MedImpact Healthcare Systems, Inc v. State of Louisiana, Division of Administration, Jay Dardenne, in his official capacity as Commissioner of Division of Administration, State of Louisiana, Office of Group Benefits, State of Louisiana, Office of State Procurement

STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT

2021 CA 1367

qyo MEDIMPACT HEALTHCARE SYSTEMS, INC.

VERSUS

STATE OF LOUISIANA, DIVISION OF ADMINISTRATION, JAY
DARDENNE, IN HIS OFFICIAL CAPACITY AS COMMISSIONER OF
DIVISION OF ADMINISTRATION, STATE OF LOUISIANA, OFFICE OF
1
Cj% GROUP BENEFITS, STATE OF LOUISIANA, OFFICE OF STATE
PROCUREMENT

Judgment Rendered: JUN 032022

Appealed from the
19th Judicial District Court
In and for the Parish of East Baton Rouge
State of Louisiana
Docket Number 705290

Honorable Donald R. Johnson, Judge Presiding

J. Wendell Clark Counsel for Defendant/Appellant
Mark L. Barbre State of Louisiana, Office of Group
Baton Rouge, LA Benefits

Sean T. Porter Counsel for Defendant/Appellant
Baton Rouge, LA State of Louisiana, Division of
Administration and Jay Dardenne,
in His Official Capacity as
Commissioner of Division of
Administration

Carlos A. Romanach Counsel for Defendant/Appellant
Baton Rouge, LA State of Louisiana, Office of State
Procurement

Larry Demmons Counsel for Intervenor/Appellant
Metairie, LA CaremarkPCS Health, LLC
and

A.J. Herbert III
Jennifer Warden Herbert
New Orleans, LA

Christopher K. LeMieux Counsel for Plaintiff/Appellee,
Donald C. Douglas, Jr. MedImpact Healthcare Systems,
Johanna Elizabeth Lambert Inc.
New Orleans, LA

BEFORE; WHIPPLE, C.J., PENZATO AND RESTER, JJ.

WHIPPLE, C.J.

Defendants -appellants, State of Louisiana, Division of Administration

DOA"), Jay Dardenne, in his official capacity as Commissioner of Division of

Administration (" the Commissioner"), State of Louisiana, Office of Group

Benefits (" OGB"), and State of Louisiana, Office of State Procurement (" OSP")

collectively " the State Defendants"), and intervenor -appellant, CaremarkPCS

Health, LLC (" CVS"), appeal the July 16, 2021 judgment, as amended by the

March 26, 2022 judgment, of the district court, acting in an appellate capacity in

response to a petition for judicial review filed on behalf of a rejected proposer,

plaintiff a
- ppellee, MedImpact Healthcare Systems, Inc. (" MedImpact"). The

district court' s judgment reversed the decision of the Commissioner, which upheld

OGB' s award of a state contract for pharmacy benefits manager (" PBM") services

to CVS, and ordered that the " proposed contract award to ... [ CVS] ... be reversed

and cancelled." For the following reasons, we reverse.

FACTS AND PROCEDURAL BACKGROUND

On February 21, 2020, OGB issued Request for Proposals No. 3000014397

the RFP") for a two-year term from January 1, 2021 through December 31, 2023,

regarding PBM services for certain self-funded health plans offered by OGB.

Since 2014, MedImpact had been the incumbent provider of OGB' s PBM services;

however, those contracts were set to expire on December 31, 2020.

Pursuant to Section 1. 28 of the RFP, the evaluation of proposals was to be

accomplished by an evaluation committee (" Evaluation Team" or " Evaluation

Committee"). Section 1. 28 permitted the Evaluation Team to " consult subject

matter expert( s) to serve in an advisory capacity regarding any proposer or

proposal," and provided that "[ s] uch input may include, but not be limited to,

analysis of Proposer financial statements, review of technical requirements, or

preparation of cost score data."

3

As to the evaluation and review of proposals, Section 3. 1 of the RFP stated

that proposals passing the mandatory requirements review would " be evaluated

based on information provided in the Proposal" according to the following criteria:

Approach and Methodotogy 325
Corporate Experience and Staff qualifications 205

TECHNICAL, APPROACH SCORE 530

Hudson/ Veteran Small Entrepreneurship Program {up to 100 points
reserved for Hudson -certified vendors, up to 120 points reserved for 120
Veterans -certified vendors; if no Veterans -certified vendors propose,
those 20 points are not awarded. see Section 1. 9. G for detsilsl

M

Section 3. 1 further provided that the Evaluation Team would " evaluate each

criterion within the Technical Proposal and assign scores based upon information

submitted in the proposal content for Approach and Methodology and Corporate

Experience and Staff Qualifications." Approach and Methodology included

d] emonstrated effectiveness of Proposer' s approach and methodology to

performing the various services outlined in Section 2, Scope of Services and

Attachment III; Technical Questionnaire." Cost proposals for all proposers would

be evaluated and an absolute score calculated. Points for cost proposals would be

assigned for cost using a calculation -based evaluation process based on the costs

from the pricing submitted by each proposer on Attachment XIII: Cost Proposal

Template and Attachment XVI: Credits & Allowances," and "[ p] roposers [ were

obligated to] complete Attachment XII: Cost Proposal Questionnaire."

