Relying on numerous contractual provisions between ESI and the NYCTA, the Court issued an order and opinion denying ESI's motion for summary judgment and found that the contract between ESI and the NYCTA, at least arguably, imposed a duty upon ESI to flag and investigate potentially fraudulent claims. These provisions include, without limitation, the following:

ESI's duty to identify and respond to clear indicia of fraud under Section 4.2

Contractor shall process Claims incurred during the Term of this Agreement and provide customer service in a prudent and expert manner, including investigating and reviewing such Claims to determine what amount, if any, is due and payable according to the terms and conditions of the Plan documents and this Agreement.

ESI's duty to maintain network pharmacies under Section 4.16

ESI "shall be solely responsible for the selection, monitoring, and retention of its Network Pharmacies" and that ESI "shall exercise due diligence in the selection and retention of Network Pharmacies…".

ESI duties to pursue recovery of overpayment under Section 4.7

With respect to any Overpayment of any Claim made to a Participant, Contractor shall pursue recovery of such Overpayment in accordance with applicable law and industry standards and, upon recovery, repay the amount of such Overpayment to the Plan…. Notwithstanding the foregoing, Contractor shall be liable for all unrecovered Overpayments due to Contractor's breach of this Agreement (including, without limitation, Contractor's failure to meet the standard of care) … After termination of this Agreement, Contractor shall continue to identify Overpayments, and pursue recovery on Claims, as required by this section, paid during the Term of this Agreement and the Run-Out Period.

ESI duties to carry out obligations in non-negligent manner under Section 4.1

use that degree of care and reasonable diligence that an experienced and prudent plan administrator of pharmacy benefits under a group health plan familiar with such matters would use acting in like circumstances, and consistent with industry standards.

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