Case: 4:18-cv-01005 Doc.

#: 1-9 Filed: 06/20/18 Page: 1 of 5 PageID #: 64

Exhibit I
 Case: 4:18-cv-01005 Doc. #: 1-9 Filed: 06/20/18 Page: 2 of 5 PageID #: 65

January 29, 2018

Sent via Email to SLee@BSFLLP.com

William A. Isaacson, Esq.

Boies Schiller Flexner LLP
1401 New York Avenue NW
Washington, DC 20005

Re: Final Demand - Notice of Breach and Cease & Desist to CZ Services, Inc. d/b/a
CareZone Pharmacy, NCPDP 5654137 ("Provider")

Dear Mr. Isaacson,

This correspondence is in follow up to our conversation on October 25, 2017, as well as my previous
letters dated June 30, 2017 and September 20, 2017. Following our discussion, Express Scripts, Inc.
("ESI'') has had the opportunity to further review the applicable contractual language and laws as
they relate to the relationship between Provider, Parliament Delivery, LLC ("Parliament"), and ESI
members. Ultimately, ESI remains unconvinced that Provider's arrangement with Parliament is
permitted by law or the Express Scripts, Inc. Pha1·macy Provider Agreement, inc]uding the Express
Scripts, Inc. Network Provider Manual (collectively, the "Agreement"). Therefore, please consider
this letter Provider's final notice of breach, and ESl's demand fo1· Provider to cease and desist its
mail order/delivery practices with respect to ESI members.

Acting in Bad Faith and Undermining the Agreement

Provider is acting in bad faith and with the intent to undermine ESI's contractual rights under the
Agreement. Simply put, Provider is attempting to circumvent compliance with its contractual
obligations to ESI by utilizing another entity to do what Provider cannot do directly - engage in mail
order to ESI members. Parliament exists solely to provide delivery services (and, seemingly, solely to
deliver Provider's medications). Parliament delivers an ovetwhelming majority of Provider's claims
for ESI members. Provider and Parliament are located in extremely close proximity to one another
(less than a minute drive), have shared management/leadership; 1 and regardless of how many
entity/corporate layers exist between or among the two entities, there is obviously an affiliation
between them. Clearly, the arrangement between Provider and Parliament is for one purpose: to

1
In Califomia 's Secreta1y of State filings, Jonathan Schwartz is listed as the Chief Executive Officer ("CEO") for
Parliament, and he is listed as the CEO, Secretary, and Chief Financial Officer for CZ Services, Inc.
Confidential lnformliltlon

Express Scripts, Inc. One Express Way St. Louis, MO 63121 {888)571-8182
4082523,vl
 Case: 4:18-cv-01005 Doc. #: 1-9 Filed: 06/20/18 Page: 3 of 5 PageID #: 66

engage in mail order delivery by exploiting what Provider perceives to be a loophole in the
Agreement. ESI cannot and will not tolerate Provider's bad faith in this regard.

Breach of Contract

Not only is Provider intentionally undermining the spirit of the Agreement, but by utilizing a
third-party delivery service to dispense to ESI members, Provider has violated a number of express
contractual obligations Provider has under the Agreement.

Prov;der Does Not Meet the DefinWon of Retail Provider

First, Provider is acting as a mail order pharmacy, as opposed to a retail pharmacy. This
violates Section. of the Network Provider Manual, which states,

_ Accordingly,
being a retail pharmacy is a standard term and condition for participation in Express Scripts' retail
network(s). As Provider, through Parliament, delivers (mails) 99% ESI member prescriptions, it
does not primarily fill and sell via storefront location,2 and does not meet the definition of a Retail
Provider.

Further, of the Network Provider Manual states:

By utilizing a third-party delivery service to deliver prescriptions to ESI members that should be
dispensed by Provider in-person to ESI members, Provider has, effectively, engaged another entity to
carry out a portion of the services for which ESI has contracted with Provider to provide, namely, the
safe dispensing of prescriptions to ESI members. ESI did not (and does not) consent to Provider's
utilization of any such service. Once again, it is ESI's expectation and Provider's contractual
obligation to location.
See Section . of the Provider Agreement.