OGB received proposals from MedImpact, CVS, Express Scripts, Inc.,

OptumRx, Inc., and Clutch Health. The proposal submitted by Clutch Health did

not conform to the cost proposal requirement and was deemed non-responsive.

The following process was used to evaluate and score the proposals. As a

preliminary review, the RFP Coordinator examined the proposals for proper form

and cost elements. The Evaluation Team first discussed the strengths and

weaknesses of each proposal for the criterion under consideration. OGB' s

4

actuarial consultant, Buck Global, LLC (" Buck"), prepared a presentation dated

May 11, 2020, which outlined the pros and cons of the technical proposals. In

response to question CIO in the " Cost Proposal Questionnaire," which asked

whether the proposer utilized a " Rebate Aggregator," MedImpact answered " Yes."

In outlining the " Pros" and " Cons" of each proposal, Buck' s presentation listed

MedImpact' s use of a rebate aggregator under " Cons" and noted "[ u] tilizing a

rebate aggregator limits third party audit abilities."

The scoring was by consensus, and the Evaluation Team filled out technical

evaluation scoring sheets, which were developed utilizing the criteria specified in

the RFP. OptumRx, Inc.' s proposal did not meet the minimum 265 points ( 50%)

of the total available points in the categories of Approach and Methodology and

Corporate Experience and Qualifications and accordingly, did not proceed.

The Evaluation Team submitted oral presentation invitations, instructions,

and agenda to the three proposers deemed reasonably susceptible of receiving the

award, namely: CVS, Express Scripts, Inc., and MedImpact. Oral presentations

were held, and once concluded, the Evaluation Team submitted written follow ups

for oral presentations and requests for Best and Final Offers (` BAFO") to the three

proposers.

The Evaluation Team assembled on June 5, 2020 to award points for

proposers' oral presentations and follow up responses. Once again, strengths and

weaknesses were identified, and the Evaluation Team adjusted preliminary scoring

points using consensus scoring based on the strengths and weaknesses identified.

Buck prepared a presentation dated June 5, 2020, which outlined the post-BAFO

technical proposal results and cost proposal results.

The Evaluation Team chose to submit another Best and Final Offer (`BAFO

II") request to the three remaining proposers. The Evaluation Team reconvened on

June 12, 2020 to adjust scoring points based on the three proposers' BAFO II

5

responses. Buck prepared a presentation dated June 12, 2020, which outlined the

post-BAFO II total costs and scores of each cost proposal.

After considering the submissions received, the Evaluation Team

recommended awarding the contract to CVS. The evaluations and

recommendations of the Evaluation Team were presented to the Chief Executive

Officer; the Evaluation Team' s recommendation was to award the contract to the

highest scored proposer. On June 22, 2020, OGB submitted a selection

memorandum' to the OSP, which included an outline of the foregoing process used

to evaluate and score the proposals, among other information. Thereafter, OGB

announced the award of the PBM services contract to CVS.

On July 23, 2020, MedImpact2 filed a protest of the award of the PBM

contract to CVS with the Chief Procurement Officer (" CPO"), pursuant to LSA-

R.S. 39: 1671. On July 23, 2020, the CPO acknowledged receipt of the protest and

issued a Stay of Award. MedImpact filed a supplemental protest on September 4,

2020, arguing, in part, there was an absence of materials from the Evaluation

Committee relative to how the final scores were derived, which rendered the

evaluation process fatally flawed; there was a substantial error in the assignment of

MedImpact' s technical proposal administration score; and there were mathematical

errors in the scoring of MedImpact' s cost proposal. MedImpact also objected to

OGB' s alleged negotiation of an " emergency" contract with CVS for the same

services included in the RFP. The CPO denied MedImpact' s protest on January 8,

2021.

1 Former La. Admin. Code Title 34, Part V, § 2545, which was repealed in May 2021,
applied to all requests for proposals solicitations issued under any provision of Chapter 17, Title
39 of the Louisiana Revised Statutes, unless otherwise stated. See La. Admin. Code Title 34,
Part V, § 2545( A). Former La. Admin. Code Title 34, Part V, § 2545( A)(2) provided that

w]hen a final selection has been made, but prior to notice of award, the contract file containing
that information outlined in Paragraphs 1- 2 above, including the request for proposals, along
with a selection memorandum justifying the final selection shall be sent to the [ OSP] for final
concurrence."

