State of Ohio, ex rel. Dave Yost Attorney General of Ohio v. Ascent Health Services LLC

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

State of Ohio, ex re/. Dave Yost

Attorney General of Ohio,

Plaintiff, Case No. 2:23-cv-1450

vV. Judge Michael H. Watson

Ascent Health Services LLC, et al., Magistrate Judge Vascura

Defendants.

OPINION AND ORDER

There are several pending motions before the Court:

e State of Ohio, ex rel. Dave Yost Attorney General of Ohio

(‘Plaintiff’) moves to remand this case to state court. ECF No. 40.

e Humana lInc., Humana Pharmacy Solutions, Inc., and Cigna Group

move to dismiss for lack of personal jurisdiction. ECF Nos. 41 &

42.

e Ascent Health Services LLC, Cigna Group, Evernorth Health, Inc.,

and Express Scripts, Inc. move to file a sur-reply. ECF No. 63.

e Prime Therapeutics LLC, Humana Inc., Humana Pharmacy

Solutions, Inc., Ascent Health Services LLC, Cigna Group,

Evernorth Health, Inc., and Express Scripts, Inc.’ move to dismiss

for failure to state a claim. ECF Nos. 76, 77, & 78

e Attorney Margaux Poueymirou moves for leave to appear pro hac

vice. ECF No. 79.

1 Ascent Health Services LLC, Express Scripts, Inc., The Cigna Group, Evernorth

Health, Inc., Prime Therapeutics LLC, Humana Pharmacy Solutions, Inc., and Humana

Inc. are collectively referred to as “Defendants.”

As an initial matter, the motion for leave to file a sur-reply is DENIED. The

Court can assess the motion to remand without the help of a sur-reply.

For the following reasons, Plaintiffs motion to remand is GRANTED.

Because the Court remands the case, it does not consider the other motions.

I. FACTS

Plaintiff brings this action for alleged anti-competitive conduct in the

pharmaceutical industry. See generally, Compl., ECF No. 12. According to

Plaintiff, several pharmacy benefit managers, most notably Express Scripts, Inc.,

and other healthcare-related entities have colluded to fix prescription prices and

otherwise unlawfully profit from an anti-competitive scheme. /d. Based on these

allegations, Plaintiff asserts claims under Ohio’s Valentine Act and Ohio's

Deceptive Trade Practices Act. /d.

ll. STANDARD OF REVIEW

Defendants removed this case under 28 U.S.C. § 1442(a)(1),? sometimes

called the “federal officer removal statute.” 28 U.S.C. § 1442(a)(1) provides as

follows:

(a) A civil action or criminal prosecution that is commenced in a State

court and that is against or directed to any of the following may be

removed by them to the district court of the United States for the

district and division embracing the place wherein it is pending:

2 The notice of removal references “preemption.” Notice Jf] 82-89, ECF No. 1. Federal

preemption can be a basis for federal-question jurisdiction. See, e.g., Healthcare

Venture Partners, LLC v. Anthem Blue Cross & Blue Shield, No. 1:21-CV-29, 2021 WL

5194662, at *2-3 (S.D. Ohio Nov. 8, 2021). Here, however, Defendants are clearly nof

seeking removal based on federal-question jurisdiction and, therefore, the Court does

not address whether preemption would provide a separate basis for removal.

Case No. 2:23-cv-1450 Page 2 of 8

(1) The United States or any agency thereof or any officer (or

any person acting under that officer) of the United States or of

any agency thereof, in an official or individual capacity, for or

relating to any act under color of such office or on account of

any right, title or authority claimed under any Act of Congress

for the apprehension or punishment of criminals or the

collection of the revenue.

The statute protects federal interests by allowing federal officials—and

those acting under a federal officer—to present their federal immunity defenses

in federal court, rather than state courts, which may be hostile to such defenses.

