Beeman v. Anthem Prescription Management, LLC
58 Cal. 4th 329
| Cal. | 2013Background
- Civil Code section 2527 requires prescription drug claims processors to conduct or obtain and transmit biennial studies identifying California pharmacies’ fees for dispensing services to clients.
- The statute is challenged as a content-based compelled-speech provision potentially violating California Constitution article I, section 2.
- The case traces legislative history (1982 enactment) and prior appellate decisions (ARP Pharmacy decisions and Beeman line) leading to en banc review.
- The Ninth Circuit sought California Supreme Court guidance on whether section 2527’s speech requirements survive state free-speech scrutiny.
- The majority holds section 2527 implicates free speech but is subject to rational-basis review and satisfies it; it dis approves ARP Pharmacy to the extent it applied strict scrutiny.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 2527 implicates California free speech | Beeman argues it does threaten speech rights | The defendants contend it does not implicate free speech | Yes, implicates article I §2 free speech |
| What level of scrutiny applies | Beeman suggests heightened scrutiny (intermediate or strict) | AR P Pharmacy argues strict scrutiny; majority adopts rational basis | Rational basis review applies |
| Whether the statute satisfies rational-basis review | Disclosures promote informed decisionmaking; rational | Disclosures are unrelated to reimbursement rates; inadequate fit | Yes, rational basis is satisfied; reasonably related to legitimate objective |
| Classification of the speech (commercial vs noncommercial) and proper framework | Speech is commercial and thus subject to proper scrutiny | Statute is a factual disclosure; relabeling as commercial not dispositive | Disclosures are commercial speech and reviewed under rational-basis framework under article I |
Key Cases Cited
- Sorrell v. IMS Health Inc., 131 S. Ct. 2653 (U.S. 2011) (creation/dissemination of information as speech; compelled disclosure scrutinized)
- Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (U.S. 1985) (compelled disclosures in commercial advertising; rational-basis under certain contexts)
- Central Hudson Gas & Elec. Co. v. Public Serv. Comm’n, 447 U.S. 557 (U.S. 1980) (establishes intermediate scrutiny for commercial speech)
- ARP Pharmacy, Services, Inc. v. Gallagher Bassett Services, Inc., 138 Cal.App.4th 1307 (Cal. Ct. App. 2006) (held section 2527 may trigger strict scrutiny under state constitution)
- Gerawan Farming, Inc. v. Lyons, 24 Cal.4th 468 (Cal. 2000) (commercial speech; compelled subsidy framework; informs proper scrutiny)
- Gerawan Farming, Inc. v. Kawamura, 33 Cal.4th 1 (Cal. 2004) (Gerawan II; adopts Central Hudson intermediate scrutiny for commercial speech in California)
- Beeman v. Anthem Prescription Management, Inc., 652 F.3d 1085 (9th Cir. 2011) (en banc; challenged 2527; discussion of compelled speech in federal context)
- New York State Restaurant Assn. v. Board of Health, 556 F.3d 114 (2d Cir. 2009) (calorie disclosure; rational basis for informing consumers)
- National Electrical Mfrs. Ass’n v. Sorrell, 272 F.3d 104 (2d Cir. 2001) (rational basis for disclosure requirements to inform consumers)