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Exhibit 0
Case: 4:18-cv-01005 Doc. #: 1-15 Filed: 06/20/18 Page: 2 of 8 PageID #: 112
BSF
BO IES
SCHILLER
FLEX NER
Adam Fuemmeler
Litigation Counsel
Express Scripts
One Express Way
St. Louis, MO 63121
CZ Services
As has come to be the pattern in our correspondence with ESI, ESI's latest letter
begins with the allegation that CZ Services is a mail-order pharmacy. It ignores all of the
facts provided over the last year of correspondence and, instead, sets forth a host of new
erroneous factual allegations. ESI then ends by notifying CZ Services that ESI is
terminating CZ Services' contract without cause. This purported termination is the
ultimate confirmation of ESI's pretextual intent to terminate what it perceives to be a
competitive threat to ESl's captive mail-order pharmacy.
In the last year of responding to repeated ESI requests, CZ Services has been
nothing but forthcoming- answering every question and request-to no avail. As I said
in my last letter, it is apparent that ESI is simply choosing not to listen. In response to
our request to meet and confer pursuant to paragraph . of the contract, ESI waited 21
days and then sent a long list of documents it wanted CZ Services to produce "in order to
engage in the meet and confer process," with a 5-day deadline to comply. CZ Services
responded and provided the information ESI sought, but no meet and confer ever
happened. ESI' s next action was the termination letter.
BSF
Adam Fuemmeler
April 25, 2018
Page2
ESI's letter goes on to erroneously conclude (as ESI has done over and over) that,
because patients outside of California use the pharmacy, that CZ Services must be
mailing prescriptions. As we have discussed before, the pharmacy partners with the
CareZone health management service, which provides an app that assists in managing
health care for chronically ill individuals, many of whom are on Medicare and/or
Medicaid. Those patients appoint the health-management company to facilitate filling
and delivery of their prescriptions through a different entity, which acts as the patients'
agent. The service partners with a number of pharmacies, not just CZ Services.
ESI next sites a number of facts it wrongly believes supports a conclusion that the
pharmacy is mailing:
"The same person, J onathan Schwa rtz, owns, controls and/o r is the CEO of
Provider, Carezone, Inc. and Parliament." Jonathan Schwartz is the CEO of CareZone
Inc., a technology company that is owned by a number of investors, including Mark
Benioff, McKesson, a former Obama cabinet member, a sovereign wealth fund and
several venture capital firms. Parliament Delivery is a wholly owned subsidiary of
CareZone (and is not managed by Mr. Schwartz). Mr. Schwartz is also the owner of CZ
Services. Common ownership/management does not automatically tum separate
companies into the same company. Elon Musk is the CEO of Tesla and SpaceX; Jack
Dorsey is the CEO of Twitter and Square. We presume that several of ESI's many
subsidiaries and affiliates share an ownership structure-for example, we would be
curious to know whether Express Scripts Mail Pharmacy Service, Inc., shares any
common ownership with Express Scripts Holding Company. Under settled law, the
existence of shared ownership does not alone merge the companies into one. CZ Services
and CareZone are separate companies.
"The website and physical signage of Provider use the same trademarked owl
logo and wordmark as the website and app of Carezone, Inc." Shared branding does
not defeat corporate separateness. Many companies and franchises license branding from
a different company. For example, McKesson's Health Mart network unifies independent
pharmacies under one brand and touts the advantage of using the Health Mart brand. Two
independent pharmacies that use the Health Mart brand are not related simply by
Case: 4:18-cv-01005 Doc. #: 1-15 Filed: 06/20/18 Page: 4 of 8 PageID #: 114
BSF
Adam Fuemmeler
April 25, 2018
Page 3
licensing the same brand collateral, just as two companies using CareZone branding do
not automatically become related by doing so.
"CareZone Inc. filed an application with the U.S. Patent and Trademark
Office on December 11, 2017 that lists 'pharmaceutical services, namely, process
prescription orders in retail pharmacies' among its services." Again, CareZone
licenses its branding to partner pharmacies. CareZone owns its trademarks and is entitled
to protect them as they relate to any services it markets to consumers. CareZone markets
pharmacy assistance service, whereby it facilitates selection of retail pharmacies to
consumers. CareZone itself is not required to be a pharmacy in order to market these
services.
BSF
Adam Fuemmeler
April 25, 2018
Page4
ESI lists seven individuals who have listed on Linkedln or Facebook that they
work for CareZone.com. CZ Services does not control what people list on social media
platforms. As previously stated, a number of pharmacies work under the CareZone brand.
Four of the individuals listed work for CZ Services in Richmond, California, but the
remaining individuals appear to be associated with other pharmacies. While CZ Services
cannot speak for its employees, we can make an educated guess that the employees
simply mistakenly selected the wrong entity.
While ESI dedicates 4 pages of its letter to new allegations in a last-ditch effort to
claim that CZ Services is mailing, none of the facts set forth establish that conclusion.
ESI' s behavior has repeatedly made it clear that it made a decision a year ago that CZ
Services was mailing and it is unwilling to listen to the facts that prove that this
conclusion is wrong.
ESI cites Section • of the Provider Manual that requires that providers notify
ESI of a change of ownership. ESI notes that the pharmacy was originally owned by
Walter Smith and Jonathan Schwartz, and that by early 2016, Mr. Smith no longer held
an ownership share. Under California law, the Board of Pharmacy does not consider the
resignation of a co-owner of a pharmacy to be an ownership change. The pharmacy did
not notify ESI of a change because under the law that applies to it, there was no change.