See Watson v. Philip Morris Companies, Inc., 551 U.S. 142, 150-51 (2007)

(interpreting a prior version of the statute). The statute must be liberally

construed. /d. at 147.

ll. ANALYSIS

Although Defendants removed this case under the federal officer removal

statute, no Defendant is itself a federal officer. Under the federal officer removal

statute, if the removing party is not a federal officer, it must satisfy a three-

pronged test to properly remove under that statute:

(1) the defendants must establish that they acted under a federal

officer, (2) those actions [for which they are sued] must have been

performed under color of federal office, and (3) the defendants must

raise a colorable federal defense.

Friedman v. Montefiore, No. 22-3703, 2023 WL 4536084, at *5 (6th Cir. July 13,

2023) (internal quotation marks and citation omitted).

However, even if a defendant establishes all three prongs, if the plaintiff

validly disclaims (or waives) any claim that would give rise to federal officer

Case No. 2:23-cv-1450 Page 3 of 8

removal and if remand is otherwise appropriate, then remand may be warranted.

See Healthcare Venture Partners, LLC, 2021 WL 5194662, at *6; see also Wilde

v. Huntington Ingalls, Inc., 616 F. App’x 710, 715, n.28 (5th Cir. 2015) (“Courts

regularly recognize post-removal claim disclaimers in federal officer

proceedings.” (citation omitted)).

When evaluating whether remand is appropriate based on a post-removal

waiver, a court must first consider whether “the terms of the waiver offered by the

plaintiff [are] effective,” or whether they are “merely artful pleading for purposes

of circumventing federal officer jurisdiction[.]’ Healthcare Venture Partners, LLC,

2021 WL 5194662, at *6 (quotation marks and citations omitted). If the waiver is

effective, then a court must decide whether judicial economy, comity, and

fairness support remand. /d. (citations omitted).

Here, Plaintiff disclaims a basis for federal officer removal. Thus, if the

disclaimer is effective and remand is otherwise appropriate, the Court will

remand the case.

A. _ Is Plaintiff's disclaimer effective?

The “key inquiry” in deciding whether a disclaimer is effective is “whether

the terms of a given disclaimer would interfere with the protection to federal

officers (or contractors) that § 1442(a)(1) is designed to provide.” See

Healthcare Venture Partners, LLC, 2021 WL 5194662, at *8. Thus, an effective

disclaimer cannot broadly disclaim “any claim arising under federal law’ or “any

claim arising from the acts of any federal officer.” /d. at *7-8. With that sort of

Case No. 2:23-cv-1450 Page 4 of 8

broad disclaimer, “state courts would need to decide when and to what extent the

contractors were entitled to protection as ‘federal officers[.]” /d. at*7. That could

“potentially depriv[e] federal contractors of the insulation from state-court

decision-making that the removal statute was designed to provide.” /d. If,

however, “a disclaimer is sufficiently clear and specific,” then the state court on

remand “would not be left to determine whether an action was taken on behalf of

an officer of the United States and under color of office[.]” /d. at *8; see also

Dougherty v. A O Smith Corp., No. CV 13-1972-SLR-SRF, 2014 WL 3542243, at

*10 (D. Del. July 16, 2014), report and recommendation adopted sub nom.

Dougherty v. A.O. Smith Corp., No. CV 13-1972-SLR-SRF, 2014 WL 4447293

(D. Del. Sept. 8, 2014) (“[F]ederal courts have consistently granted motions to

remand where the plaintiff expressly disclaimed the claims upon which federal

officer removal was based.”).

Here, Plaintiff offers the following disclaimer:

[Plaintiff's] claims do not challenge the operation or administration of

federal health benefits programs such as TRICARE or [Federal

Employees Health Benefits (“FEHB”)]. [Plaintiff] does not seek

recovery for the types of [pharmacy benefit managers] or pharmacy

services Removing Defendants identify in their notice of removal as

they relate to TRICARE or FEHB plans .... The State only brings

claims and seeks recovery for actions [] Defendants took related to

commercial or State of Ohio-sponsored health plans.

