Kim and Stewart Wixson, Melanie and Charlie Jones, Aimee and Tommy Joe Woodard, Jr., and the Louisiana Independent Pharmacies Association, Inc. v. The State of Louisiana through the Office of the Governor, Division of Administration, Office of Group Benefits, and Jay Dardenne, in his official capacity as Louisiana Commissioner of Administration

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STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT

NUMBER 2023 CA 0054

KIM & STEWART WIXSON, MELANIE & CHARLIE JONES, AIMEE AND
TOMMY JOE WOODARD, JR., AND THE LOUISIANA INDEPENDENT

VERSUS

PHARMACIES ASSOCIATION, INC.

DIVISION OF ADMINISTRATION, OFFICE OF GROUP BENEFITS, AND

WL, tt THE STATE OF LOUISIANA THROUGH THE OFFICE OF THE GOVERNOR,
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JAY DARDENNE, IN HIS OFFICIAL CAPACITY AS LOUISIANA
COMMISSIONER OF ADMINISTRATION

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Judgment Rendered: QCT 20 2023

On appeal from the

Nineteenth Judicial District Court

In and for the Parish of East Baton Rouge

State of Louisiana

Docket Number C726389

Honorable Tarvald A. Smith, Judge Presiding

Karl J. Koch
Baton Rouge, LA

J. Wendell Clark
Mark L. Barbre

J. Weston Clark
Mary Eliza Baker
Baton Rouge, LA

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Counsel for Plaintiffs/Appellants
Kim and Stewart Wixson, Melanie
and Charlie Jones, Aimee and
Tommy Joe Woodard, Jr. and The
Louisiana Independent Pharmacies
Association, Inc.

Counsel for Defendants/Appellees
State of Louisiana through the Office
of the Governor, Division of
Administration, Office of Group
Benefits, and Jay Dardenne, in his
official capacity as Louisiana
Commissioner of Administration
Carey T. Jones
Angelique Duhon Freel
David Jeddie Smith
Emily Andrews

Craig Cassagne

Scott N. Whitford
Jeffrey Martin Landry
Baton Rouge, LA

Tina Vanichchagorn
John C. Walsh
Terrel T. Kent
Baton Rouge, LA

Larry E. Demmons
Metairie, LA

Jennifer Warden Herbert

Mark E. Van Horn
A.J. Hebert, II
Jessica Salafia Ward
New Orleans, LA

Counsel for Intervenor/Appellant
State of Louisiana through Jeff
Landry, in his official capacity as
Attorney General

Counsel for Intervenor/Appellee
John Bel Edwards in his official
capacity as Governor of the State
of Louisiana

Counsel for Intervenor/Appellee
CaremarkPCS Health, LLC

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BEFORE: GUIDRY, C.J., CHUTZ, AND LANIER, JJ.
GUIDRY, C.J.

The plaintiffs appeal from a judgment granting a peremptory exception of no
cause of action. For the reasons that follow, we affirm.

FACTS AND PROCEDURAL HISTORY

A contract between the Louisiana Office of Group Benefits (OGB) and
CaremarkPCS Health, LLC (Caremark) is the basis of this litigation. Plaintiffs,
Kim and Stewart Wixson, Melanie and Charlie Jones, and Aimee and Tommy Joe
Woodard, Jr., are pharmacists, OGB beneficiaries, and owners/operators in the
pharmacy industry. The Louisiana Independent Pharmacies Association, Inc., also
a plaintiff, is a membership association consisting of independent retail pharmacies
operating in the state of Louisiana.

On December 2, 2022, the plaintiffs filed a petition for injunctive relief.
Named defendants in the petition were the State of Louisiana through the Office of
the Governor, Division of Administration, OGB, and Jay Dardenne in his official
capacity as the commissioner of administration for the State of Louisiana. In said
petition, the plaintiffs allege that Commissioner Dardenne declared his intention to
enter into a contract (the Caremark contract} without the final approval of the Joint
Legislative Committee on the Budget (JLCB). The plaintiffs further allege that
Commissioner Dardenne and OGB’s actions were in direct violation of statutory
law, namely La. R.S. 42:802(D)(1).!

The defendants filed exceptions to the plaintiffs’ petition. The defendants
contended that the plaintiffs failed to state a cause of action because La. R.S.
42:802(D)(1) does not apply to the Caremark contract. They also claimed that the

plaintiffs failed to exhaust administrative remedies and had no right of action.