2 Clutch Health likewise filed a protest, which was later voluntarily dismissed.

on

On January 15, 2021, MedImpact appealed the CPO' s decision denying its

protest to the Commissioner, pursuant to LSA-R.S. 39: 1671( E) and LSA-R.S.

39: 1683. On February 18, 2021, the Commissioner denied MedImpact' s appeal

and affirmed the decision of the CPO awarding and reinstating the PBM contract to

CVS.

Thereafter, MedImpact filed a petition for preliminary and permanent

injunction and mandamus against the State Defendants in the Nineteenth Judicial

District Court on March 3, 2021, asking the district court to enjoin the State

Defendants from executing, performing, or proceeding with the award and

execution of the PBM contract with CVS and to order the Commissioner to cancel

the award to CVS and issue a new RFP. CVS intervened on March 5, 2021. The

State Defendants filed an exception of lack of original jurisdiction, challenging the

district court' s original jurisdiction to hear the requests for mandamus and

injunctive relief, as well as exceptions raising the objections of no cause of action

and no right of action, contending MedImpact had no right or cause of action to

seek a writ of mandamus. The district court sustained the exception of no cause of

action and ordered MedImpact to amend its petition.

On April 13, 2021, MedImpact filed its first amended and supplemental

petition for judicial review, stating that its requests for injunctive relief and

mandamus were moot and removed, seeking judicial review of the State

Defendants' actions in connection with the scoring and proposed contract award to

CVS, and asking the district court to reverse and cancel the award to CVS.

MedImpact raised the following assignments of error for consideration by the

district court: ( 1) the Commissioner erred in participating in both the attempted

award of an emergency contract to CVS and the review of MedImpact' s protest;

2) OGB erred in using an outside consultant to evaluate the proposals, as it did not

have statutory or regulatory authority to do so; ( 3) OGB and the outside consultant

7

erred in failing to comply with the RFP in the manner in which the outside

consultant evaluated the proposals; ( 4) OGB erred in its scoring of MedImpact' s

use of a rebate aggregator in the technical proposal section instead of the cost

proposal section, as required by the RFP; and ( 5) OGB erred in deducting points

from MedImpact for its past performance on its state contract, as past performance

was not an advertised criterion in the RFP.

A copy of the administrative record was filed with the district court, and

MedImpact filed a motion to compel, objecting to the current contents of the

record as incomplete and seeking supplementation. The district court ordered that

the administrative record be supplemented with documents including " the ` official

contract file' as referenced in La. R.S. 39: 1558 and/ or the ` contract file' referenced

in LAC 34: V.2545( A)(2) 3 to include ... [ t] he original, advertised RFP ... [ t]he

original proposal submitted by MedImpact ... [ t] he first and second Best and Final

Offer submitted by MedImpact ... [ t] he original PowerPoint presentations prepared

for or used by the OGB for the RFP." Counsel for the DOA certified that although

such documents normally would not be included in a contract file as referenced in

the cited statutes, the requested documents were supplemented to the

administrative record. Thereafter, in a supplemental Memorandum in Support of

Petition for Judicial Review, MedImpact asserted OGB failed to maintain a

contract/procurement file."

After a hearing on June 24, 2021, the district court reversed and cancelled

the proposed contract award of OGB' s PBM services contract to CVS and ordered

the RFP for PBM services be cancelled. In signing MedImpact' s proposed

Findings of Fact, Conclusions of Law, and Reasons for Judgment, on July 9, 2021,

as its own written reasons for judgment, the district court ruled that the State

3 See footnote 1, supra. After former La. Admin. Code Title 34, Part V, § 2545 was

repealed in May 2021, La. Admin. Code Title 34, Part V, § 2545( A)(2) became La. Admin. Code
Title 34, Part V, § 2605( A).

E:3

Defendants' actions were in violation of Louisiana law and the RFP and arbitrary

and capricious. The district court found that the State Defendants violated the

RFP, as Sections 1. 28 and 3. 1 of the RFP required the Evaluation Team to score

the technical proposals, yet Buck, not the Evaluation Team, scored the technical

proposals and the Evaluation Team merely adopted the scores. The district court

further found that the State Defendants violated the RFP in that MedImpact' s use

of a rebate aggregator improperly was scored in the technical proposal section

rather than the cost proposal section. Lastly, the district court found that the State

Defendants failed to maintain a contract file and transmit same along to the OSP

with the selection memorandum, in violation of LSA-R.S. 39: 1558 and La. Admin.

Code Title 34, Part V, § 2605( A). The district court signed a judgment in

accordance with these findings on July 16, 2021, ordering that the award to CVS

be reversed and cancelled and further ordering that the RFP be cancelled.'

