UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
MSP RECOVERY CLAIMS, SERIES LLC et al.,
Plaintiffs,
v. No. 22-cv-1419 (DLF)
PFIZER, INC. et al.,
Defendants.
MEMORANDUM OPINION
Five limited liability companies—MSP Recovery Claims, Series LLC; MSP Recovery
Claims PROV, Series LLC; MSPA Claims I, LLC; MAO-MSO Recovery II, LLC, Series PMPI;
and MSP Recovery Claims Series 44, LLC—bring this action against Pfizer, Inc., Advanced Care
Scripts, and the Patient Access Network Foundation for allegedly conspiring to increase the price
and sales volume of three prescription drugs. Amend. Compl. ¶ 1, Dkt. 77. Before the Court are
the defendants’ motions to dismiss and to strike. Dkts. 82, 83, 84. For the reasons that follow, the
Court will grant the motions to dismiss and deny the motions to strike as moot.
I. BACKGROUND
A. Statutory & Policy Background
The federal Medicare Act offers health insurance to the elderly and disabled.1 See, e.g.,
Fischer v. United States, 529 U.S. 667, 671 (2000). Part C of the Act allows eligible patients to
1
Consistent with the applicable legal standard, what follows assumes the truth of all material
factual allegations in the plaintiffs’ Amended Complaint. See Am. Nat’l Ins. Co. v. FDIC, 642
F.3d 1137, 1139 (D.C. Cir. 2011). The relevant facts have not substantially changed since the
Court’s prior decision in MSP Recovery Claims, Series LLC v. Pfizer, Inc., No. 22-cv-1419, 2023
WL 2770432 (Apr. 4, 2023) (“MSP I”).
1
receive healthcare benefits from private insurers. 42 U.S.C. §§ 1395w-21 et seq.; see Azar v. Allina
Health Servs., 139 S. Ct. 1804, 1809 (2019). Part D of the Act provides for private insurance plans
that cover certain patients’ prescription drugs. 42 U.S.C. §§ 1395w-101 et seq. Patients, doctors,
and others often refer to private insurance plans offered under Part C of the Medicare Act as
“Medicare Advantage” Plans. Amend. Compl. ¶ 78.
Although Medicare Advantage and Medicare Part D plans can cover prescription drugs,
they often require copayments. Id. ¶ 3 n.6. By requiring patients to cover part of their own
healthcare costs, copayments discourage overconsumption of healthcare. Id. But they also mean
that some patients with insurance cannot afford drugs they need. Id. ¶ 93. Enter “Patient
Assistance Programs” (“PAPs”), charities that help patients access prescription drugs. Id. ¶ 94.
Sometimes, pharmaceutical companies donate drugs directly to PAPs they create, which in turn
distribute the drugs to patients. Id. In other cases, companies donate money to PAPs, which
channel the money to patients, who use it to pay their copayments. Id. ¶ 95.
PAPs can be legitimate, but they are also subject to fraud and abuse. Abusive PAPs can
“steer patients toward and lock them into a particular [drug] manufacturer’s product, even when
other equally effective and less costly alternatives are available.” Id. ¶ 105 (cleaned up). In
addition, when a PAP subsidizes specific drugs, the subsidies “eliminat[e]” or limit the “price
sensitivity” created by the copayment system—in other words, they encourage patients to purchase
drugs they might not have bought otherwise. Id. ¶ 37. That, in turn, increases the volume of drugs
sold and/or the price that a drug’s manufacturer can charge per drug dose, with insurers and the
Medicare program footing the bill. Id. ¶¶ 4, 30, 288–89.
In accordance with the Court’s approach in MSP I, the Court “will not address the defendants’
argument that [the plaintiffs] may not ‘recast’ the allegations in a settlement agreement to state a
claim,” as the Court will resolve this case on other grounds. Id. at *1 n.1.
2
B. Factual Background
This case alleges abusive use of a PAP. Pfizer sells three prescription medications: Sutent
and Inlyta, which “treat renal cell carcinoma,” and Tikosyn, which “treats arrhythmia in patients
with atrial fibrillation or atrial flutter.” Id. ¶ 1. The Patient Access Network Foundation (“PANF”)
is a PAP. Id. ¶ 56. According to the First Amended Complaint, from 2009 and onwards, Pfizer
“conspired with PANF to create and finance a fund for Medicare patients being treated for
arrythmia with atrial fibrillation or atrial flutter.” Id. ¶¶ 12, 73, 202. Pfizer also made donations
to PANF to enable it to cover Sutent and Inlyta copays and encouraged patients to receive those
drugs through PANF rather than Pfizer’s “existing free drug program.” Id. ¶ 181 (quoting Pls.’ Ex.
C). Advanced Care Scripts (“ACS”), a specialty pharmacy, facilitated these activities by—among
other things—coordinating patient referrals to PANF. Id. ¶¶ 8, 181.
In the plaintiffs’ telling, this scheme allowed Pfizer to “raise its prices to supra-competitive
levels.” Id. ¶¶ 4–5. After all, “because . . . patients . . . were no longer incurring any cost” to
purchase Pfizer’s drugs, they had no incentive not to consume them. Id. ¶ 30. The upshot was that
health insurers and the federal government paid “artificially increased prices” for Sutent, Inlyta,
and Tikosyn and/or spent money on “an increased quantity of claims” for those drugs, id. ¶ 31,
costing them “millions of dollars,” id. ¶ 10.
The plaintiffs are not health insurers or the federal government, however. Instead, they are
Delaware LLCs created for litigation purposes. According to the plaintiffs, some of the defendants’
victims have assigned them the right to recover damages from the defendants’ scheme. Id. ¶¶ 2,
66, 69. The plaintiffs list five “Representative Assignors” in their Amended Complaint and
provide excerpts of their assignment agreements. Id. at App’x. They also purport to sue on behalf
of other unnamed assignors. Id. ¶¶ 1–3.
3
On May 20, 2022, the plaintiffs filed a complaint in this Court alleging claims under the
federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961–68,
and various state laws. Compl. ¶¶ 167–373, Dkt. 1. The Court dismissed the complaint for lack
of standing, Dkt. 67, and the plaintiffs filed an amended complaint on May 8, 2023, Dkt. 77. As
before, the plaintiffs’ complaint alleges claims under RICO and state law, id., and the defendants
move to dismiss for lack of standing and for failure to state a claim, Dkts. 82, 83, 84. Pfizer and
ACS additionally move to strike certain allegations in the complaint as improperly derived from a
settlement agreement. Dkts. 83, 84.
II. LEGAL STANDARDS
Under Rule 12(b)(1) of the Federal Rules of Civil Procedure, a defendant may move to
dismiss an action for lack of subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1). Standing to sue
is jurisdictional, meaning that if a litigant cannot demonstrate standing dismissal under Rule
12(b)(1) is proper. See, e.g., Conf. of State Bank Supervisors v. OCC, 313 F. Supp. 3d 285, 294
(D.D.C. 2018) (citing cases). In deciding motions to dismiss under Rule 12(b)(1), the Court “may
consider documents outside the pleadings.” Id.
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a defendant may move to
dismiss an action for failure to state a claim. Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6)
motion, a complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). “A claim is facially plausible when the complaint contains
‘factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.’” Sanchez v. Office of State Superintendent of Educ., 45 F.4th 388,
395 (D.C. Cir. 2022) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
4
III. ANALYSIS
For the following reasons, the Court concludes that it lacks jurisdiction over the plaintiffs’
claims brought on behalf of the Amended Complaint’s unnamed assignors and over all of the
plaintiffs’ state-law claims. The Court has jurisdiction over the named or representative assignors’
federal claims but will dismiss those claims under Rule 12(b)(6).
