Mark P. Robinson, Jr., Bar No. 054426
Sharon J. Arkin, Bar No. 154858
ROBINSON, CALCAGNIE & ROBINSON
620 Newport Center Drive, 7th Floor
Newport Beach, California 92660
(949) 720-1288, Fax (949) 720-1292
Arthur Bryant, Bar No. 208365
Victoria Ni, Bar No. 212443
TRIAL LAWYERS FOR PUBLIC JUSTICE
One Kaiser Plaza, Suite 275
Oakland, California 94612-3684
(510) 622-8150, Fax 622-8155
Thomas Grande
Davis Levin Livingston Grande
851 Fort Street
Honolulu, Hawaii 96813
(808) 524-7500, Fax 545-7802
Attorneys for Plaintiffs
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF ALAMEDA
AUDREY TIMMIS; LINDA GUDINO; )
WINSTON YARBOROUGH; MARY )
O’DONNELL; SHIRLEY MILLIGAN; )
MARY CARGILE; and, CHARLES )
PHILLIPS, M.D.; and CALIFORNIA )
CONSUMER HEALTH CARE COUNCIL, )
a California non-profit corporation, )
)
Plaintiffs, )
)
vs. )
)
KAISER PERMANENTE; KAISER )
FOUNDATION HEALTH PLAN, INC.; )
KAISER FOUNDATION HOSPITALS, )
INC.; THE PERMANENTE MEDICAL )
GROUP, INC.; and DOES 1 through )
100, inclusive, )
)
Defendants. )
_________________________________________ )
CASE NO. 833971-7
The Hon. Ronald Sabraw
Filing Date: December 6, 2000
PLAINTIFFS’ OPPOSITION TO MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE, SUMMARY ADJUDICATION
Date: October 25, 2002
Time: 2:00 p.m.
Dept.: 22
[Filed concurrently with Separate Statement; Objection to Summary Adjudication; Objections to Evidence; Appendix of Evidence]
TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD:
Plaintiffs hereby oppose the motion for summary judgment or, in the alternative, summary adjudication of issues by defendants on the grounds that triable issues of material fact remain in dispute and summary determination is precluded by law.
Plaintiffs’ opposition will be based on this Opposition, the attached Memorandum of Points and Authorities, the concurrently-filed Separate Statement, the concurrently-filed Appendix of Evidence, the concurrently-filed Objection to Summary Adjudication, the concurrently-filed Objections to Evidence, all papers, pleadings and records on file in this action and on such other and further argument and evidence as may be presented.
Dated: October 10, 2002 ROBINSON, CALCAGNIE & ROBINSON
TRIAL LAWYERS FOR PUBLIC JUSTICE
DAVIS LEVIN LIVINGSTON GRANDE
By:________________________________
SHARON J. ARKIN
Attorneys for Plaintiffs
TABLE OF CONTENTS
MEMORANDUM OF POINTS AND AUTHORITIES
1. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. KAISER’S PILL SPLITTING POLICY IS UNLAWFUL
AND UNFAIR AND ITS REPRESENTATIONS ARE FRAUDULENT. . . . . . . . . . . . . . . . .4
A. Kaiser’s pill splitting policy is unlawful.
(1) As a medical care provider, Kaiser has a duty to
disclose to patients that their care is impacted by
Kaiser’s financial self-interest
(2) Kaiser’s pill splitting policy violates the Consumer
Legal Remedies Act, the violation of which can be
a predicate for a violation of the UCL under the unlawful prong.
(3) Kaiser’s pill splitting policy also violates Penal Code
B. Kaiser’s representations regarding the quality of the medical
care provided and the factors to be considered in establishing
its formulary are likely to mislead.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
(1) Kaiser’s formulary - to the extent it provides for
pill splitting as a cost containment device - does
not provide for a quality-based program predicated
on safety, patient convenience and quality of care
in which cost is the last consideration, as represented
(2) Kaiser’s pill splitting policy does not provide its members
with “high quality, evidence-based” medical care.
