MSP RECOVERY CLAIMS SERIES LLC MSPA CLAIMS LLC PMPI MAO MSO RECOVERY II LLC MSP RECOVERY CLAIMS SERIES 44 LLC v. CARING VOICE COALITION INC UNITED THERAPEUTICS CORPORATION SMITHS MEDICAL ASD INC EXPRESS SCRIPTS INC EXPRESS SCRIPTS HOLDING COMPANY ACCREDO HEALTH GROUP CVS HEALTH CORPORATION ADIRA FOUNDATION (2024)

ORDER ON DEFENDANTS’ MOTION TO DISMISS

This matter is before the Court on Defendants’, United Therapeutics (“UT”), Specialty Pharmacies (“SPs”), and Smiths Medical (“Smiths”), motions to dismiss Plaintiffs’ Second Amended Complaint (“SAC”). [D.E. 246]; [D.E. 247]; [D.E. 249]. Plaintiffs responded to Defendants’ motion on May 19, 2023 [D.E. 255]; [D.E. 256]; [D.E. 257], to which Defendants replied on June 30, 2023. [D.E. 260]; [D.E. 261]; [D.E. 262]. The parties have also filed notices of supplemental authority in the interim period. Therefore, Defendants’ motions are now ripe for disposition. After careful consideration of the motions, responses, replies, relevant authority, and for the reasons discussed below, UT's motion to dismiss is due to be GRANTED, SPs’ motion to dismiss is due to be GRANTED, and Smiths’ motion to dismiss is also due to be GRANTED.

I. BACKGROUND

On October 27, 2022, following the dismissal without prejudice of the Amended Complaint, Plaintiffs filed the SAC seeking relief under Federal RICO and antitrust law, state antitrust, consumer protection, tortious interference, unjust enrichment, and Florida Civil Remedies laws (Florida RICO). [D.E. 178, ¶¶ 531–840]. Plaintiffs added Defendants Express Scripts, Inc., Express Scripts Holding Company, Accredo Health Group, CVS Health Corporation (collectively referred to as the Specialty pharmacies or SPs), and Adira Foundation (the “de facto successor of CVC” who along with co-defendant Caring Voice Coalition, Inc. are referred to as the “Charities” or “Charity Defendants”) into this action. Id. at ¶¶ 2, 58. Plaintiffs named UT as a defendant in all fifteen counts, Charity Defendants and SPs in ten counts (Counts I-II, V-VI, IX-XV), and Smiths in seven counts (V-VI, IX-XIII). Id. at ¶¶ 531–840.

Plaintiffs are assignees of various private health insurance providers (“the Assignors”) tasked with recovering reimbursement or payment to Defendants. Id. at ¶ 39-51, A.1-3. Assignors offer Medicare benefits to enrollees through Part C and Part D Medicare coverage. Id. Medicare Part C outlines the Medicare Advantage program, allowing enrollees to contract with private insurers, the Assignors, to deliver their Medicare benefits. Id. Part D coverage enables private insurers to provide prescription drug coverage to enrollees in return for proper reimbursement. Id.

Defendant UT is a pharmaceutical company that markets the branded drug Remodulin, known in its generic form as Treprostinil, to treat patients with pulmonary arterial hypertension (“PAH”). Id. at ¶2 at Defendant CVC is a 501(c)(3) charity with a patient assistance program that covers the cost of medically insured patients’ co-payments if they are unable to pay the co-payment on their prescription, while the insurance company, the assignors, paid the rest. Id. Defendants SPs are pharmacies that, among other things, distribute prescribed drugs to patients in accordance with distribution agreements with pharmaceutical companies. Id. at ¶14. Defendant Smiths is a medical devices company that manufactured CADD-MS 3 pumps (“MS 3 pump”) and cartridges used to administer Remodulin either subcutaneously or intravenously. Id. at ¶60. Plaintiffs allege two schemes involving these defendants that give rise to their claims: the co-payment circumvention scheme and the generic scheme.

Co-Payment Circumvention Scheme

Congress requires Medicare beneficiaries to pay a certain amount, known as a co-payment, for drugs that are insured through the program to keep pharmaceutical companies from inflating their prices with no market forces to serve as a check. Pharmaceutical companies are permitted to donate money or drugs to independent charities which cover the co-pay requirement for patients with inadequate finances. However, companies are prohibited from coordinating with charities to direct donations to their specific drug co-payments or from receiving information from the charities to perform return on investment calculations for their donations. [D.E. 178]

Plaintiffs allege that UT conspired with the charities and SPs to eliminate price sensitivity for the UT drug Remodulin and caused assignors to pay supra-competitive prices for claims tainted by Anti-Kickback Statute (“AKS”) violations. From 2010 to 2014, UT allegedly used CVC as a conduit to cover the co-payment obligations of Medicare patients taking UT drugs and received data from CVC detailing how much money UT was making based on their donations in violation of AKS and the False Claims Act. Plaintiffs also allege that the specialty pharmacies were complicit in this conspiracy by directing patients away from UT's free drug program to the CVC patient assistance programs as per their distribution agreement and thereby facilitating the conspiracy. [D.E. 178]

Generic Scheme

Plaintiffs allege defendants violated state and federal antitrust law by UT entering into agreements with defendant Smiths, a medical device manufacturer, and SPs to ensure that Smiths’ MS 3 pumps would be provided solely to UT and would create artificial barriers to entry for generic competitors. Remodulin was the only form of Treprostinil administered through infusion, either subcutaneously or intravenously, until generic competitor Sandoz entered the market in 2019. Smiths is the manufacturer of the MS 3 pump used to administer Remodulin subcutaneously. [D.E. 178]

In 2015, Smiths filed an “End of Life Notice” notice for the MS 3 pump (the only FDA-approved pump for subcutaneous use of Treprostinil) stating it would discontinue the production of the MS 3 pump and Smiths would continue to sell its remaining inventory until the pumps ran out in June 2017. UT then entered into an agreement with Smiths in 2016 where UT would fund a “final manufacturing run of 7,000 pumps” and required UT to purchase any pumps unsold by Smiths after six years. The 2016 agreement did not limit Smiths’ sale of the MS 3 pump to UT's Remodulin and required Smiths to make commercially reasonable efforts to sell the pumps in the ordinary course of business. However, Smiths allegedly ignored Sandoz's inquiries into purchasing the pumps in 2016. [D.E. 178].

Plaintiffs also allege that SPs were complicit in the scheme because, although they met with Sandoz to plan the launch of generic Tresprotinil in 2016, SPs agreed with UT and Smiths that the MS 3 pumps would be restricted to Remodulin-use only in 2019. Therefore, although Sandoz launched its generic Treprostinil in 2019, it was unable to market the drug for subcutaneous use until May 2021. Id. at 470. As a result of this scheme, plaintiffs’ assignors were required to pay inflated/anti-competitive prices for Treprostinil's subcutaneous use due to the lack of a generic competitor for those two years. [D.E. 178]

II. GOVERNING PRINCIPLES

A. Motion to Dismiss Pursuant to 12(b)(1)

To the extent defendants challenge plaintiffs’ standing to pursue their various claims, Rule 12(b)(1) applies. See Stalley ex rel. United States v. Orlando Reg'l Healthcare Sys., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008). “ ‘Because standing is jurisdictional, a dismissal for lack of standing has the same effect as a dismissal for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1).” Id. (quoting Cone Corp. v. Fla. Dep't of Transp., 921 F.2d 1190, 1203 n.42 (11th Cir. 1991)). “In the absence of Article III standing, the district court lack[s] jurisdiction to resolve MSPRC's claims on the merits.” MSP Recovery Claims, Series LLC v. ACE Am. Ins. Co., 974 F. 3d 1305, 1316 (11th Cir. 2020) (citing MAO-MSO Recovery II v. State Farm Mutual Automobile Ins. Co., 935 F. 3d 573, 581–82 (7th Cir. 2019)).

