Case: 4:18-cv-01005 Doc.

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Exhibit N
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,..,_
, . EXPRESS SCRIPTS"
....,.,
...

April 18, 2018

Via Fedex

CareZone Pharmacy, LLC dba CareZone Pharmacy

800 Airpark Center Drive
Nashville, TN 37217

Re: Termination of CareZone Pharmacy, LLC dba CareZone Pharmacy, NCPDP 4449523
("Provider")

Dear Provider,

This letter notifies you of the termination by Express Scripts, Inc., and Medco Health Solutions, Inc.
(collectively, "Express Scripts"), of Provider's Express Scripts, Inc. Network Provider Agreement (the
"Agreement").

Express Scripts has learned that Provider is in direct violation of the Agreement, including the Network
Provider Manual. To date, Provider's known violations include operating as a mail-order pharmacy and
engaged in the unlicensed dispensing of medications. Each of these violations is a material breach and
constitutes a separate ground for Express Scripts to terminate the Agreement immediately in accordance
with Section - of the Agreement. Express Scripts hereby provides written notice that it is terminating
the Agreement in accordance with Section • . ceffective on July 13, 2018.

I. Grounds for Immediate Termination Under Section Im

Section - of the Agreement allows immediate termination when certain conditions are met. In relevant
part, Section - provides:

A. Provider Is a Mail-Order Pharmacy, Not a Retail Pharmacy

As part of establishing that it qualified as a Retail Provider, Provider submitted to Express Scripts a Provider
Certification dated May 16, 2017, in which it represented that 100% of its practice is "Open Door
Retail/Community". Provider indicated that none of its practice is by mail order. Based on these
representations, Express Scrips certified Provider as a "Retail Provider." In addition Provider supplied an
attestation signed by Jonathan Schwartz, dated June 26, 2017, that included its guarantee that "CareZone
Pharmacy LLC will not mail or ship any claims or prescriptions in state or out of state, now or in the future. "

Contrary to its representations, Provider is, in fact, primarily a mail-order pharmacy. Provider's retail location

a
is in Tennessee, but claims submitted by Provider to Express Scripts for adjudication show that, between

Internal Information

One Express Way. St. Louis, MO 63121 . 314.770.1666. www.express-scripts.com

 Case: 4:18-cv-01005 Doc. #: 1-14 Filed: 06/20/18 Page: 3 of 5 PageID #: 108

July 3, 2017, and March 23, 2018, it filled thousands of prescriptions for patients with addresses outside of
Tennessee. The chart below, for example, shows that during this time period Provider dispensed over
15,000 prescriptions to patients living in a dozen states across the country. Such a high volume of out-of-
state prescriptions shows that Provider is functioning as a mail-order pharmacy.

Member State Member Count Claims Count

OH 118 1,923
NY 103 1,839
CA 111 1,653
PA 111 1,614
Ml 105 1,465
IN 92 1,312
TX 83 1,220
VA 68 1,058
MO 55 964
FL 55 766
KY 35 715
GA 57 596

To disguise its status as a mail-order pharmacy, Provider funnels its mail orders through affiliated
companies. One affiliate, the similarly named "CareZone, Inc." interfaces with out-of-state patients through
an application and the website "CareZone.com," steers out-of-state patients to fill their prescriptions at
Provider, and coordinates the shipment of prescriptions from Provider to out-of-state patients. As
CareZone.com states: "[W]e can arrange for your prescriptions to be shipped to you." A second affiliate,
"Parliament Delivery, LLC" ("Parliament"), actually picks up the prescriptions from Provider and delivers
them to out-of-state patients. In addition, the same person, Jonathan Schwartz, owns, controls, and/or is
the CEO of Provider, CareZone, Inc., and Parliament.

Moreover, the CareZone, Inc. application provides status updates for pharmacy orders from Provider.
These status updates track the shipment of prescriptions being filled by Provider and list requests from
CareZone Pharmacy for information regarding the prescriptions. For examples, see "What does a
pharmacy order status of 'On Hold' mean?", Pharmacy Knowledge Base,
http: //support.ca rezone .com/knowledg ebase/articles/ 1828 750-what-does-a-ph armacy-ord er-status-of-on-
hold-mea.