C. Kaiser’s pill splitting practice is also unfair.
3. RESTITUTIONARY RELIEF MAY PROPERLY BE
AWARDED IN THIS ACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
4. PLAINTIFFS NEED NOT PROVE ACTUAL DAMAGES
IN ORDER TO PREVAIL UNDER THE CLRA
5. KAISER HAS NOT DEMONSTRATED THAT ANY CHANGE
HAS OCCURRED SINCE ITS DEMURRER ON THE
ABSTENTION ISSUES AND THERE IS, THEREFORE, NO
BASIS FOR GRANTING SUMMARY JUDGMENT ON
THAT GROUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
A. Not all defendants are subject to regulation by the
“investigating” agencies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
B. Primary jurisdiction does not apply because none of
the governmental agencies have any pervasive and
self-contained system of administrative procedure to
deal with the precise issue in this case: Pill-splitting.. . . . . . . . . . . . . . . . . . . . . 26
C. Litigation of these issues under the consumer interest
statutes is not limited under Samura.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
D. The doctrine of equitable abstention is irrelevant to the
issues in this case.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6. FURTHER DISCOVERY IS NECESSARY
TABLE OF AUTHORITIES
CASES
American Suzuki Motor Corp. v. Superior
Court (1995) 37 Cal.App.4th 1291. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 26, 27
Bahl v. Bank of America (2001)
89 Cal.App.4th 389. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Bank of the West v. Superior
Court (1992) 2 Cal.4th 1254. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Bondanza v. Peninsula Hospital &
Medical Center (1979) 23 Cal.3d 260. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Cel-Tech Communications, Inc. v. Los
Angeles Cellular Telephone Co.
(1999) 20 Cal.4th 163. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Christensen v. Dewor Developments,
Inc. (1983) 33 Cal.3d 778. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Committee on Children’s Televison v.
General Foods Corp. (1983) 35 Cal.3d 197. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21, 22
Cundiff v. GTE California, Inc.
(2002) 101 Cal.App.4th 1395. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27, 29
Day v. AT&TCorporation
(1998) 63 Cal.App.4th 325. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Desert Healthcare Dist. v. PacfiCare,
FHP, Inc. (2001) 94 Cal.App.4th 781. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Diaz v. Kay-Dix Ranch
(1970) 9 Cal.App.3d 588. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Doers v. Golden Gate Bridge, Hwy.
& Transp. Dist. (1979) 23 Cal.3d 180. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Farmers Ins. Exchange v. Superior
Court (1992) 2 Cal.4th 377. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Fletcher v. Security Pacific National
Bank (1989) 23 Cal.3d 442. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Frazee v. Seely (2002)
95 Cal.App.4th 627. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
In re Marriage of Brown (1976) 15 Cal.3d 838. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21, 22
Kraus v. Trinity Management Services,
Inc. (2000) 23 Cal.4th 116. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Leoni v. State Bar (1985)
39 Cal.3d 609. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Maio v. Aetna, Inc. (3rd Cir. 2000)
221 F.3d 472. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
McCall v. PacifiCare of Calif.,
Inc. (2001) 25 Cal.4th 412. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
McConnell v. Merrill Lynch, Pierce, Fenner
& Smith, Inc. (1980) 105 Cal.App.3d 946. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Moore v. California State Board of
Accountancy (1992) 4 Cal.4th 999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Moore v. Regents of University
of California (1990) 51 Cal.3d 120. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Outboard Marine Corp. v. Superior Court
In and For Sacramento County (1975)
52 Cal.App.3d 30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
People v. Duz-Mor Diagnostics Lab,
Inc. (1998) 68 Cal.App.4th 654. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
People v. Superior Court (Jayhill
Corp.) (1973) 9 Cal.3d 283. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Podolsky v. First Healthcare Corp.