“A defendant can move to dismiss a complaint under Rule 12(b)(1) for lack of subject matter jurisdiction by either facial or factual attack.” Id. (quoting McElmurray v. Consol. Gov't of Augusta–Richmond Cnty., 501 F.3d 1244, 1251 (11th Cir. 2007)). “A facial attack on the complaint ‘require[s] the court merely to look and see if [the] plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion.’ ” McElmurray v. Consol. Gov't of Augusta-Richmond, Cnty., 501 F.3d 1244, 1251 (11th Cir. 2007) (quoting Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990)). To survive a facial challenge to standing, “each element of standing ‘must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.’ ” Bischoff v. Osceola Cnty., Fla., 222 F.3d 874, 878 (11th Cir. 2000) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).

“Factual attacks, on the other hand, challenge the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits are considered.” McElmurray, 501 F.3d at 1251 (citations and internal quotation marks omitted). “[T]he trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case.” Streib v. United States, 2013 WL 4401036 at *2 (S.D. Fla. Aug. 12, 2013) (quoting Lawrence, 919 F.2d at 1529). “[N]o presumptive truthfulness attaches to a plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims.” Id. In short, “when a party mounts a factual attack, a district court is free to independently weigh facts, and may proceed as it never could under 12(b)(6) or Fed. R. Civ. P. 56.” Int'l Broth. of Teamsters v. Amerijet Int'l, Inc., 932 F. Supp. 2d 1336, 1343 (S.D. Fla. 2013) (quoting Morrison v. Amway Corp., 323 F.3d 920, 925 (11th Cir. 2003)).

B. Motion to Dismiss Pursuant to 12(b)(2)

“A plaintiff seeking to establish personal jurisdiction over a nonresident defendant ‘bears the initial burden of alleging in the complaint sufficient facts to make out a prima facie case of jurisdiction.’ ” Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1350 (11th Cir. 2013) (quoting United Techs. Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009)). “[T]he facts as alleged in the complaint are taken as true to the extent they are uncontroverted by defendants’ affidavits.” Home Ins. Co. v. Thomas Indus., Inc., 896 F.2d 1352, 1355 (11th Cir. 1990).

When a defendant submits evidence sufficiently challenging personal jurisdiction, “the burden traditionally shifts back to the plaintiff to produce evidence supporting jurisdiction.” United Techs. Corp., 556 F.3d at 1274 (quoting Meier ex rel. Meier v. Sun Intern. Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002)). Then, the plaintiff must “affirmatively support its jurisdictional allegations and may not merely rely upon the factual allegations set forth in its complaint.” Kernel Records Oy v. Mosley, No. 09-cv-21597-TORRES, 2010 WL 2812565 at *3 (S.D. Fla. July 5, 2010). If the parties’ supplemental evidence conflicts, courts must construe all reasonable inferences in favor of the plaintiff. Diamond Crystal Brands, Inc. v. Food Movers Int'l, Inc., 593 F.3d 1249, 1257 (11th Cir. 2010).

A federal court conducts a two-step inquiry to determine whether personal jurisdiction over a nonresident defendant exists. Carmouche v. Tamborlee Mgmt., Inc., 789 F.3d 1201, 1203 (11th Cir. 2015) The Court first looks to the state's long-arm statute to determine whether personal jurisdiction exists. Id. The Court must then examine whether the exercise of personal jurisdiction over the defendant would violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Id. “The long-arm statute must be strictly construed; therefore, any doubts about the applicability of the statute must be resolved in favor of the defendant and against a conclusion that jurisdiction exists.” Peruyero v. Airbus S.A.S., 83 F. Supp. 3d 1283, 1289 (S.D. Fla. 2014).

C. Motion to Dismiss Pursuant to 12(b)(6)

Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a claim for failure to state a claim upon which relief can be granted. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Conclusory statements, assertions, or labels will not survive a 12(b)(6) motion to dismiss. Id. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.; see also Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir. 2010) (setting forth the plausibility standard). “Factual allegations must be enough to raise a right to relief above the speculative level[.]” Twombly, 550 U.S. at 555 (citation omitted). Additionally:

Although it must accept well-pled facts as true, the court is not required to accept a plaintiff's legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (noting “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions”). In evaluating the sufficiency of a plaintiff's pleadings, we make reasonable inferences in Plaintiff's favor, “but we are not required to draw plaintiff's inference.” Aldana v. Del Monte Fresh Produce, N.A., Inc., 416 F.3d 1242, 1248 (11th Cir. 2005). Similarly, “unwarranted deductions of fact” in a complaint are not admitted as true for the purpose of testing the sufficiency of plaintiff's allegations. Id.; see also Iqbal, 556 U.S. at 681 (stating conclusory allegations are “not entitled to be assumed true”).

Sinaltrainal v. Coca-Cola, 578 F.3d 1252, 1260 (11th Cir. 2009), abrogated on other grounds by Mohamad v. Palestinian Auth., 566 U.S. 449, 453 n.2, (2012). The Eleventh Circuit has endorsed “a ‘two-pronged approach’ in applying these principles: 1) eliminate any allegations in the complaint that are merely legal conclusions; and 2) where there are well-pleaded factual allegations, ‘assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.’ ” Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010) (quoting Iqbal, 556 U.S. at 679).

III. ANALYSIS

Defendants assert arguments similar to those originally raised in response to the first amended complaint, as well as new arguments based on the added defendants and new allegations brought in the SAC. In particular in their motion to dismiss, UT argues that Plaintiffs lack Article III standing, antitrust standing through their representative assignments, a cognizable injury under RICO, and proximate causation between Defendant's conduct and the alleged RICO injury. SPs argue that this Court lacks personal jurisdiction over certain pharmacy Defendants, Plaintiffs’ claims relating to the co-payment scheme are time-barred, and the SAC is impermissible shotgun pleading. Smiths argues that Plaintiffs failed to plead a plausible antitrust injury, Defendants’ conduct did not foreclose competition in the relevant markets, and the proposed markets the Plaintiffs allege are not plausible. We will start with the narrower arguments first and proceed from there.

A. Lack of Personal Jurisdiction Over Defendants CVS Health Corporation and Express Scripts Holding Company

“A fundamental principle of Anglo-American law is that a business operating as a legally recognized entity is separate and distinct from its owners.” 114 Am. Jur. Proof of Facts 3d 403 (2015). “Generally, a foreign parent corporation is not subject to the jurisdiction of a forum state merely because a subsidiary is doing business there.” Meier v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1272 (11th Cir. 2002). Agency-based personal jurisdiction does exist where “the parent entity exercises operational control” over a subsidiary by “the day-to-day control of the internal affairs or basic operations” of the subsidiary. Hard Candy, LLC v. Hard Candy Fitness, LLC, 106 F. Supp. 3d 1231, 1241 (S.D. Fla. 2015).

