Senderra RX Partners, LLC v. Blue Cross and Blue Shield of North Carolina ( 2022 )

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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 21-1549
SENDERRA RX PARTNERS, LLC,
Plaintiff – Appellant,
v.
BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA,
Defendant – Appellee.
Appeal from the United States District Court for the Middle District of North Carolina, at
Greensboro. Catherine C. Eagles, District Judge. (1:18-cv-00871-CCE-JEP)
Argued: May 4, 2022 Decided: June 1, 2022
Before KING, AGEE, and HEYTENS, Circuit Judges.
Affirmed by unpublished opinion. Judge Agee wrote the opinion, in which Judge King
and Judge Heytens joined.
ARGUED: Adam Pierson, DLA PIPER LLP (US), Dallas, Texas, for Appellant. Adam
Howard Charnes, KILPATRICK TOWNSEND & STOCKTON LLP, Winston-Salem,
North Carolina, for Appellee. ON BRIEF: Marc Katz, Micala Bernardo, Breegan
O’Connor, DLA PIPER LLP (US), Dallas, Texas; Paul K. Sun, Jr., Kelly Margolis Dagger,
ELLIS & WINTERS LLP, Raleigh, North Carolina, for Appellant. Chad D. Hansen,
Whitney R. Pakalka, KILPATRICK TOWNSEND & STOCKTON LLP, Winston-Salem,
North Carolina, for Appellee.
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Unpublished opinions are not binding precedent in this circuit.
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AGEE, Circuit Judge:
Senderra RX Partners, LLC (“Senderra”) appeals the district court’s grant of
summary judgment in favor of Blue Cross and Blue Shield of North Carolina (“Blue
Cross”), arguing that the district court erred when it concluded that Senderra was not
aggrieved by Blue Cross’ purported violations of the North Carolina Pharmacy of Choice
statute. Finding no error, we affirm.
I.
A.
Blue Cross is an insurer whose operations include a specialty pharmacy network
(“the Network”) in North Carolina. 1 To join the Network, prospective pharmacies must
complete both a credentialing and contracting process. Blue Cross’ website includes
instructions on the credentialing process, which requires that the pharmacy obtain, as
relevant here, a pharmacy permit issued by the North Carolina Board of Pharmacy
(“NCBOP permit”) as required under North Carolina law, see N.C. Gen. Stat. § 90-
85.21(a); 21 N.C. Admin. Code 46.1401(a), and an accreditation certificate from the
Utilization Review Accreditation Commission (“URAC accreditation”). 2 The contracting
1
Given the standard on summary judgment, we recite the facts in the light most
favorable to the non-moving party, Senderra. Garofolo v. Donald B. Heslep Assocs., Inc.,
405 F.3d 194, 198 (4th Cir. 2005).
2
“URAC is an independent body that accredits specialty pharmacies and other
healthcare entities.” J.A. 466. Blue Cross required URAC accreditation because it was
“considered the gold standard for specialty pharmacies . . . . It ensures that the specialty
pharmacy meets a rather rigorous set of standards for quality.” J.A. 509.
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process then “confirms that each specialty pharmacy applying to join the Network meets
the applicable contract requirements and secures the pharmacy’s agreement to the
contractual terms that will govern its participation in the Network.” J.A. 308. Those terms
are included in a Network Participation Agreement (“NPA”).
In 2018, Blue Cross updated the terms of the Network and, among other changes,
replaced the requirement that participating pharmacies maintain a staffed business office
in North Carolina with a requirement that there be a dispensing pharmacy location in North
Carolina (“dispensing-location term”). Blue Cross then solicited from its existing Network
members applications to join this new specialty pharmacy network. Its solicitation
specified that “pharmacies that d[id] not meet the requirements for participation in the new
specialty pharmacy network w[ould] receive [a] notice of removal” from it. J.A. 672.
Interested pharmacies had to “submit all necessary paperwork that [Blue Cross] require[d]
by [October 1] for a [January 1] entry date.” J.A. 713.
Along with this solicitation, the participating pharmacies received the updated NPA
and NPA Addendum (“Addendum”). Those materials identified the new dispensing-
location term, as well as the licensing, certification, and accreditation requirements.
