Federal Judge Rejects Motion to Dismiss HIV Patients’ Disability Bias Suit by CVS

October 26, 2022
Hall Benefits Law, LLC

A California federal judge refused to dismiss a proposed class action claiming that CVS Pharmacy’s prescription drug program discriminates against HIV and AIDS patients. CVS had argued that its five subsidiaries against which the plaintiffs had filed suit under the Affordable Care Act (ACA) could not be held responsible for the alleged discrimination. The judge disagreed, finding that separate corporate entities could not shield CVS from federal health care law requirements. The case is John Doe One et al. v. CVS Pharmacy Inc. et al., case number 3:18-cv-01031, U.S. District Court for the Northern District of California.

Section 1557 of the ACA provides that entities receiving federal funding and administering a health program or activity cannot discriminate on the same grounds prohibited by Title VI of the Civil Rights Act, Title IX, or the Age Discrimination Act. CVS claimed that none of its subsidiaries that allegedly committed the discriminatory acts alone administered the pharmacy benefits program or received federal funding. The court rejected that argument, pointing out that Congress meant Section 1557 to be broadly construed and that the CVS subsidiaries still received indirect federal funding. The court noted that several other courts have held that entities are subject to the anti-discrimination provisions of the ACA if they can reject federal funding or have controlling authority over a federal program.

The plaintiffs in John Doe One claim that the health plans discriminate against them because they provide in-network specialty medications only through mail orders delivered to their homes or a CVS store. These exclusive delivery methods can cause delays and privacy concerns. These delivery methods also make it impossible for pharmacists to monitor the medications based on the patients’ medical histories for interactions with other drugs they might be taking. In other words, the plaintiffs claim they do not receive the same level of care that non-HIV/AIDS patients receive.

The district court initially dismissed the suit in December 2018, but the U.S. Court of Appeals for the Ninth Circuit revised the suit in 2020. The appellate court ruled that the plaintiffs had sufficiently alleged that the structure of the CVS program is discriminatory because it prevents them from receiving the same level of care as other patients with neither HIV nor AIDS. CVS sought a writ of certiorari to the U.S. Supreme Court but agreed to drop that appeal in November 2021.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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