Further, Care Zone, Inc. filed an application with the U.S. Patent and Trademark Office on December 11,
2017 that lists "[p]harmaceutical services, namely, processing prescription orders in retail pharmacies"
among its services.

In sum, Provider is providing mail-order pharmacy services through its affiliated entities CareZone, Inc. and
Parliament. Accordingly, Provider materially breached the Agreement and is subject to termination in
accordance with Section rmm
8. Provider appears to have been engaged in the unlicensed dispensing of medications

Based on a review of Provider's recent claims, Express Scripts has serious concerns that Provider is mailing
drugs into states without the appropriate licensure. Specifically, a preliminary review of Provider's claims
data has led Express Scripts to identify claims submitted by Provider from members in Arkansas, California,
Nebraska, New York, South Carolina, Wisconsin, and Virginia, states in which Provider is not licensed.

a Internal In fo rmation
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Unlicensed dispensing violates the terms of the Agreement, constitutes malfeasance, and creates the
potential for action by a state Board of Pharmacy.

C. Failure to Report Lawsuits Against Owner

Provider has also failed to disclose civil lawsuits against its owner.

Provider certified in its Provider Certifications dated May 16, 2017 that neither the pharmacy, nor its owners
or principals, nor any of its pharmacists has been the subject of a civil lawsuit or criminal prosecution
involving fraud, deception or a similar offense involving moral turpitude in the last ten years.

In April 2009, Mr. Schwartz was named as a defendant in a civil complaint alleging breach of fiduciary duty.
Additionally, in November 2017, Mr. Schwartz was named as a defendant in a civil lawsuit brought by Ben
Suscavage alleging violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, 15
U.S.C. §§ 78n(a), 78t(a), and SEC Rule 14a-9, 17 C.F.R. § 240.14a-9. These allegations included claims
that Mr. Schwartz and the other defendants disseminated a "materially incomplete and misleading Proxy
Statement" that was "false and misleading" and "which omitted to state material facts." These allegations
involve fraud and deception.

Provider's failure to disclose these lawsuits, and its false contrary representations in its Provider
Certifications, materially breached the Agreement and subject Provider to termination in accordance with
Sections- an d - of the Agreement and Section• of the Provider Manual.

D. Failure to Report Ownership of Other Pharmacies

Provider certified in its Provider Certifications dated May 16, 2017 that none of Provider's owner(s),
member(s)/principal(s), officers, or directors have owned any other pharmacy (besides Provider).

Public records show that Mr. Schwartz and/or CareZone actually own several additional pharmacies that
were not disclosed in the Provider Certifications:

• CareZone in Richmond, CA NCPDP 5654137

• 3175 Pharmacy in San Francisco, CA NCPDP 5659860

• Anderson Family Pharmacy in Des Plaines, IL

• Brown Pharmacy in Des Plaines, IL

• Clark Pharmacy in Antioch, TN, NCPDP 4449535

• Davis Pharmacy in Antioch, TN NCPDP 4449547

Provider's failure to disclose these other affiliated pharmacies, and its false contrary representations in its
Provider Certifications, materially breached the Agreement and su~t Provider to termination in
accordance with Sections - and- of the Agreement and Section• of the Provider Manual.

Based on all of the above, Provider has materially breached the Agreement and is subject to termination.
Express Scripts here2l..Erovides Provider with this written notice that it is terminating the Agreement for
cause under Section-· effective July 13, 2018. From and after that termination date, Provider will no
longer be a provider or participating pharmacy in any Express Scripts network.

Express Scripts reserves the right to identify and assert additional breaches of the Agreement.

la In ternal Information
 Case: 4:18-cv-01005 Doc. #: 1-14 Filed: 06/20/18 Page: 5 of 5 PageID #: 110

Please retain a copy of this letter as Provider's official notice of termination. ShoLtld you have any question
regarding this notification, please contact ProviderCompliance@express-scripts.com

Regards,

Provider Compliance
Express Scripts, Inc.

a lntemal Information