In this case, plaintiffs allege this Court has personal jurisdiction over CVS Health Corp. and Express Scripts Holding Co. because the SP Defendants and their “non-defendant subsidiaries” engaged in “the marketing, sale, promotion, and distribution of the PAH Drugs” throughout the state of Florida causing economic injury to assignors. [D.E. 178]. Furthermore, plaintiffs argue that even if CVS Health and ESHC were not the corporate entities directly involved in the marketing, sale, promotion, and distribution of PAH drugs, this Court has personal jurisdiction over them through agency-based jurisdiction. [D.E. 255].

Defendants counter that “UT contracted with ‘Accredo Health Group, Inc.’ and ‘CVS Caremark,’ to market and distribute the PAH drugs, not Express Scripts Holding Company or CVS Health.” [D.E. 247 at 24]. Defendants supported their assertions through affidavits from two officials from both entities that declare that both CVS Health and ESHC are merely holding companies and do not conduct the activities alleged by plaintiffs. [D.E. 247-3; 247-4]

Plaintiffs did not provide any factual evidence to refute these declarations. [D.E. 255]. Instead, Plaintiffs conclusorily argue that CVS markets itself as an “integrated healthcare company” that does not have any legal “firewall” between its subsidiaries that distinguishes them for the sake of personal jurisdiction. Id. Plaintiffs also argue that the shared leadership between CVS Health, ESHC, and their respective subsidiaries confer agency-based personal jurisdiction onto both holding companies for the actions of their subsidiaries. Id.

This Court finds plaintiffs’ arguments unpersuasive without factual evidence to controvert the declarations provided by the defendants. There is no factual basis from which the court can find that CVS Health or ESHC exercises “day-to-day control of the internal affairs or basic operations” of their subsidiaries. The record presented on this motion shows otherwise. And even in the interim period since the motion was originally filed, Plaintiffs have offered nothing new to support their theory in the form of evidence or record facts.

Based on the present record, we can only apply the long-settled principle that shared leadership between parent companies and subsidiaries does not magically pierce the “firewall” separating an entity from its owner. See Herederos De Roberto Gomez Cabrera, LLC v. Teck Res. Ltd., 43 F.4th 1303, 1312 (11th Cir. 2022), cert. denied, 143 S. Ct. 736 (2023) (affirming dismissal on personal jurisdiction where “[common officers and leadership” are factors courts use when assessing whether a subsidiary is an alter ego, ․ but they are not by themselves sufficient to establish a subsidiary's alter-ego status”); Consolidated Dev. Corp. v. Sherritt, Inc., 216 F.3d 1286, 1293 (11th Cir. 2000) (“Where the ‘subsidiary's presence in the state is primarily for the purpose of carrying on its own business and the subsidiary has preserved some semblance of independence from the parent, jurisdiction over the parent may not be acquired on the basis of the local activities of the subsidiary.’ ”); Blevin-Ellington v CooperSurgical, Inc., 2023 WL 21111346 at *8 (N.D. Ga. Jan. 17, 2023) (finding shared leadership and shared decision making between parent and subsidiaries does not support agency based or “alter ego” personal jurisdiction); In re Takata Airbag Products Liab. Litig., 396 F. Supp. 3d 1101, 1150 (S.D. Fla. 2019) (dismissing claims against foreign parent companies where “Plaintiffs’ allegations fail to overcome these presumptions [that “a foreign parent corporation is not subject to the jurisdiction of a forum state merely because a subsidiary is doing business there.”).

Therefore, plaintiffs have not properly rebutted the evidence presented on this record that dispels the exercise of specific personal jurisdiction over these defendants. So Special Pharmacies’ motion to dismiss CVS Health Corp. and Express Scripts Holding Co. should be GRANTED.

B. Plaintiffs’ Standing From Assignments for Any Causes of Action After 2017, Including for All State and Federal Antitrust Claims

As this Court has previously found, the language of Plaintiffs’ assignments conferring “all right[s], title[s], ownership[s], and interest[s]” to the plaintiffs, Ex. 2, 3, 4, “may validly convey federal antitrust and RICO claims” from their assignors. [D.E. 163] (emphasis added); see Gulfstream III Associates, Inc. v. Gulfstream Aerospace Corp., 995 F.2d 425, 438–40 (3d Cir. 1993) (finding that assignment of federal antitrust claims must be “express”); contra MSP Recovery Claims, Series, LLC v. Sanofi Aventis U.S. LLC, 2019 WL 1418129 at *7-*8 (D.N.J. Mar. 29, 2019) (finding assignment with identical language to the current case was within the meaning of Gulfstream and expressly assign Federal RICO rights).

So, we reiterate what assignment we are dealing with here. Plaintiffs’ assignments state:

Assignor hereby irrevocably assigns, transfers, conveys, sets over, and delivers to Assignee or its assigns any and all of Assignor's right, title, ownership and interest in and to all rights and entitlements, that Assignor has, may have had, or has asserted against third parties arising from or relating to the Claims.

Defendants now raise the argument that plaintiffs’ most recent assignment was executed in 2017, and the alleged antitrust injury did not occur until 2019 when Sandoz entered the market for generic Treprostinil. The language of the assignment only confers rights to bring claims, “that Assignor has, may have had, or has asserted” at the time of the assignment. So, Defendants argue in their present motion, this assignment is a nullity when it comes to Plaintiffs’ post-2017 claims.

In opposition, plaintiffs point to a provision in the Fallon Community Health Plans assignment that allows assignors to assign additional rights when it transfers data after the effective signing date of 2017. That said, Plaintiffs offer nothing else to support that Fallon or any other assignor has transferred data to plaintiffs after 2017. [D.E. 257]. The other assignment agreements signed in 2014 and 2016 do not contain a provision for the continuing assignment of rights after their effective signing date. Ex. 3, 4.

Plaintiffs also assert that they have additional assignors who have claims against UT. [D.E. 178]. For example, they allege that “AvMed, one of the Assignors,” paid claims for UT therapies in 2018. Id. at ¶334. But Plaintiffs cannot establish standing based on Avmed or these other unnamed assignors because, unlike the three representative assignors, plaintiffs did not plead the terms of those assignment agreements and thus cannot plead standing based on them. See MSP Recovery Claims, Series LLC v. Am. Fam. Connect Prop. & Cas. Ins. Co., 2023 WL 3276792 at *3 (S.D. Fla. May 5, 2023) (finding standing must be pleaded based on the terms of the representative assignments).

Plaintiffs alternatively argue that the antitrust conduct and injury at issue in this complaint actually started in 2012, when UT filed patent litigation suits against its generic competitor Sandoz, and continued thereafter through and past 2017. [D.E. 256]. Hence, the assignment at issue amply supports their standing to pursue these antitrust claims.