(1996) 50 Cal.App.4th 632. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Prata v. Superior Court (2001)
91 Cal.App.4th 1128. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Samura v. Kaiser Foundation Health
Plan, Inc. (1993) 17 Cal.App.4th 1284. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Wolfe v. State Farm Fire & Cas.
Ins. Co. (1996) 46 Cal.App.4th 554. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
STATUTES
Business & Professions Code section 17200
Business & Professions Code section 17205. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Civil Code section 1750. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Civil Code section 1752. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Civil Code section 1770(a)(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Civil Code section 1770(a)(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27, 29
Civil Code section 1770(a)(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Civil Code section 1770(a)(14). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Civil Code section 1770(a)(16). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Civil Code section 1780(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Civil Code section 1780(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17, 24, 29
Penal Code section 550(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Penal Code section 550(b)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
MEMORANDUM OF POINTS AND AUTHORITIES
INTRODUCTION
There is compelling evidence demonstrating that this motion must be denied: Clinical studies
unequivocally demonstrate that pill splitting is not safe. And if it is not safe, Kaiser should not be doing it
for cost containment purposes.
Throughout its brief, Kaiser engages in an insupportable syllogism, asserting that because plaintiffs are not seeking damages for personal injuries in this case, there must necessarily be no risk of harm resulting from pill splitting. That argument is, of course, ridiculous and the available evidence affirmatively demonstrates that, in fact, pill splitting does create a risk of harm. There is only one clinical study that has compared clinical outcomes as between half tablets and whole tablets with respect to any of the drugs on Kaiser’s “approved” list for pill splitting. (Exh. 7: Deposition of Mirta Millares, 67:12-83:13 [discussing all studies relevant to simvastatin]; 87:25-88:9 [reference to lisinopril study]; 89:19-90:10 [acknowledgment that lisinopril is not currently on the approved list].) That study, Duncan MC, Castle SS, and Streetman DS, Effect of Tablet Splitting on Serum Cholesterol Concentrations, The Annals of Pharmacotherapy, 36:205 (2/2002) (Exh. 10), compared clinical outcomes with respect to several serum lipid measurements as between whole tablet doses and half-tablet doses of simvastatin (brand name: Zocor). As reported in that study, although many of the patients had equivalent clinical outcomes, the authors reported that 15% of the participants in the study had clinically significant increases (greater than 10%) in total cholesterol on half-tablet doses as compared with whole tablet doses. Additionally, 18% of the participants had clinically-significant increases (greater than 10%) in LDL cholesterol (the so-called “bad” cholesterol) while taking half-tablet doses as compared with whole tablet doses. (Declaration of Neil Spingarn, paragraph 10C; Declaration of James Haas, M.D., paragraph 7.) Other studies have noted that a 1% decrease in overall cholesterol results in a 2% decrease in cardiac risk. (Rindone JP, The Outcome of Very Low Dosages of Simvastatin in Patients with Hypercholesterolemia, Pharmacotherapy, 19:399, 402 (1999) (attached as Exh. 11)) The obverse is likely true as well: a 1% increase in overall cholesterol may result in a 2% increase in cardiac risk. (Spingarn Decl., paragraph 10C; Haas Declaration, paragraph 7.) Thus, for at least 15-18% of the participants, half-tablet dosing caused the patients to suffer a worse clinical outcome than with whole tablet doses, and may have increased their cardiac risk by more than 20%. (Spingarn Decl., paragraph 10C; Haas Declaration, paragraph 7.)
This evidence is unequivocal: Pill splitting results in adverse clinical outcomes for a significant number of people. Given that, it cannot rationally be considered “safe.”
