Doe v. CVS Pharmacy, __ F.3d __, 2020 WL 7234964 (9th Cir. Dec. 9, 2020)
Individuals with HIV/AIDS who rely on an employer-sponsored health plan for their medication sued their pharmacy benefits manager, CVS Caremark, alleging that its modification of the pharmacy benefits program violated the anti-discrimination provisions of the Affordable Care Act (ACA), Americans with Disabilities Act (ADA), and California’s Unruh Act, denied benefits that were owed under ERISA, and violated California’s unfair competition law (UCL). Prior to CVS’s modification, plaintiffs could refill their prescriptions at community pharmacies, where they could consult the pharmacist regarding drug interactions and make modifications needed to address disease progression. Following the modification, however, HIV/AIDS drugs and other specialty medications had to be obtained by mail or drop shipment to CVS pharmacy stores, while non-specialty prescriptions could be filled at any community pharmacy and still remain “in-network.” Plaintiffs alleged the modification caused them to lose essential counseling their local pharmacies provided, created difficulty in obtaining refills, risked drug interaction problems because different medications had to be filled at different pharmacies, and increased the risk of disclosing their private medical information. The district court dismissed the complaint with prejudice, and plaintiffs appealed.
The Ninth Circuit vacated in part and affirmed in part. First, the Court held that the ACA did not create a healthcare-specific anti-discrimination standard; instead, it incorporated anti-discrimination standards from numerous civil rights statutes, including the ADA and Title VII of the Civil Rights Act. Applying these principles, the Court held that, under the Rehabilitation Act, the plaintiffs adequately alleged that CVS’s modifications disparately impacted HIV/AIDS patients and denied them meaningful access to their prescription drug benefit because of “their unique pharmaceutical need[s],” including medically appropriate dispensing of medications and access to necessary counseling. The fact the program applied to enrollees in a facially neutral way did not negate plaintiffs’ disparate impact discrimination claim. But the Court rejected plaintiffs’ ADA claim because their benefit plan is not a place of “public accommodation,” and the Court rejected plaintiffs’ ERISA claim because they failed to identify a specific term in their healthcare plan that conferred the benefits they claim were denied. Finally, the Court partially reversed dismissal of plaintiffs’ UCL claim because they adequately stated a Rehabilitation Act-based discrimination claim under the ACA (upon which a UCL claim could be premised), but the Court affirmed dismissal of the UCL claim based on alleged “unfairness” of CVS Caremark’s decision to modify the pharmacy benefits in order to increase profits.