To understand that theory, recall that pleading an antitrust injury “requires [a] private antitrust plaintiff to show that his own injury coincides with the public detriment tending to result from the alleged violation.” Austin v. Blue Cross & Blue Shield, 903 F.2d 1385,1389-90 (11th Cir. 1990). Antitrust conduct under either § 1 or § 2 of the Sherman Act is the sort that restricts, delays, limits, and interferes with the entry of competitors. Id. Patent holders of course have the lawful right to exclude others. See 35 U.S.C. §§ 271(a) (defining infringement) & 283 (providing injunctive relief for infringement); Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 215, (1980) (patent rights grants the right to exclude others from profiting from the patent holder's invention). Hence a patent holder's right to exclude is understood to be a defense to an antitrust claim. See, e.g., Walker Process Equip., Inc., v. Food Mach. & Chem. Corp., 382 U.S. 172, 179 (1965) (Harlan, J., concurring).

It is similarly well established that, even if a patent is later found to be invalid, a patent infringement lawsuit and later settlement does not “pierce[ ]” patent immunity from antitrust liability unless “the patentee enforced a patent with the knowledge that the patent was procured by fraud on the Patent Office.” Valley Drug Co. v. Geneva Pharm., Inc., 344 F.3d 1294, 1306 (11th Cir. 2003) (citing Walker Process, 382 U.S. at 177) (emphasis added).

This Valley Drug precedent is instructive because it involved three pharmaceutical companies that were sued for Sherman Act violations after settling with the plaintiffs in a patent infringement case before the patent was later found to be invalid. The Eleventh Circuit found that patent holders who in good faith exercised their right to exclude competitors were not liable for antitrust violations. Id. The court reasoned that “exposing settling parties to antitrust liability for the exclusionary effects of a settlement reasonably within the scope of the patent merely because the patent is subsequently declared invalid would undermine the patent incentives”. Id. at 1302, 1308.

Here, plaintiffs argue Defendants engaged in anti-competitive conduct “since at least 2012 when UT filed several frivolous patent infringement lawsuits.” [D.E. 256]. According to the SAC, on March 14, 2012; January 2013; and September 30, 2013, UT filed patent infringement lawsuits against Sandoz, its generic competitor, triggering a 30-month stay of FDA-approval of Sandoz's ANDAs for generic Treprostinil. [D.E. 178 ¶ 376-83]. Before the 30-month stay had expired, UT and Sandoz reached a settlement agreement granting Sandoz a license to manufacture and commercialize generic Treprostinil beginning on June 26, 2018. Id. at ¶406-7.

While Plaintiffs allege “UT informed its investors it could provide ‘no assurances that we will prevail in our defense of our patent rights’ ”, they do not allege that UT “enforced a patent with the knowledge that the patent was procured by fraud on the Patent Office.” [D.E. 178 ¶379]. Valley Drug Co., 344 F.3d at 1306. Therefore, regardless of the agreement UT made with Smiths in 2015 about its “End of Life Notice”, Sandoz, the only generic competitor for Treprostinil through subcutaneous use, was already foreclosed from entering the market until 2018.

Furthermore, the terms of the 2015 agreement between Smiths and UT did not restrict the sale of the MS 3 pumps to Remodulin use only and stated that Smiths should use “commercially reasonable efforts to sell the pumps in the ordinary course of business.” [D.E.178]. The agreement is not plausibly antitrust conduct that would “restrict, delay, limit, and interfere with the entry of competitors”, and Sandoz was still foreclosed from entering the market for Treprostinil until 2018. So, as a matter of law, any alleged antitrust injury could only have occurred after 2017.

Consequently, plaintiffs’ theory that pre-2017 antitrust conduct could have been assigned in this case falters. In this case, as a matter of law, plaintiffs’ assignments cannot confer any rights of action or standing after 2017.¹ Therefore, Plaintiffs’ representative assignments do not confer standing to bring these antitrust claims and Defendants’ motion to dismiss Counts III, IV, V, VI, VII, VIII, IX, and X should be GRANTED on that basis.²

C. Plaintiffs Fail to Plead Plausible RICO Claims

Plaintiffs next assert RICO claims for violations of 18 U.S.C. § 1962(c) and (d). [D.E. 178]. Section 1962(c) makes it “unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.” 18 U.S.C. § 1962(c). At the motion to dismiss stage, § 1962(c) requires a plaintiff to adequately plead: A private plaintiff suing under the civil provisions of RICO must plausibly allege six elements: that the defendants “(1) operated or managed (2) an enterprise (3) through a pattern (4) of racketeering activity that included at least two predicate acts of racketeering, which (5) caused (6) injury to the business or property of the plaintiff.” Cisneros v. Petland, Inc., 972 F. 3d 1204, 1211 (11th Cir. 2020).

In addition, the Eleventh Circuit has explained that a section 1962(d) RICO conspiracy claim must be raised in one of two ways: “(1) by showing that the defendant agreed to the overall objective of the conspiracy; or (2) by showing that the defendant agreed to commit two predicate acts.” Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1293 (11th Cir. 2010) (quoting Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 950 (11th Cir. 1997)). The existence of a conspiracy can also be inferred from the participant's conduct. Id. But “a civil conspiracy plaintiff cannot bring suit under RICO based on injury caused by any act in furtherance of a conspiracy that might have caused the plaintiff injury.” Beck v. Prupis, 529 U.S. 494, 504–05 (2000). Instead, a civil conspiracy plaintiff must plead that her injury was caused by something “analogous to an ‘act of tortious character’ ”. Id. at 501–05 (quoting 4 Restatement (Second) of Torts § 876, Comment b); see, e.g., Silver v. Countrywide Home Loans, Inc., 760 F. Supp. 2d 1330, 1343 (S.D. Fla. 2011) (“ ‘Additionally, an actionable conspiracy requires an actionable underlying tort or wrong.’ ”) (quoting Raimi v. Furlong, 702 So. 2d 1273, 1284 (Fla. 3d DCA 1997)).

1. Association-in-fact Enterprise

RICO defines an “enterprise” as “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961(4). Plaintiffs that allege Defendants participated in an “association-in-fact enterprise” must show “at least three structural features: (1) a purpose, (2) relationships among those associated with the enterprise, and (3) longevity sufficient to permit these associates to pursue the enterprise's purpose,” Boyle v. United States, 556 U.S. 938, 946 (2009). An association-in-fact enterprise need not have any particular indicia of organization, such as a “chain of command,” but it does need some sort of discrete existence and structure uniting its members in a cognizable group.” Id.

To satisfy the purpose factor, “[a]n abstract common purpose, such as a generally shared interest in making money, will not suffice․ [W]here the participants’ ultimate purpose is to make money for themselves, a RICO plaintiff must plausibly allege that the participants shared the purpose of enriching themselves through a particular criminal course of conduct.” Cisneros, 973 F.3d at 1211; see also Ray v. Spirit Airlines, Inc., 836 F.3d 1340, 1352 n.3 (11th Cir. 2016) (the “common purpose of making money” would not be sufficient to find an association-in-fact enterprise between Spirit Airlines and outside vendors who merely provided “anodyne services”).