The State Defendants and CVS then filed the instant appeal of the district

court' s July 16, 2021 judgment, assigning as error: ( 1) the district court' s

consideration of issues not presented to the CPO or the Commissioner or raised in

MedImpact' s petitions for review; ( 2) the district court' s finding the RFP was

violated because the Evaluation Team utilized the evaluation and input from its

expert consultant, Buck, on technical components of the RFP; ( 3) the district

court' s finding the RFP was violated because OGB scored the administrative and

audit limitations of MedImpact' s rebate aggregator under the technical section of

4 On July 9, 2021, the district court signed a judgment, denying MedImpact' s Petition for
Judicial Review; a copy of that judgment was mailed on July 14, 2021. However, on July 16,
2021, which was within the LSA-C. C. P. art. 1974 delay for applying for a new trial, the district
court signed an Order, stating " IT IS ORDERED that the Judgment denying Plaintiffs Petition
for Judicial Review signed on July 9th, 2021 be vacated and without legal effect because it was
erroneously signed." See e. g. First Bank and Trust v. Fitness Ventures, L.L.C., 2017- 0475 ( La.
App. 1St Cir. 12/ 6/ 17), 2017 WL 6031783, * 3 ( unpublished) ( citin Lousteau v. K -Mart Corp.,
2003- 1182 ( La. App. 5th Cir. 3/ 30/ 04), 871 So. 2d 618, 620, writ denied, 2004- 1027 ( La.
6/ 25/ 04), 876 So. 2d 835 (" The recordation of the trial court that it signed the first judgment in
error, within the time frame permitted for granting a new trial, persuades us that the [ second]
judgment is not invalid as an impermissible amended judgment.")).

6

the RFP; and ( 4) the district court' s finding the State Defendants failed to maintain

and transmit a" contract file" and that the alleged deficiency was a basis to

overturn the contract award to CVS.'

This court determined that the July 16, 2021 judgment lacked decretal

language and issued an interim order on March 9, 2022, remanding the matter to

the district court for the limited purpose of allowing the district court to sign an

amended judgment. On March 26, 2022, the district court signed an amended

judgment, granting MedImpact' s petition for judicial review, rendering judgment

in favor of MedImpact and against the State Defendants and CVS, and ordering

that " the February 18, 2021, decision of the Commissioner of Administration

affirming the January 8, 2021 protest decision of the Chief Procurement Officer

and the contract award for RFP No. 3000014397 is REVERSED," " the proposed

contract award to Intervenor, Caremark PCS, LLC for pharmacy benefit

management services be reversed and cancelled pursuant to La. R.S. 39: 1677," and

Request for Proposal No. 3000014397 for pharmacy benefit management services

be cancelled."

We find the March 26, 2022 amended judgment is sufficiently precise,

definite, and certain, and contains the requisite decretal language, such that the

appeal is properly before us. See e. g. LSA-C. C. P. art. 1918( A); Metcalfe & Sons

Investments, Inc. v. State ex rel. Department of Natural Resources, 2010- 2120 ( La.

App. 1St Cir. 12114111), 2011 WL 6288044, * 2 ( unpublished), writ denied, 2012-

0143 ( La. 3123112), 85 So. 3d 94 ( finding that judgment language stating " the

5 MedImpact asserts that appellants' " Statement of the Case" and " Statement of Facts"

fail to comply with Uniform Rules— Courts of Appeal, Rule 2- 12. 4. We find no merit to this
contention. Appellants' brief provides a concise statement of the case, indicating the nature of
the case, the action of the district court and the disposition, and a statement of facts relevant to
the assignments of error and issues for review, with references to the specific page numbers of
the record, in compliance with Rule 2- 12. 4( A)(4) and ( 7).

10

decision of the Commissioner of Administration be and is hereby REVERSED"

was a final judgment).

STANDARD OF REVIEW

Judicial review of the decision of an administrative agency is an exercise of

a district court' s appellate jurisdiction pursuant to LSA -Const. art. V, § 16( B),

which provides "[ a] district court shall have appellate jurisdiction as provided by

law." 6 The district court applied the standard of review set forth in the Louisiana

Administrative Procedure Act (" APA") in LSA-R.S. 49: 964( G). Louisiana

Revised Statutes 49: 964( G) states:

The court may affirm the decision of the agency or remand the case
for further proceedings. The court may reverse or modify the decision
if substantial rights of the appellant have been prejudiced because the
administrative findings, inferences, conclusions, or decisions are:

1) In violation of constitutional or statutory provisions;

2) In excess of the statutory authority of the agency;

3) Made upon unlawful procedure;

4) Affected by other error of law;

5) Arbitrary or capricious or characterized by abuse of discretion or
clearly unwarranted exercise of discretion; or

6) Not supported and sustainable by a preponderance of evidence as
determined by the reviewing court... .

As this court recognized in United Healthcare Insurance Co. v. State ex rel.