Specifically, the Addendum indicated that the pharmacies “must have a dispensing location
within the state of North Carolina.” J.A. 713. The Addendum also detailed that each
pharmacy must “maintain [URAC] Specialty Pharmacy accreditation and provide proof
thereof.” J.A. 709. In addition, the NPA established that the participating pharmacies must
hold the necessary licensing and certification “under North Carolina and any other
applicable law.” J.A. 687. Finally, the NPA referenced “Policies and Procedures” that were
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listed on Blue Cross’ website, J.A. 689, which explained that each specialty pharmacy
location was required to hold an NCBOP permit and URAC accreditation, as well as the
Provider Manual, which detailed the credentialing process.
In actual application, Blue Cross permitted pharmacies to satisfy the dispensing-
location term through a corporate affiliate, 3 but did not expressly offer pharmacies this
option. Instead, “[w]hen a pharmacy communicated their intent to satisfy [the dispensing-
location term] through corporate affiliation[,] [Blue Cross] discussed with them . . . how to
go about doing that.” J.A. 1139.
B.
Senderra is a Texas-based specialty pharmacy that first applied to join the Network
in 2013. After initially submitting an insufficient application for lack of proof of an
NCBOP permit or URAC accreditation, it was admitted into the Network in 2015.
Senderra received Blue Cross’ updated Network materials on May 3, 2018,
acknowledging on May 7, 2018, that it likely “ha[d] to go through a whole new application
process to be in [Blue Cross’] new Statewide Specialty Pharmacy Network.” J.A. 374.
Senderra’s “biggest concern [was] the dispensing location within [North Carolina].” J.A.
373. Because it only had “a staffed business office” in North Carolina, id., it recognized
that the dispensing-location term “w[ould] preclude [it] from being able to qualify under
the new terms and conditions and w[ould] result in its termination from the specialty
3
Corporate affiliate agreements involve “the parent or umbrella organization . . .
contract[ing] with a payer on behalf of all of those locations or entities within its structure.”
J.A. 871.
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network,” J.A. 755. Nonetheless, Senderra “decided to apply into the network first and get
an anticipated rejection letter.” J.A. 761.
Senderra submitted its application on June 1, 2018. After Blue Cross confirmed that
Senderra only had a staffed business office in North Carolina, it sent Senderra a termination
letter dated July 11, 2018, stating that Senderra’s NPA would terminate effective October
15, 2018, for failure to “satisfy the requirements for continued participation in [the
Network].” J.A. 173.
Upon receipt of this letter, Senderra contacted Blue Cross “to inquire about . . . the
reason for termination,” J.A. 638, although it “assum[ed]” it had been terminated due to its
lack of a dispensing location in North Carolina, J.A. 639. As Blue Cross confirmed on July
26, 2018, Senderra was noticed for termination because it “did not have a dispensing
location within North Carolina.” J.A. 30.
Senderra subsequently obtained a physical dispensing location in North Carolina
and submitted a new application on September 14, 2018, stating that it had “a dispensing
pharmacy location address in [North Carolina] to fully satisfy the requirements for
participation in the new specialty network.” J.A. 183. However, the location did not possess
an NCBOP permit as required by North Carolina law. In response, on September 18, 2018,
Blue Cross informed Senderra that “[o]nce th[e] new pharmacy location [was]
credentialed, provided all other requirements [were] satisfied, the new site [would] be
included as a dispensing location on the new contract.” J.A. 195. But Senderra did not
timely obtain an NCBOP permit for that location, so its NPA was terminated effective
October 15, 2018, as originally scheduled.
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While Blue Cross terminated Senderra from the Network for failure to comply with
the dispensing-location term, Blue Cross learned during the underlying litigation that it
“inadvertently” allowed two pharmacies—Avita Pharmacy (“Avita”) and Long’s Drugs
(“Long’s”), both of which had existing permitted dispensing locations in North Carolina—
to execute new NPAs despite their dispensing locations lack of URAC accreditation. J.A.