Mot. 10, ECF No. 40 (internal citation omitted).

Plaintiff's disclaimer is effective. Unlike the broad “any claim” disclaimers

that Courts have found ineffective, Plaintiffs disclaimer clearly identifies that it

Case No. 2:23-cv-1450 Page 5 of 8

does not challenge conduct related to TRICARE or FEHB. Thus, Plaintiff's

waiver provides “a discrete and readily identifiable category’ of claims it disclaims

and, therefore, remand would not “require the state court to consider the

contours of the federal officer removal statute.” Healthcare Venture Partners,

LLC, 2021 WL 5194662, at *8. As a result, Plaintiffs disclaimer is effective.

Defendants disagree, primarily arguing that Plaintiffs disclaimer is

ineffective because the Complaint challenges conduct indivisible from conduct

related to TRICARE or FEHB. Resp. 10-14, ECF No. 55. At least one other

federal court has already rejected this argument:

The Court also rejects Express Scripts’ indivisibility argument.

Because this case does not make any claims related to federal

programs, a decision in this case would have no impact on

[medication] prices under any federal program because relief would

be strictly limited to non-federal health insurance plans. Thus, upon

remand, the state court would not need to address any issue related

to Defendants’ contracts with the federal government nor would

Defendants have any colorable federal defense because the claims

asserted do not involve federal programs or federal actors. Just

because Defendants conduct business in a particular way, [i.e.,]

negotiations with manufacturers do not take place on a plan-by-plan

basis, does not mean that they cannot conduct negotiations differently

pursuant to a court order. Moreover, the Court is not persuaded that

dividing the work done by Defendants on behalf of the federal

government from the work done for its private clients is not possible

in this case.

Gov't of Puerto Rico, v. Eli Lilly & Co., No. CV 23-1127 (JAG), 2023 WL

4830569, at *2 (D.P.R. July 13, 2023). This Court agrees with the Eff Lilly Court's

reason and thus also rejects Defendants’ indivisibility argument.

Case No. 2:23-cv-1450 Page 6 of 8

At bottom, as in Healthcare Venture Partners, LLC, Plaintiffs post-removal

disclaimer is effective.

B. Do judicial economy, comity, and fairness support remand?

Even if there is an effective disclaimer, a court must examine whether the

interests of “comity, fairness, and judicial economy” support remand. /d. at *9

(citation omitted). In doing that examination, a Court might consider the age and

progress of the case and whether state-law or federal-law claims predominate.

Id. at *9-10.

Here, comity, fairness, and judicial economy favor remand. First, the case

is relatively young: the original state-court Complaint was filed in March 2023, the

discovery period has almost a year remaining in it, and dispositive motions are

not due until early 2025. See ECF Nos. 12 & 35. Second, the case is entirely

comprised of state-law claims and, therefore, “[clomity suggests that an Ohio

court, not the federal court, would be better positioned to adjudicate those

claims.” Healthcare Venture Partners, LLC, 2021 WL 5194662, at *10.

In sum, Plaintiff effectively disclaimed any basis for federal officer removal

and comity, fairness, and judicial economy support remand. Therefore, the Court

remands this case to the Delaware County Court of Common Pleas.

Because the Court remands the case, it need not address the other

pending motions to dismiss.

Case No. 2:23-cv-1450 Page 7 of 8

IV. CONCLUSION

For these reasons, Plaintiffs motion is GRANTED; the case is

REMANDED to the Delaware County Court of Common Pleas.

The Clerk shall terminate all pending motions and close the case.

However, the Clerk shall not mail this Opinion and Order to the Delaware County

Court of Common Pleas FOR SEVEN DAYS.

IT IS SO ORDERED. \- ff yf | hh

LL / MN.

MICHAEL H. WATSON, JUDGE

UNITED STATES DISTRICT COURT

Case No. 2:23-cv-1450 Page 8 of 8