By Rachel Stone, LAW 360

October 29, 2021

https://www.law360.com/articles/1435636?scroll=1&related=1

Law360 (October 29, 2021, 8:19 PM EDT) -- The U.S. threw its support behind a group of people living with HIV who urged the U.S. Supreme Court to hold that federal law covers their discrimination claims against CVS, alleging their health plans' prohibition on getting specialty medication from local pharmacies unfairly affected them.

In an amicus brief filed Thursday at the nation's highest court, the federal government argued that Section 504 of the Rehabilitation Act, and by extension the Affordable Care Act, permits people to bring disability discrimination lawsuits regarding policies with a discriminatory impact, not just policies that are discriminatory on their face.

The government said the plain language of Section 504 — which protects individuals against being deprived of benefits under a federally funded program as a result of their having a disability — can be read to include disparate-impact claims.

The fact that the statute was written in the passive voice also supports this interpretation, the government said in the brief, claiming this "powerfully indicates" that the statute doesn't need someone to show that an actor intentionally discriminated.

Plus, CVS Pharmacy Inc. "identif[ied] no textual support for limiting Section 504 to intentional discrimination," the brief stated.

The U.S. government's brief also relied heavily on the 1985 Supreme Court case Alexander v. Choate . While the brief noted that this decision had technically left the door open as to whether Section 504 lets people make disparate impact claims, it "aptly identified persuasive reasons for concluding that Section 504 extends beyond intentional discrimination against persons with disabilities."

According to the brief, the court in Choate believed that Congress had meant to encompass disparate-impact discrimination when it constructed the Rehabilitation Act, quoting the Choate decision's statement that most of what Congress sought to end through passing the act would be stymied if Section 504 only covered intentional discrimination.

Subsequent court decisions also supported that interpretation, the brief stated.

"In the first 34 years after Choate, every court of appeals to resolve the question concluded that Section 504 allows disparate-impact liability based on the denial of 'meaningful access' to a benefit," the government said.

Since the U.S. filed its amicus brief in support of the patients, a slew of other education and advocacy groups, including the NAACP Legal Defense and Educational Fund Inc. and National Health Law Program and Disability Rights California, have done the same.

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.

Two of the five patients have passed away since the Supreme Court agreed to weigh in on the matter, counsel for the patients told Law360 in September.

The anonymous patients, who according to CVS' September 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 the pharmacy chain'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 CVS claimed in its September high court brief that plaintiffs can't allege disparate impact under Section 504 because its language addresses the reasons for banned actions by the entity that receives the money, not a potential outsized burden on a protected group. And unlike other federal laws that include language protecting against disparate impact, this statute doesn't make that protection explicit, the pharmacy chain argued.

The Ninth Circuit revived the 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 the five plaintiffs adequately alleged that the structure of CVS' program is discriminatory, because it prevents them from receiving the same level of care that people who are not living with HIV regularly obtain when filling nonspecialty prescriptions.

"Respondents are delighted by the support of the United States," said Gerald Flanagan, counsel for the patients.

Counsel for the federal government did not immediately respond to a request for comment Friday.

Counsel and representatives from CVS did not immediately respond to requests for comment Friday.

The federal government is represented in the amicus brief by Brian H. Fletcher, Kristen Clarke, Malcolm L. Stewart, Masha G. Hansford, Thomas E. Chandler and Jason Lee of the U.S. Department of Justice.

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 Amanda Ottaway, Melissa Angell and Dani Kass. Editing by Leah Bennett.