A. Subject-Matter Jurisdiction
Whether the Court has subject-matter jurisdiction over the plaintiffs’ claims turns on
whether the plaintiffs have standing to sue. As assignees of the entities whom the defendants
allegedly injured, the plaintiffs have standing if (1) their assignors would have standing to sue and
if (2) those assignors validly assigned their claims to the plaintiffs. Sprint Commc’ns Co., L.P. v.
APCC Servs., Inc., 554 U.S. 269, 274–75 (2008); see, e.g., MSPA Claims 1, LLC v. Tenet Fla., Inc.,
918 F.3d 1312, 1318 (11th Cir. 2019). The assignors have standing if they (1) suffered a concrete
and tangible injury (2) caused by the defendants’ challenged conduct (3) that a favorable judicial
decision could redress. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992); Spokeo, Inc. v.
Robins, 578 U.S. 330, 338 (2016).
“Standing is not dispensed in gross.” Town of Chester, N.Y. v. Laroe Estates, Inc., 581 U.S.
433, 439 (2017) (quoting Davis v. FEC, 554 U.S. 724, 734 (2008)). Rather, “a plaintiff must
demonstrate standing for each claim he seeks to press and for each form of relief that is sought.”
Id. (quoting Davis, 554 U.S. at 734). When “a case is at the pleading stage, [a] plaintiff must
‘clearly . . . allege facts demonstrating’” each element of standing for each claim on which he seeks
relief. Spokeo, 578 U.S. at 338 (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)); see also
Lujan, 504 U.S. at 561.
5
In some instances, the Court may resolve factual disputes as to a plaintiff’s standing on a
motion to dismiss under Rule 12(b)(1). See Cherokee Nation v. U.S. Dep’t of Int., 643 F. Supp. 3d
90, 104 (D.D.C. 2022) (discussing the difference between “factual” and “facial” challenges to
standing in this District). It need not do so, however. Id.; see Haase v. Sessions, 835 F.2d 902,
907 (D.C. Cir. 1987). Because the defendants in this case have not asked the Court to resolve any
factual disputes in their favor, the Court will adjudicate the plaintiffs’ standing based on the
allegations in their complaint and the “undisputed facts evidenced in the record.” Magruder v.
Capital One, N.A., 540 F. Supp. 3d 1, 4 (D.D.C. 2021) (quoting Herbert v. Nat’l Acad. of Scis.,
874 F.2d 192, 197 (D.C. Cir. 1992)).
The plaintiffs assert standing to sue on behalf of five entities that they allege paid for
Pfizer’s drugs—SummaCare, Inc. (“Summacare”); Interamerican Medical Center Group, LLC
(“Interamerican”); Preferred Medical Plan, Inc. (“Preferred”); Health First Health Plans, Inc.
(“Health First”); and Centro de Pediatria y Medicina de Familia de Villalba, C.S.P. (“Centro”)—
as well as other unnamed assignors. Amend. Compl. App’x. The Court concludes that the
plaintiffs lack standing to sue on behalf of the unnamed assignors. It also concludes that they lack
standing to pursue their state-law claims on behalf of the five entities named in the Amended
Complaint (the “named assignors”). They do, however, have standing to pursue the named
assignors’ claims under federal law.
1. Unnamed Assignors
The plaintiffs cannot sue on behalf of the unnamed assignors because their complaint
pleads no facts establishing that those assignors, specifically, would have standing to sue on their
own. See, e.g., MSP Recovery Claims, LLC v. Actelion Pharm. US, Inc., No. 22-cv-07604, 2023
WL 5725517, at *8 (N.D. Cal. Sept. 5, 2023) (“At a minimum, Plaintiffs must plead some specific
6
facts alleging a specific named assignor assigned its claims to Plaintiffs via a valid assignment
agreement.”); accord MAO-MSO Recovery II, LLC v. Mercury Gen., No. 21-56395, 2023 WL
1793469, at *2 (9th Cir. Feb. 7, 2023). Although the operative complaint contends that the
assignors it lists are representative of the unnamed assignors, Amend. Compl. ¶ 2 & nn.4–5, that
is not enough. Rather, “to establish standing,” the plaintiffs must “name” or otherwise identify
every entity whose claims they assert. Summers v. Earth Island Inst., 555 U.S. 488, 498 (2009)
(discussing an analogous issue in the organizational-standing context).
2. Named Assignors’ State Law Claims
Similarly, the plaintiffs have not adequately alleged standing to pursue their state law
claims on behalf of the named assignors. Although the Amended Complaint alleges that the
plaintiffs collectively possess claims under several states’ consumer protection laws, it does not
say which plaintiffs have been assigned which claims. See Amend. Compl. ¶¶ 431–582. A similar
problem afflicts the Amended Complaint’s discussion of the plaintiffs’ claims for unjust
enrichment under state common law and for violations of the Florida Civil Remedies for Criminal
Practices Act. Id. ¶¶ 583–620. Accordingly, the Court cannot find that any specific plaintiff has
standing to sue under the laws of any specific state. Because the Court must dispense standing to
specific plaintiffs and claims rather than groups of plaintiffs “in gross,” it follows that the Amended
Complaint does not adequately demonstrate that any plaintiff has standing to assert any given state-
law claim. Davis, 554 U.S. at 734; see Summers, 555 U.S. at 498–500.
3. Named Assignors’ Federal Claims
With respect to the named assignors’ claims under the federal RICO statute, however, the
plaintiffs have established standing. Unlike the plaintiffs’ first complaint, Dkt. 1, the Amended
Complaint alleges facts demonstrating that each named assignor has suffered injuries in fact caused
7
by the defendants’ challenged conduct and that this Court could redress. Lujan, 504 U.S. at 560–
61; Spokeo, 578 U.S. at 338. It also shows that the named assignors have validly assigned their
claims to the plaintiffs. Sprint, 554 U.S. at 274–75.
First—and unlike the plaintiffs’ first complaint in this action—the Amended Complaint
alleges facts demonstrating that each named assignor has suffered a concrete injury. The Amended
Complaint contends that the defendants’ misconduct “artificially inflated prices and quantities” of
Sutent, Inlyta, and Tikosyn from 2009 through at least 2019. Amend. Compl. ¶¶ 202, 308; see,
e.g., id. ¶ 184 (suggesting that payors continued to pay elevated prices for Sutent, Inlyta, and
Tikosyn in 2019). In turn, Exhibit A to the Amended Complaint suggests that Summacare,
Interamerican, and Health First purchased each of Sutent, Inlyta, and Tikosyn during that ten-year
period, and that Centro and Preferred purchased Sutent during parts of that period (in 2014–15 and
2019, respectively).2 Putting two and two together, Summacare, Interamerican, and Health First
spent more on Sutent, Inlyta, and Tikosyn than they otherwise would have spent because of Pfizer’s
donations to PANF. Centro and Preferred spent more on Sutent for the same reason. Those
“pocketbook injur[ies]” are “prototypical form[s] of injury in fact,” Collins v. Yellen, 141 S. Ct.
1761, 1779 (2021), giving Summacare, Interamerican, and Health First concrete injuries as to as
to each drug and Centro and Preferred concrete injuries as to Sutent.
Second, the Amended Complaint adequately alleges causation and redressability. Taking
the allegations in the plaintiffs’ Amended Complaint as true, the named assignors’ pecuniary
injuries are “fairly traceable” to the defendants’ conduct. Absent the defendants’ conspiracy, each
assignor would have paid less for Pfizer’s drugs or paid for fewer of them. See Lexmark Int’l, Inc.
