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Appellate Court Affirms Dismissal Of Federal Action Against The State Of Vermont

CONTACT: Bridget Asay, Assistant Attorney General, (802) 828-5500

February 15, 2012

Vermont Attorney General William H. Sorrell announced today that the Second Circuit Court of Appeals has rejected an effort by McGRX, Inc. to have claims against the State of Vermont reinstated in federal court. McGRX, Inc., a pharmacy operator doing business as McGregor’s Medicine on Time, sought to challenge certain Medicaid prescription drug regulations promulgated by the Department of Vermont Health Access. The company filed a federal lawsuit in January 2010. The federal district court in Vermont dismissed the case and the company appealed that decision to the Second Circuit Court of Appeals in Manhattan. The appeal was heard last week. In a short order issued today, the Court of Appeals affirmed the dismissal of the claims.

The State of Vermont has a Medicaid and consumer fraud action pending against McGRX, Inc. in Washington Superior Court. In its order, the Court of Appeals held that McGRX, Inc. could assert its claims in that state-court proceeding, and denied the request to have the claims tried in federal court. According to the Court of Appeals, the “Vermont state court is more than capable” of addressing the federal claims. The Court of Appeals also recognized that the State’s lawsuit implicates important state interests, including remedying alleged consumer fraud and protecting “the financial integrity” of Vermont’s Medicaid program.

The appeal was briefed and argued by Assistant Attorney General Bridget Asay.

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