470. As a result, Blue Cross “noticed both pharmacies for contract termination.” J.A. 255.
But when the pharmacies notified Blue Cross that “they intended to exercise their right to
cure” under the terms of the new NPA and requested an extension to do so, Blue Cross
granted the requests. 4 J.A. 529–30. In contrast, Blue Cross denied Senderra such an
extension because Senderra was fundamentally ineligible to execute the new NPA due to
its lack of a permitted dispensing location, meaning it could not invoke the right-to-cure
provision. See J.A. 534 (Blue Cross’ Rule 30(b)(6) witness explaining that Avita and
Long’s “had a North Carolina pharmacy. It was not a credentialed one. But it was a
location, a dispensing location[, so] they were allowed to contract. . . . [Whereas Senderra]
didn’t even have any [dispensing] location in North Carolina that—you know credentialed
or uncredentialed”); J.A. 1210 (relaying that Blue Cross “allowed Long’s Drugs and Avita
additional time to cure their breaches of the NPAs because . . . [they] were not at fault for
[Blue Cross] inadvertently failing to ensure they were fully credentialed before offering
4
In a similar vein, Senderra permitted AllianceRX, which also had a permitted
dispensing location in North Carolina, to execute the new NPA past the October 2018
deadline in December 2018.
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them an NPA and [Blue Cross] felt it would be unfair and inequitable to punish [them] for
[Blue Cross’] inadvertence”).
Senderra ultimately obtained an NCBOP permit for its North Carolina dispensing
location on November 5, 2018, and URAC accreditation on March 12, 2019 (both well
after the October 15, 2018, deadline). It then reapplied for admission into the Network and
executed a new NPA on March 30, 2019, with an effective date of July 1, 2019. As a result
of Senderra’s exclusion from the Network, its expert estimated a loss of $13,999,315.33 in
revenue and $232,476.57 in profits. Senderra’s expert also projected that Senderra would
incur further damages for up to five years after its readmittance.
C.
On October 15, 2018, Senderra filed suit against Blue Cross, asserting violations of
the North Carolina Pharmacy of Choice statute (“NCPOC statute”), N.C. Gen. Stat. § 58-
51-37, and Article 1 of the North Carolina Unfair and Deceptive Trade Practices Act
(“NCUDTPA”), N.C. Gen. Stat. § 75-1.1, and for breach of the NPA. After Blue Cross
informed Senderra that it inadvertently admitted Avita and Long’s into the Network,
Senderra amended its complaint to include, as relevant here, a claim of fraud. 5
Blue Cross subsequently moved to dismiss Senderra’s amended complaint, which
the district court granted in part and denied in part. At the close of discovery, Blue Cross
moved for summary judgment on the remaining claims, and the district court granted the
motion. As for Senderra’s claim under the NCPOC statute, while the court recognized that
While Senderra’s amended complaint included its original claims under the
5
NCPOC statute and the NCUDTPA, it did not raise a claim for breach of the NPA.
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“[n]o court ha[d] clearly set forth the elements of ‘a violation of this section’ or defined
when a pharmacy is ‘aggrieved by such a violation,’” the court reasoned that it was
elementary that Senderra show it was aggrieved by Blue Cross’ actions. J.A. 1575. The
court concluded that Senderra could not do so because
all the evidence show[ed] that [Blue Cross] made its terms available to
Senderra through mailings and its website, that Senderra knew [Blue Cross]
required an in-state dispensary, and that Senderra did not have an operational
in-state dispensing pharmacy when it applied to participate in the new
network in June or when the old contract expired. Thus, Senderra did not
meet a clearly communicated term required by [Blue Cross.]
J.A. 1576–77.
The court recognized that even though Senderra asserted it was unaware of Blue
Cross’ credentialing requirement until October 2018, “Senderra was not aggrieved by that
purported violation because Senderra had not met the preliminary requirement of having a
permitted in-state dispensing pharmacy.” J.A. 1577. And although Senderra challenged
Blue Cross’ failure to inform it of the option to satisfy the dispensing-location term by
corporate affiliate, the court explained that the NCPOC statute “requires [Blue Cross] to
make its terms available to interested pharmacies, not walk the pharmacy through how to
meet those terms.” Id. Finally, the court found unavailing Senderra’s argument that Blue
Cross improperly admitted Avita and Long’s despite the fact that their dispensing locations
lacked URAC accreditation, reasoning that
[t]his d[id] not matter, as Senderra did not have a permitted in-state
dispensary. Assuming [Blue Cross] violated the statute by inadvertently
offering different terms to different pharmacies, Senderra was not aggrieved
by that violation since it did not meet the basic term imposed on all
pharmacies and met by every pharmacy admitted into the network.
