RICHMOND, Va. (CN) — The Fourth Circuit heard arguments on Wednesday over whether Walgreens violated customers’ privacy by sharing prescription information through a third-party vendor.
“Residents of the State of South Carolina who patronize Walgreens’ pharmacies do so without explicitly or impliedly agreeing to sacrifice their well-established common law privacy rights “at the corner of happy and healthy,” began the underlying class-action lawsuit against the company in February 2019.
A three-judge panel on Wednesday heard arguments from both sides.
In a 72-page brief for the consumers, attorney Michael Moore said the case arises from “covert corporate access and use of pharmacy patients’ personally-identifiable medical and financial information to profit via unrelated third-party contracts.”
The plaintiffs in the case, including more than 100 proposed class members, bought prescription drugs from a South Carolina pharmacy owned by Walgreen Co.
They say the company acquired their sensitive prescription information from the pharmacy through a corporate-sharing software program.
Moore, who works with the law firm Pope, McGlamry, Kilpatrick, Morrison, & Norwood P.C., argued for the plaintiffs in the case on Wednesday.
“Very simply, this is a privacy case. This is about the sanctity of health care records, and who should have access to it and who should not have access to it,” he told the judges, Wednesday.
When it comes to Walgreens, he said, the pharmacy is a separate entity that is governed by state law.
Urging the panel to overturn a decision made by the federal court in Charleston, Moore said that the lower court had failed to recognize this distinction between entities.
Moore said it occurred to him as he reviewed briefs in preparation for Wednesday’s arguments that, if the federal court was right, “if you have your prescriptions filled at a big-box retailer, that happens to also have a pharmacy, anybody within that big-box retailer would be authorized to have access to your personal health information and prescription information.”
U.S. Circuit Judge G. Steven Agee interrupted to ask Moore to state his claims with respect to privacy.
“What is the specific injury that you say your clients have suffered?” the George W. Bush nominee pressed.
“We claim and know and have alleged that, in fact, their personal information was taken from them without consent and disseminated to unauthorized people,” the attorney responded.
At least 160 people who are completely unrelated to the pharmacy and to prescription services have been provided access to customers’ personal records, Moore said.
“These are simply people that work in a separate, profit-generated department that Walgreens has set up to try to get drugs at a cheaper cost,” he said, adding “Walgreens does not even tell its pharmacists that work for them that they are doing this.”
Agee again interjected to ask “Isn’t that the purpose of the 340B program, is to get to the people that are qualified, to get them these low-cost drugs?”
The 340B drug pricing program, Moore responded, was set up “to help these poor hospitals be able to find drugs at a cheaper price to set off some costs.”
But, he argued, if Walgreens simultaneously controls a 340B plan and a pharmacy, it may be able to pick-and-choose plans for customers based on what is more profitable.
South Carolina affords greater privacy protections and rights than the Health Insurance Portability and Accountability Act, one of many claims under which the customers brought the legal action.
Robert Hochman of Sidley Austin LLP argued that billing and payments are pharmacy operations, as he represented Walgreens during Wednesday’s oral arguments.
He contended that Walgreens never considers profit when determining what plan to use.
“Plaintiffs seem to be saying they’ve alleged injury by alleging that we benefit from using their personal information in connection with the 340B program,” he said later adding, “The agreement makes clear that the payment calculation Walgreens carries out pends on whether the patient is insured or not.”
The whole point of the 340B program is to make sure there is a greater amount of resources available to covered entities that are serving hard-to-reach populations, he said.
He argued that Walgreens must always choose the option that leaves the customer paying less.
“So when plaintiffs complain about this secondary financial analysis at least with respect to uninsured patients, they’re literally saying ‘they should have paid more’. That's what I mean by the opposite of injury,” he added.
The Walgreens attorney came after Moore for not providing the full scope of who had access to the pharmacy information.
“And, I know Mr. Moore said today that there are other people, but he was asked point blank whether he knows of anybody else and he said no,” Hochman said, adding, “So, the injury actually in the complaint is all 340B and so, therefore, we know from the materials properly before the court that the 340B program just describes how their information was used to determine how to pay for medications.”
Moore had previously acknowledged that a refusal of certain discovery materials left his side without further information related to who else may have accessed the information.
In rebuttal, Moore accused Hochman’s side of pretending to “ride a white horse” by keeping costs cut.
“The fact is, they've acknowledged they make money. It's a profit-driven thing,” Moore said, adding, “They make money on the filling of prescriptions and certainly on the vendor contract. That’s why appropriations says we have a right, the plaintiffs have a right, to control their private information and what it’s used for.”
U.S. Circuit Judge Diana Gribbon Motz, a Bill Clinton nominee and Senior U.S. Circuit Judge Barbara Milano Keenan, a Barack Obama nominee, joined the panel on Wednesday.
“If the district court’s ruling stands, South Carolina citizens immediately lose any previously-held expectation of privacy over their prescription-PII that the state legislature and judiciary has exerted great effort to provide,” Moore wrote in the brief.
The panel did not indicate when or how it would rule.
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