1 Attorney General Jeff Landry (hereinafter also referred to as a plaintiff) and Governor John Bel
Edwards and Caremark (hereinafter also referred to as a defendant) filed petitions to intervene in
this litigation.
On December 13, 2022, a hearing on the defendants’ exceptions was held.
On December 21, 2022, the trial court signed a judgment, sustaining the
defendants’ peremptory exception raising the objection of no cause of action and
dismissing their claims.* The plaintiffs are now before this court appealing.

DISCUSSION

The question raised herein by the plaintiffs is whether the trial court erred in
sustaining the peremptory exception raising the objection of no cause of action. A
cause of action, for purposes of the peremptory exception, is defined as the
operative facts that give rise to the plaintiff's right to judicially assert the action

against the defendant. Ramey v. DeCaire, 03-1299, p. 7 (La. 3/19/04), 869 So. 2d

114, 118. The function of the exception of no cause of action is to test the legal
sufficiency of the petition by determining whether the law affords a remedy on the
facts alleged in the petition. Ramey, 03-1299 at p. 7, 869 So. 2d at 118. The
burden of establishing that the petition fails to state a cause of action is on the

mover. MAW Enterprises, LLC v. City of Marksville, 14-0090, p. 6 (La. 9/3/14),

149 So. 3d 210, 215.

Generally, no evidence may be introduced to support or controvert the
exception of no cause of action. La. C.C.P. art. 931. All facts pled in the petition
must be accepted as true, and any doubts are resolved in favor of the sufficiency of

the petition to state a cause of action. Truitt v. West Feliciana Parish Government,

19-0808, pp. 3-4 (La. App. 1 Cir. 2/21/20), 299 So. 3d 100, 103. Facts shown in
any documents annexed to the petition must also be accepted as true. See Spinks

Construction, Inc. v. Quad States Construction, LLC, 17-0580, p. 6 (La. App. Ist

Cir. 12/21/17), 240 So. 3d 215, 220. The correctness of conclusions of law,

however, is not conceded for the purposes of a ruling on an exception of no cause

2 The plaintiffs were given the opportunity to amend their petition within seven days of the
judgment.
of action. CamSoft Data Systems, Inc. v. Southern Electronics Supply, Inc., 15-

1260, p. 12 (La. App. Ist Cir. 9/23/15), 182 So. 3d 1009, 1016.

The only issue at the trial of the exception is whether, on the face of the
petition, the plaintiff is legally entitled to the relief sought. Truitt, 19-0808 at p. 4,
299 So. 3d at 103. If the petition alleges sufficient facts to establish a case
cognizable in law, the exception raising the objection of no cause of action must
fail. In addition, when a petition states a cause of action as to any ground or
portion of a demand, the exception should be overruled. Truitt, 19-0808 at p. 4,
299 So. 3d at 103. Appellate courts review a judgment sustaining a peremptory
exception raising the objection of no cause of action de novo. Ramey, 03-1299 at
pp. 7-8, 869 So. 2d at 119.

In their petition, the plaintiffs assert that the Louisiana Legislature granted
certain authority to the OGB:

This grant of authority included the authority for OGB to enter into

contracts for health care plans or systems, “including but not limited

to any health care service, delivery system, benefits programs,

insurance, or any other plan or programs that may be authorized by

law.” La. R.S. 42:802 (B)(8)(b)\(ii). But this law did not provide

OGB with unlimited or unconditional authority to enter into contracts

but instead provided that “any new plan of benefits or the annual plan

of benefits submitted under the direction of the Commissioner of

Administration for the life, health, or other benefit programs offered

through the [OGB] or any professional, personal, and social services

contracts” (except for certain contracts not at issue here) “shall be
subject to review and final approval by the [JLCB].” La. RS.
42:802(D)(1).

The plaintiffs allege that, “[t]hrough the authority granted to it by La. R.S.
42:802, the [OGB] decided to contract with a company to provide pharmacy
benefit manager (PBM) services.” The petition reads: PBMs are also used by
many health insurers as third-party administrators to manage their pharmacy
benefits by performing functions such as providing verification of coverage,

processing and paying prescription claims, negotiating with drug manufacturers,

and other related functions. The plaintiffs further allege that Commissioner
Dardenne indicated that he would enforce the provisions of the subject contract
even if the JLCB did not want him to proceed. The petitions states: “At this time,
although the proposed contract document has been signed by OGB and Caremark
there is no contract between the parties because such a contract cannot exist unless
and until it is approved by the [JLCB].” Attached to the petition is a memo from
the Office of State Procurement/Division of Administration, which reads:

The above referenced contract has been reviewed by the Office of

State Procurement. The document ... is ready for submission to the

[JLCB]. Upon approval of the proposed contract ... in accordance

with La. R.S. 42:802, please return the “Agency Memo to OSP After
JLCB Approval,” along with the stamped contract from the JLCB.