2
Because, based on Exhibit A, Centro and Preferred never purchased Inlyta or Tikosyn, it
follows that they lack standing to sue for injuries arising out of purchases for either drug.
8
v. Static Control Components, Inc., 572 U.S. 118, 134 n.6 (2014); see also id. (“Proximate
causation is not a requirement of Article III standing.”). And even a dollar in damages would help
redress those injuries. Sprint, 554 U.S. at 286–87.
Third, and finally, the Amended Complaint adequately alleges that the named assignors
assigned their claims to each plaintiff. According to the Amended Complaint, Summacare,
Interamerican, Preferred, and Health First “irrevocably assigned . . . all [their] rights to recover
against any liable third party . . . for payments made on behalf of [their] enrollees” to MSP
Recovery LLC. Amend. Compl. App’x at 132–35. MSP Recovery LLC then reassigned
Summacare’s claims to a designated series of plaintiff MSP Recovery Claims, Series LLC;
Interamerican’s claims to plaintiff MSPA Claims I, LLC; Preferred’s claims to plaintiff MAO-
MSO Recovery II, LLC; and Health First’s claims to a designated series of plaintiff MSP Recovery
Claims Series 44, LLC. Id. For its part, Centro assigned “all its rights to recovery against any
liable entity . . . for payments made on behalf of its [e]nrollees pursuant to its Government
Healthcare Program” directly to “a designated series of [p]laintiff MSP Recovery Claims PROV,
Series LLC.” Id. at 136. Together with the text of the relevant assignment agreements, which the
plaintiffs have provided to the Court, these allegations make it plausible that the named assignors
assigned the claims at issue in this litigation to each of the plaintiffs. See Pls.’ Resp. to PANF’s
Mot. to Dismiss Ex. A, Dkt. 87-1.
Although the plaintiffs’ Amended Complaint and exhibits do not specifically show how
much each named assignor paid for Sutent, Inlyta, and Tikosyn during each year of the (alleged)
conspiracy, the plaintiffs need not do so to survive a motion to dismiss under Rule 12(b)(1). The
plaintiffs describe Exhibit A of the Amended Complaint, also submitted separately to the Court as
a Microsoft Excel spreadsheet, as “contain[ing] a year-by-year breakdown of claims paid by the
9
[named assignors]” from 2009 through 2021. Amend. Compl. ¶ 2 n.5; see id. Ex. A. Exhibit A
contains one column, “msp_client,” that appears to list each of the five named assignors by
abbreviation; another column, “msp_drug_name,” that lists one of Sutent, Inlyta, or Tikosyn; and
another column, “msp_dos,” listing dates by month, day, and year. Id. Ex. A. Consistent with the
Amended Complaint’s description, the Court thus infers that Exhibit A shows the month, day, and
year that each of the named assignors paid claims for Sutent, Inlyta, and Tikosyn. So construed,
Exhibit A demonstrates that each of the named assignors paid at least one claim for those drugs
during the period of the (alleged) conspiracy, meaning each suffered an injury in fact. Cf. MSP
Recovery Claims, Series LLC v. Lundbeck LLC, 664 F. Supp. 3d 635, 650 (E.D. Va. 2023) (“[T]he
Court is not convinced that [the plaintiffs] must include specific documents or bills . . . at this stage
in the proceeding.”).
True also, and irrelevant also, the Amended Complaint does not say whether the named
assignors’ patients received copayment assistance from PANF. The Amended Complaint alleges
that PANF’s payouts raised prices for all consumers of Pfizer’s drugs, regardless of whether those
consumers received copayment assistance from PANF. Amend. Compl. ¶¶ 30, 37, 288–90. In
conjunction with Exhibit A, it also alleges that the named assignors paid for Pfizer’s drugs during
the period that PANF provided copayment assistance. Id. Ex. A. As a result, it adequately pleads
that the named assignors suffered injuries from the defendants’ conduct.
Nor does it matter that, according to government records, Interamerican and Centro are
physician practices rather than health insurance companies. PANF’s Mem. in Support of Mot. to
Dismiss at 11, Dkt. 82-1. That reality might make it unlikely that either Interamerican or Centro
overpaid for any drugs from 2009 through 2021, but “[w]hether” the two organizations “actually”
spent money on patients’ drugs “is a question of fact” that the Court need not resolve on a motion
10
to dismiss. MSP Recovery Claims, Series, LLC v. Sanofi Aventis U.S. LLC, No. 18-cv-2211, 2019
WL 1418129, at *10 (D.N.J. Mar. 29, 2019). In a similar vein, it is irrelevant that the applicable
statutes of limitations might bar all assignors’ claims arising out of payments made before 2016.
PANF’s Mem. in Support of Mot. to Dismiss at 12. “Statutes of limitations . . . create affirmative
defenses” on the merits. Gordon v. Nat’l Youth Work Alliance, 675 F.2d 356, 360 (D.C. Cir. 1982);
W. Va. Highlands Conservancy v. Johnson, 540 F. Supp. 2d 125, 138 (D.D.C. 2008) (quoting
Gordon). They are “not a bar to jurisdiction” and do not limit a plaintiff’s standing to sue. Gordon,
675 F.2d at 360; W. Va. Highlands, 540 F. Supp. 2d at 138.
It is also true that the Amended Complaint “does not include language specifying what
‘claims’ were assigned” by the named assignors to the plaintiffs. Pfizer’s Mem. in Support of Mot.
to Dismiss at 19, Dkt. 83-1. But the Amended Complaint does not stand alone—the plaintiffs have
also provided (redacted) copies of the named assignors’ assignment agreements with their briefing.
Dkt. 87-1. The Court can consider those agreements in order to confirm its jurisdiction, Conf. of
State Bank Supervisors, 313 F. Supp. 3d at 294, and the text of the agreements at least arguably
covers the named assignors’ claims arising under federal law. To the extent that ambiguity remains
as to which claims the assignment agreement assigns, “the interpretation of ambiguous contract
language” presents “question[s] of fact” that the Court need not resolve on a motion to dismiss
under Rule 12(b)(1). Flynn v. Dick Corp., 481 F.3d 824, 831 n.7 (D.C. Cir. 2007); see Haase, 835
F.2d at 907.3
3
For similar reasons, the Court need not decide at this juncture whether the plaintiffs have been
assigned claims arising after the effective dates of the named assignors’ assignment agreements,
either because the named assignors’ assignment agreements did not assign them or because MSP
Recovery LLC did not assign them to the plaintiffs. Cf. PANF Mem. in Support of Mot. to
Dismiss at 12. In view of the allegations in the Amended Complaint and the text of the
applicable assignment agreements, many of which purport to allow for continuing assignment of
the named assignors’ claims, see, e.g., Health First Recovery Agrmt. § 4.2, Summacare Recovery
11
Last but not least, three plaintiffs—MSP Recovery Claims, Series 44, and Claims PROV—
seek relief for claims assigned to their designated series. Courts have split on whether an LLC has
standing to sue on behalf of a designated series in this manner. See MSP Recovery Claims, Series
44, LLC v. Quincy Mut. Fire Ins. Co., No. 22-cv-11271, 2023 WL 4107038, at *11 (D. Mass. June
21, 2023) (citing cases). In this case, the Court concludes that all three plaintiffs may. Recovery
Claims and Claims PROV’s operating agreements explicitly allow both LLCs to sue on their series’
behalf, and the Certificate of Designation for Series 44’s series says much the same thing. MSP
Recovery Claims, Series LLC Second Amend. & Restated LLC Op. Agmt. § 3.1(d) (Oct. 22,
2020), Dkt. 87-2; MSP Recovery Claims PROV, Series LLC LLC Op. Agmt. § 2.3 (Dec. 22, 2020),
Dkt. 87-2; Series 44 Cert. of Designation at 2, Dkt. 87-1. Because Delaware law “give[s] the
maximum effect to the principle of freedom of contract and to the enforceability of limited liability
company agreements,” a Delaware court would likely honor this allocation of rights. 6 Del. Code
§ 18-1101(b); R&R Capital, LLC v. Buck & Doe Run Valley Farms, LLC, 2008 WL 3846318, at
*4 (Del. Ch. 2008) (quoting 6 Del. Code § 18-1101(b)). And because the question of whether an
assignment to a series of a Delaware LLC also bestows rights upon the parent LLC is a question
of Delaware law, it follows that each of MSP Recovery Claims, Series 44, and Claims PROV has
standing to sue on behalf of the series to which claims were assigned.4
Agrmt. § 4.2, Dkt. 87-1, the Court cannot conclude based on the uncontested facts that no claims
after the agreements’ effective dates have been assigned.
