By Amanda Ottaway, LAW360

September 7, 2021

https://www.law360.com/appellate/articles/1418979/cvs-tells-high-court-…

Law360 (September 7, 2021, 8:53 PM EDT) -- CVS Pharmacy Inc. told the U.S. Supreme Court that federal law doesn't allow HIV-positive individuals to pursue discrimination claims alleging they were unfairly affected by their health plans' requirement that they get their prescriptions by mail or at a CVS store rather than at a neighborhood pharmacy.

The pharmacy chain argued in a brief Friday that Section 504 of the Rehabilitation Act, and by extension the Affordable Care Act, doesn't allow people claiming disability bias to cite so-called disparate impact, or say they were affected disproportionately by a seemingly neutral policy like prescriptions by mail.

"Section 504 guarantees equal opportunity, not 'equal results.' All section 504 requires is that a plan make the same package of benefits available to participants regardless of their disability status — just as respondents' plans do. Any health or prescription-drug plan is a better fit for certain people," CVS said, citing the court's 1985 ruling in Alexander v. Choate .

The Supreme Court took up the case on July 2. The justices said they would limit their involvement to one question the petition raised: whether the Rehabilitation Act — along with the ACA by extension — offers a disparate-impact cause of action for disability bias plaintiffs.

The anonymous patients, who according to Friday's brief get their prescription drugs covered through their employers Amtrak, Lowe's and Time Warner Inc., argued that the health plans are discriminatory because they provide in-network specialty medications solely through mail orders delivered to their homes or to a CVS store.

If the patients were to pick up the drugs at their preferred neighborhood pharmacies, they would have to pay out-of-network costs, according to Friday's brief. The patients argued in their own high court brief in June that their local pharmacists know their medical histories and can help prevent dangerous medication combinations and bad side effects.

But if people can sue to get out-of-network benefits at the price of what they pay for in-network services, CVS argued Friday, "health care networks as we know them will collapse and costs will rise for everyone."

Section 504, which applies to entities that receive federal funding, isn't a statute under which plaintiffs can claim disparate impact because its language addresses the reasons for banned actions by the entity that receives the money and "not simply the existence of disparate burdens on a protected class," CVS argued.

Section 504 also uses a so-called "sole causation standard," meaning any biased actions must be only because of a person's disability — a standard that doesn't jibe with disparate impact. Further, liability for disparate impact focuses on a policy's effects on a group, not on individuals, CVS argued.

CVS also noted that the federal laws protecting against disparate impact make clear that they're doing so, and that Section 504 doesn't use that telltale language.

The Ninth Circuit revived the HIV patients' ACA claims in December 2020 after a Northern District of California judge dismissed the case in 2018. The three-judge Ninth Circuit panel unanimously agreed that five patients with HIV and AIDS adequately alleged that the structure of CVS' program is discriminatory, because it prevents them from receiving the same level of care that non-HIV/AIDS patients regularly obtain when filling nonspecialty prescriptions.

According to the patients' attorney, Jerry Flanagan of Consumer Watchdog, two of the five patients have passed away since the Supreme Court took up the case. Though Flanagan didn't specify their causes of death, he noted that individuals with HIV "often have complicated comorbidities that undermine their health."

"This is why mail-order-only delivery of medications is so dangerous: short delays in deliveries and no access to pharmacists in managing the disease is very dangerous to the health of those with HIV," Flanagan said in an email Tuesday.

"CVS' brief ignores the plain language of Section 504, which is clearly focused on the effects that these programs have on the disabled person," Flanagan said.

In an emailed statement Tuesday, CVS Health spokesperson Mike DeAngelis said subsidiary CVS Caremark "abhors" disability discrimination.

"In this case, restrictions on plaintiffs' specialty medications applied equally to more than 300 drugs on the specialty drug list and to all plan members, not just patients with HIV/AIDS. Plaintiffs' lawsuits perversely risk hurting individuals with disabilities because plans and employers may be forced to cut back on benefits to other groups," he said.

Counsel for CVS did not immediately respond to a request for comment.

CVS is represented by Lisa Blatt, Enu Mainigi, Craig Singer, Sarah Harris, Katherine Moran Meeks, Kimberly Broecker and Aaron Z. Roper of Williams & Connolly LLP.

The patients are represented by Gerald Flanagan, Daniel Sternberg and Benjamin Powell of Consumer Watchdog, and by Alan Mansfield and Henry Quillen of Whatley Kallas LLP.

The case is CVS Pharmacy Inc. et al. v. John Doe One et al., case number 20-1374, in the U.S. Supreme Court.

--Additional reporting by Melissa Angell, Dani Kass and Alexis Shanes. Editing by Bruce Goldman.

Read more at: https://www.law360.com/appellate/articles/1418979/cvs-tells-high-court-…