Division of Administration, 2011- 1398 ( La. App. 1St Cir. 9/ 28/ 12), 103 So. 3d

10959 10999 it is proper to apply LSA-R.S. 49: 964( G) by analogy in these types of

cases since there was no " adjudication" by a state agency after notice and a

6 The Nineteenth Judicial District Court, subject to appeal or review by the First Circuit
Court of Appeal or by the supreme court, as otherwise permitted in civil cases by law and the
state constitution, shall have jurisdiction over any claims arising out of a request for proposal or
award of a contract, any controversies involving the state, or any other matters in connection
with a petition for review of a decision made pursuant to this Chapter, following the exhaustion
of administrative remedies as provided by law or regulation. LSA-R.S. 39: 1672. 4( A); see also,
LSA-R. S. 39: 1691( A).

11

hearing. See also Catamaran PBM of Maryland, Inc. v. State, Office of Group

Benefits, 2014- 1672 ( La. App. 1St Cir. 6/ 5/ 15), 174 So. 3d 683, 688. The general

principle governing the standard of review to be used when reviewing the findings

of an administrative agency is, if the evidence, as reasonably interpreted, supports

the agency' s determinations, then the agency' s decisions are accorded great weight

and will not be reversed or modified in the absence of a clear showing that the

administrative action was arbitrary or capricious. United Healthcare, 103 So. 3d at

1099. Further, an administrator vested with authority to exercise discretion is free

to exercise that discretion as he or she sees fit as long as the exercise of that

discretion is rational and not arbitrary or capricious. Id. at 1099- 1100. The

agency' s discretion must be exercised in a fair and legal manner and not arbitrarily.

The test for determining whether an action was arbitrary or capricious is whether

the action taken was without reason. Id. at 1100.

DISCUSSION

In their first assignment of error, appellants assert that the district court erred

in considering issues that were never raised to the CPO, the Commissioner, or in

the petitions for judicial review filed with the district court, which were waived

and therefore improperly reviewed by the district court. Specifically, appellants

initially contend that MedImpact never raised the " contract file" issue in the

proceedings below. In response, MedImpact contends that it could not have been

aware of the failure to maintain and transmit a contract file until the administrative

record was lodged, and that LSA-R.S. 49: 964( F) l allows proof of procedural

irregularities to be taken in the court of review.

7 Louisiana Revised Statutes 49: 964( F) states: " The review shall be conducted by the
court without a jury and shall be confined to the record. In cases of alleged irregularities in
procedure before the agency, not shown in the record, proof thereon may be taken in the court.
The court, upon request, shall hear oral argument and receive written briefs."

12

When reviewing a final administrative decision, the district court functions

as an appellate court, confining its review to the administrative record. Ledet v.

1St
Louisiana Department of Public Safety and Corrections, 2017- 1457 ( La. App.

Cir. 9/ 24/ 18), 259 So. 3d 348, 351, writ denied, 2018- 1751 ( La. 1/ 28/ 19), 262 So.

3d 901, cert. denied, --- U.S.---, 139 S. Ct. 2757, 204 L. Ed. 2d 1136 ( 2019); see

also Hotel de la Monnaie Owners Association, Inc. v. Louisiana Tax Commission,

95- 1009 ( La. App. 1St Cir. 12/ 15/ 95), 669 So. 2d 455, 458, writ denied, 96- 0956

La. 5/ 31/ 96), 673 So. 2d 1030 ("[ u] nder the [ APA], a reviewing court is confined

to the record established before the agency").

The administrative record reflects that neither the CPO nor the

Commissioner addressed whether a contract file was properly transmitted and

maintained, and that MedImpact did not raise this argument before them.

However, prior to filing its protest, MedImpact tendered public records requests to

the DOA and received documentation in response. The record does not reflect that

MedImpact instituted a mandamus proceeding asserting it was denied the right to

inspect, copy, reproduce, or obtain a copy or reproduction of a record,' or that it

objected to the completeness of the production to either the CPO or the

Commissioner. Instead, MedImpact proceeded with its protest using the

documents received in response to its public records request.

We agree with appellants that MedImpact cannot assert a deficiency in the

State Defendants' documentation for the first time in the district court, acting in its

appellate capacity. As a general rule, appellate courts may not address issues

raised for the first time on appeal. Jackson v. Home Depot, Inc., 2004- 1653 ( La.

App. 1St Cir. 6/ 10/ 15), 906 So. 2d 721, 725. Furthermore, we find MedImpact' s

allegations cannot be construed as " irregularities in procedure before the agency,"

necessitating a remand by this court to the district court for the presentation of new

8 See LSA-R.S. 44: 35( A).

13

evidence pursuant to LSA-R.S. 49: 964( F). Accordingly, we find merit to

appellants'
contention that the contract file issue was not properly before the

district court and could not serve as a basis for the decision of the district court to

set aside the Commissioner' s decision affirming the CPO' s award of the PBM

contract to CVS. 9

Appellants further assert in their first assignment of error that MedImpact

made no inquiry or objection when the RFP disclosed the use of a subject matter

expert and failed to timely protest the expert' s involvement, under LSA-R. S.