4
Delaware law also provides that an LLC’s series “may have separate rights, powers, or duties”
as its parent LLC. 6 Del. Code § 18-215 (emphasis added). But “may” does not mean “must,”
meaning this provision does not preclude contrary provisions in LLC operating agreements.
Accord MSP Recovery Claims, Series LLC v. ACE Am. Ins. Co., 974 F.3d 1305, 1319–20 (11th
Cir. 2020) (citing 6 Del. Code § 18-215).
12
* * *
For these reasons, Plaintiffs MSP Recovery Claims, MSPA Claims I, and Series 44 have
standing to pursue their assignors’ federal claims arising out of their purchases of Sutent, Tikosyn,
and Inlyta. Plaintiffs MAO-MSO and Recovery Claims PROV also have standing to pursue their
federal claims arising out of their assignors’ purchases of Sutent. The Court will dismiss the
plaintiffs’ claims on behalf of the unnamed assignors, their claims under state law, and any claims
by MAO-MSO or Recovery Claims PROV arising out of purchases of Tikosyn and Inlyta for lack
of jurisdiction.
B. Failure to State a Claim
That leaves the plaintiffs’ claims under the federal RICO statute, 18 U.S.C. §§ 1961–68.
RICO makes it “unlawful for any person employed by or associated with any enterprise engaged
in . . . interstate commerce, to conduct or participate, directly or indirectly, in the conduct of such
enterprise’s affairs through a pattern of racketeering activity,” id. § 1962(c), and for any person “to
conspire to” engage in such activity, id. § 1962(d). “Racketeering activity” includes (1) “any act
or threat involving . . . bribery . . . which is chargeable under State law and punishable by
imprisonment for more than one year” and (2) “any act which is indictable” under the federal
Travel Act or the federal mail and wire fraud statutes. Id. § 1961(1). “Any person injured in his
business or property by reason of” a RICO violation “may sue therefor” and receive treble
damages. Id. § 1964(c).
At the outset, the Amended Complaint’s conclusory character makes it difficult for the
Court to discern the factual allegations on which the plaintiffs’ RICO claims rest. The Amended
Complaint is quite lengthy, containing more than 620 paragraphs spread across 139 pages. Even
13
so, it rarely specifies the who, what, when, where, and how of the plaintiffs’ theory—for example,
how ACS allegedly conspired with Pfizer and PANF or which of Pfizer’s payments to PANF
amounted to acts of racketeering. Further, certain allegations in the Amended Complaint relate to
other lawsuits, making it challenging for the Court to ascertain which of the complaint’s factual
contentions bear on this case. See, e.g., Amend. Compl. ¶¶ 76, 394–95 (alleging misconduct with
respect to Xenazine, a drug that Pfizer does not manufacture and that was at issue in Lundbeck but
not this case). This Court is not the first to alert the plaintiffs to this problem. See, e.g., MSP
Recovery Claims, Series LLC v. AIG Prop. Cas. Co., No. 20-cv-2102, 2021 WL 1164091, *1
(S.D.N.Y. Mar. 26, 2021) (dismissing an MSP complaint “long on invective and indignation but
short on facts”); MSP Recovery Claims, Series LLC v. N.Y. Cent. Mut. Fire Ins. Co., 2019 WL
4222654, *5 (N.D.N.Y. Sept. 5, 2019) (dismissing MSP action after observing: “[T]he Court is
faced with a messy Complaint, improper exhibits, and [p]laintiffs’ inconsistent arguments.”).
“Federal courts do not possess infinite patience,” MSP-MSO Recovery II, LLC v. State Farm Mut.
Auto. Ins. Co., 994 F.3d 869, 878 (7th Cir. 2021), and while the Court has done its best to
understand the plaintiffs’ claims, it remains their burden to present “a short and plain statement of
[their] claim[s] showing that [they are] entitled to relief,” Fed. R. Civ. P. 8(a)(2).
Against that backdrop, and in view of the Court’s understanding of the facts alleged in the
Amended Complaint, the plaintiffs fail to state a claim under RICO’s private right of action for
two independent reasons. First, under the indirect purchaser rule, the plaintiffs did not suffer
injuries “by reason of” the defendants’ RICO violations. Second, the Amended Complaint does
not plausibly allege a pattern of racketeering activity. The Court will therefore dismiss the
plaintiffs’ RICO claims under Federal Rule of Civil Procedure 12(b)(6).
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1. Indirect Purchaser Rule
RICO affords a private right of action to persons “injured in [their] business or property by
reason of” a RICO violation. 18 U.S.C. § 1964(c). This language incorporates “common-law
principles of proximate causation.” Holmes v. SIPC, 503 U.S. 258, 267 (1992). It also mirrors § 4
of the Clayton Act, which authorizes suit by “any person who shall be injured in his business or
property by reason of anything forbidden in the antitrust laws.” 15 U.S.C. § 15(a); see Holmes,
503 U.S. at 267 (quoting 15 U.S.C. § 15(a)).
One principle of proximate causation, known to antitrust lawyers as the Illinois Brick or
“indirect purchaser” rule, is particularly relevant here. See Illinois Brick Co. v. Illinois, 431 U.S.
720 (1977); Apple Inc. v. Pepper, 139 S. Ct. 1514, 1520 (2019) (describing Illinois Brick as resting
on “principles of proximate cause”). Under Illinois Brick, only “immediate buyers” from a
lawbreaking seller may sue for injuries to their business or property. Pepper, 139 S. Ct. at 1520
(quoting Kansas v. UtiliCorp United Inc., 497 U.S. 199, 207 (1990)). “[I]ndirect purchasers who
are two or more steps removed from” the seller “may not sue.” Id. at 1521. For example, if
wrongdoer A sells to B, who sells to C, B but not C may sue A. Id. The idea is that B—not C—is
the direct victim of A’s misconduct, and that any injuries C suffers based on B’s response to A’s
activity (say, its choice to pass along A’s higher prices to C) are too attenuated to support liability.
Id. at 1520–21; cf. Hemi Group, LLC v. City of New York, 559 U.S. 1, 10 (2010) (“[T]he general
tendency of the law, in regard to damages at least, is not to go beyond the first step.”) (quoting
Holmes, 503 U.S. at 271–72).
