Doe v. CVS Pharmacy, Inc.

Decision Date12 December 2018
Docket Number Docket Nos. 87, 89, 97, 113,Case No. 18-cv-01031-EMC
Citation348 F.Supp.3d 967
Parties John DOE ONE, et al., Plaintiffs, v. CVS PHARMACY, INC., et al., Defendants.
CourtU.S. District Court — Northern District of California

Alan M. Mansfield, The Consumer Law Group, San Diego, CA, Benjamin Reese Powell, Jerry Sinclair Flanagan, Los Angeles, CA, Charles Nicholas Dorman, Whatley Kallas, LLP, Birmingham, AL, Edith Marie Kallas, Joe R. Whatley, Jr., Whatley Kallas, LLP, New York, NY, Henry C. Quillen, Pro Hac Vice, Whatley Kallas, LLP, Portsmouth, NH, for Plaintiffs.

Enu A. Mainigi, Grant A. Geyerman, Pro Hac Vice, Benjamin Walker Graham, Sarah Lochner O'Connor, Williams and Connolly LLP, Washington, DC, Tami Sue Smason, Foley & Lardner LLP, Phillip J. Eskenazi, Kirk Austin Hornbeck, Hunton Andrews Kurth LLP, Los Angeles, CA, Nicholas John Fox, Foley and Lardner LLP, San Diego, CA, Brian W. Shaffer, Morgan, Lewis & Bockius LLP, Philadelphia, PA, Elise Monique Attridge, Morgan, Lewis and Bockius LLP, Washington, DC, Ellie Frances Chapman, Morgan, Lewis and Bockius LLP, James Landon Mink, Scott David Mroz, Walsworth Franklin Bevins & McCall, San Francisco, CA, Jean E. Tomasco, Pro Hac Vice, Patrick W. Begos, Pro Hac Vice, Robinson and Cole LLP, Hartford, CT, Michael H. Bernstein, Pro Hac Vice, Robinson and Cole LLP, New York, NY, for Defendants.


EDWARD M. CHEN, United States District Judge

Plaintiffs bring this putative class action alleging that they have been discriminatorily denied benefits under their employer-offered prescription drug benefit plans. The complaint names two sets of defendants: CVS Pharmacy, Inc., Caremark, LLC., and Caremark California Specialty Pharmacy, LLC (collectively "CVS"), and Amtrak, Lowe's Companies, and Time Warner, Inc. (collectively "Employer Defendants"). CVS contracted with Employer Defendants to provide prescription drug benefits to Plaintiffs. Plaintiffs allege that their benefit plans allow them to obtain their HIV/AIDS medications at favorable "in-network" prices only via mail or from a CVS pharmacy. Compared to the non-CVS "community pharmacies" from which Plaintiffs were previously able to obtain their medications, the mail order and CVS Pharmacy pickup options do not offer the same level of privacy, convenience, reliability, and service.

Plaintiffs bring eight causes of action: (1) violation of the anti-discrimination provision of the Affordable Care Act ("ACA"); (2) violation of Title III of the Americans with Disabilities Act ("ADA"); (3) violation of the California Unruh Civil Rights Act; (4) violation of the California Unfair Competition Law ("UCL"); (5) claim for benefits due under plans governed by the Employee Retirement Income Security Act ("ERISA"); (6) claim for breach of fiduciary duties under ERISA; (7) failure to provide full and fair review under ERISA; and (8) declaratory relief. Counts 1–4 are against CVS only. Counts 5–8 are against all Defendants. CVS and each of the Employer Defendants have moved to dismiss the complaint.

For the reasons discussed below, the Court GRANTS CVS and Employer Defendants' motions to dismiss. Plaintiffs' ACA and ADA claims fail because the benefit plan restrictions they challenge do not discriminate on the basis of HIV/AIDS status or disability generally; the restrictions apply to medications that treat disabilities as well as those that do not. Plaintiffs' Unruh Act claim fails because they cannot show intentional discrimination on the part of CVS. They have not stated a claim under the UCL because the benefit restrictions are neither "unlawful" nor "unfair." Plaintiffs' ERISA claims against CVS fail because their benefit plans do not entitle them to the benefit they seek, and because CVS is not an ERISA fiduciary with respect to the benefit plans. Plaintiffs' ERISA claims against Employer Defendants fail for similar reasons.