39: 1671( A). Moreover, they argue, MedImpact has alleged it is " not objecting to

OGB' s use of Buck, OGB' s consultant, in the RFP evaluation process and

acknowledges that the RFP allows OGB to ` consult subject matter expert( s) to

serve in an advisory capacity."'

MedImpact did argue to the district court that, while the RFP allowed the

Evaluation Team to consult with a subject matter expert to serve in an advisory

capacity, this did not authorize OGB to retain an outside third -party consultant to

score the proposals, which MedImpact alleged Buck did. MedImpact likewise

raised the scope of Buck' s work on the RFP and OGB' s purportedly unreasonable

adoption of Buck' s recommendations in its protest to the CPO and/or its appeal to

the Commissioner, which rendered decisions as to the propriety of OGB' s adoption

of Buck' s recommendations. Therefore, we find the issue of OGB' s use ( or

misuse) of its expert was properly before the district court and reject this portion of

appellants' first assignment of error.

In their inter -related second assignment of error, appellants argue that the

district court erred in finding the RFP was violated by the Evaluation Team' s use

9 Rescission of the RFP and cancellation of the award to CVS is not a stated remedy for
failure to transmit a contract file, under former La. Admin. Code Title 34, Part V, § 2545( A) or
La. Admin. Code Title 34, Part V, § 2605( A), or failure to maintain a contract file, under LSA-
R.S. 39: 1558.

14

of the evaluation and input of its expert consultant on technical components of the

RFP. Appellants point out that the RFP allowed OGB to retain a subject matter

expert, and argue that the district court' s limitation of Buck' s role on the technical

component constitutes an overly restrictive and improper RFP interpretation. They

further assert that in any event, the record does not contain any document showing

Buck actually scored or allocated points to the technical proposals, since the

Evaluation Team allocated the technical scores as shown in the selection

memorandum and as contemplated under the RFP. MedImpact contends that OGB

was not permitted to retain a subject matter expert to score the proposals, yet the

administrative record shows that Buck set the technical proposal scores and the

Evaluation Team adopted Buck' s unreviewed, unevaluated scoring matrix as its

own, as evidenced by language in the Evaluation Team' s scoresheets stating

Evaluation Committee adopting Technical Proposal strengths and weaknesses

presentation from Buck ...."

1'
Clearly, OGB is authorized to appoint a consulting actuary. Moreover, as

noted above, Section 1. 28 of the RFP permitted the Evaluation Team to " consult

subject matter expert( s) to serve in an advisory capacity regarding any proposer or

proposal," and disclosed that " input may include, but not be limited to, ... review

of technical requirements ...." ( Emphasis added).

While OGB did retain and use Buck' s services, OGB' s selection

memorandum, as discussed in detail above, sets forth the activities and actions of

the Evaluation Team with regard to the evaluation and scoring of technical

proposals including, but not limited to, discussing the strengths and weaknesses of

each proposal for the criterion under consideration, completing scoring sheets,

conducting oral presentations, submitting written follow ups after oral

presentations and requests for BAFOs and BAFO IIs, and awarding and adjusting

io See LSA-R.S. 42: 802( B)( 4).

15

scoring points to proposers. Moreover, the administrative record includes the

Evaluation Team' s scoring sheets.

We find no evidence in the administrative record to indicate that OGB did

not, in fact, evaluate and score the proposals. Buck' s technical proposal

presentations do not reflect any point allocations. Additionally, although language

in various scoresheets specified " Evaluation Committee adopting Technical

Proposal strengths and weakness presentation from Buck ...," we find this notation

does not reflect Buck solely evaluated or scored the proposals. Instead, this

notation indicates the Evaluation Team relied upon the presentation of its

consulting subject matter expert. Further, the use of the information in Buck' s

presentation does not preclude the Evaluation Team' s own evaluation, nor does it

establish that the Evaluation Team failed to do so. Thus, we find merit to

appellants' argument in this assignment of error and that the district court erred in

reversing the Commissioner' s decision on the basis of improper use or reliance on

Buck' s evaluation and input.

Turning to their third assignment of error, appellants argue that the district

court erred and misinterpreted the RFP in finding that OGB could not score

administrative deficiencies in MedImpact' s rebate aggregator program under the

technical proposal as questions about rebate aggregators were in the Cost

Proposal Questionnaire and therefore required to be included in cost scoring.

