By Brendan Pierson, REUTERS LEGAL

December 9, 2020

(Reuters) – A federal appeals court has revived a proposed class action by California HIV/AIDS patients alleging that pharmacy benefit manager CVS Caremark discriminated against them by requiring them to use its own specialty pharmacy in order to benefit from in-network rates through their employer-sponsored health plans.

The 9th U.S. Circuit Court of Appeals on Wednesday ruled that the plaintiffs, identified as John Does, had stated claims under the Affordable Care Act’s anti-discrimination provisions against CVS Caremark. The court affirmed a lower court ruling dismissing claims against their plans’ sponsors – Lowe’s Cos Inc, Time Warner Inc and National Passenger Corp, better known as Amtrak.

“This decision is an important victory for HIV patients who sought to vindicate their healthcare rights and obtain their life-sustaining medications in medically-appropriate manner,” said Jerry Flanagan of Consumer Watchdog, a lawyer for the plaintiffs, in an statement.

“We are pleased that the 9th Circuit has affirmed the dismissal of the claims against Amtrak and that the litigation is successfully concluded as to it,” said Brian Shaffer of Morgan Lewis & Bockius, a lawyer for Amtrak.

Craig Singer of Williams & Connolly, a lawyer for CVS Caremark, did not immediately respond to a request for comment. Nor did Phillip Eskenazi of Hunton Andrews Kurth, for Lowe’s, or Michael Bernstein of Robinson & Cole, for Time Warner.

The lawsuit, filed in February 2018 in San Francisco federal court, alleged that the employer plans and CVS Caremark discriminated against HIV/AIDS patients by forcing them use CVS Caremark’s own specialty pharmacy to obtain specialty drugs, rather than community pharmacies of their choice, to benefit from in-network pricing.

That policy had a disparate impact on HIV/AIDS patients, the plaintiffs said, because managing HIV/AIDS required pharmacists familiar with their individual medical histories to avoid dangerous drug interactions. They also said it required them to either travel long distances to CVS pharmacies to pick up their prescriptions, or risk their privacy by having them delivered to their homes.

The plaintiffs brought a claim against CVS Caremark under the anti-discrimination provisions of the ACA, and claims against all defendants under the Americans with Disabilities Act, California’s civil rights and unfair competition laws and the Employee Retirement Income Security Act.

U.S. District Judge Edward Chen in San Francisco dismissed the case in December 2018, finding that all of the plaintiffs’ claims failed because the plan restrictions they challenged were not specific to HIV/AIDS patients, and thus not discriminatory.

Circuit Judge Milan Smith, writing for the 9th Circuit panel on Wednesday, said that even a “facially neutral” provision could be discriminatory under the ACA, and that the plaintiffs “have adequately alleged that they were denied meaningful access to their prescription drug benefit, including medically appropriate dispensing of their medications and access to necessary counseling.”

However, the judge affirmed dismissal of the other claims, finding the plaintiffs had not alleged that their health plans were places of public accommodation that would be covered by the ADA, or that they had been denied benefits promised by their plans under ERISA.

Smith was joined by Circuit Judge Andrew Hurwitz and by U.S. District Judge Timothy Burgess of the District of Alaska, sitting by designation.

The case is Doe et al v. CVS Pharmacy Inc et al, 9th U.S. Circuit Court of Appeals, No. 19-15074.

For plaintiffs: Jerry Flanagan of Consumer Watchdog

For CVS Caremark: Craig Singer of Williams & Connolly

For Lowe’s: Phillip Eskenazi of Hunton Andrews Kurth

For Time Warner: Michael Bernstein of Robinson & Cole

For Amtrak: Brian Shaffer of Morgan Lewis & Bockius