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North Shore Home Medical Supply, Inc. v. Catamaran Pbm of Illinois, Inc.

United States District Court, D. Massachusetts

July 21, 2015



NATHANIEL M. GORTON, District Judge.

This case involves allegations by plaintiff North Shore Home Medical Supply, Inc. d/b/a Home Care Pharmacy ("Home Care") that defendant Catamaran PBM of Illinois, Inc. ("Catamaran") breached the contract governing their relationship when it removed Home Care as an approved pharmacy under its prescription drug coverage network ("the Catamaran Network"), effective as of July 21, 2015. Pending before the Court is Home Care's emergency motion for injunctive relief in which it seeks to enjoin Catamaran from effectuating its removal from the Catamaran Network. According to Home Care, it faces irreparable harm absent the injunction because it will lose a significant portion of its customer base who will be forced to turn to other pharmacies that remain members of the Catamaran Network. For the reasons that follow, the motion will be denied.

I. Background

A. Facts

Home Care is a Massachusetts corporation operating in Peabody, Massachusetts as a full-service retail pharmacy with specialties in providing pharmaceutical compliance packaging and prescription home delivery service to patients unable to leave their homes. Neil Welch ("Welch") has served as Home Care's President and Chief Pharmacist since its founding in 2013.

Catamaran is an Illinois corporation and is a large, nationwide pharmacy benefits manager ("PBM").

In March, 2014, Home Care became a party to a provider agreement ("the Provider Agreement") previously signed by a broker on behalf of a collection of pharmacies, whereby Home Care would be included in the prescription provider network for policyholders of health care plans under which Catamaran served as PBM. The Provider Agreement governs the relationship between the parties and incorporates by reference a provider manual ("the Provider Manual"). In relevant part, Section 5.C of the Provider Manual states that

Catamaran may immediately terminate the Provider Agreement for cause... [if it determines that a pharmacy has a] [c]urrent... affiliation... to a pharmacy that was terminated under any of the above listed conditions associated with fraud and/or abuse. Affiliation includes ownership or controlling interest in any percentage; holding of the physical real estate of the pharmacy location; a consultant relationship; employment of current and/or prior employees; immediate relatives... or otherwise obscuring ownership links. In October, 2014, Catamaran became aware that Ciampa

Apothecary ("Ciampa"), a pharmacy which it had removed from the Catamaran network in 2013 for purported fraud and abuse it uncovered during an internal audit, was in the process of opening a new pharmacy in Peabody. Due to its location in Peabody and recent incorporation, Catamaran tasked its Special Investigations Unit with scrutinizing Home Care. The investigation revealed a number of connections between Ciampa and Home Care, most notably that 1) the website for Ciampa reported its closure but stated that "we are... still offering our [various services]... out of our new company and facility in Peabody" and included a link to which took visitors to Home Care's website and 2) Home Care's Annual Report for Domestic Corporations filed with the Commonwealth of Massachusetts for fiscal year 2014 identified both Joseph Ciampa and Walter Ciampa as Directors.[1]

In a letter dated June 4, 2015, Catamaran informed Home Care that it was evaluating Home Care's continued participation as an approved pharmacy in the Catamaran network as the result of "[Home Care's] association with a previously terminated pharmacy, Ciampa Apothecary". The letter stated that Catamaran's Pharmacy Membership Evaluation Committee (PMEC) would consider any response submitted by Home Care but the response would need to be received before June 10, 2015.

Counsel for Home Care responded on June 9, 2015 and reported that neither Home Care nor Welch had been disciplined by any regulatory organization or had been the subject of any action by the Commonwealth of Massachusetts. It further requested that Catamaran specify any documentation sought by the PMEC. Home Care's response, however, failed to address the contention made by Catamaran that Home Care was associated with Ciampa.

On June 18, 2015, Catamaran sent notice to Home Care that it was removing Home Care from the Catamaran network, effective July 21, 2015. Catamaran noted that its action was "due to [Home Care's] ownership or management [being] linked to a terminated pharmacy, Ciampa Pharmacy". Catamaran also advised Home Care that it had the opportunity to appeal its removal from the Catamaran Network. According to Catamaran, Home Care has yet to file an appeal of its termination decision.

After Home Care received notice of termination from the Catamaran Network, Home Care repeatedly requested a copy of the Provider Agreement without response.

B. Procedural History

On July 2, 2015, Home Care filed the instant lawsuit and sought immediate injunctive relief through an emergency motion for a temporary restraining order.[2] The four-count complaint asserts claims for 1) breach of contract, 2) breach of the covenant of good faith and fair dealing, 3) breach of the Any Willing Provider Act, M.G.L. c. 176D, ยง 3B, ...

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