Appellants assert that the RFP was set up to score costs strictly based on a

numerical calculation, non -numerical factors were to be scored under the technical

section, and a reference to a contract component in one section of the RFP does not

preclude its consideration in another section of the RFP. MedImpact counters that

Louisiana law and the RFP require the use of a rebate aggregator to be scored

strictly in the cost proposal section, as the question appears in the Cost Proposal

Questionnaire.

C

Louisiana Revised Statutes 39: 1595( B)( 5)( a) provides that "[ t]he request for

proposals ... shall indicate ... the criteria to be used in evaluating the proposals."

Accordingly, an "[ a] ward shall be made to the responsible proposer whose

proposal is determined ... by the using agency to be the most advantageous to the

state, taking into consideration review of price and the evaluation factors set forth

in the [ RFP]." LSA-R.S. 39: 1595( B)( 8)( a); see also former La. Admin. Code Title

34, Part V, § 2545( A)(2) (" The final selection of a contractor shall be made in

accordance with the selection criteria established in the RFP."). In this regard,

Section 1. 28 of the RFP required the Evaluation Team to determine the proposal

most advantageous to OGB, taking into consideration cost, technical capabilities,

and the other evaluation factors set forth in the RFP."

It was within the Evaluation Committee' s discretion to choose the

responsible offerer whose proposal is most advantageous to the state, taking into

consideration review of price and the evaluation factors set forth in the RFP.

Fleetcor Technologies Operating Co., LLC v. State ex rel. Division of

Administration, Office of State Purchasing, 2009- 0976 ( La. App. 1 s' Cir. 12/ 23/ 09),

30 So. 3d 102, 111." Moreover, the question as to which proposal is the " most

advantageous" depends on the reasonable perceptions of the governing authority.

See Executone of Central Louisiana, Inc. v. Hospital Service District No. 1 of

Tang_ipahoa Parish, 99- 2819 ( La. App. 1St Cir. 5/ 11/ 01), 798 So. 2d 987, 990, writ

denied, 2001- 1737 ( La. 9/ 28/ 01), 798 So. 2d 116. Thus, a reviewing court is not

empowered to substitute its judgment for the good -faith judgment of the

11 Fleetcor references former LSA-R.S. 39: 1593( C)( 2)( d)( i), which stated, "[ a] ward shall

be made to the responsible offerer whose proposal is determined in writing by the agency to be
the most advantageous to the state, taking into consideration review of price and the evaluation
factors set forth in the request for proposals." In 2015, LSA-R. S. 39: 1593( C)( 2)( d)( i) was

amended and renumbered as LSA-R.S. 39: 1595( B)( 8)( a), which presently states, "[ a] ward shall

be made to the responsible proposer whose proposal is determined in writing by the using agency
to be the most advantageous to the state, taking into consideration review of price and the
evaluation factors set forth in the request for proposals" and is substantially similar to the prior
version.

17

administrative agency based on its reasonable perceptions. See Fleetcor, 30 So. 3d

at 110.

Question C 10 in the Cost Proposal Questionnaire specifically asked

proposers "[ d] o you utilize a Rebate Aggregator" and "[
i] f so, please explain any
12
limitations for audits." MedImpact responded affirmatively, noting that it

contracts with a rebate services vendor that negotiates with multiple aggregators

and works directly with pharmaceutical manufacturers to provide the most

competitive rebates," "[
r]ebates are auditable for every client," and it " permits an

independent third party to audit records and contracts for compliance with the

terms of the MedImpact agreement," which " includes disclosure of MedImpact' s

contractual information with the rebate services vendor for its rebate

administration program." In its BAFO request, OGB asked MedImpact to

r]econfirm that MedImpact is unable to provide a third -party auditor direct

access to manufacturer rebate contracts ... due to the use of a rebate aggregator."

MedImpact offered the following BAFO response:

The proposed rebate guarantee amounts assume OGB adopts

MedImpact' s multi -bid strategy in which multiple rebate aggregators
bid against each other by key therapeutic class to deliver low net cost
for our clients. Under that model, MedImpact and OGB do not have
access to the upstream manufacturer contracts and those manufacturer
contracts cannot be audited. However, OGB can audit MedImpact' s
contract with our rebate services vendor to confirm rebates received

by MedImpact and paid to OGB.

If OGB requires audit rights of manufacturer rebate contracts,
that can be accommodated through MedImpact' s ` single bid strategy'
which only submits rebates through pharma contracts. This provides
audit rights but reduces rebate yield and rebate guarantees.

Buck' s May 11, 2020 technical proposal presentation listed MedImpact' s

rebate aggregator use under " Cons" and noted "[ u] tilizing a rebate aggregator

limits third party audit abilities." The State Defendants concede that MedImpact' s

12
Conversely, in response to question C10 in the Cost Proposal Questionnaire, CVS
stated it "does not utilize a Rebate Aggregator."