The Supreme Court has recognized only two exceptions to Illinois Brick: an exception
“when the direct purchaser and the indirect purchaser have entered into pre-existing cost-plus
contracts,” and an exception “when the direct purchaser is owned or controlled by the indirect
15
purchaser.” California v. ARC Am. Corp., 490 U.S. 93, 97 n.2 (1989). Expanding on the latter
carveout, several circuits allow “an indirect purchaser [to] maintain a damage action upon a
showing that there was a conspiracy between [a] manufacturer[] and [a] direct purchaser
middleman.” In re Nifedipine Antitrust Litig., 335 F. Supp. 2d 6, 14 (D.D.C. 2004) (citing cases).
This “co-conspirator exception” applies when a manufacturer and distributor make joint pricing
and perhaps volume or other sales decisions at customer expense. See, e.g., In re ATM Fee
Antitrust Litig., 686 F.3d 741, 751–52 (9th Cir. 2012) (citing cases); Philip E. Areeda & Herbert
Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles & Their Application ¶ 346h
(“Illinois Brick does not limit suits by consumers against a manufacturer who illegally contracted
with its dealers to set the latter’s resale price . . . . This result has been phrased in terms of a ‘co-
conspirator’ exception.”). After all, in a co-conspirator case, a manufacturer harms its end-users
in “one step”—by agreeing with its distributors to fix the prices they will pay or similar—albeit
with the intermediary distributor’s help. Cf. Hemi Group, 559 U.S. at 10.
Applied in this case, these principles raise three questions. Does the indirect-purchaser
rule apply in civil RICO cases? If so, in view of the allegations in the Amended Complaint, do the
plaintiffs’ named assignors qualify as “direct” or as “indirect” purchasers? And if the named
assignors count as “indirect” purchasers, can they still seek refuge under the co-conspirator
exception? The Court will answer each question in the defendants’ favor, meaning it must dismiss
the plaintiffs’ civil RICO claims for failure to state a claim.
First, the Court concludes that Illinois Brick’s indirect-purchaser rule applies in civil RICO
cases. As a textual matter, RICO’s private-right-of-action provision is almost identical to the
Clayton Act provision that grounds Illinois Brick, suggesting that the two provisions should carry
the same meaning. Holmes, 503 U.S. at 267–68; see, e.g., Northcross v. Bd. of Ed. of Memphis
16
City Schs., 412 U.S. 427, 428 (1973). In addition, the indirect purchaser rule reflects principles of
proximate causation that the Supreme Court has already said apply in the RICO context. Compare
Pepper, 139 S. Ct. at 1520 (explaining that the indirect purchaser rule reflects “principles of
proximate cause”), with Holmes, 503 U.S. at 267–68 (applying principles of proximate cause
developed in antitrust cases to RICO actions). Consistent with all this, although the Supreme Court
and D.C. Circuit have not opined on the point, “[e]very circuit to have considered the [issue] has
held” that the indirect purchaser rule “applies to civil RICO actions.” Humana, Inc. v. Biogen,
Inc., 666 F. Supp. 3d 135, 141 (D. Mass. 2023).
Second, the Amended Complaint does not plausibly allege that the named assignors count
as direct rather than indirect purchasers. According to the Amended Complaint, the defendants’
conspiracy boosted demand for Sutent, Tikosyn, and Inlyta, allowing Pfizer to sell more of those
drugs and/or to charge higher prices for them. Amend. Compl. ¶¶ 30–31. But the Amended
Complaint does not allege that any of the named assignors purchased anything from Pfizer.
Instead, it says that they made payments to “dispensing pharmacies,” including but not limited to
defendant ACS. Id. ¶ 222; see, e.g., id. ¶¶ 20 & n.8, 203, 240, 263. A report attached to the
Amended Complaint clarifies that drug manufacturers “typically sell their prescription
medications to wholesale distributors, which in turn sell products to pharmacies, hospitals, doctors,
and other entities that deliver medications to patients.” House Cmte. on Oversight & Reform,
Drug Pricing Investigation Majority Staff Report 8–9 & Fig. 1 (Dec. 10, 2021), Dkt. 79.5 That
paints a “textbook indirect-purchaser” picture, as the Third Circuit has recognized: Pfizer sold to
distributors, who sold to pharmacies, who sold to doctors and patients, who triggered the named
5
“In determining whether a complaint fails to state a claim” under Rule 12(b)(6), the Court “may
consider . . . documents either attached to or incorporated in the complaint,” including the House
Report. EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997).
17
assignors’ payments back to the pharmacies. Humana, Inc. v. Indivior, Inc., Nos. 21-2573 & 21-
2574, 2022 WL 17718342, at *3 (3d Cir. Dec. 15, 2022); accord United Healthcare Servs., Inc. v.
United Therapeutics Corp., No. 22-2948, 2024 WL 1256266, at *6–8 (D. Md. Mar. 25, 2024);
Lundbeck, 664 F. Supp. 3d at 651–52; Sanofi Adventis, 2019 WL 1418129, at *14–16.
Third, any co-conspirator exception to Illinois Brick would not help the plaintiffs.6 The
plaintiffs allege that the named assignors sometimes paid ACS for Pfizer’s drugs and that ACS
participated in Pfizer and PANF’s racketeering enterprise.7 Amend. Compl. ¶¶ 9, 15–16, 222.
Even so, they do not allege that ACS made pricing, volume, or other equivalent sales decisions
with Pfizer and PANF, as any co-conspirator exception would require. Rather, ACS sits behind
Pfizer in the plaintiffs’ casual chain: ACS facilitated Pfizer’s donations to PANF, which boosted
demand for Pfizer’s drugs, which altered Pfizer’s volume and pricing decisions, which filtered
through Pfizer’s wholesalers to pharmacies (including ACS again) to the named assignors. That
places ACS’s alleged misconduct many steps away from the plaintiffs’ injuries, making clear that
the named assignors count as indirect purchasers and that this case is not a co-conspirator case.
Putting the point differently, the co-conspirator exception applies when a co-conspirator functions
as a “seller,” but ACS’s (alleged) conspiratorial conduct had little to do with its sales. See Marion
Healthcare, LLC v. Becton Dickson & Co., 952 F.3d 832, 839 (7th Cir. 2020).
6
The Court assumes without deciding (1) that Illinois Brick allows for a co-conspirator
exception and (2) that such an exception would also apply in the RICO context. Cf. In re
Nifedipine, 335 F. Supp. 2d at 14. It also assumes without deciding (3) that a RICO co-
conspirator exception would cover more than vertical price-fixing conspiracies. But cf. Dickson
v. Microsoft Corp., 309 F.3d 193, 215 (4th Cir. 2002).
7
In addition, any co-conspirator exception would not protect payments made by the named
assignors to pharmacies besides ACS. In view of the plaintiffs’ Exhibit KK—or, to be precise, an
unlabeled spreadsheet following the plaintiffs’ exhibit JJ—which the plaintiffs represent records
payments that their assignors made to ACS, it appears that ACS may have received comparably
few payments from the named assignors. See Amend. Compl. ¶ 20 n.8; Dkt. 79 at 1111–18.
18
The plaintiffs reply that the indirect-purchaser rule “should not be applied to RICO,”
emphasizing that the Supreme Court has employed a “flexible proximate cause analysis” in RICO
cases instead. Pls.’ Mem. in Opp. to Defs.’ Mot. to Dismiss at 15–16, Dkt. 87. None of the cases
that the plaintiffs cite for that proposition, however, suggests that the Supreme Court’s proximate
cause analysis in RICO cases would supplant Illinois Brick. See Holmes, 503 U.S. at 264–76;
Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 456–62 (2006); Bridge v. Phoenix Bond & Indem.