The First Amended Complaint alleges the following. Plaintiffs1 are individuals living with HIV/AIDS who are enrolled in employer-sponsored health plans. Docket No. 75 ("FAC") ¶ 1. CVS Defendants "act as agents of one another and operate as a single entity for purposes of administering pharmacy benefits and providing prescription drugs to health plans and health plan members." Id. ¶ 14. One of the CVS Defendants, CVS Caremark, administers the prescription drug benefits under Plaintiffs' plans. Id. ¶ 1. In order to qualify for lower "in-network" drug prices under their plans, Plaintiffs are required by CVS Caremark to obtain their HIV/AIDS medications from Caremark California Specialty Pharmacy, which delivers medications in one of two ways: by mailing the medications to Plaintiffs directly, or by mailing them to a CVS Pharmacy for pickup. Id. Otherwise, Plaintiffs "must either pay more out-of-pocket or pay full-price" to procure their HIV/AIDS medication from an "out-of-network" community pharmacy. Id. Plaintiffs refer to this CVS-mandated scheme for obtaining medications as "the Program." Id. All drugs designated in the benefit plans as "specialty medications" are subject to the Program's restrictions, not just drugs that treat HIV/AIDS. However, Plaintiffs allege that HIV/AIDS patients are "disproportionately impacted by the Program" due to the "complex nature of their disease and medications." Id. ¶¶ 92, 94. CVS Caremark offers "financial inducements" to health plan sponsors—Plaintiffs' employers—to enroll Plaintiffs in benefit plans subject to the Program. Id. ¶ 2.

Before their employers enrolled Plaintiffs in the Program, each of the Named Plaintiffs was able to purchase their HIV/AIDS medications through their benefit plan from any in-network pharmacy, including non-CVS pharmacies, with full insurance benefits. See id. ¶¶ 9–13. Many of them had long obtained their medications from their local "community pharmacies" and had developed relationships with their pharmacists. Id. These in-person appointments with expert pharmacists who were familiar with Plaintiffs and their medical histories serve a critical function because the pharmacists can "detect potentially life-threatening adverse drug interactions and dangerous side effects, some of which may only be detected visually"; immediately prescribe new drug regimens as Plaintiffs' conditions progress and evolve; and provide essential counseling to help Plaintiffs and their families navigate the challenges of living with a chronic condition. Id. ¶¶ 70, 80–84, 89.

Since being enrolled in the Program, however, Plaintiffs have faced numerous difficulties and indignities in their efforts to obtain their HIV/AIDS medications. Those who opted to have the medication mailed to their homes have experienced delivery problems. Id. ¶¶ 37, 46, 51. For example, in some instances the packages containing their medications were left "baking in the afternoon sun," which could "quickly degrade the potency and stability" of the medication. Id. ¶ 24. Out of concerns about parcel theft, some Plaintiffs have had to wait at home on the days their medications are scheduled for delivery, resulting in missed doctor appointments and missed days of work. Id. ¶¶ 46, 51. Those who have opted to pick up their prescriptions from CVS Pharmacies have also encountered problems. For some, the closest CVS Pharmacy is many miles away. Id. ¶ 34. Some have had to make multiple trips to and from a pharmacy to deal with incorrectly filled prescriptions. Id. Others have experienced "CVS personnel shout[ing] the name of their HIV/AIDS Medications across the room in front of other customers, raising severe privacy concerns."Id. ¶ 76. Many Plaintiffs have reached out to CVS in an attempt to resolve their problems, only to encounter bureaucracy and long wait-times. See id. ¶¶ 29, 35, 40, 91. Reportedly, CVS representatives also "appear to have no specialized knowledge about HIV/AIDS Medications or the concerns of HIV patients." Id. ¶¶ 39, 48, 85.

In short, Plaintiffs allege, the Program forces them into a "potentially life-threatening" decision: to either "forego essential counseling from an expert pharmacist at a community pharmacy and face risks to their privacy that are inherent in the Program," or "pay hundreds or thousands of dollars out-of-pocket monthly for their medications at their non-CVS community pharmacy." Id. ¶ 69. Thus, the Program "constitutes a material and discriminatory change in [Plaintiffs'] coverage, a significant reduction in or elimination of prescription drug benefits, and a violation of the standards of good health care and clinically appropriate care for HIV/AIDS patients." Id. ¶ 78.

Many Plaintiffs have attempted to opt-out of the Program, but their requests were denied. Id. Some have made formal, written opt-out requests, appealed the denial of those requests, and ultimately received "final determinations" affirming the denials. See id. ¶ 27.

Plaintiffs seek to represent the following class:

All persons currently or previously enrolled in or covered by a health plan since January 1, 2015 in which the prescription drug benefit is or was administered by CVS Caremark, and who: (i) obtained or may obtain HIV/AIDS Medications; and (ii) have been or may in the future be required to participate in the Program with no right to opt-out or notice thereof, but not including individual claims for personal injury or bodily harm.

Id. ¶ 131.

Plaintiffs filed their original class action complaint on February 16, 2018. See Docket No. 1. After CVS and Amtrak each filed a motion to dismiss, Plaintiffs filed the operative First Amended Class Action Complaint on June 18, 2018. See Docket No. 75. Each Defendant filed a motion to dismiss thereafter. See Docket Nos. 87 ("CVS Mot."), 89 ("Amtrak Mot."), 97 ("Lowe's Mot."), 113 ("Time Warner Mot.").


To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain a "short and plain statement of the claim showing that the...

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