Court of Appeals Dismissed Express Scripts HIPAA-Based Lawsuit

In 2019, five independent pharmacies filed a lawsuit against Express Scripts alleging inappropriate use of patient data, which violates of HIPAA.

Express Scripts is the biggest pharmacy benefits manager in the USA that has its own retail pharmacies and pharmacy service. The five independent pharmacies joined the Express Scripts network and had to submit complete claims to Express Scripts for processing and payment before releasing drugs. The pharmacies additionally had to include details with regards to the medicines in their claims, together with the contact data of their clients.

In the lawsuit, the pharmacies claimed that Express Scripts violated the contract and good-faith and fair-dealing covenant, and in that way violated the HIPAA and the HITECH Act. The pharmacies needed to give Express Scripts details regarding their consumers, which it is claimed was then employed to transition the clients to the mail order service of Express Scripts. The pharmacies stated it was not needed to give that data to validate coverage and for compensation.

The Pharmacies state that Express Scripts is utilizing their confidential client details with no consent to transfer their consumers to [Express Scripts] own mail-order service when Express Scripts ought to merely utilize the data to verify clients’ coverage and to compensate the Pharmacies. The pharmacies additionally claimed the pharmacy benefits manager was involved in the unjust competition and disclosed the Pharmacies’ trade secrets with its associates to be able to swipe the Pharmacies’ clients.

The district court closed the lawsuit saying the data given was not secured and the contracts the pharmacies agreed upon with Express Scripts permitted the pharmacy benefits manager to engage in mail-order prescription arrangements with no infringement of any good faith agreements. The district court likewise made a decision that the pharmacies can’t file suit for a HIPAA violation since there’s no private cause of action under HIPAA.

In their plead against the ruling of the district court to close the case, the pharmacies mentioned that the judgment to disregard the lawsuit for inadequate standing was wrong because they were not seeking to file a claim for a HIPAA violation. They furthermore requested the courts substitute reasoning that HIPAA simply permits the Pharmacies’ consumers, not the Pharmacies, to grant the usage of their confidential health data be dismissed. Express Scripts contended that even when it was possible to express a claim under HIPAA, the pharmacies did not present adequate facts to show past or continuing HIPAA violations.

The pharmacies furthermore stated in their plead that Express Scripts was just eligible to obtain information following claims were processed, and that the gathering of consumer details was not necessary and was merely being obtained due to self-interest.

The 8th U.S. Circuit Court of Appeals confirmed the lower court’s decision that it isn’t feasible to sue for a HIPAA violation, that the data given to Express Scripts were not protected, and the conditions of the pharmacies agreements with Express Scripts granted the pharmacy benefits manager to provide mail-order prescription arrangements to the pharmacies’ consumers. The contracts signed by the pharmacies expressed they agreed to partner with Express Scripts for managing their clients’ benefits, and mail service distribution – even via Express Script’s own service – is classified as benefits offered to any member.

The Court of Appeals additionally established the lower courts discharge of the pharmacies attempted monopolization allegation, mentioning that the Pharmacies failed to plead enough details to satisfy their “burden of alleging a pertinent market so as to point out a possible antitrust claim.