Doe One v. CVS Health Corporation

Background

The plaintiffs alleged that a health plan required them to use a mail-order prescription program and that this policy discriminated against people with disabilities, including people living with HIV/AIDS. The Ninth Circuit had revived the plaintiffs’ disability-discrimination claim under Section 1557 of the Affordable Care Act and their California Unfair Competition Law claim to the extent it relied on an Affordable Care Act violation. The Supreme Court later granted review on whether the Affordable Care Act provides a disparate-impact cause of action for disability discrimination, but the defendants withdrew their petition before oral argument.

By the time of this order, Does 2 through 4 had died, Doe 5 had been dismissed for failure to prosecute, and Doe One was no longer enrolled in the challenged program. Doe Three and Doe Four had been voluntarily dismissed after their deaths. Doe One and the estate of Doe Two remained. The plaintiffs sought to add Doe Six, whom they said was enrolled in the program, and to clarify that they sought monetary damages as well as an injunction.

Motion to Amend

Under Federal Rule of Civil Procedure 15, courts generally should freely allow amended pleadings when justice requires, although amendment may be denied for reasons such as undue delay, prejudice, or futility. The court explained that prejudice to the opposing party is the most important factor, but that amendment may also be denied if the proposed changes would be futile.

The defendants identified the costs of litigating the case, including an appeal and the Supreme Court proceedings, as prejudice from the delay. The court held that these general litigation burdens were not enough to establish the prejudice necessary to block amendment. The court also considered evidence relating to the defendants’ factual challenge to standing and concluded that it did not need to take judicial notice of that evidence.

Doe Six’s Standing

The defendants argued that Doe Six was not enrolled in the challenged program because his employer had allowed employees to receive HIV/AIDS medication in person at community pharmacies. Doe Six submitted a declaration stating that he had never received notice that he was exempt from the program. His counsel explained that Doe Six could not yet verify whether he was allowed to receive his medication in person because he obtained medication in 90-day supplies and had not used his current supply.

The court allowed the plaintiffs to amend so they could allege facts showing that Doe Six remained subject to the program. The court stated that if Doe Six could not do so consistently with Rule 11, he likely would not have standing to seek injunctive relief. Rule 11 requires factual and legal support for representations made to the court.

Claim for Monetary Damages

The plaintiffs also sought to clarify allegations that the defendants intentionally discriminated against them through deliberate indifference. The court explained that monetary damages under Section 1557, as applied to disability discrimination, require intentional discrimination. Under the theory recognized by the Ninth Circuit, deliberate indifference can satisfy that requirement. Deliberate indifference requires knowledge that harm to a federally protected right is substantially likely and a failure to act on that likelihood.

The plaintiffs identified several alleged sources of the defendants’ knowledge: Doe Six’s attempts to contact his employer, the health plan, and claims representatives; Doe Two’s complaints to regulators; widely publicized litigation involving similar mail-order programs; and prelitigation negotiations. The court found that the plaintiffs had plausibly alleged notice, but that the pleadings did not sufficiently describe what was communicated to some claims representatives. The court therefore allowed amendment to clarify the notice allegations.

The defendants argued that the law-of-the-case doctrine and the mandate rule barred amendment. The mandate rule limits a lower court’s action on remand to matters covered by the appellate court’s decision, while leaving unresolved issues available for consideration. The court held that neither it nor the Ninth Circuit had previously considered deliberate indifference as a discrimination theory in this case, and that the proposed theory did not conflict with the Ninth Circuit’s mandate. The court therefore concluded that amendment would not be futile.

Rulings

The court GRANTED the plaintiffs’ motion for leave to amend to add Doe Six and GRANTED their motion for leave to amend to add intentional-discrimination causes of action. The court allowed the plaintiffs to revise their complaint to address Doe Six’s alleged continued exposure to the program and to allege deliberate indifference supporting a claim for monetary damages.

The court DENIED the defendants’ motion to dismiss without prejudice while the plaintiffs made those amendments. The Third Amended Complaint was due within 45 days of the order. Judge Edward Chen stated that the order disposed of Docket Nos. 208, 212, and 219.