Drug Claims Rules Are Too Close for 9th to Call

(CN) - An 11-judge panel of the 9th Circuit asked for guidance Wednesday on the long-running free-speech dispute over rules that California sets for prescription drug claims processors.

Owners of five California retail pharmacies filed two class actions since 2002 after Anthem Prescription Management and other firms failed to comply with the reporting requirements.

The U.S. District Court in Riverside dismissed both cases for lack of standing. While those cases were under appeal, the pharmacists filed a similarly unsuccessful case against some of the same defendants in Los Angeles Superior Court. The California Court of Appeal affirmed dismissal of that case.

On the federal side, however, the 9th Circuit found that the law violated California's free speech clause.

A majority of the divided three-judge panel "reason[ed] that the California Supreme Court would decide the state constitutional question 'by relying, primarily, if not exclusively, on First Amendment precedent,'" according to the summary published by the court Wednesday as it faces an interim appeal.

After rehearing the issue en banc, the federal appeals court in San Francisco found that the inconsistency precludes its resolution of the case.

"The outcome of this appeal is dictated by the scope of the free speech clause of the California Constitution as applied to section 2527," according to the 11-judge panel. "This constitutional question is critical to California's interest in consistent enforcement and interpretation of its constitution and laws in both state and federal courts. It is only because the panel's ... decision has been withdrawn that the result that section 2527 is enforceable in federal, but not state, courts has been avoided. The majority of the three judge panel acknowledged that this situation, if left in place, would lead to forum shopping and the inconsistent enforcement of state law. Without the California Supreme Court's examination of this question, the risk remains that the en banc court would follow the lead of the panel majority to the same end. If, of course, the California Supreme Court itself were to agree with the panel majority, then it too would conclude that the statute is constitutional, and its decision would control in California state and federal courts."

The 11-judge panel thus certified the following question to the California Supreme Court:

"Does California Civil Code section 2527 compel speech in violation of article I, section 2 of the California Constitution?"

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit