926 F.3d 235
6th Cir.2019Background
- Plaintiff John Doe, HIV-positive, received Genvoya through a BlueCross BlueShield Tennessee plan that covers the drug only if obtained via a specialty pharmacy network or mail order; local pharmacy fills were not covered in-network.
- Doe sued BlueCross as a putative class action alleging disability discrimination under §1557 of the Affordable Care Act (incorporating §504 of the Rehabilitation Act), the ADA Title III, and breach of contract; district court dismissed and denied leave to amend.
- BlueCross’s specialty-medication program is facially neutral and lists high-cost drugs used by both disabled and non-disabled patients; the policy’s common characteristic is cost, not disability.
- Doe sought an accommodation (permitting local pharmacy fill) and argued disparate-impact liability under §1557; he also argued BlueCross “operated” the pharmacy under Title III and breached an implied duty of good faith.
- The Sixth Circuit considered (1) whether §1557 permits disparate-impact claims or borrows the substantive standards of the incorporated statutes, (2) whether §1557 creates a private right of action, (3) whether §504/§1557 reach disparate-impact claims, (4) whether BlueCross violated the ADA Title III and contract law, and (5) whether amendment was permitted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §1557 allow plaintiffs to pick any incorporated statute’s substantive standard (e.g., disparate-impact) for any protected class? | §1557’s incorporation and enforcement-mechanism sentence allows using any substantive standard (including disparate-impact) from the four listed statutes for any protected ground. | §1557 incorporates the substantive standards tied to each listed statute and makes available their enforcement mechanisms; it does not permit mixing-and-matching standards. | Held: §1557 adopts the substantive standard of the relevant incorporated statute (here §504 for disability), not a buffet of standards. |
| Is there a private right of action to enforce §1557 disability claims? | §1557’s enforcement-mechanism sentence permits private suits under the enforcement mechanism of the relevant statute. | Same as plaintiff on this point. | Held: Yes; because §504 contains a private right of action, §1557 claims for disability discrimination can be privately enforced. |
| Does §504 (as applied via §1557) reach disparate-impact claims? | Doe argued the specialty-pharmacy rule disparately impacts disabled beneficiaries and §504 should cover such impacts. | BlueCross argued §504 prohibits discrimination "solely by reason of" disability and does not reach disparate-impact liability; disparate-impact would be inconsistent with §504’s text and purpose. | Held: §504 does not prohibit disparate-impact discrimination; plaintiff’s disparate-impact theory fails. |
| Does ADA Title III reach BlueCross for interfering with access to a public accommodation (local pharmacy)? | Doe argued BlueCross’s plan effectively denied him access to the local pharmacy (a public accommodation) and thus is liable under Title III. | BlueCross argued it does not own/lease or operate the pharmacy; it only sets plan coverage terms and co-pay levels and therefore is not an operator under Title III. | Held: BlueCross is not an owner/lessee/operator of the pharmacy; Title III claim fails. |
| Did BlueCross breach the implied covenant of good faith and should Doe get leave to amend? | Doe alleged breach tied to inadequate coverage and sought leave to amend to add theories. | BlueCross argued statutory claims failed, and amendment would be futile; Doe had not shown how to cure defects in prior pleadings. | Held: Contract claim fails because statutory claims fail; the district court did not abuse discretion denying further amendment as proposed amendments would be futile. |
Key Cases Cited
- Barnes v. Gorman, 536 U.S. 181 (private right of action exists under the Rehabilitation Act)
- Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (limits on agency authority; clear congressional intent controls)
- Alexander v. Choate, 469 U.S. 287 (assumed without deciding that §504 might reach some disparate-impact conduct; cautioned about boundless disparate-impact scope)
- Ricci v. DeStefano, 557 U.S. 557 (definition and framework for disparate-impact analysis)
- Alexander v. Sandoval, 532 U.S. 275 (Title VI does not support a disparate-impact private cause of action)
- Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 135 S. Ct. 2507 (disparate-impact liability under statutes with language referring to adverse effects/availability)
- Griggs v. Duke Power Co., 401 U.S. 424 (classic disparate-impact theory under Title VII)