Key Points

  • Fraudulent-concealment tolling failed because Boston had notice and means to investigate PBM conduct before 2021.
  • Massachusetts actual knowledge does not require a plaintiff to have no substantial doubt about wrongdoing.
  • Boston’s continuing-nuisance argument was waived and failed on the merits.
  • The First Circuit also affirmed denial of OptumRx’s disqualification motion.

The First Circuit affirmed dismissal of Boston’s Massachusetts public-nuisance claim against pharmacy benefit managers OptumRx and Express Scripts, holding that the claim was outside the applicable three-year limitations period and was not tolled by alleged fraudulent concealment. The March 2 opinion also affirmed the denial of OptumRx’s effort to disqualify the law firm representing the city.

Boston alleged that the PBMs had colluded with opioid manufacturers to misrepresent opioid risks, contributing to injuries suffered by the city. It argued that the limitations period should be extended because the alleged misconduct constituted a continuing nuisance and because the PBMs had concealed the basis for the claim.

The panel’s principal holding concerned Mass. Gen. Laws ch. 260, § 12, which excludes from the limitations calculation time before a claimant discovers a cause of action when a liable person fraudulently conceals it. Assuming without deciding that Boston had plausibly alleged the statute’s prerequisites, the court concluded that tolling still could not apply because the city had notice of a probability of PBM wrongdoing and the means to obtain supporting facts before 2021.

The court rejected Boston’s proposed reading of Massachusetts actual-knowledge doctrine. Boston had contended that knowledge can be imputed only when a plaintiff has no substantial doubt about wrongdoing and its resulting claim. The panel said the statute and Massachusetts decisions impose no such requirement outside the distinct context of a fiduciary relationship.

Instead, the court applied the standard under which knowledge may be attributed where a plaintiff had the means to acquire facts and the probability of wrongdoing was sufficiently evident. As the opinion put it, “Full means of detecting the fraud which had been practiced upon the[] [plaintiffs] under circumstances which put them upon inquiry, is equivalent to actual knowledge.”

Several publicly available sources defeated Boston’s tolling theory, the panel held. The city admittedly knew of opioid-related harms before 2021 and had pursued claims against opioid manufacturers. The opinion also pointed to numerous suits by local governments against PBMs, PBM bellwether litigation in the federal opioid multidistrict litigation, a letter to Boston’s counsel describing PBMs’ alleged role, and public reporting and a Massachusetts government report cited in Boston’s own complaint.

That record made it implausible that Boston lacked awareness of earlier PBM litigation, the court said. The court did not treat the public materials as establishing that Boston had already proved a PBM claim. Rather, they established that the city had adequate notice and investigative means such that fraudulent-concealment tolling was unavailable under the Massachusetts standard.

The panel also rejected Boston’s continuing-nuisance position. Boston newly argued on appeal that the alleged misconduct had created an ongoing harmful condition, an argument the court held waived because it had not been raised below. In any event, the court said the allegation did not resemble a continuing-nuisance theory based on ongoing conduct within the limitations period, such as continuing seepage of pollutants.

For PBMs confronting municipal opioid suits under Massachusetts law, the decision gives substantial weight to the public record in assessing when a government plaintiff had inquiry notice. A claimant cannot preserve an otherwise late claim merely by alleging that it did not know the full extent of PBM involvement; where public litigation, reports and other materials make a probability of wrongdoing evident, the claimant’s ability to investigate can amount to actual knowledge for purposes of the tolling statute.