Co., 553 U.S. 639, 654–55 (2008). Indeed, those opinions’ emphasis on the textual and contextual
similarities between RICO and the Clayton Act suggests the opposite, especially because Illinois
Brick and other proximate cause doctrines coexist in the antitrust context. Holmes, 503 U.S. at
263; Ideal Steel, 547 U.S. at 456–57; see, e.g., Assoc. Gen. Contractors of Cal., Inc. v. Cal. State
Council of Carpenters, 459 U.S. 519, 535–41 (1983). Nor does 18 U.S.C. § 1962(c), which
imposes liability on all who participate “directly or indirectly” in a racketeering enterprise,
distinguish RICO from the Clayton Act as a textual matter. The indirect-purchaser rule offers a
gloss on 18 U.S.C. § 1964(c), which governs who may sue for damages under RICO. By contrast,
§ 1962(c) sets out the substantive conditions of RICO liability.
In the alternative, the plaintiffs emphasize that the injuries they suffered are not “derived
from” another “third party’s direct injury.” Pls.’ Mem. in Opp. to Def.’s Mot. to Dismiss at 14.
But if the defendants’ conspiracy allowed Pfizer to boost prices for its drugs, Pfizer’s distributors
paid those increased prices first and suffered injury as a result. Illinois Brick, 431 U.S. at 728–29.
More importantly, the indirect-purchaser rule is not a no-more-direct-injury rule. Rather, the rule
supplants inquiry into who within a value chain has suffered a direct injury first—that is, into
whether a seller’s illegal overcharges injured direct purchasers, downstream consumers, or both.
Pepper, 139 S. Ct. at 1521.
19
Finally, the plaintiffs lean heavily on the co-conspirator exception, emphasizing that the
named assignors sometimes “purchased” drugs “directly from . . . ACS.” Pls.’ Mem. in Opp. to
Defs.’ Mot. to Dismiss at 8. This observation does not help the plaintiffs with respect to the drugs
their named assignors did not purchase from ACS, however. More importantly—and in any
event—ACS did not participate in any conspiracy by altering the terms of its sales to the named
assignors. Indeed, the reality that any such alterations were independent from Pfizer and PANF
makes the relationship between ACS and the named assignors’ injuries too attenuated to support
application of the co-conspirator exception to the indirect purchaser rule. None of the plaintiffs’
cases says otherwise. Each involves conspiracies between manufacturers and distributors in which
both agreed on the prices the distributors would charge, the volumes the distributors would sell, or
other equivalent contract terms. See, e.g., Marion Diagnostic Ctr., LLC v. Becton Dickinson &
Co., 29 F.4th 337, 340–42 (7th Cir. 2022) (prices and contract terms); In re Nat’l Football League
Sunday Ticket Antitrust Litig., 933 F.3d 1136, 1157–58 (9th Cir. 2019) (volumes). In those cases,
unlike this one, the distributors’ conduct bore directly on end consumers and thus made co-
conspirator liability appropriate.8
In a last-ditch effort to avoid the indirect-purchaser rule, the plaintiffs urge this Court to
expand the co-conspirator exception further. The Court will not. The Supreme Court has warned
lower courts against “litigat[ing] a series of exceptions” to Illinois Brick, a warning this Court must
heed. UtiliCorp, 497 U.S. at 217.
8
The plaintiffs’ observation that RICO liability is joint and several, so that they could recover
100% of their damages under RICO from ACS if they prevailed against it, does not help them
either. The indirect-purchaser rule governs whether the plaintiffs have a cause of action based on
an injury to their “business or property by reason of” ACS’s conduct. 18 U.S.C. § 1964(c).
Without a cause of action the plaintiffs may not recover damages from anyone regardless of
whether liability under RICO is joint and several.
20
For these reasons, the indirect-purchaser rule bars the plaintiffs’ RICO claims.
2. Racketeering Activity
The plaintiffs’ RICO claims also fail for another, independent reason: the Amended
Complaint does not plausibly allege a pattern of racketeering activity.
Under 18 U.S.C. § 1962(c), it is “unlawful for any person . . . associated with any enterprise
engaged in . . . interstate or foreign commerce . . . to conduct or participate, directly or indirectly,
in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” 18 U.S.C.
§ 1962(d) makes it unlawful “to conspire to violate” § 1962(c). Liability under both sections
requires “a pattern of racketeering activity” (under § 1962(c)) or a conspiracy to engage in a pattern
of racketeering activity (under § 1962(d)). See, e.g., Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S.
479, 496 (1985).
“[R]acketeering activity” includes “any act ‘chargeable’ under several generically
described state criminal laws” and “any act ‘indictable’ under numerous federal criminal
provisions.” Id. at 481 (quoting 18 U.S.C. § 1961(1)). The plaintiffs allege three types of
racketeering activity: violations of state “bribery” statutes, violations of the federal Travel Act, and
violations of the federal wire and mail fraud statutes. Amend. Compl. ¶¶ 371, 372, 375. Because
the Amended Complaint does not plausibly allege any of those violations, however, the Court will
dismiss the plaintiffs’ RICO claims for failure to state a claim.
State bribery statutes. “As used in” RICO, “racketeering activity” includes “any act or
threat involving . . . bribery . . . which is chargeable under State law and punishable by
imprisonment for more than one year.” 18 U.S.C. § 1961(1). To involve bribery, an act “must be
capable of being generically classified” as a bribe. See Scheidler v. Nat’l Org. for Women, Inc.,
537 U.S. 393, 409–10 (2003).
21
A person commits generic bribery when “he solicits, accepts, or agrees to accept any benefit
as consideration for knowingly violating or agreeing to violate a duty of fidelity,” either as a public
servant or as a private individual holding certain positions of trust.9 Am. L. Inst., Model Penal
Code § 224.8 (1980) (commercial bribery); see id. § 240.1 (bribery of a public official); In re
EpiPen Direct Purchaser Litig., No. 20-cv-827, 2022 WL 1017770, at *4–5 (D. Minn. Apr. 5,
2022) (“[G]eneric bribery” requires “‘relations which are recognized in a society as involving
special trust.’”) (quoting Perrin v. United States, 444 U.S. 37, 45 n.11 (1979)). This duty-of-
fidelity requirement is significant, as it separates bribery from other offenses involving improper
payments. For example, a smuggler who pays a border guard to ignore his smuggling bribes the
border guard, for his payment pays the guard to breach his duties to his employer. But a smuggler
who pays a drug courier to carry drugs across the border does not bribe the courier, as the courier’s
decision to smuggle does not implicate any duty of fidelity.
9
The parties dispute whether RICO’s “any act or threat involving [a predicate offense]” language
requires a “conduct based” approach to RICO predicates—in which the Court considers whether
a defendant’s alleged conduct (1) involved a generic predicate offense and (2) was chargeable
under State law and punishable by more than a year’s imprisonment—or a “categorical”
approach—in which the Court considers whether a defendant’s conduct was chargeable under a
State law whose elements necessarily encompass the elements of the generic offense. Cf. Taylor
v. United States, 495 U.S. 575, 600–01 (1990). Every Circuit to consider the question has held
that RICO prescribes a conduct-based approach rather than a categorical approach, and the Court
would be inclined to agree. Johnson v. United States, 64 F.4th 715, 728 (6th Cir. 2023); United
States v. Brown, 973 F.3d 667, 709 (7th Cir. 2020).