ESI claims that the pharmacy failed to notify it of PIC changes. That is patently
false . The pharmacy is in contract with ESI both directly and through Access Health.
Access Health instructed the pharmacy that PIC changes should be communicated to ESI
through it. Notice of every PIC change was submitted in writing to Beth Miller, the
pharmacy' s account representative at McKesson/Access Health, who confirmed that the
information had been submitted. If ESI never received those notices, the failure is
between ESI and Access Health.
Prior to his current position, Mr. Schwartz was the CEO of Sun Microsystems. In
addition, he sits on the boards of several publicly traded companies. It is a common
reality that public company officers and directors routinely are named in securities
lawsuits arising out of mergers and acquisitions. ESI is certainly familiar with this, given
that Mr. Wentworth has himself been named in many such lawsuits.
Case: 4:18-cv-01005 Doc. #: 1-15 Filed: 06/20/18 Page: 6 of 8 PageID #: 116
BSF
Adam Fuemmeler
April 25, 2018
Page 5
In Mr. Schwartz's case, he was the subject of a lawsuit that sought to stop the
acquisition of Sun Microsystems by Oracle. He was also named as a board member in a
lawsuit brought over an acquisition by Silver Spring Networks. None of these lawsuits
involved causes of action for fraud, deception or an offense involving moral turpitude. To
make that allegation is both offensive and false.
ESI sets forth a number of pharmacies and claims they are owned by Mr.
Schwartz. Again, this is simply untrue. Mr. Schwartz does not own any of the pharmacies
listed.
Finally, ESI claims that CZ Services failed to submit "certain documentation and
information needed to demonstrate Provider's compliance with programs, processes,
protocols, policies and procedures, including proof that Provider dispensed prescriptions
to patients or verifiable agents of patients and any agreements with related companies,
pharmacies or prescription delivery services." CZ Services believes it provided
everything requested in the last letter. If there is something else that ESI wants, please
specifically identify it.
It is worth reiterating that in addition to the year-long letter writing campaign, ESI
has audited the pharmacy five times. As part of those audits, CZ Services has produced
everything that has been requested by ESI, including signature logs. Coincidentally, ESI
is currently auditing the pharmacy and is refusing to accept signature logs (in violation of
California Business & Professions Code Section 4436(d)). The auditor has also taken the
extreme position of refusing to accept signed patient attestations confirming they
received their medications. Consistent with ESI' s pattern of pretext, ESI seems
determined to refuse to listen to facts as it marches on its quest to terminate yet another
independent pharmacy.
After spending seven pages making all of the above arguments and after a year's
worth of correspondence trying to establish a reason for termination, ESI concludes the
letter by saying that it is terminating the contract for no reason.
Case: 4:18-cv-01005 Doc. #: 1-15 Filed: 06/20/18 Page: 7 of 8 PageID #: 117
BSF
Adam Fuemmeler
April 25, 2018
Page6
The sole new allegation against CareZone Pharmacy is that it is operating without
the requisite licenses. This, too, is false. CareZone Pharmacy dispenses prescriptions
solely in Tennessee, where it is licensed and in good standing. The pharmacy is not
required to be licensed in any other state because it is not filling prescriptions in those
states. For the sole purpose of patient counseling, CareZone Pharmacy has applied for
non-resident licenses in all 50 states and, to date, has received 47 licenses. That being
said, none of those non-resident licenses are required for prescriptions dispensed in the
state of Tennessee to a patient's agent.
We have been open with ESI that our business model is novel. In the past, ESI has
contracted with other companies that also employ novel business models, like Pill Pack.
When we have asked that ESI give us the same consideration, ESI has refused to even
have a conversation. The only logical reason for ESI's actions is that it would prefer to
put a pharmacy that it perceives to be competitive with ESI's own captive mail -order
pharmacy out of business and attempt to steer those customers to ESI's own pharmacy, as
evidenced by ESI' s termination of CareZone Pharmacy without even one prior discussion.
Our request remains that we meet to discuss the pharmacies' model and how, like
Pill Pack, they offer unique benefits to very ill individuals. As we have established, the
pharmacies serve a sensitive polychronic audience, half of whom are on Medicare and/or
Medicaid. The services they offer are unique in improving health outcomes and cannot be
easily replaced.
Given ESI's massive market share, terminating a pharmacy from ESI's network
effectively puts that pharmacy out of business. We urge you to reconsider your position.
If ESI insists on putting CZ Services and CareZone Pharmacy out of business, we will
have no choice but to pursue all available legal remedies to protect our patients' interests.
Case: 4:18-cv-01005 Doc. #: 1-15 Filed: 06/20/18 Page: 8 of 8 PageID #: 118
BSF
Adam Fuemmeler
April 25, 2018
Page 7
In addition to taking actions to remedy ESI's anticompetitive behavior, we may also need
to reach out to the Center for Medicare and Medicaid Services ("CMS") regarding ESI's
and potentially others' violation of laws, including the Federal "Any Willing Provider"
law (which applies to ESI and its insurer clients). We also expect that the thousands of
ESI patients who use CareZone' s pharmacy-assistance services, along with the millions
of people who use the app, will want to know about ESI's anticompetitive behavior, and
may also wish to express their opinions to their legislators, regulators, insurers, and
employers.
As we've said all along, we would prefer to operate in the spirit of collaboration
and transparency but, to date, ESI has exhibited no interest in doing so. We again ask that
ESI be open to having a dialogue, rather than having both of us spend resources engaging
in a public debate.
Sincerely,
William A. Isaacson