Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-3_04-cv-00673/USCOURTS-almd-3_04-cv-00673-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 42:0256 Public Health Services Act

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IN THE DISTRICT COURT OF THE UNITED STATES FOR THE

MIDDLE DISTRICT OF ALABAMA, EASTERN DIVISION

CENTRAL ALABAMA )

COMPREHENSIVE HEALTH )

CARE, INC., et al., )

)

Plaintiffs, )

) CIVIL ACTION NO.

v. ) 3:04cv673-MHT

) (WO)

AVENTIS PHARMACEUTICALS, )

INC., et al. )

)

Defendants. )

ORDER

This case is again before the court as the defendants

seek to avoid discovery in this case, this time via a

motion to stay the proceedings. The plaintiffs,

community-health providers, are suing various drug

manufacturers, alleging that the plaintiffs

over-reimbursed the defendants under the federal

government’s 340B drug discount plan. In their

complaint, the plaintiffs cite a June 2004 report

prepared by the Office of Inspector General (OIG) of the

United States Department of Health and Human Services

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1. The court now notes that the withdrawal of the

report has no bearing on whether the plaintiffs can bring

this claim, because the Federal Rules of Civil Procedure

establish a notice-pleading system. The plaintiffs’

complaint alleges that the defendants were overpaid by

the plaintiffs because the defendants miscalculated the

price ceiling; that is sufficient to put the defendants

on notice of the claims against them.

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that concluded that health plans had over-reimbursed drug

companies due to a problem in “price ceiling”

calculations required under the 340B plan.

The various defendants previously filed motions to

dismiss, which this court denied. One of the grounds

advanced in those motions was the so-called “primaryjurisdiction doctrine.” The defendants noted that the

OIG had issued a statement in October 2004 withdrawing

the June 2004 report because the data upon which it had

relied in preparing the June 2004 report had been called

into question. The court’s order, dated September 30,

2005, noted that the issues presented in the motions were

better addressed on summary-judgment motions.1

 Four days

after the court entered a scheduling order, the

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defendants filed the present motion to stay, which is

based entirely on the primary-jurisdiction doctrine. 

The only change in circumstances to which the

defendants point to justify their attempt to reargue this

issue at this stage of the proceedings is that the OIG

released a new report, in October 2005, stating that

there were systemic flaws in the data-gathering

mechanisms that are used to estimate the price ceiling

for the 340B drug plan. The October 2005 report

catalogued the data flaws in greater detail than the

October 2004 statement; noted that the Health Resources

and Services Administration could not adequately oversee

the program due to the data-collection shortcomings;

noted that, under the current statutory scheme, the

Health Resources and Services Administration could not

enforce or punish drug companies that overcharge under

the 340B plan; and found that private health providers

could not independently assess whether they were

overpaying for drugs under the plan. The defendants

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assert that the OIG intends to issue another report in

the spring of 2006 following up on this issue.

Before considering the merits of the defendants’

argument, the court notes that the defendants are

essentially attempting to circumvent the court’s previous

order denying their dismissal motions by seeking a

different form of relief based on an argument rejected in

those motions. The court has ruled previously that it

would consider these arguments only after discovery had

been conducted; yet, the defendants have now attempted to

stall discovery by seeking a stay based on one of those

arguments. The court would be justified in summarily

denying this stay motion for this reason alone.

The court need not do so, however, because this case

does not present grounds for the primary-jurisdiction

doctrine’s application. The primary-jurisdiction

doctrine applies: (1) where there is a strong possibility

that the agency decision would end the dispute or (2)

where a prior agency adjudication of the dispute will be

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2. Wheelabrator Corp. v. Chafee, 455 F.2d 1306 (D.C.

Cir. 1973), cited by the defendants, is inapposite. That

case held that a court should apply the primaryjurisdiction doctrine and defer to an agency action even

if the agency acts only in an advisory capacity. Id. at

1313-14. However, the General Accounting Office, the

agency in question there, was issuing an advisory opinion

on the merits of the claim the federal court was

considering. Id. Here, the OIG is studying the

effectiveness or legitimacy of a federal program (and not

the validity of the plaintiff’s claims). Although

Wheelabrator and the present case are similar in that the

agency action in each is advisory, the nature of the

agency action is completely different.

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a “material aid” in ultimately deciding the issue.

Sprint Corp. v. Evans, 846 F. Supp. 1497, 1505 (M.D. Ala.

1994) (Thompson, J.). As the defendants all but concede

in their reply brief, the first requirement is not met

because the OIG has authority only to investigate and

report, 5 U.S.C. § 6, and not to adjudicate or enforce.

Thus, no matter how many reports the OIG generates, it

cannot resolve the matter currently before the court.2

Nor is the second requirement met. The OIG’s

forthcoming report may be completely irrelevant to this

case. There is no guarantee that the OIG is

investigating the actions of the parties to this suit or

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will publish any data relevant to these parties. Even if

the OIG does happen to investigate and publish data about

the parties in this suit, it is all but certain that the

report will not completely illuminate the factual

questions in this case. Although the OIG’s study may

duplicate some discovery that would occur in this case,

the report alone will not give the court a complete

enough picture to decide this case. In short, because it

is possible that the report will be of no benefit at all

and, at most, will merely replicate some of the

information that the parties will present to the court

after discovery, the OIG report cannot be considered a

material aid to the court.

Moreover, based on the results of its current study,

the OIG may wish to conduct further investigations. Were

the court to stay the proceedings now and were the OIG to

conduct future investigations, the proceedings in this

case could be delayed interminably. Courts “applying the

[primary-jurisdiction] doctrine must always balance the

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benefits of seeking the agency’s aid with the need to

resolve disputes fairly yet as expeditiously as

possible.” Sprint Corp., 846 F.Supp. at 1505 (internal

quotations omitted). The possibility of interminable

delay combined with the speculative benefit of the

forthcoming OIG report counsels against application of

the primary-jurisdiction doctrine here.

Accordingly, it is ORDERED that the defendants’

motion to stay (Doc. No. 179) is denied. 

DONE, this the 10th day of April, 2006.

_____________________________ /s/ Myron H. Thompson

UNITED STATES DISTRICT JUDGE 

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