The contract will not receive final approval by OSP until it has
been approved by JLCB ....

As set forth by La. R.S. 42:802:

B. [The OGB] shall have the following powers and duties:

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(6) Te establish benefit plans, under the direction of the
commissioner of administration, for the life, health, and other benefit
programs offered through the office. This duty shall include the
responsibility to ensure, to the greatest extent practicable, that the
plans for benefits and coverages available for employees in all parts of
the state are comparable with respect to coverages offered.

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(8)(a) To negotiate contracts under the provisions of Chapter 17 of
Subtitle IL of Title 39 of the Louisiana Revised Statutes of 1950, in
the best interests of the office and its covered persons. The [OGB] is
specifically authorized te negotiate and contract directly with the
following:

(i) Health maintenance organizations as defined by R.S. 22:242(7).

(ii) A group purchaser as defined in R.S. 40:2202(3).

(ii1) A preferred provider organization.

(iv) A health care provider or providers for formation of a preferred
provider organization as defined by R.S. 40:2202(5).

{b) The office is specifically authorized te negotiate and contract
directly for the following:

(1) Provision of basic health care services and other health care
services to the program’s covered persons.
(1) Any other health care plan or systems, including but not limited to
any health care service, delivery system, benefits programs, insurance,
or any other plan or programs that may be authorized by law.

(c) For the purposes of this Paragraph, the basic health care services
provided under a contract for a preferred provider organization or a
health maintenance organization shall be those services which are
covered under the [OGB] Schedule of Benefits. Nothing herein shall
prohibit the office from adopting rules or regulations to prevent or
prohibit adverse selection between programs offered by the office.

(d) Any such contract shall be subject to review and final approval
by the appropriate standing committees of the legislature having
Jurisdiction over review of agency rules by the [OGB] as designated
by R.S. 49:966(B)(21)(c), or the subcommittees on oversight of such
standing committees, and the office of state procurement of the
division of administration.

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D. (1) Notwithstanding any other provision of this Section to the
contrary, any new plan of benefits or the annual plan of benefits
submitted under the direction of the commissioner of administration

for the life, health, or other benefit programs offered through the

[OGB] er any professional, personal, and social services contracts

other than contracts for legal services or actuarial services negotiated

through the [OGB] under the provisions of Chapter 17 of Subtitle HI

of Title 39 of the Louisiana Revised Statutes of 1950 as provided in

Subsection A and Paragraph (B)(8) of this Section or any contracts in

connection therewith shall be subject to review and final approval by

the [JLCB].

(Emphasis added.)

The defendants contend that the facts pled in the plaintiffs’ petition are
insufficient to state a cause of action under La. R.S. 42:802. According to the
defendants, the proper reading of La. R.S. 42:802(D)(1), as it concerns contracts, is
as follows: any professional, personal, and social services contracts other than
contracts for legal services or actuarial services negotiated through the
procurement code or any contract in connection therewith are subject to review by
the JLCB. The defendants contend that the contract in question, a contract for
pharmacy benefit manager services, is a consulting services contract. The

defendants thus argue that the contract is not of the kind contemplated by

Paragraph (D)(1) of the statute, is not subject to JLCB review, and that the
plaintiffs have failed to state a cause of action. The plaintiffs, on the other hand,
seem to contend that all contracts entered into for health or benefit programs and/or
all contracts in connection with a new or annual plan of benefits are contemplated
under Paragraph (D)(1).? The plaintiffs contend that the Caremark contract, as a
contract related to a new or annual plan of benefits, is subject to JLCB review.
Whether the plaintiffs have stated a cause of action is based upon
interpretation of the statute. The interpretation of any statutory provision starts

with the language of the statute itself. Oubre v. Louisiana Citizens Fair Plan, 11-

0097, p. 11 (La. 12/16/11), 79 So. 3d 987, 997. It is a well-established principle of
statutory construction that, absent clear evidence of a contrary legislative intention,
a statute should be interpreted according to its plain language. When a law is clear
and unambiguous and Its application does not lead to absurd consequences, the law
shall be applied as written and no further interpretation may be made in search of

the intent of the legislature. La, C.C. art. 9; La. R.S. 1:4; Cleco Evangeline, LLC

v. Louisiana Tax Commission, 01-2162, p. 5 (La. 4/3/02), 813 So. 2d 351, 354.