Furthermore, to be liable under RICO, “one must participate in the operation or management of the enterprise itself” and take “some part in directing the enterprise's affairs.” Reves v. Ernst & Young, 507 U.S. 170, 179 (1993). Each defendant must have “conducted or participated in the conduct of the ‘enterprises affairs,’ not just [its] own affairs.” Id. at 185; see also Emess Cap. v. Rothstein, 2011 WL 13214308 at *8 (S.D. Fla. Dec. 21, 2011) (dismissing RICO complaint based on “liability for mere aiding and abetting” by “someone associated with the enterprise who does not direct its affairs”).

In this case, the earlier Report and Recommendation found that plaintiffs may have sufficiently alleged the existence of an “association-in-fact enterprise” between UT and CVC. [D.E. 163]. The plaintiffs sufficiently alleged (1) a common purpose to maximize UT's profits and CVC's executive compensation, (2) interpersonal relationships between UT and CVC's officers that allow direct communication for the alleged fraudulent activity, and (3) an ongoing four-year relationship to pursue the purpose.

However, plaintiffs failed to plausibly plead a RICO enterprise between UT, CVC, and SPs. In their RICO counts, plaintiffs claim the common purpose between the UT, CVC, and SPs in the co-payment scheme was “to profit from the illegal kickbacks and referrals”. [D.E. 178]. While there are sufficient allegations connecting UT and CVC to this common purpose, plaintiffs only support SPs’ involvement by stating it “received substantial revenue” and had “contractual relationships, financial ties, and continuing coordination” with the other two defendants. Id. The contractual relationship between SPs and UT comes in the form of distributions agreements where SPs agreed to distribute UT's drugs, assist patients in enrolling in Medicare coverage if needed, and guide patients who could not pay the co-pay on their drugs to the PAP charities or UT's free drug program in exchange for a fee ³ . Id.

The fact that these SPs made money flowing from these distribution agreements and aided the overall scheme does not mean they acted with the required purpose under RICO. See Cisneros, 973 F.3d at 1211. Plaintiffs do not assert that the SPs engaged in a “particular criminal course of conduct” by following the terms of the distribution agreement. Id. The failure to plead specific facts going to SPs’ knowledge and participation in criminal or predicate acts is fatal. While it may violate AKS law for a PAP charity to send pharmaceutical company data from which they could conduct rate of return calculations on their charitable donations, the same does not apply to pharmacies that distribute prescription drugs for pharmaceutical companies. 79 Fed. Reg. at 31121. SPs with only knowledge of the existence of PAP charities does not make it plausible to find that a common purpose existed with UT and CVC to defraud patients with AKS-tainted claims. [D.E. 178]. Plaintiffs also allege no facts suggesting that the SPs took “some part in the directing of the enterprise itself.” Boyle, 556 U.S. at 946.

Therefore, plaintiffs have still failed to plead that the SPs were part of an “Association-in-Fact Enterprise” with UT and CVC. That failure negates the existence of a plausible RICO claim as a matter of law. See, e.g., Lewis v. Mercedes-Benz USA, LLC, 530 F. Supp. 3d 1183, 1218 (S.D. Fla. 2021) (dismissing RICO claim where complaint lacked any allegations of “collective conduct outside the regular course of Defendants’ businesses, which is required to establish a RICO enterprise.”) (“Plaintiffs have ‘alleged no facts that plausibly support the inference that the defendants [and their unnamed employees and associates] were collectively trying to make money in ․ sales by fraud, which is a common purpose sufficient to find a RICO enterprise, as opposed to the ‘obvious alternative explanation,’ that they were simply trying to make money in ․ sales, which is not ․”).

For the sake of completeness we will proceed with analyzing other elements of the prima facie case.

2. RICO Injury

This Court previously found that the Plaintiffs pleaded sufficient injury to confer Article III standing to sue Defendants by alleging economic injury for loss of money related to paying supra-competitive prices for PAH drugs [D.E. 163]. Focusing on the deficiencies in plaintiffs’ proximate cause and after giving the plaintiffs leave to amend their FAC to plead a “viable and direct economic injury”, the Court will now evaluate if a proper RICO injury has ultimately been alleged in this case. Id.

Plaintiffs allege their assignors suffered an economic injury in three ways: “(1) by paying for induced over-dispensing of the UT drugs; (2) by paying supra-competitive prices for the UT drugs; and (3) by paying for claims that were tainted by violations of the Federal AKS and state analogs and therefore unpayable.” [D.E. 257].

“[E]conomic injury is a necessary element of all the plaintiffs’ claims, and in the context of prescription drug purchases, the fact that the payer merely paid for more expensive drugs does not suffice.” Ironworkers Local 68 v. AstraZeneca Pharmaceuticals, LP, 634 F.3d 1352, 1360 (11th Cir. 2011) (“plaintiff must allege that her purchase payments were the product of a physician's medically unnecessary or inappropriate prescriptions”). “[T]he insurer, under the terms of their insurance policies, consciously exposes themselves to pay for all prescriptions ․ even if such prescriptions were birthed by fraud.” Id. at 1360. The Eleventh Circuit in Ironworkers reasoned that insurance companies know the costs of drugs and can adjust premiums to offset the cost of expensive drugs and if an insurance company ultimately ends up losing money, “only actuarial errors would be to blame”. Id.

In the context of Medicare part D, private insurers act as “sponsors” who contract with the Centers for Medicare & Medicaid Services (“CMS”) to pay for medically necessary prescription drugs for Medicare-covered patients. Medicare Overpayments and Underpayments—oig Reports: Audit Finds Medicare Part D Sponsor Not Always In Compliance With Federal Requirements, 2019 WL 5780146. Part D allows these sponsors to receive direct and indirect remunerations (DIR) in the form of rebates, subsidies, or other price reductions that decrease the costs that the sponsor incurs for a Part D drug. Id. CMS requires sponsors to report their DIR on a yearly basis so that they may calculate the costs actually incurred by the sponsor. Id. Sponsors are paid by CMS through subsidy payments and a final payment reconciliation based on the costs as calculated using DIR. Id.

“[C]ompliance with the AKS” is “a condition for payment from the Government” under Medicare. United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 313 (3d Cir. 2011), abrogated on other grounds by Universal Health Servs., Inc. v. United States, 579 U.S. 176, 186 (2016). A civil plaintiff can bring a claim for violation of the AKS and FCA on behalf of the government in a qui tam capacity and can be awarded part of the damages suffered by the government, but there is no cause of action for private civil litigants, even private insurers under Medicare Part C or D to recover for “AKS-tainted claims”.

For this reason, federal courts around the country have declined to accept AKS-tainted claims as predicate acts under Federal RICO. Indeed this Court found no case accepting AKS-tainted claims as a viable injury under RICO. See MSP Recovery Claims, Series LLC v Avanir Pharmaceuticals, Inc. 2023 WL 4162338 at *5 (C.D. Cal. May 19, 2023) (“Declin[ing] to lend credence to Plaintiffs’ renewed attempt to allege predicate acts through kickbacks” for RICO claims); Illinois Farmers Ins. Co. v. Mobile Diagnostic Imaging, Inc., 2014 WL 4104789 at *10 (D. Minn. Aug. 19, 2014) (violations of the Anti-Kickback Statute do not “constitute a predicate act of mail or wire fraud for purposes of RICO”).