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J.A. 1578.
As for the fraud claim, the court found that Senderra could neither demonstrate
reasonable reliance on the purported misrepresentations nor cognizable harm from them.
Finally, the court determined that the NCUDTPA claim failed for the same reasons the
other claims failed.
Senderra timely noted an appeal, over which we have jurisdiction pursuant to 28
U.S.C. § 1291.
II.
“We review a district court’s decision to grant summary judgment de novo, applying
the same legal standards as the district court, and viewing all facts and reasonable
inferences therefrom in the light most favorable to the nonmoving party.” Carter v.
Fleming, 879 F.3d 132, 139 (4th Cir. 2018) (citation omitted). Summary judgment is
appropriate “if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
III.
As a preliminary matter, Blue Cross asserts that Senderra lacks Article III standing
because it cannot demonstrate that any injury it sustained was “fairly traceable to the
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challenged action of the defendant.” 6 Friends of the Earth, Inc. v. Laidlaw Env’t Servs.
(TOC), Inc., 528 U.S. 167, 180 (2000) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–
61 (1992)). In other words, Blue Cross avers that Senderra effectively caused its own
injury, as its failure to comply with the fundamental requirements of the dispensing-
location term—namely, to establish a permitted dispensing location in North Carolina—
led to its termination from the Network.
But Senderra alleges its injury was due to myriad circumstances fairly traceable to
Blue Cross, including, among other allegations, that Blue Cross “fail[ed] to provide
sufficient information as to the various requirements for a dispensing location,” issued
“vague, incomplete and conflicting” instructions on how to satisfy them, and enforced them
with “unequal force and manner.” J.A. 1569–70 (citation omitted). Compare with GBA
Assocs. v. Gen. Servs. Admin., 32 F.3d 898, 901 (4th Cir. 1994) (reasoning that the plaintiff
lacked standing solely due to its own shortcomings, which “br[oke] the chain of causation
and divest[ed] [it] of standing”). Senderra’s injury is therefore at least fairly traceable to
Blue Cross’ actions. See Sierra Club v. U.S. Dep’t of the Interior, 899 F.3d 260, 284 (4th
Cir. 2018) (explaining that the causation element “does not require the challenged action
to be the sole or even immediate cause of the injury”). Accordingly, we are satisfied that
Senderra meets the causation element of Article III standing to proceed with its claims
against Blue Cross.
6
Although Article III standing was not raised below, we consider it here because
we “have an independent obligation to ensure that [we] do not exceed the scope of [our]
jurisdiction.” Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 434 (2011).
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IV.
On appeal, Senderra contends that the district court erred when concluding that it
was not aggrieved by Blue Cross’ alleged violations of the NCPOC statute. While the
parties spar over the legal framework under which this argument should be housed,
invoking concepts such as statutory standing and proximate cause in the process, we find
Senderra’s core argument unpersuasive in any event. We therefore perceive no error in the
district court’s determination that Senderra was not aggrieved by Blue Cross’ actions.
Senderra alleges that Blue Cross violated three provisions of the NCPOC statute’s
subsection (c), which direct that “the terms of a health benefit plan shall not”:
(1) Prohibit or limit a resident of this State . . . from selecting a pharmacy of
his or her choice when the pharmacy has agreed to participate in the health
benefit plan according to the terms offered by the insurer;
(2) Deny a pharmacy the opportunity to participate as a contract provider
under a health benefit plan if the pharmacy agrees to provide pharmacy
services that meet the terms and requirements . . . of the insurer under a health
benefit plan . . . ; [or]
(4) Impose a monetary advantage or penalty under a health benefit plan that
would affect a beneficiary’s choice of pharmacy[.]
