Trone Health Services, Inc. v. Express Scripts Holding Co., No. 19-1774 (8th Cir. 2020)Annotate this Case
The Pharmacies filed suit against ESI, the nation's largest Pharmacy Benefit Manager (PBM), alleging breach of contract, attempted monopolization, and other claims. The district court dismissed the entire complaint with prejudice, holding that the Pharmacies did not state a claim for breach of contract because their claim was based on the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Health Information Technology for Economic and Clinical Health (HITECH) Act. The parties had incorporated HIPAA and the HITECH Act into section 5.3 of their pharmacy provider agreements (PPA).
The court affirmed and held that, textually, HIPAA does not authorize the Pharmacies to direct or control the use of their customers’ information and does not grant the Pharmacies power to enforce their customers' rights. Furthermore, the Pharmacies failed to allege a breach of contract based upon an alleged past or ongoing HIPAA violation. In this case, the Pharmacies failed to allege that ESI's use of their customers’ HIPAA-protected information to provide lower cost mail order refills lacked the express authorization of the plan sponsors and, thus, the implied authorization of the customers seeking to have their prescription costs covered by their plans.
The court also held that the district court did not err in dismissing the Pharmacies' claim for breach of the implied covenant of good faith and fair dealing where the parties' agreements give ESI access to the Pharmacies' customer information and do not prevent its use for mail-order service dispensing. Finally, the court rejected the Pharmacies' claims of unfair competition, misappropriation of trade secrets, tortious interference with business expectancy and attempted monopolization.