18

technical proposal score was reduced, in part, due to " administrative problems with

Medlmpact' s rebate aggregator." They further note that "[ o] n more than one

occasion, the Legislative Auditor and other auditors have questioned OGB' s

13
inability to obtain complete information regarding the aggregator' s accounting,"

and that "[ d] uring the prior contract OGB pointed out this problem to MedImpact

as the result of more than one audit, but it was never adequately addressed."

Although a question regarding the use of a rebate aggregator was asked in

the Cost Proposal Questionnaire, rebates, rebate aggregators, and auditability were

listed criteria and considerations under the RFP' s technical section. For example,

Section 1. 9( E) of the RFP, which is titled " Approach and Methodology," required

the proposer to "[ d] emonstrate ... how its Proposal will best meet the needs of

OGB through providing ... rebate management ... ." Section 2.2 of the RFP,

which is captioned " Tasks and Services," similarly notes a proposer is responsible

for providing "[ PBM] services including ... rebate management ..." and

r]ender[ ing] payment to OGB for all rebates ...." As noted above, Section 3. 1

of the RFP provided technical proposal scores were derived, in part, from

Approach and Methodology," which included " demonstrated effectiveness of

Proposer' s approach and methodology to performing the various services outlined

in Section 2, Scope of Services ... ,"

Additionally, question A4 in the Technical Questionnaire asked the

proposers to "[ 1] ist all entities or persons to which you intend to subcontract any

work required under this Contract or utilize in connection with providing services

to OGB. Subcontractors should include ... any ... rebate aggregator

MedImpact responded to question A4, admitting its use of subcontractor services

13 Section 1. 40 of the RFP stated "[ t] he State Legislative Auditor, federal auditors,
internal auditors of the [ DOA] and its designated agents ... shall be entitled to audit all accounts,

procedures, matters, and records of any Contractor or subcontractor/vendor under any negotiated
Contract or subcontract ...."

19

and identifying its rebate administration services subcontractor. 14 Question C14 in

the Technical Questionnaire asked the proposers to "[ c] onfirm that OGB ... will

have full audit rights, including ... on- site rebate contract review ...," and

Questions F22- 24, K1, and P4 raised additional questions about rebates and

whether such would be passed back to OGB... .

Furthermore, although Section 3. 1 of the RFP required that proposers

complete Attachment XII: Cost Proposal Questionnaire, the RFP expressly states

that points for cost proposals are " assigned for cost using a calculation -based

evaluation process based on the costs from the pricing submitted by each Proposer

on the Attachment X111: Cost Proposal Template and Attachment XVI: Credits &

Allowances." The RFP does not state cost proposal scores will be calculated from

Cost Proposal Questionnaire responses.

We find nothing in the language of the RFP precluding Cost Proposal

Questionnaire responses from being considered in the technical section of the RFP.

Section 3. 1 of the RFP noted that proposals would be evaluated based on

information provided in the Proposal," without specifying any limitation, and

Section 1. 9( D) of the RFP stated " OGB/ State may consider any relevant

information about any Proposer known or discovered by OGB." ( Emphasis in

original). Thus, we also find merit to this assignment of error.

OGB is afforded great deference in decisions made within its scope of

experience, expertise, and reasonable perceptions. Catamaran, 174 So. 3d at 690.

Considering the foregoing, we find OGB had discretion and a reasonable basis to

utilize the evaluation and input from Buck on technical components of the RFP and

to score the administrative and audit limitations of MedImpact' s rebate aggregator

14 In response to question A4 in the Technical Questionnaire, however, CVS answered
w]e directly furnish the core PBM services through our PBM subsidiaries or affiliates and do
not have a strategic alliance or subcontract arrangement for such core PBM services." CVS
provided a list of vendors it used for " support or ancillary services," and none provided rebate

services.

20

under the technical section of the RFP. Accordingly, OGB' s decision as well as

the actions of the State Defendants were not in violation of the RFP or Louisiana

law and were not arbitrary and capricious, and the district court erred in ruling

otherwise.

CONCLUSION

For the above and foregoing reasons, the March 26, 2022 amended

judgment, granting the Petition for Judicial Review of MedImpact Healthcare

Systems, Inc., ordering that the proposed contract award to intervenor -appellant,

CaremarkPCS Health, LLC, for pharmacy benefit manager services be reversed

and cancelled, and ordering that Request for Proposals No. 3000014397 for

pharmacy benefit manager services be cancelled, is hereby reversed. The decision

of the Commissioner of Administration denying the appeal of MedImpact

Healthcare Systems, Inc. and affirming the Chief Procurement Officer' s decision

awarding and reinstating the pharmacy benefit manager services contract to

intervenor -appellant, CaremarkPCS Health, LLC, pursuant to Request for

Proposals No. 3000014397, is hereby reinstated.

Costs of this appeal are assessed to plaintiff -appellee, MedImpact Healthcare

Systems, Inc.

REVERSED AND RENDERED.

21