N.C. Gen. Stat. § 58-51-37(c)(1), (2), (4). Relevant here, “[a] violation of this section
creates a civil cause of action for damages or injunctive relief in favor of any person or
pharmacy aggrieved by the violation.” Id. § 58-51-37(h).
While the parties contest the applicability of subsection (c) of the NCPOC statute to
Senderra’s claims (with Blue Cross asserting that subsection (e) of that statute controls),
we need not resolve the issue. Assuming, without deciding, that Senderra’s claims can be
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housed under subsection (c), Senderra has failed to establish it was aggrieved by Blue
Cross’ actions. We thus address the relevant provisions of subsection (c) in turn.
A.
Senderra first argues that Blue Cross violated subsections (c)(1) and (2) of the
NCPOC statute, which can protect pharmacies that have agreed to, and comply with, the
terms required by the insurer. Senderra fails to qualify as such a pharmacy for the reasons
cited by the district court—namely, that Senderra did not satisfy the NPA’s threshold
requirement to establish a permitted dispensing location in North Carolina before the
October 2018 termination deadline.
To start, the record reflects that the materials Senderra received from Blue Cross on
May 3, 2018, enumerated that a physical dispensing location in North Carolina was
required to participate in the new Network. Senderra was expressly aware of this new term–
–in fact, it was Senderra’s “biggest concern” when it came to the new Network. J.A. 373.
Moreover, Senderra was (or should have been) aware of the permitting aspect of the
dispensing-location term as it was required by North Carolina law. See N.C. Gen. Stat. §
90-85.21(a); 21 N.C. Admin. Code 46.1401(a). Its argument to the contrary borders on
nonsensical. As a sophisticated entity, Senderra cannot claim ignorance of such a standard
state-imposed requirement, particularly when it had previously submitted an application
for admission into the Network in 2013 that was deemed insufficient for lack of an NCBOP
permit. As the district court remarked on this point, “Why would anybody who runs a
pharmacy think that [it] would suffice to have a pharmacy that couldn’t actually dispense
drugs for prescriptions?” J.A. 1543. Not to mention, the materials Senderra received from
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Blue Cross in May 2018 contained general information on holding the necessary licensing
and certification “under North Carolina and any other applicable law,” J.A. 687, and
referenced “Policies and Procedures” that were listed on Blue Cross’ website, J.A. 689,
which explained that each specialty pharmacy location was required to hold an NCBOP
permit.
Despite the clarity of these requirements, at no time prior to the October 2018
deadline did Senderra establish a permitted dispensing location in North Carolina, a fact
which it conceded during oral argument. Oral Argument at 9:54–10:05, Senderra RX
Partners, LLC v. Blue Cross & Blue Shield of N.C. (No. 21-1549) (4th Cir. May 4, 2022),
https://www.ca4.uscourts.gov/OAarchive/mp3/21-1549-20220504.mp3 (Senderra
conceding that it “did not have the in-state dispensing location requirement met by October
15 as it was ultimately required by Blue Cross”). And on this basis, Blue Cross terminated
Senderra from the Network. Because Senderra failed to comply with required components
of the dispensing-location term, it cannot claim protection under subsections (c)(1) and (2)
of the NCPOC statute as an aggrieved party as if it had complied with those provisions.
Senderra raises three primary arguments in response, none of which is persuasive.
First, it claims that the new NPA and Addendum did not clearly convey that the North
Carolina dispensing location needed to be credentialed. But this point is immaterial to
Senderra’s case because, as discussed above, it was unable to establish a permitted
dispensing location. That is to say, whether Senderra could have hypothetically met the
credentialing requirement is irrelevant, as it had yet to establish a permitted dispensing
location in North Carolina by the October deadline.
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Next, Senderra asserts that Blue Cross’ treatment of Avita, Long’s, and AllianceRX
evinces Blue Cross’ disparate conduct towards Senderra because Avita and Long’s
executed the new NPA despite their permitted dispensing locations in North Carolina lack
of URAC credentialing and were granted an extension to cure that defect, and AllianceRX
signed its new NPA after the October deadline in December 2018. But the circumstances
of these pharmacies are not analogous to those of Senderra. Avita, Long’s, and AllianceRX
all had timely permitted dispensing locations in North Carolina, a fact which Senderra
acknowledged during oral argument. Id. at 10:30–10:43 (Senderra conceding that these
three pharmacies “had an actual physical location” in North Carolina “that could dispense
drugs,” and that Senderra did not). In other words, no pharmacy was admitted to the
Network without a permitted dispensing location, which Senderra undeniably lacked. So,
while Senderra makes much of Blue Cross’ treatment of Avita, Long’s, and AllianceRX,
their respective positions were fundamentally distinguishable from that of Senderra.
