the pharmacy rate and was not overcharged under the plan, the record contained no evidence of the alleged underlying fraud. The court therefore dismissed the substantive RICO claims and the RICO conspiracy claim.

Disposition

The court granted the defendants’ motion for summary judgment. It directed the Clerk to terminate the motion and close the case.