Provider is Jeopardizing Patient Safety

Second, serious patient safety concerns are raised by Provider's pharmacy practice. Per the

To the extent Parliament - a corporate entity - can act as the

2
As it relates to ESI members, Provider cannot credibly claim to be open to the general public, when essentially the
sole "public" ESI "customers" are delive1y representatives from a single delivery company.
Co11ficlential lnformEltion

Express Scripts, Inc. One Express Way St. Louis, MO 63121 (888)571-8182
4082523.vl
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patients' "agent" (and ESI does not agree that it can), Provider dispenses prescl'iption drugs to this
entity with knowledge that these dl'Ugs will be transported by Parliament out-of~state to plan
members. Among other problems, this practice poses a danger to patient safety due to the risk of drug
adulteration and diversion. Provider cannot simply ignore patient safety considerations by inferring
that ESI has failed to specifically prohibit a practice (a position with which ESI disagrees) or that
Provider's responsibility to patients ends once Parliament is in possession of the drngs, particularly
as Parliament is not a pharmacy provider. In California, pharmacist unprofessional conduct includes
acts or omissions that involve, in whole or in part, the failure to exercise or implement his or her best
professional judgment or corresponding responsibility with regard to the dispensing or furnishing of
controlled substances, dangerous drugs, or dangerous devices, or with regard to the provision of
services. Cal. Bus. & Prof. Code § 430q.5(b). Accordingly, by failing to ensure 3 that the drugs
delivered by Parliament to patients are safe and intact, Provider is engaging in unprofessional
conduct pursuant to California law.

Provider is Violating State and Federal L(lW

In addition, ESI has just cause to believe Provider is violating applicable state and federal controlled
substances laws through its arrangement with Parliament. Provider's ESI claims data reveals that it is
dispensing and delivering controlled substances to ESI members through Parliament. Under
California law, a dangerous drug may not be transferred, sold, or delivered to a person outside the
state, unless the transferor, sellet·, or deliverer does so in compliance with applicable laws, including
the laws of the state to which the dangerous drugs are to be transferred or delivered. Cal. Bus. &
Prof. Code § 4059.S(e). There is no evidence that Provider's practice with ParJiament is lawful and
acceptable either in California or in the states in which the patients reside.

Futther, under United States Drug Enforcement Administration ("DEA") rules, only practitioners
with DEA registrations may dispense controlled substances. The term "dispense" means to deliver a
controlled substance to an ultimate user by, or pursuant to the lawful order of, a practitioner,
including the prescribing and administering of a controlled substance and the packaging, labeling or
compounding necessary to prepare the substance for such delivery. 21 U.S.C. § 802(10). The term
"ultimate user" means a person who has lawfully obtained, and who possesses, a controlled
substance for his own use or for the use of a member of his household .... " 21 U.S .C. § 802(27)
(emphasis added). Parliament does not fall within the definition of ultimate user under federal law,
yet Provider is "dispensing" controlled substances to Parliament representatives.

3
We can only presume that due to Provider's position that Parliament is an agent of the patient and acting in the
patient's stead, that once Parliament takes possession of medications, there are no further attempts by Provider to
ensure that the intended patients actually receive the medications. If, in fact, Provider does confirm the patients'
receipt of the drugs, then Provider is tacitly acknowledging that its dispensing is not complete until the drugs are in
the actual patients' possession, in which case Parliament is merely serving as a conduit for Provider's
mailing/dispensing to patients.
V Confic!e11tlal Information

Express Scripts, Inc. One Express Way St. Louis, MO 63121 {888)571 -8182
4082523.vl
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Turning again to Section . . of the Pharmacy Provider Agreement, Provider agreed to provide
pharmacy services, including the dispensing of Covered Medications
Accordingly, to the extent Provider has dispensed controlled
substances to patients via Parliament, this practice was/is unlawful and violates the Agreement.

Conclusion

The arrangement between Provider and Parliament violates not only the essence and express terms of
the Agreement, but also applicable state and federal laws. Accordingly, ESI, again, demands that
Provider refrain from any conduct that constitutes a breach of the Agreement and, specifically, that
Provider cease mailing or delivering, including, but not limited to, via Parliament or any other
affiliated or unaffiliated delivery service, to ESI members by no later than February 26 111, 20 18.

Alternatively, if Provider desires to continue with its mail order arrangement, Provider may apply to
become a mail order pharmacy provider solely for Medicare Pait D and if the pharmacy passes the
Medicare D mail order credentialing process, it will be permitted in the network to fill for Medicare
Part D claims only. Provider, however, will be terminated from participation in any other networks
for other payors. If Provider is interested in pursuing this path, the pharmacy may contact ESI's
credentialing department to request a Medicare Pat1 D mail order application.

Provider must confirm in writing no later than February 1it11 • 2018 that it will cease its activities, as
set fo1th above. In the event Provider fails to supply the requested confirmation, ESI will move
forward with immediate termination of Provider's paiticipation in ESI's provider network in
I
accordance with Section of the Provider Agreement.

If you have any further questions, you may contact me at (314) 684-5176 or via email at
SJRile @express-scripts.com.

n Riley
Assistant General Counsel
Express Scripts, Inc.

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Express Scripts, Inc. One Express Way St. Louis, MO 63121 {888)571-8182
4082523 .vl