And there is more: As discussed in more detail below, other factors - including important public policy considerations - warrant the rejection of pill splitting as a cost-containment device. Allowing a managed care entity to require patients to split pills in order to save the entity money undermines the careful regulatory system established by the FDA (Spingarn Decl., paragraphs 3-6, 8); Kaiser’s reliance on its own weight variation tests as justification for selecting pills that can be split for cost containment purposes is misplaced in light of well-documented studies demonstrating that pills cannot be consistently split into equal doses (Spingarn Decl., paragraphs 9, 10, 10B, 10E); and, finally, clinical studies demonstrate that pill splitting has the overall effect of reducing patient compliance - meaning that people take their pills less regularly than they would with whole tablets. (Spingarn Decl., paragraph 10D.) These are the very reasons why several important organizations condemn pill splitting for cost containment purposes:
* The Veterans Administration issued its Project Report Summary regarding pill splitting and concluded: “Does the VA recommend tablet splitting? No. Tablet splitting is not recommended by the VA.” (Exh. 18; emphasis added.)
* The American Society of Consultant Pharmacists “has issued a position statement strongly opposing policies to deny payment for lower strengths of tablet dosage forms, or otherwise mandate splitting of tablets by patients.” (Exh. 19; emphasis added; see, also Exh. 34.)
* The National Association of Boards of Pharmacy - which is an association of every state Board of Pharmacy - passed a resolution in 2001committing to work “to stop this potentially dangerous practice.” (Exh. 20; emphasis added.)
* The American Medical Association’s Policy Number H-115.973 similarly provides that the AMA “opposes third party policies that mandate the use of pill-splitting or pill-breaking to reduce pharmaceutical or healthcare costs without proper input from the pharmaceutical manufacturers and practicing physicians.” (See, www.ama-assn.org/apps/pf_online? f_n=browse&doc=p.../H-115.973.HT.)
Nor can pill splitting be allowed to continue because of Kaiser’s implied threat in its motion that if it is forced to abandon its pill splitting policy, it will have to reduce or eliminate pharmaceutical benefits in order to remain solvent. First, of course, Kaiser provides not one bit of direct or empirical evidence that it would, in fact, reduce pharmacy benefits if pill splitting was stopped. Nor could it justify such a result. Although Kaiser fails to provide this Court with any assessment of how much it saves per year as the result of its pill splitting policy, even assuming it were millions of dollars per year, that would not significantly impact Kaiser’s overall financial condition in light of its recent news release that it obtained over $161 million in net income - just in the second quarter of this year alone. (Exh. 26.) In fact, during the first and second quarters of this year, Kaiser has received a total of $458 million in net income. (Id.) Given that massive net income, there is no justification for Kaiser’s implied threat that it would reduce or eliminate pharmacy benefits altogether if, in fact, it were forced to stop pill splitting.
There are at least two other reasons why Kaiser’s motion must be denied: (1) Kaiser’s written pill splitting policy fails, on its face, to comply with standard informed consent requirements because it does not require the doctor or the pharmacist to reveal to patients the potential risks of pill splitting (as evidenced by the Duncan study, supra) or to disclose to the patients the economic benefits obtained by Kaiser from the policy, thereby breaching the standard of care (Haas Decl., paragraphs 6-8); and, (2) Even if the written pill splitting policy, as drafted were “safe” and appropriate, the fact is that it is not being implemented in the way Kaiser claims. As evidenced by the declarations of Larry Hayes, Leda Hayes, Sharon Rushford and Gary Rushford, Kaiser doctors and pharmacists are not instructing patients about how to split pills, are not providing patients with the Patient Information Sheet required by the policy, and are not informing patients that the policy is voluntary and that they can decline to accept split dosages. Moreover, Kaiser is doing nothing to survey patients to find out if there are any compliance problems with respect to pill splitting or to follow up to assure that the policy is being followed.
Kaiser promises the public and its own members that it will provide “high-quality, evidence-based health care.” (Exh. 24.) Similarly, Kaiser promises “superior quality health care” (Exh. 24) and “health care experiences and outcomes that set quality standards for American Medicine.” (Exh. 25) Specifically with respect to pharmacy benefits, Kaiser promises that its formulary principles are based on factors such as “safety, efficacy; patient convenience . . . quality of care” and that cost is the “last consideration.” (See Exhibit 23, emphasis added.) But with pill splitting, safety, efficacy, patient convenience and quality of care are not considered, at all. Rather, the only consideration is cost. (Exh. 7: Deposition of Mirta Millares 42:24-43:16.) Similarly, in its contracts, Kaiser agrees that its formulary decisions (which include tablet splitting, see Exh. 29), will be based on a number of factors, and emphasizes “safety and effectiveness” as the primary factors. (Exh. 28.) But, again, with the pill splitting policy, safety and effectiveness are not factors that are considered at all - only cost is.
Kaiser has not demonstrated that pill splitting is safe. Indeed, the only clinical study that does a head-to-head comparison of whole tablet dosing versus half-tablet dosing for any of the drugs on Kaiser’s “approved” list demonstrates that it is not safe for a significant number of people. Given that - especially in light of Kaiser’s numerous representations to the public in its advertising and to its members in their contracts about the quality of medical care provided - pill splitting is a policy that violates the UCL and Kaiser’s motion must be denied.
KAISER’S PILL SPLITTING POLICY IS UNLAWFUL AND UNFAIR AND
ITS REPRESENTATIONS ARE FRAUDULENT
Under Business & Professions Code section 17200, et seq., commonly referred to by the courts as the Unfair Competition Law or “the UCL,” a defendant can be enjoined from engaging in any act or practice which is unlawful, unfair, or fraudulent. (Business & Professions Code section 17200.) Because the terms used in the statute are in the disjunctive, case law makes clear that a defendant violates the UCL by engaging in any of the prohibited actions. (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) In other words, an unlawful practice is forbidden even if it is not unfair or fraudulent, an unfair practice is forbidden even if it is not unlawful or fraudulent and a fraudulent practice is actionable even if it is neither unfair nor unlawful.
In this case, Kaiser’s pill splitting policy is all three: It violates California law in several respects, including the fact that Kaiser fails to disclose to patients that their medical care is being rationed on the basis of Kaiser’s own financial interest; it is unfair because it puts its own patients at risk of injury for its own financial benefit; and, it is fraudulent because Kaiser represents that its pharmacy decisions will be based primarily on safety and that cost will be the last consideration while, in fact, the pill splitting policy is unsafe and is imposed for no other reason than to save Kaiser money.
A. Kaiser’s pill splitting policy is unlawful.
There are several ways in which Kaiser’s pill splitting policy - at least as it is currently promulgated and implemented - is unlawful.
Preliminarily, a violation of the UCL occurs whenever the defendant’s conduct violates any law. (Cel-Tech Communications, supra, 20 Cal.4th at 180.) As the Supreme Court explained in Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 383, the UCL “borrows” violations of other laws and treats them independently as violations of the UCL. Notably, the UCL even applies to violations of published court precedent. (Bondanza v. Peninsula Hospital & Medical Center (1979) 23 Cal.3d 260, 266-268.) Additionally, a defendant’s conduct which violates professional standards may also serve as the predicate for a UCL violation under the unlawful prong. (Leoni v. State Bar (1985) 39 Cal.3d 609; Moore v. California State Board of Accountancy (1992) 4 Cal.4th 999.)
///
///
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(1) As a medical care provider, Kaiser has a duty to disclose to patients that their care is impacted by Kaiser’s financial self-interest.