The Court need not decide whether § 1961(1)(A) is conduct-based or categorical, however, as
the plaintiffs fail to state a claim regardless of the path the Court takes. If § 1961(1)(A) is
conduct-based, the plaintiffs fail to state a claim because they do not plausibly allege that the
defendants engaged in generic bribery. And if § 1961(1)(A) is categorical, the plaintiffs fail to
state a claim because they do not allege violations of state statutes that categorically encompass
generic bribery—because the plaintiffs do not plausibly allege conduct amounting to generic
bribery, any statute that the plaintiffs plausibly violated could not categorically encompass the
elements of generic bribery.
22
Generic bribery’s duty-of-fidelity requirement dooms the bribery allegations in the
plaintiffs’ Amended Complaint. The Amended Complaint posits that Pfizer made or conspired to
make payments to PANF to induce it “to refer patients for receipt of” Pfizer’s drugs. Amend.
Compl. ¶ 377; see, e.g., id. ¶¶ 379–90. It does not, however, plead facts suggesting that PANF
owed a duty of fidelity to anyone to abstain from those referrals. Duties of fidelity require “a
special relationship of trust or confidence,” a relationship that charities do not typically hold with
their beneficiaries and that PANF did not seem to hold with anyone. Krukas v. AARP, Inc., 458 F.
Supp. 3d 1, 9 (D.D.C. 2020) (holding that AARP lacked a fiduciary duty to its members); cf.
EpiPen, 2022 WL 1017770, at *3–5.
The plaintiffs’ contrary authorities do not say otherwise. It is true that, in some cases,
“arrangements involving ‘kickbacks’” under state law and/or violations of the Federal Anti-
Kickback Statute can “constitute ‘bribery.’” United States v. Gross, 370 F. Supp. 3d 1139, 1150
(C.D. Cal. 2019). Those cases, however, involve “illegal monetary incentives meant to induce a
person, often a doctor, to use his or her position of trust to influence another, often the patient, for
the purpose of financially benefitting a third party.” Id. (emphasis added); see, e.g., United States
ex rel. Travis v. Gilead Scis., Inc., 596 F. Supp. 3d 522, 538 (E.D. Pa. 2022) (describing scheme
“to funnel money to” doctors); United States v. Rogers, 389 F. Supp. 3d 774, 793 (C.D. Cal. 2019)
(kickback scheme directed at doctor). Here, by contrast, the plaintiffs do not adequately allege
that PANF occupied an equivalent position of trust. United States v. Babaria does not change this
conclusion; Barbaria deals with the position-of-trust enhancement contained in the Sentencing
Guidelines, which sweeps more broadly than the duty-of-fidelity requirement for bribery. 775 F.3d
593, 596–97 (3d Cir. 2015); cf. United States v. Adam, 70 F.3d 776, 482 (4th Cir. 1995); United
States v. Liss, 265 F.3d 1220, 1229 (11th Cir. 2001) (similar).
23
Nor does Perrin v. United States get the plaintiffs to the finish line. 444 U.S. 37 (1979).
Perrin interprets the Travel Act, a federal precursor to RICO in which Congress similarly included
a list of predicates incorporating State offenses. The case holds that generic bribery under the
Travel Act includes “bribery of private persons.” Id. at 48. Perrin does not hold that any payment
to a private person counts as bribery, however, and it approvingly cites the Model Penal Code’s
decision to link bribery with “relations . . . involving special trust.” Id. at 45 n.11.10 As a result,
Perrin does not suggest that generic bribery under RICO requires anything less than a breach of a
duty of fidelity.
For these reasons, the Amended Complaint does not plausibly allege that the defendants
committed or conspired to commit “act[s] of bribery . . . chargeable under State law and punishable
by imprisonment for more than one year.” 18 U.S.C. § 1961(1)(A).
Travel Act. RICO also says that violations of the federal Travel Act, 18 U.S.C. § 1952,
count as racketeering acts or predicates. The Travel Act makes it illegal to “perform[] or attempt[]
to perform” certain specified “unlawful activit[ies]” after “travel[ing] in interstate or foreign
commerce or us[ing] the mail or any facility in interstate commerce, with intent to . . . promote,
manage, establish, carry on, or facilitate the promotion, management, establishment or carrying
on” of those activities. Id. § 1952(a)(3).
Unlawful activities include “bribery . . . in violation of the laws of the State in which
committed or of the United States.” Id. § 1952(b)(2). Bribery under the Travel Act means generic
bribery. Perrin, 444 U.S. at 45.
10
The plaintiffs observe—correctly—that “[t]he assertion that all special trust relationships
should be free from bribery is not equivalent to the assertion that only special trust relationships
should be free from bribery.” Pls.’ Opp. to Defs.’ Mot. to Dismiss at 11 n.18, Dkt. 86. In
context, however, the language quoted in Perrin implies that bribery offenses must involve
relations of special trust in some way.
24
The Amended Complaint does not plausibly allege generic bribery for the reasons given
above. Generic bribery requires payments meant to induce breaches of a duty of fidelity, and
PANF is not alleged to have borne any such duties. As a result, the Amended Complaint does not
plausibly allege that the defendants violated or conspired to violate the Travel Act.
Wire and mail fraud. Finally, RICO makes violations of the federal mail and wire fraud
statutes acts of racketeering. See 18 U.S.C. §§ 1341, 1343. The mail fraud statute targets those
who use the mails “for the purpose of executing” a “scheme or artifice to defraud, or for obtaining
money or property by means of false or fraudulent pretenses.” Id. § 1341. The wire fraud statute
similarly criminalizes the use of “wire, radio, or television communication[s]” as part of a
fraudulent scheme. Id. § 1343.
Both statutes require “specific intent to defraud”—e.g., that a fraudster make statements he
knows to be false or misleading. United States v. Philip Morris USA Inc., 566 F.3d 1095, 1118
(D.C. Cir. 2009) (per curiam). In pleading fraud, including under RICO, a plaintiff must satisfy
“the heightened pleading standards of Federal Rule of Civil Procedure 9(b).” Ambellu v. Re’ese
Adbarat Debre Selam Kidist Mariam, 406 F. Supp. 3d 72, 78 (D.D.C. 2019). “Relevant
circumstances of mail and wire fraud subject to this heightened standard include ‘the time, place,
and contents of [any] false representations.’” Id. (quoting Johnson v. Comput. Tech. Servs., Inc.,
670 F. Supp. 1036, 1039–40 (D.D.C. 1987)). A defendant’s knowledge of falsity, however, “may
be alleged generally.” Fed. R. Civ. P. 9(b).
The Amended Complaint does not plausibly allege fraud within the contours of Rule 9(b).
To the extent that it states “the time, place, and contents” of the defendants’ alleged
misrepresentations, it pleads no facts suggesting that the defendants knew those representations
were false when they made them. In particular, the Amended Complaint says that, when Pfizer
25
and ACS enrolled in the Medicare program and when they submitted bills for payment to Medicare
contractors, they falsely certified their compliance with “state [and] federal bribery [and] anti-
kickback statute[s].” Amend. Compl. ¶ 19; see, e.g., id. ¶¶ 20, 83, 91. But it pleads no facts so
much as hinting that either Pfizer or ACS thought that their collaboration with PANF violated the
law at those times. Indeed, much of the Amended Complaint suggests the opposite. According to
Exhibit AA to the Amended Complaint, Pfizer sued in 2020 to vindicate its position that it could
lawfully donate to entities like PANF. Dkt. 79 at 526–52. And according to the Amended
Complaint itself, the defendants operated under several advisory opinions from the U.S.
Department of Health and Human Services confirming that their conduct was lawful. Amend.
Compl. ¶¶ 124, 132, 153. That does not look like intentional fraud.
