United States District Court for the District of Columbia
March 22, 2004.
IN RE LORAZEPAM & CLORAZEPATE ANTITRUST LITIGATION, This Order applies to:HEALTH CARE SERVICE CORPORATION, et al., Plaintiffs
MYLAN LABORATORIES, INC., et al., Defendants
The opinion of the court was delivered by: THOMAS HOGAN, Chief Judge, District
Pending before the Court is Defendants' Motion for Clarification and/or
Reconsideration Regarding Out-of-State Damages ("Motion"). For the
reasons stated below, the motion will be granted in part and denied in
Defendants request that the Court reexamine a portion (pp. 27-31) of
its October 17, 2003 Memorandum Opinion [# 447] and clarify whether,
under the Court's ruling, Health Care Services Corporation ("HCSC") must
show that each and every Texas or New Mexico. sale for which it seeks
damages involved some actual conduct that "occurred at least in part in
slip op. 31, or whether it is sufficient for HCSC to allege that it
suffered some "ultimate financial" injury in Illinois, id.,
from conduct that occurred entirely outside of the state, Defendants
argue that the Commerce Clause precludes application of a state economic
regulatory statute to commerce that takes place wholly outside of the
State's border, whether or not the commerce has effects within the state.
Motion at 5-6 (quoting Healy v. Beer Institute, 491 U.S. 324,
336 (1989) ("[A] statute that directly controls commerce occurring wholly
outside the boundaries of a State exceeds the inherent limits of the
enacting State's authority and is invalid regardless of whether the
statute's extraterritorial reach was intended by the legislature."))
For the oral argument on February 4, 2004, me Court ordered that the
parties focus their arguments on at least the following issues:
(1) The timing of HCSC's acquisition of its Texas and New Mexico
divisions, and whether HCSC purchased any rights and liabilities
which allow it to bring a cause of action for relevant time periods
before HCSC acquired those two divisions.
(2) Whether HCSC can show that any pertinent sales occurred in Illinois
and, in conjunction with the fact mat HCSC is incorporated in Illinois,
whether such a showing (or lack thereof) permits Illinois law to regulate
activities that occurred outside of Illinois.
Counsel for Plaintiff HCSC [hereinafter "counsel"] confirmed that HCSC
merged with Blue Cross Blue Shield ("BCBS") of Texas effective January 1,
1999, see Tr. of Feb. 4, 2004 Hrg. at 19:9-12, and BCBS of New
Mexico. "roughly around My of 2001." Id. at 19:15,
Counsel further stated that HCSC is "not seeking to recover for any
premerger or preacquisition conduct." Id. at 20:3-5. As to the
length of time in which the damages occurred, counsel noted that
we have pled damages going from 1998 through the
present, because we believe that those effects
from that conduct continued on through the
The price increases for these drugs . . .
were in the 3,000 to 9,000 percent range.
And those effects just don't end
overnight. . . . there was an effect on the
market . . . other players in the market raised
their prices as well And, of course, they didn't
immediately reduce their prices at the end of
[Defendants'] exclusive agreement.
Id. at 18:15-19:5.
In arguing that Healy is inapplicable to the case at hand,
counsel stated that
HCSC is specifically not seeking subrogation or
seeking to recover the monies paid by its
individual members. What HCSC is doing, very
simply, is simply attempting to recover the monies
it overpaid in Illinois for its prescription drag
costs related to lorazepam and clorazepate during
the relevant time period here.
Tr. of Feb. 4, 2004 Hrg. at 28:1-7. Counsel was very clear in
representing to the Court that HCSC, which is headquartered in Illinois,
was paying the pharmacy benefit manager bills for lorazepam and
clorazepate prescriptions filled in its Texas and New Mexico. divisions.
See generally id. at 29-33. Crucially., "HCSC is not seeking to
recover on behalf of its members here. It is only seeking to recover the
money it paid in Illinois." Id. at 33. Put simply, "HCSC is seeking to
recover, under Illinois law, for damages it sustained in Illinois [from]
overpayments made in Illinois. . . ." Id. at 19:20-23. Such
damages are distinct from the slight nexus of mere "effects within the
State" precluded by Healy.
The above representations by counsel coincide with the Court's previous
understanding of the claims pled by HCSC in its Second Amended Complaint.
HCSC has averred that (1) its Illinois headquarters paid for sales that
occurred in Texas and New Mexico. (after deductions for co-payments), (2)
that it was directly damaged in Illinois., and (3) that by making the
payments from its headquarters in Illinois, the transactions in question
did not "wholly occur" in other States in violation of the Commerce
Clause. These representations by HCSC should guide the parties in
As this Memorandum Opinion serves to farther clarify the Court's
Memorandum Opinion of October 17, 2003, Defendants' Motion is granted in
part. Concomitantly, since the Commerce Clause does not prohibit HCSC's
attempt to seek damages under Illinois law in this case, Defendants'
Motion will denied in part.
For the reasons stated above, the Court will grant in part and deny in
part Defendants' Motion for Clarification and/or Reconsideration
Regarding Out-of-State Damages, An appropriate Order will accompany this
For the reasons stated in the accompanying Memorandum Opinion, it is
hereby ORDERED that Defendants' Motion for Clarification and/or
Reconsideration Regarding Out-of-State Damages*fn1 is GRANTED IN
PART and DENTED IN PART.