Doe One v. CVS Health Corporation

Background

The plaintiffs are people living with HIV/AIDS who use employer-sponsored health plans to obtain HIV/AIDS medication. The defendants include five direct or indirect subsidiaries of CVS Health Corporation: three pharmacies and two pharmacy benefit managers, which administer prescription benefits for employer clients.

The plaintiffs challenged a plan requirement called “The Program.” To receive in-network pricing for specialty medications, members had to receive their medication by mail through Caremark or have it shipped to a CVS retail pharmacy for pickup. Filling prescriptions at other retail pharmacies resulted in out-of-network prices. The plaintiffs alleged that this arrangement compromised privacy, created delivery and pickup problems, and denied them meaningful access to their prescription-drug benefits. They also alleged that they repeatedly requested an option to use their preferred pharmacies but were told that only their employer plan sponsors could authorize an opt-out.

The court had previously allowed the plaintiffs to amend their complaint to add John Doe 6 and claims seeking monetary damages based on deliberate indifference. The plaintiffs then filed a Third Amended Complaint that also added John Doe 7. The defendants moved to dismiss all claims and to dismiss the additions of Does 6 and 7.

Standing for Injunctive Relief

The defendants argued that John Does 1, 2, and 6 lacked standing to seek an injunction. The court agreed that Does 1 and 2 could not seek forward-looking injunctive relief: Doe 1 was no longer in a CVS Caremark health plan, and Doe 2 had died. The court nevertheless held that Does 6 and 7 adequately pleaded a continuing injury. Doe 6 allegedly remained subject to The Program and had repeatedly sought an opt-out, while Doe 7 allegedly remained a current member of The Program and had made several unsuccessful opt-out attempts.

Affordable Care Act Disability Discrimination

Section 1557 of the Affordable Care Act incorporates Section 504 of the Rehabilitation Act, which prohibits disability discrimination in covered health programs. The court noted that the Ninth Circuit had already held, in an earlier round of this case, that the plaintiffs adequately alleged denial of meaningful access to prescription benefits because The Program prevented effective HIV/AIDS treatment. The court therefore focused on whether the plaintiffs adequately alleged deliberate indifference.

Deliberate indifference requires allegations that the defendants knew harm to a federally protected right was substantially likely and failed to act on that likelihood. The court held that the plaintiffs adequately alleged both elements. Their repeated requests to opt out of The Program and concerns about privacy, delivery, and access allegedly gave the defendants notice of the need for an accommodation. The court also relied on allegations concerning federal regulations, internal CVS data, prior litigation, media coverage, and communications before the lawsuit.

The defendants argued that they lacked authority to approve an opt-out because employers controlled the plans. The court rejected that argument at the pleading stage, finding that the plaintiffs adequately alleged that the defendants helped design and control The Program, could coordinate an opt-out with employers, and had previously offered employers an HIV/AIDS medication exception. The court held that offering that exception to employers, but not directly to members with HIV/AIDS, did not defeat the plaintiffs’ allegations that the defendants deliberately failed to provide a reasonable accommodation.

Proxy Discrimination

The plaintiffs separately alleged proxy discrimination. That theory applies when a seemingly neutral criterion is so closely associated with a protected group that using it amounts to discrimination against that group. The court granted the motion to dismiss this theory. The Program covered more than 400 specialty medications used to treat many conditions, not only HIV/AIDS. In the court’s view, the medication list was not sufficiently closely associated with HIV/AIDS to support an inference that it was a proxy for discrimination against people living with HIV/AIDS.

The court distinguished this theory from the plaintiffs’ separate claim that The Program denied meaningful access to HIV/AIDS medication by failing to provide a reasonable accommodation. The court allowed that separate Affordable Care Act disability-discrimination claim to proceed.

Equitable Restitution Under California’s Unfair Competition Law

The court granted the motion to dismiss the plaintiffs’ claim for equitable restitution under California’s Unfair Competition Law. Such restitution must restore particular funds in the defendant’s possession. The plaintiffs alleged that they paid higher prices at community pharmacies, but they did not allege that the defendants possessed those funds. The court therefore dismissed the equitable-restitution claim.

John Doe 7

The defendants argued that Doe 7 should be dismissed because the court’s prior order had referred only to adding Doe 6. The court denied that request. It found that adding Doe 7 was consistent with the purpose of the amendment and that the defendants had not shown undue prejudice.

Disposition

The court denied in part and granted in part the defendants’ motion to dismiss. It denied the motion as to the claims for intentional disability discrimination under the Affordable Care Act, injunctive relief, and John Doe 7. It granted the motion as to the claims for proxy discrimination under the Affordable Care Act and equitable restitution under California’s Unfair Competition Law. The order disposed of Docket No. 242.