Lastly, Senderra argues that Blue Cross should have made it aware that relying on
a corporate affiliate was an acceptable alternative mode of fulfilling the dispensing-location
term. But the record establishes that Blue Cross did not offer this option to any pharmacy.
J.A. 1139 (explaining that Blue Cross “did not proactively raise . . . ways to satisfy the
requirement with any pharmacy”). Rather, “[w]hen a pharmacy communicated their intent
to satisfy [the dispensing-location term] through corporate affiliation[,] [Blue Cross]
discussed with them . . . how to go about doing that.” Id. Quite simply, Senderra did not
ask Blue Cross about this option, so Blue Cross did not explain how to utilize it. Senderra
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was therefore on equal footing with the other specialty pharmacies, as it should have
inquired about this option if it intended to rely on it.
To obtain the protection of subsection (c)(1) or (2), Senderra had to comply with
“the terms offered by the insurer” and “meet the terms and requirements . . . of the insurer.”
N.C. Gen. Stat. § 58-51-37(c)(1)–(2). Having failed to demonstrate that it complied with
the insurer’s fundamental condition precedent of the dispensing-location term, Senderra
cannot make a claim under subsections (c)(1) and (2) of the NCPOC statute.
B.
Next, Senderra claims that Blue Cross violated subsection (c)(4) of the NCPOC
statute, which directs that the terms of a health benefit plan shall not “[i]mpose a monetary
advantage or penalty . . . that would affect a beneficiary’s choice of pharmacy.” Id. § 58-
51-37(c)(4). Specifically, Senderra argues that Blue Cross effectively granted certain
pharmacies a monetary advantage when it permitted them to remain in the new Network
despite their lack of credentialing (Avita and Long’s) or a timely executed NPA
(AllianceRX). For the reasons explained by the district court, Senderra’s claim on this point
fails as well.
At bottom, Senderra does not fall within the class of claimants this provision
protects. The examples of “monetary advantage or penalty” cited in subsection (c)(4) make
clear that it protects pharmacies within the Network. Said another way, “higher copayment,
a reduction for reimbursement for services, or promotion of one pharmacy over another”
are all advantages or penalties that only participating pharmacies would face. Id. But unlike
Avita, Long’s, and AllianceRX, Senderra was not a participating pharmacy in the new
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Network due to its termination for failure to establish a permitted dispensing location.
Therefore, it fails to qualify within the class protected by this subsection, meaning it cannot
claim it was aggrieved by Blue Cross’ conduct.
V.
Finally, Senderra contests the district court’s grant of summary judgment in favor
of Blue Cross on its fraud and alleged NCUDTPA violation. Assuming arguendo that Blue
Cross engaged in misrepresenting or concealing the credentialing component of the
dispensing-location term, Senderra cannot demonstrate that this conduct caused its injury.
Ragsdale v. Kennedy, 209 S.E.2d 494, 500 (N.C. 1974) (enumerating the elements to
establish a claim for fraud). 7 As discussed above, Blue Cross terminated Senderra from the
Network for failure to establish a permitted dispensing location in North Carolina, meaning
Senderra’s exclusion was unrelated to Blue Cross’ representation of the credentialing
component. Accordingly, the district court properly granted summary judgment in favor of
Blue Cross on Senderra’s fraud claim. And because Senderra recognizes that its alleged
NCUDTPA violation rises and falls with its other claims, we likewise conclude that
summary judgment was proper as to that claim.
VI.
For the reasons discussed above, the judgment of the district court is
7
Because we sit in diversity in this case, North Carolina law applies. S. Power Co.
v. Cleveland Cnty., 24 F.4th 258, 262 (4th Cir. 2022).
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AFFIRMED.
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