Opinion ID: 2710262
Heading Depth: 2
Heading Rank: 5

Heading: analysis of plaintiffs’ complaints

Text: As previously mentioned, a pharmacy’s obligation under § 17755(2) is not implicated whenever a generic drug is dispensed, even though a pharmacy may, generally speaking, incur greater profit when generic drugs are dispensed than when brand-name drugs are dispensed. Instead, a pharmacy is obligated to “pass on the savings in cost” only if, in a given transaction, the pharmacy dispenses a generic drug in substitution for a brand-name drug that had been prescribed. Thus, a substitution transaction is a necessary component of a violation of § 17755(2), which becomes an essential element to plaintiffs’ 4 Furthermore, “a plaintiff does not necessarily need the exact dollar amounts, billing numbers, or dates to prove to a preponderance that fraudulent bills were actually submitted” because “requir[ing] these details at pleading is one small step shy of requiring production of actual documentation with the complaint . . . .” Grubbs, 565 F3d at 190. 6 claims under the HCFCA and the MFCA because they are predicated on alleged violations of § 17755(2). Applying the aforementioned heightened pleading standard under MCR 2.112(B)(1), plaintiffs have not met the particularity requirement because their complaints do not allege a single, let alone “representative examples,” Joshi, 441 F3d at 557, of instances in which defendants failed to pass on the savings in cost for a substitution transaction. Instead of pleading substitution transactions in their complaints, plaintiffs simply list series of transactions in 2008 that represent alleged occasions when defendants merely dispensed generic drugs, with no indication of whether the dispensed generics resulted from the pharmacies’ replacement of a brand-name drug with a generic drug.5 Requiring plaintiffs to identify the alleged transactions that specifically violate § 17755(2) is necessary to give sufficient notice to defendants of the particular 5 The following excerpt from the second amended complaint in Docket No. 146791, the qui tam action, illustrates the nature of plaintiffs’ allegations as they relate to the specific transactions pleaded: Rather than alleging out of the millions of prescriptions drug transactions with Defendants each of the transactions that violated the Michigan generic drug pricing laws and the Medicaid False Claims Act, Plaintiff alleges . . . specific information about Medicaid claims submitted by Defendants for . . . five generic drugs during the fourth quarter of 2008 as examples of Medicaid claims by Defendants that violated Michigan law. These examples are not exhaustive of those purchases for which Defendants failed to pass on to the State of Michigan the difference between the acquisition cost of the generic drug and brand-name drug as required by Michigan law. [Emphasis omitted.] The class-action plaintiffs’ complaints include nearly identical language demonstrating the gravamen of all plaintiffs’ allegations. 7 transactions they are to defend against. See Chesbrough, 655 F3d at 466. Furthermore, under the circumstances of this case, this requirement does not create an insurmountable burden. As the majority notes, whether some plaintiffs received a generic drug in replacement for a previously prescribed brand-name drug is information that at least the plaintiffs who are uninsured buyers would have access to.6 See Spelman v Addison, 300 Mich 690, 702; 2 NW2d 883 (1942) (“In determining the sufficiency of a bill of complaint, consideration should be given to the character of the plaintiff’s alleged cause of action and to such circumstances as whether the records and knowledge of the facts on which the plaintiff relies are in his possession or largely, if not exclusively, in the possession of defendant.”); Apotex, 2012 Utah at ¶ 27. Given that plaintiffs did not specifically identify in their complaints a single transaction that, if assumed true, would constitute a violation of § 17755(2), they have failed to meet the heightened particularity standard for pleading fraud claims, and, thus, summary disposition in favor of defendants under MCR 2.116(C)(8) is proper. See Spiek v Dep’t of Transp, 456 Mich 331, 339; 572 NW2d 201 (1998) (holding that summary disposition under MCR 2.116(C)(8) was appropriate when “[t]aking all plaintiffs’ factual allegations as true, the complaint fails to allege an essential element of their cause of 6 According to the trial court, plaintiff Marcia Gurganus “concede[d] that she has no way of knowing whether the prescription was written using the brand-name or generic . . . .” However, for the purposes of her qui tam action, that fact does not relieve Gurganus of her pleading burden; rather, her lack of knowledge regarding the nature of the transactions between defendant pharmacies and the state serves to question her ability to bring a qui tam action under MCL 400.610a(13) as “the original source of the information.” 8 action”).7 Accordingly, I concur only in the majority’s result reinstating the trial court’s grant of summary disposition to defendants. Michael F. Cavanagh 7 Like the majority, I do not find it necessary to opine on the merits of the class-action plaintiffs’ claim that § 17755(2) was intended as an implied cause of action. However, assuming arguendo that such a cause of action exists, the claims would be based on a statutory violation that is not necessarily fraudulent in nature, and, thus, the heightened pleading standard under MCR 2.112(B)(1) might not apply. Nevertheless, summary disposition in favor of defendants would be appropriate because plaintiffs’ complaints are void of a bare allegation pertaining to the critical requirement for their possible claim under § 17755(2), i.e., the complaints failed to include a mere statement that defendants failed to pass on the savings in cost with respect to a substitution transaction. Instead, plaintiffs’ theory of liability would essentially impose on defendants the obligation to pass on the “full cost savings realized by the pharmacies’ lower acquisition cost of the generic drug” “obtained by the pharmacies in dispensing a generically equivalent drug product . . . .” Therefore, “the legal sufficiency of the claim on the pleadings alone . . . determine[s]” that plaintiffs have not “stated a claim on which relief may be granted.” Spiek, 456 Mich at 337. 9