Fourth circuit narrows assignee standing and upholds dismissal of racketeering price‑inflation suit

The Fourth Circuit ruled that plaintiff entities, which purchase recovery rights from health‑care payors, may sue only for the five assignors specifically identified in their contracts and not for any unnamed assignors, ordering those unidentified claims dismissed without prejudice for lack of subject‑matter jurisdiction. Beyond that jurisdictional correction, the court affirmed a district court decision that dismissed with prejudice plaintiff’s Racketeer Influenced and Corrupt Organizations Act and state‑law claims alleging defendants—a drug manufacturer, a specialty pharmacy, and two nonprofit foundations—conspired to inflate the price and volume of the movement‑disorder drug Xenazine.

Because plaintiffs themselves suffered no direct injury, their standing turned entirely on contractual assignments. The panel held that assignee standing extends no further than the entities actually named in the pleadings; broad references to other “third‑party payors” were insufficient. Moving to the merits for the five named assignors, the court agreed that the complaint failed to plausibly allege proximate causation. Plaintiffs asserted that defendants’ allegedly fraudulent certifications and charitable‑donation scheme drove up Xenazine reimbursement costs, but the panel found a multi‑step causal chain interrupted by distributors, pharmacies, prescribing physicians, and patient decisions. More direct victims—wholesalers who paid the inflated prices first—undermined plaintiffs’ price theory, while any rise in prescription volume could stem from numerous independent factors. The court also deemed the asserted RICO predicates—mail and wire fraud based on purported anti‑kickback and False Claims Act violations—too vaguely pleaded to support liability.

Finding no error in the district court’s refusal to grant injunctive relief, post‑judgment reconsideration, or leave to amend, the panel affirmed those rulings. The case returns to the trial court solely to dismiss the claims related to unidentified assignors for want of Article III standing.

The 32 page opinion is MSP Recovery Claims Series LLC v. Lundbeck LLC, Lawyers’ Weekly No. 001‑060‑25.