Words and phrases shal] be read with their context and construed according
to the common and approved usage of the language. La. R.S. 1:3. Further, every
word, sentence, or provision in a law is presumed to be intended to serve some
useful purpose, that some effect 1s given to each such provision, and that no
unnecessary words or provisions were employed. Courts are bound, if possible, to
give effect to all parts of a statute and to construe no sentence, clause, or word as
meaningless and surplusage if a construction giving force to and preserving all
words can legitimately be found. OQubre, 11-0097 at p. 12, 79 So. 3d at 997. The

meaning and intent of a law is determined by a consideration of the law in its

> In the petition, the plaintiffs reference subparagraph (B)(8)(b)(ii) of the statute, which
authorizes OGB to contract directly for certain health services and benefit programs and
seemingly conflate it with the provision of Paragraph (D)(1) providing that “any new plan of
benefits or the annual plan of benefits submitted under the direction of the commissioner of
administration for the life, health, or other benefit programs” is subject to JLCB review.

8
entirety and all other laws on the same subject matter, and the court’s construction
should be placed on the provision in question which is consistent with the express
terms of law and with the obvious intent of the lawmaker in enacting it. Richard v.
Hall, 03-1488, p. 27 (La. 4/23/04), 874 So. 2d 131, 151.

In the present matter, when the entirety of the La. R.S. 42:802 is examined,
we agree with the trial court that Paragraph (D)(1} does not contemplate the
Caremark contract in question. In making our determination, we are reminded that
work rendered by pharmacy benefit managers falls within the definition of a
“consulting service” under the procurement code. See La. R.S. 39:1556(10).
Louisiana Revised Statutes 39:1556(10) specifically provides: “Consulting
service” means “work, other than professional, personal, or social service ...
including but not limited to such areas as ... pharmacy benefit managers ... .”

Notably, as originally proposed in 2015, La. R.S. 42:802(D)(1) would have
made applicable to all procurement code contracts review and final approval by a
standing committee of the legislature. The language of Paragraph (D)(1) was
changed, however, and as enacted in 2015, Paragraph (D)(1) limited the review
and approval of procurement code contracts to those classified as professional,
personal, and social services, or any contracts in connection therewith. See 2015
LA S.B. 260 (April 3, 2015) and La. R.S. 42:802 (prior to amendment by 2018 La.

Acts, No. 603 § 1).4

4 Paragraph (D)(1) as originally proposed in 2015 read as follows:

Notwithstanding any other provision of this Section to the contrary, any new plan
of benefits or the annual plan of benefits submitted under the direction of the
commissioner of administration for the life, health, and other benefit programs
offered through the Office of Group Benefits er any contracts negotiated
through the Office of Group Benefits under the provisions of Chapter 17 of
Subtitle HT of Title 39 of the Louisiana Revised Statutes of 1950 as provided in
Subsections A and B(8) of this Section shall be subject to review and final
approval by the appropriate standing committees of the legislature having
jurisdiction over review of agency rules by the Office of Group Benefits as
designated by R.S. 49:968(B)(21)(c), or the subcommittees on oversight of such
standing committees, and the office of state procurement of the division of
administration. [Emphasis added. ]
Based on the plain language of Paragraph (D)(1), and guided by its
legislative history, it is clear to us that the phrase “or any contracts in connection
therewith” refers only to those certain contracts negotiated under the procurement
code—professional, personal, and social services.* That is to say, contrary to any
of the plaintiffs’ contentions, we do not find that the phrase broadens the language
of Paragraph (D)(1}, making it applicable to all contracts related to the provisions
therein. Even more, we do not find, based on a plain reading of the text, that
Paragraph (D)(1) makes provisions for any contracts other than those expressly
enumerated in the text.®

Indeed, in drafting Paragraph (D)(1), the legislature made clear the contracts
which are subject to JLCB review. And we note, under the well-settled rules of
statutory construction, the mention of one thing in a statute implies the exclusion
of another. When the legislature specifically enumerates a series of things, such as

contracts which are subject to JLCB review in this matter, the legislature’s

As enacted in 2015, Paragraph (D)(1) read:

Notwithstanding any other provision of this Section to the contrary, any new plan
of benefits or the annual plan of benefits submitted under the direction of the
commissioner of administration for the life, health, and other benefit programs
offered through the Office of Group Benefits or any professional, personal, and
social services contracts other than contracts for legal services or actuarial
services negotiated through the Office of Group Benefits under the provisions
of Chapter 17 of Subtitle LI of Title 39 of the Louisiana Revised Statutes of
1950 as provided in Subsection A and Paragraph (B)(8) of this Section or any
contracts in connection therewith shall be subject to review and final approval by
the appropriate standing committees of the legislature having jurisdiction over
review of agency rules by the Office of Group Benefits as designated by R.S.
49:968(B\(21)(c) ... . [Emphasis added. ]

Additionally, in 2018, La. R.S. 42:802(D)(1) was amended, giving the power of review and
approval to the JLCB instead of legislative committees. See 2018 LA $.B. 480 (May 30, 2018).

> We do not find that the plaintiffs assert (in their petition and attached documents) that the
Caremark contract is connected to a professional, personal, or social service contract, or that the
Caremark contract is anything more than a contract for pharmacy benefit manager services,
which is not a contract addressed by Paragraph (D)(1). Additionally, to the extent that the
provisions of Paragraph (D}(1) would be deemed unclear and ambiguous, we find that the
legislative history, as detailed above, evidences the legislature’s intent to confine the review of
contracts by the JLCB only to those which are enumerated in the text and to those related thereto.

6 Any argument by the plaintiffs that the contracts for health and benefit programs under
subparagraph (B)(8)(b)(ii) are contemplated within Paragraph (D)(1) fails under the plain
wording of the text.

10
omission of other things, which could have easily been included, is deemed

intentional. See State, through Department of Public Safety and Corrections,

Office of State Police, Riverboat Gaming Division v. Louisiana Riverboat Gaming

Commission and Horseshoe Entertainment, 94-1872, p. 17 (La. 5/22/95), 655 So.
2d 292, 302.

Accepting the plaintiffs’ argument that JLCB review is required for all
contracts entered into or in connection with a new or annual plan of benefits would
lead to an illogical and strained interpretation of Paragraph (D)(1). There would be
no reason for the legislature to first provide for a// contracts related to a new or
annual plan of benefits and to make those contracts subject to JLCB review, only
to then provide for more contracts and to list specific contracts, which could also
be related to new or annual plans of benefits, and which would also be subject to

JLCB review. See State, through Department of Public Safety and Corrections,

Office of State Police, Riverboat Gaming Division, 94-1872 at p. 18, 655 So. 2d at

302 (observing that statutes must be interpreted in such a manner as to render their
meaning rational, sensible, and logical), We cannot construe the statute herein in
such a manner as to produce absurd or unreasonable results. The law provides that
a statute be accorded a fair and genuine construction, and it is well established that
when a statute is clear and free of ambiguity, it must be given effect as written.

ABL Management, Inc. v. Board of Supervisors of Southern University, 00-0798,

pp. 5-6 (La. 11/28/00), 773 So. 2d 131, 135; Qubre, 11-0097 at p. 11, 79 So. 3d at
997.

The plaintiffs herein contend that all contracts entered into for health or
benefit programs and/or all contracts in connection with a new or annual plan of
benefits are subject to JUCB review. However, a plain reading of the text suggests
otherwise. Hence, even when we accept the factual allegations in the plaintiffs’

petition as true, we cannot say that the plaintiffs have stated a cause of action under

11
La. R.S. 42:802. Where the plaintiffs have not alleged that the Caremark contract
is a new or annual plan of benefits, or alleged that the contract is for professional,
personal, or social services, the plaintiffs have failed to allege a violation under La.
" R.S. 42:802(D)\(1). The plaintiffs alleged that OGB entered into a contract for
pharmacy benefit manager services. Given the plain language of the statute herein,
such a contract is not subject to JUCB review. We therefore find no error in the
trial court’s determination sustaining the exception of no cause of action.
CONCLUSION

For the above and foregoing reasons, the December 21, 2022 judgment of
the trial court sustaining the exception of no cause of action is affirmed. All costs
of this appeal in the amount of $2,580.00 are assessed to the plaintiffs/appellants,
Kim and Stewart Wixson, Melanie and Charlie Jones, Aimee and Tommy Joe
Woodard, Jr., and the Louisiana Independent Pharmacies Association, Inc. and the
State of Louisiana through Jeff Landry in his official capacity as Attorney General.

AFFIRMED.

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