In this case, plaintiffs claim that their assignors paid ultra-excessive prices for induced over-prescribed PAH drugs and should be fully reimbursed for paying AKS-tainted claims. This is because compliance with the AKS is “a precondition for the payment of any claim for Medicare Benefits”. [D.E. 257]. Although Assignors in this case are private insurers who act as sponsors under Medicare Part D, as opposed to the non-Medicare private insurers in Ironworkers, the reasoning in Ironworkers still applies. Medicare Part D sponsors provide data to the CMS based on the amount spent on a prescription drug for a covered patient. The CMS reimburses the cost of the prescription drug to the sponsor depending on the research and the data sent by the sponsor to the CMS. Even if Assignors were paying high costs for Remodulin, they were still reimbursed by the CMS because the data sent to the CMS would reflect the costs incurred by the sponsor. Therefore, Medicare Part D sponsors like Assignors have mechanisms to compensate for high drug costs and any loss on their part would be attributed to the data that they send to the CMS or in other words “actuarial errors” on their part. See Ironworkers, 634 F.3d at 1360.

Neither party disputes that the PAH drugs in question were medically necessary or inappropriately prescribed by physicians. [D.E. 246]; [D.E. 257]. Therefore, the induced over-prescription of the PAH drug by itself, and without alleging that the inducement was medically inappropriate, is also not a recognized RICO injury. See Ironworkers, 634 F.3d at 1359.

Furthermore, all the cases cited by the plaintiff, to support the assertion that AKS violations invalidate claims and insurers do not have to pay them, emanate from criminal cases brought by the government or by qui tam plaintiffs suing on the government's behalf. But they do not mention or address civil liability for AKS or FCA violations.⁴ [D.E. 255]. Plaintiffs provide no case law to support a finding that RICO plaintiffs can recover the full cost of prescription drugs based on AKS-tainted claims. Plaintiffs may assert that the claims were fraudulent, but claims “birthed by fraud” also are not a RICO injury. Therefore, plaintiffs have failed to plead that they have a cognizable RICO injury. That means that, for this independent reason, they have failed to plead a plausible RICO claim.

3. Proximate Causation

Assuming that a plausible common purpose and injury had been alleged, we turn next to whether the proximate cause element survives review. A plaintiff must properly plead that a defendant's conduct proximately caused her RICO injury. Ironworkers, 634 F.3d at 1367–70. “When a court evaluates a RICO claim for proximate causation, the central question it must ask is whether the alleged violation led directly to the plaintiff[s’] injuries.” Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 461 (2006). “The connection between racketeering activity and the injury can neither be remote, purely contingent, nor indirect.” Ray v. Spirit Airlines, Inc., 836 F.3d 1340, 1349 (11th Cir. 2016). “When a court evaluates a Racketeer Influenced and Corrupt Organizations Act (RICO) claim for proximate causation, the central question the court must ask is whether the alleged violation led directly to the plaintiff's injuries.” Id. (citing 18 U.S.C.A. § 1962(c)).

In prescription drug cases, a physician prescribing the more expensive drug is not committing fraud to sustain a RICO claim unless the drug was unsafe or ineffective for the prescribed use. See Ironworkers, 634 F.3d at 1361. As a result, the Eleventh Circuit affirmed a district court's dismissal of RICO claims in Ironworkers because plaintiffs failed to show a direct relation between the defendant's fraudulent representations and the plaintiff's loss. Id. at 1358-63.

In following Ironworkers, this Court previously adopted the Report and Recommendation dismissing Plaintiff's RICO causes of action for lack of proximate cause tying Defendants’ alleged conduct to Plaintiffs’ assignors’ injury of having to pay supra-competitive costs for PAH drugs.⁵ [D.E. 163] This Court stated that Plaintiffs “resort to making conclusory allegations that UT and CVC's enterprise influenced Plaintiff's Assignors to purchase some UT hypertension drugs.” Id. The Court further stated the plaintiffs could remedy this insufficiency by “citing data or specific representations made to CVC physicians or those related” which directly led physicians to prescribe the drugs. Id. “Without a more plausible allegation of direct injury, this Court is left to speculate as to the portion of increased costs due to Defendants’ fraudulent activity and how it disproportionately affected assignors.” Id.

Plaintiffs have amended their allegations to now include the SPs as co-conspirators and added that assignors were injured by having to pay anti-kickback “tainted” claims on top of the previous injury of paying for over-induced, supra-competively priced PAH drugs. [D.E. 178]. Plaintiffs allege that Defendants “engaged in mail and wire fraud and Travel Act violations to funnel patients away from obtaining drugs from UT's competitors, to steer patients away from UT's free-drug program to CVC's PAP, and to market the UT drugs to patients as cost-free to the patient.” [D.E. 257]. But the Court has already found that the plaintiffs failed to plead that SPs were part of an “Association-in-Fact Enterprise” for their RICO claims and therefore their conduct should have little bearing on a proximate cause analysis.

The problem that follows is that plaintiffs now fail to allege any “data or specific representations made to CVC physicians or those related” that would begin to remedy the proximate cause deficiencies the court identified in the previous Report and Recommendation. [D.E. 163]. The independent decision-making of multiple parties and difficulty calculating damages remain an issue that plaintiffs have not fixed in their SAC by adding SPs as defendants and unsupported civil causes of actions to recover from AKS-tainted claims. Due to these insufficiencies, the Assignors’ injuries remain “remote”, “indirect”, and “purely contingent”. [D.E. 163]. Ray, 836 F.3d at 1349; see, e.g., Southeast Laborers Health & Welfare Fund v. Bayer Corp., 655 F. Supp. 2d 1270, 1280–81 (S.D. Fla. 2009) dismissing RICO claims in part on failure to plead proximate cause in action over marketing of pharmaceuticals; “Calculation of Plaintiff's losses would be purely speculative. There are many factors that a doctor may consider in determining what medication to administer to a given patient․ Cases where there is specific intent to drive a market up or down are not exempt from RICO's proximate cause analysis—nor do they escape the policy considerations inherent in such proximate cause analysis.”) (applying Ironworkers).

To further this point, ironically a recent Fourth Circuit case cited as supplemental authority by the plaintiffs is instructive in Defendants’ favor because it shows the type of allegation that can satisfy a plaintiff's burden. Albert v. Global Tel*Link, 68 F.4th 906 (4th Cir. 2023). In Albert, consumers of inmate calling services alleged that service providers “misrepresented the amount of their transaction costs” to justify charging consumers “high prices” for calls and paying governments “low site commissions.” 68 F.4th at 910. The Fourth Circuit held that the alleged scheme “directly injured both consumers and governments in tandem.” Id. That Court, as we have, undertook a detailed review of the proximate causation principles distilled from various Supreme Court decisions.

Rather than supporting Plaintiff's case here, however, this Fourth Circuit decision only reenforces the deficiencies in this SAC. Plaintiffs have still failed to remedy the insufficient underlying tort claim required to satisfy proximate causation and state a claim under Section 1962(c) and 1962(d). See also Viridis Corp. v. TCA Glob. Credit Master Fund, LP, 155 F. Supp. 3d 1344, 1357-58 (S.D. Fla. 2015) (dismissing RICO claims “[b]ecause of the intertwined nature of the standing, proximate cause, and damages analyses under the RICO statutes[;] Plaintiffs have failed to allege proximate cause and damages.”) (“Accepting Plaintiffs’ allegations as true for purposes of this Motion, [plaintiff] could not have standing to bring this RICO action because its damages could not flow directly from [defendants’] conduct.”).