Meanwhile, although the Amended Complaint says that the defendants lied to the
Department to obtain its advisory opinions, it does not identify the “content” of those lies and thus
fails to plead fraud with particularity. Ambellu, 406 F. Supp. 3d at 78; see Amend. Compl. ¶¶ 123–
24, 153. To obtain its first advisory opinion in 2005, PANF certified (among other things) that
“[n]o drug manufacturer or donor exer[ted] any direct or indirect influence over” it, that it acted
“in a truly independent manner,” that it “provide[d] assistance based on a reasonable, verifiable,
and uniform measure of financial need,” and that it did not provide data to drug manufacturers
“that would allow the manufacturer to substantiate the amount of its donations with the number of
subsidized prescriptions for its products.” Amend. Compl. ¶ 116. To obtain subsequent advisory
opinions, it sang a similar tune. See, e.g., id. ¶¶ 150–54. Although the plaintiffs allege generally
that those certifications were false, they do not explain which ones were false or why.11 See, e.g.,
11
In addition, the Amended Complaint alleges that the defendants’ unlawful scheme began in
2009. Amend. Compl. ¶ 202. If that is true, it is far from obvious how PANF could have made
knowingly false statements to the Department about the scheme in 2005, before that date.
26
id. ¶ 124 (“To obtain [its] favorable Advisory Opinion, PANF falsely certified that it was, and will,
adhere to [the Department’s] requirements.”); id. ¶ 154 (alleging that PANF “misled” the
Department by certifying “that it was complying with” these requirements). As a result, they fall
short of what Rule 9(b) requires. Cf. Ambellu, 406 F. Supp. 3d at 78; Sandza v. Barclays Bank
PLC, 151 F. Supp. 3d 94, 109 (D.D.C. 2015) (dismissing RICO fraud claims for failure to state a
claim when plaintiff’s “description of the basic content of [the defendant’s] alleged fraud [was]
frustratingly opaque”); Humana, 666 F. Supp. 3d at 155–60.
Although the Amended Complaint pleads that the defendants knew that some of their
statements were false, see, e.g., id. ¶¶ 17, 60, 294, that is not enough. Without “some facts to
support” claims of knowledge, the complaint “‘stops short of the line between possibility and
plausibility of entitlement to relief.’” Ambellu, 406 F. Supp. 3d at 80 (quoting Ashcroft, 556 U.S.
at 678). For similar reasons, it does not matter that fraudulent intent is typically a question of fact
that can be inferred from surrounding circumstances or from a defendant’s modus operandi. Philip
Morris, 566 F.3d at 1118; United States v. Sum of $70,990,605, 4 F. Supp. 3d 189, 202 (D.D.C.
2014). Even granting the premise, the Amended Complaint does not plead enough facts to suggest
that the defendants possessed an intent to defraud.
More promisingly, the Amended Complaint does allege that PANF provided Pfizer with
data and “information . . . to enable it to conduct ROI calculations.” Amend. Compl. ¶¶ 17.
Connecting the dots, that evidence might suggest that PANF could not have truthfully told the
Department that it did not provide drug data to Pfizer that allowed it “to substantiate the amount
of its donations with the number of subsidized prescriptions for its products.” Id. ¶ 116. But that
theory faces several problems, even assuming that the Amended Complaint pleads a degree of
coordination with adequate clarity. For one, the Amended Complaint does not support the
27
assumption that the “ROI calculations” Pfizer conducted “substantiated the amount of [Pfizer’s]
donations with the number of subsidized prescriptions for its products.” Id. ¶¶ 17, 116. For
another, it does not say whether PANF provided Pfizer its data in a manner that undermined its
earlier representations to the Department.
The plaintiffs’ remaining arguments fare no better. The Amended Complaint alleges that
by 2016 Pfizer knew that PANF used Pfizer’s money to cover copayments for Pfizer’s drugs and
that it “used [PANF] as a conduit.” Amend. Compl. ¶¶ 181–82. But the plaintiffs fail to explain
why that knowledge rendered specific representations by Pfizer false or fraudulent. The Amended
Complaint also alleges that, as part of a settlement between PANF and the Department, the
Department agreed that it would not “rescind or terminate” one of PANF’s advisory opinions—an
action the Department could take “only where relevant and material facts were not fully,
completely, and accurately disclosed to” it. Id. ¶ 191 & n.49; 42 C.F.R. § 1008.45(a)(1). But it
does not allege that the Department ever seriously contemplated recission, much less that it ever
would have had a factual basis for doing so.
* * *
For these two, independent reasons—the named assignors’ status as indirect purchasers and
the Amended Complaint’s failure to plausibly allege acts of racketeering activity—the Court will
dismiss the plaintiffs’ RICO claims for failure to state a claim. In doing so, the Court joins at least
three other district courts that have dismissed similar claims by MSP plaintiffs under Federal Rule
of Civil Procedure 12(b)(6). See Lundbeck, 664 F. Supp. 3d at 651–52, 657–58; United
Therapeutics, 2024 WL 1256266, at *5–8; MSP Recovery Claims, Series LLC v. Caring Voice
Coal., Inc., No. 21-21317, 2022 WL 3155035, at *9–12 (S.D. Fla. July 21, 2022), report &
recommendation adopted, 2022 WL 4448256 (S.D. Fla. Sept. 23, 2022).
28
Because the Court will dismiss the plaintiffs’ Amended Complaint for the reasons outlined
above, it need not consider the defendants’ remaining arguments for dismissing the plaintiffs’
RICO claims, including their argument that the applicable statutes of limitations bar them. It will
also deny the defendants’ motion to strike certain allegations from the plaintiffs’ Amended
Complaint as moot.
Finally, the Court will defer ruling on whether the plaintiffs may file a third Amended
Complaint. The Court recognizes that it did not reach the merits of the plaintiffs’ claims in its prior
opinion granting the defendants’ motions to dismiss, see Dkt. 67, and that the plaintiffs could cure
some of the deficiencies outlined in this opinion, see, e.g., Firestone v. Firestone, 76 F.3d 1205,
1209 (D.C. Cir. 1996) (per curiam) (“[L]eave to amend is almost always allowed to cure
deficiencies in pleading fraud.”) (cleaned up). Still, “this is far from [the plaintiffs’] first rodeo.”
AIG Prop. Cas. Co., 2021 WL 1164091, at *15 (denying leave to amend). The plaintiffs have
“brought many of these cases across the country” and have “already amended [their] complaint
against these [d]efendants once.” Id. In addition, the defendants’ voluminous memoranda in
support of their first round of motions to dismiss gave “notice from the outset” that the issues
considered in this opinion—including the indirect purchaser rule and the circumstances
surrounding the defendants’ alleged bribery and fraud—“would be front and center” in future
litigation. MAO-MSO Recovery II, LLC v. State Farm Mut. Auto. Ins. Co., 935 F.3d 573, 582 (7th
Cir. 2019) (affirming denial of leave to amend). The Court is thus skeptical that the plaintiffs can
overcome the pleading deficiencies identified here and by multiple other courts. Should the
plaintiffs seek leave to amend their complaint for a third time, the Court will carefully scrutinize
whether any such attempt would be futile, see Fed. R. Civ. P. 15(a).
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CONCLUSION
For these reasons, the Court will dismiss the plaintiffs’ claims under state law and on behalf
of their unnamed assignors for lack of jurisdiction under Federal Rule of Civil Procedure 12(b)(1).
It will dismiss the plaintiffs’ RICO claims for failure to state a claim under Federal Rule of Civil
Procedure 12(b)(6) and will deny the defendants’ motions to strike as moot. A separate order
accompanies this memorandum opinion.
________________________
March 30, 2024 DABNEY L. FRIEDRICH
United States District Judge
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