In dismissing the previous complaint, the Court noted that “Plaintiffs could potentially solve these shortcomings by citing data or specific representations made to ․ physicians” or alleging facts showing that physicians were “affected by [the purported] fraudulent activity.” Yet Plaintiffs have not added any of those allegations. Instead, Plaintiffs pivot to a new theory that the Specialty Pharmacies helped patients secure Medicare coverage and co-pay assistance. According to Plaintiffs, the Specialty Pharmacies signed distribution agreements in which they agreed to “market, distribute, and sell Remodulin,” and “assist[ ] patients with obtaining reimbursement for the cost of Remodulin.” SAC ¶¶ 145–46. But the Specialty Pharmacies only assisted patients whose physicians had already prescribed UT's therapies. And those physicians’ independent prescribing decisions break the chain of causation between these pharmacies alleged contributions to CVC and the assignors’ alleged payments. See, e.g., UFCW Loc. 1776 v. Eli Lilly & Co., 620 F.3d 121, 134 (2d Cir. 2010) (“Plaintiffs’ theory of liability rests on the independent actions of third and even fourth parties, as physicians, PBMs, and PBM Pharmacy and Therapeutics Committees all play a role in the chain between” the drug manufacturer and third-party payors. (citations omitted)). Thus, these Defendants’ alleged conduct cannot bridge the causal gap that this Court pinpointed before.

In sum, there is little choice now but to find that UT and SPs’ motion to dismiss Counts I and II should be GRANTED on all RICO claims alleged against them.

D. Plaintiffs’ Florida RICO claims fail for the same reasons their Federal RICO claims fail.

The Eleventh Circuit has consistently ruled that “the analysis we apply to the plaintiffs’ federal RICO claims is equally applicable to [Florida's] state RICO claims.” See Jackson v. BellSouth Telecommunications, 372 F.3d 1250, 1263–64 (11th Cir. 2004) (citing All Care Nursing Serv., Inc. v. High Tech Staffing Servs., Inc., 135 F.3d 740, 745 (11th Cir. 1998) (“Florida's RICO statutes have consistently been interpreted using federal RICO claim cases.”)); Arthur v. JP Morgan Chase Bank, NA, 569 F. App'x 669, 679 (11th Cir. 2014) (“The Florida RICO Act, patterned after the federal RICO Act, establishes civil liability when an enterprise engages in a pattern of criminal activity.”).

Therefore, Plaintiffs’ shortcomings regarding their federal RICO claims also apply to their Florida's Civil Remedies laws claim. Defendants’ motion to dismiss Count XV should also be GRANTED.

E. Plaintiffs’ State Consumer Protection Laws Claims Also Fail

We turn next to Plaintiffs’ supplemental state law claims alleged in the SAC. Plaintiffs allege that Defendants violated various state consumer protection laws due to the conduct addressed in their federal claims. Plaintiffs further claim that Plaintiffs’ Assignors unjustly enriched Defendants through inflated reimbursements and the payment of AKS-tainted claims.

To assert a valid consumer protection claim, a plaintiff must have suffered an injury-in-fact, ascertainable loss, and actual damages as a direct and proximate result of the defendant's illegal behavior. Fla. Sta. § 501.204(1).

To assert a valid unjust enrichment claim, a plaintiff must show, “(1) [she] has conferred a benefit on the defendant, who has knowledge thereof; (2) the defendant has voluntarily accepted and retained the benefit conferred; and (3) the circumstances are such that it would be inequitable for the defendant to retain the benefit without paying the value thereof to the plaintiff.” Tooltrend, Inc. v. CMT Utensili, SRL, 198 F.3d 802, 805 (11th Cir. 1999) (quoting Greenfield v. Manor Care, Inc., 705 So. 2d 926, 930–31 (Fla. 4th DCA 1997)). Further, unjust enrichment per se has nothing to do with legal liability to sustain the claim. See Guyana Tel. & Tel. Co. v. Melbourne Int'l Comms., Ltd., 329 F.3d 1241, 1245 n.3 (11th Cir. 2003) (claim that right to restitution arose from unjust enrichment was not enough absent independent allegations of equitable liability); Flint v. ABB, Inc., 337 F.3d 1326, 1330 n. 2 (11th Cir. 2003) (noting that when the plaintiff relies on a wrong to supply the unjust factor, “the causative event is a wrongful enrichment rather than an unjust enrichment”). A viable unjust enrichment claim (which is in effect an equitable remedy for a quasi-contractual obligation) must be analyzed independently of alleged generic wrongs. See, e.g., State of Fla., Off. of Atty. Gen., Dep't of Legal Affs. v. Tenet Healthcare Corp., 420 F. Supp. 2d 1288, 1309 (S.D. Fla. 2005).

In this SAC Plaintiffs have still failed to fix the “unsettled causal relations” this Court identified in the previous Report and Recommendation. The Court is not persuaded by Plaintiffs’ argument asserting that proximate causation is not required for consumer protection claims. The multiple cases they cite for this sweeping proposition have glaringly distinguishable facts and/or do not mention foreseeability or proximate cause. Therefore, applying a proximate causation analysis, the state consumer protection law claims fail for the same reasons as their RICO claims. See, e.g., Lundbeck, 2023 WL 2637383, at *17 (dismissing similar claims alongside RICO claims); Ironworkers Loc. Union No. 68 v. AstraZeneca Pharms. LP, 585 F. Supp. 2d 1339, 1346 (M.D. Fla. 2008) (dismissing state consumer protection claims against a pharmaceutical company for lack of proximate causation). Thus, Defendants’ Motions to Dismiss Count XI should be GRANTED.

Plaintiffs also fail to fix the issues with their unjust enrichment claim that this Court identified in the previous Report and Recommendation; namely “not alleg[ing] the predicate elements of liability for the [unjust enrichment] claim[s].” [D.E. 163]. As this court has previously stated, “[v]iable unjust enrichment cases do not simply focus on any ‘alleged wrongs’, yet Plaintiffs only rely on ‘Defendants’ misconduct’ as a generic basis for this claim. [D.E. 163]. In response, Plaintiffs’ have only added the SPs to their unjust enrichment claims without fixing their previous failure. Thus, Defendants UT and SPs’ Motions to Dismiss Count XIV must again be GRANTED.

F. Plaintiffs’ Tortious Interference and Civil Conspiracy to Interfere Claims Should be Dismissed because Plaintiffs Still Fail to Identify Individual Medicare Beneficiaries and How Defendants’ Conspiracy Interfered with Business Expectations.

Under Florida law (still needing to assume these claims are being brought under Florida law), a “plaintiff must demonstrate (1) the existence of a business relationship under which the plaintiff has legal rights; (2) an intentional and unjustified interference with the relationship; and (3) damage to the plaintiff as a result of the tortious interference with that relationship” to raise a valid tortious interference claim. Coach Servs., Inc. v. 777 Lucky Accessories, Inc., 752 F. Supp. 2d 1271, 1273 (S.D. Fla. 2010) (quoting Ad–Vantage Tel. Directory Consultants, Inc. v. GTE Directories Corp., 849 F.2d 1336, 1348–49 (11th Cir. 1987)). To fix Plaintiffs’ tortious interference and conspiracy to tortiously interfere claims, this Court's Orders previously found that Plaintiffs “must plausibly plead how individual contracts or business relationships were tangibly damaged as a result of Defendants’ tortious behavior” to fix the “glaring deficiencies” identified in earlier iterations of these claims. [D.E. 163].

On this go around, Plaintiffs have still failed to identify any individual contracts, business relations, or under which state law they are bringing these claims. [D.E. 178]. Indeed Plaintiffs’ tortious interference claims are substantively identical to those in their previous complaint and should be dismissed for the same reasons. Compare SAC ¶¶ 803–09, with FAC ¶¶ 342–48. This iteration of their claim are thus as hollow as their earlier ones and cannot survive a motion to dismiss. See, e.g., Duty Free Americas, Inc. v. Estee Lauder Companies, Inc., 946 F. Supp. 2d 1321, 1338 (S.D. Fla. 2013) (dismissing tortious interference claims asserted together with antitrust claims; “[A]bsent an identifiable agreement between a past customer and a plaintiff that the past customer would do business with the plaintiff again[,] a plaintiff's past relationship with a past customer cannot be the basis for the existence of a business relationship.”); Collier HMA Physician Mgmt., LLC v. NCH Healthcare Sys., Inc., 591 F. Supp. 3d 1204, 1217 (M.D. Fla. 2022), reconsideration denied, 2:18-CV-408-SPC-MRM, 2022 WL 1540396 (M.D. Fla. May 16, 2022), and reconsideration denied, 2:18-CV-408-SPC-MRM, 2022 WL 1540398 (M.D. Fla. May 16, 2022) (dismissing tortious interference claims brought by healthcare companies over poaching of doctors; “[Plaintiff] offers no basis on which a reasonable jury could find it had a business relationship with the Doctors that afforded [Plaintiff] existing or prospective legal rights. Because [it] cannot do so, it cannot meet the first element of its tortious interference with a business relationship claim.”)

Accordingly, Defendants’ Motions to Dismiss Counts XII and XIII should also be GRANTED.

G. Plaintiffs’ Claims Should be Dismissed with Prejudice Because Plaintiffs Have Failed to Fix the FAC's Deficiencies and Amendment Would be Futile.

“When a plaintiff repeatedly fails to cure deficiencies, the district court need not grant additional opportunities to amend.” Bright v. Thomas, 754 F.App'x 783, 789 (11th Cir. 2018). Dismissal with prejudice is only proper when drafting a plausible complaint would be futile. Joseph v. Bernstein, 612 F. App'x 551, 558 (11th Cir. 2015).

The Second Amended Complaint failed to fix the deficiencies this Court identified in its previous Report and Recommendation. The Court further finds that any amendment would be futile based on the facts and circumstances of this case and recommends the Court dismiss Plaintiffs’ SAC with prejudice ⁶ . The Plaintiffs have filed three complaints, each more expansive in scope than the last. Parties have extensively briefed the Court on the merits of this case, with three separate motions to dismiss totaling 97 pages, three separate responses totaling 100 pages, and three separate replies totaling 55 pages. All this work has only led to another implausible complaint. There is no need for further briefing for the Court to reach a final judgment on the merits of the legal issues presented in this case, and as stated, any further amendment would be futile.

IV. CONCLUSION

For the foregoing reasons, UT's motions to dismiss are due to be GRANTED with prejudice, Specialty Pharmacies’ motion to dismiss are due to be GRANTED with prejudice, and Smiths’ motion to dismiss are due to be GRANTED with prejudice. [D.E. 129]; [D.E. 143].

For administrative purposes, the Court is entering an Order on the pending motions. Because dispositive relief is being entered, however, the parties are entitled if they wish to appeal such an Order to the District Judge for de novo review in which case the District Judge will treat it as only a Recommendation. Additionally, because of the number of complex issues raised in these motions, and given the length of time the matters have been pending, the Court finds good cause to extend any objection period. See Local Magistrate Rule 4(b) and Fed. R. Civ. P. 73. Any appeal of this Order, triggering de novo review, must be filed within twenty-one days. If no objections are filed the Order will be rendered final and the matter permanently closed. For now, the matter will be administratively closed pending any such proceedings.

DONE AND ORDERED in Chambers at Miami, Florida, this 22nd day of March, 2024.

FOOTNOTES

1.   In fact, the case upon which Plaintiffs are basing their antitrust claims do not allege any antitrust injury until UT entered into a cartridge restriction agreement with Specialty Pharmacies in 2019. Sandoz, Inc. v. United Therapeutics Corp., 2022 WL 17335696 at *12 (D.N.J March 30, 2022).

2.   At least with respect to UT, we add as well that any antitrust claims against an indirect purchaser like UT are also barred as a matter of law because their purported assignors are indirect purchasers of UT's therapies. The indirect purchaser rule (also referred to as the “direct purchaser rule”) is a “bright-line” doctrine “that authorizes suits by direct purchasers but bars suits by indirect purchasers.” Apple Inc. v. Pepper, 139 S. Ct. 1514, 1520 (2019) (emphases omitted). Accordingly, “indirect purchasers who are two or more steps removed from the antitrust violator in a distribution chain may not sue,” unlike “direct purchasers—that is, those who are the immediate buyers from the alleged antitrust violators.” Plaintiffs do not allege that UT engaged in any direct transaction with Plaintiffs’ assignors that would allow Plaintiffs to bring federal antitrust claims against UT. Plaintiffs only allege that “dispensing pharmacies ․ submit[ted] ․ claims to Assignors” and nothing more. SAC ¶¶ 310, 330. Plaintiffs’ assignors are admittedly indirect purchasers so Plaintiffs are foreclosed from bringing federal antitrust claims against such defendants.

3.   “(or bribe)” as the SAC asserts.

4.   Notably, the US Department of Justice opened an investigation into UT and CVC for AKS and FCA violations, resulting in a $210 million settlement in 2017. [D.E. 178 ¶ 27]. This only underscores the Court's analysis of how this regulatory framework is supposed to work.

5.   Since the dismissal of the FAC in this case, a district court in the Eastern District of Virginia has also dismissed similar claims by the same plaintiffs for lack of proximate cause. See MSP Recovery Claims, Series LLC v. Lundbeck LLC, 2023 WL 2637383 at *12-*13 (March 24, 2023).

6.   Although this Court did not address the remaining antitrust allegations after 2017, this Court takes judicial notice of the New Jersey Court's ruling on summary judgment that Sandoz did not suffer an antitrust injury from UT, SPs, and Smiths’ conduct. Therefore, even if plaintiffs were to fix their assignments, their nearly identical antitrust allegations would ultimately be futile. See Sandoz, 2022 WL 17335696 at *12-*14.

EDWIN G. TORRES Chief United States Magistrate Judge