The California Supreme Court has held that it is a breach of a medical provider’s standard of care to fail to inform a patient when the medical provider’s treatment decisions may be impacted, affected or influenced by financial considerations. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 129.) In Moore, the court was clear and specific: A medical provider must disclose economic interests that may affect the medical provider’s professional judgment. (Moore, at 129.) More importantly, the Supreme Court has held that this duty is owed by managed care entities to their enrollees, and not merely by physicians to their patients. (McCall v. PacifiCare of Calif., Inc. (2001) 25 Cal.4th 412, 426.) As the McCall court noted:
“A provider may breach the fiduciary duty it owes the enrollee (see Moore v. Regents of University of California (1990) 51 Cal.3d 120, 129, 271 Cal.Rptr. 146, 793 P.2d 479), inter alia, by permitting its financial interest detrimentally to affect treatment decisionmaking or failing to disclose such interest.” (Id.; emphasis added.)
Thus, under Moore and McCall, Kaiser - especially as an “integrated” health care service provider - owes a duty to its enrollees to disclose to them its financial interest in providing medications in split-dose forms before the medication is dispensed. (Haas Decl., paragraphs 6-8.) The written policy regarding pill splitting does not require such disclosure (Exh. 4) and nothing in Kaiser’s policy or documentation demonstrates that any such disclosure is made to members. Additionally, since Kaiser’s doctors and pharmacists do not even follow the policy as written (since they fail to instruct patients about how to pill split and fail to disclose that the policy is voluntary - see Declarations of Larry and Leda Hayes and Sharon and Gary Rushford), there is no reasonable basis for concluding that they in fact disclose the financial purpose underlying the pill-splitting policy.
Thus, Kaiser’s policy as written and as implemented violates Moore and McCall and constitutes a breach of the standard of practice. (Haas Decl., paragraph 8.) These breaches therefore violate judge-made law and serve as a predicate for a violation under the unlawful prong of the UCL.
///
(2) Kaiser’s pill splitting policy violates the Consumer Legal Remedies Act, the violation of which can be a predicate for a violation of the UCL under the unlawful prong.
The violation of the Consumer Legal Remedies Act, Civil Code section 1750, et seq., commonly referred to as the CLRA, can also serve as the predicate violation which can be borrowed for purposes of the UCL’s unlawful prong. (Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632, 649.)
Kaiser’s pill splitting policy violates the CLRA in several respects:
∙ Civil Code section 1770(a)(5) defines an unfair, unlawful or deceptive act or practice as including a representation that “services have . . . characteristics, . . . [or] benefits . . . which they do not have.”
Kaiser promises medical care services that are of the highest quality and in which cost is the last
consideration. (Exhibit 23: Kaiser’s formulary principles are based on factors such as “safety, efficacy;
patient convenience . . . quality of care” and that cost is the “last consideration”; emphasis added.)
Pill splitting is medical care which is not of the highest quality (Spingarn Decl., paragraphs 3-6, 8, 10, 11;
Exhs. 8-20), and is a practice in which cost is the only consideration (Exh. 7: Deposition of Mirta Millares
42:24-43:16.), in direct conflict with the representations and promises made in Kaiser’s advertising.
∙ Civil Code section 1770(a)(7) defines un unlawful or unfair or deceptive act or practice as including a representation “that . . . services are of a particular standard, quality, or grade . . ., if they are another.”
Kaiser represents its health care services to be of the highest quality, as setting an American Standard and as being “evidence-based” (see Exhibits 23-25, 27-29) when, in fact, pill splitting can not be of the highest quality medical care, the American Standard or evidence-based, since the evidence demonstrates that pill splitting results in significantly worse clinical outcomes for a significant percentage of patients. (Spingarn Decl., paragraph 10C; Exhibit 10.)
∙ Civil Code section 1770(a)(9) defines an unlawful or unfair or deceptive act or practice as including “[a]dvertising . . . services with intent not to sell them as advertised.”
Again, since Kaiser advertises its medical care services as being of the highest quality and evidence-based when, in fact, it knows that the evidence does not support its claim that pill splitting is safe or effective, it has violated this prohibition.
∙ Civil Code section 1770(a)(14) defines as an unlawful, unfair or deceptive act or practice the representation that “a transaction confers or involves rights, remedies or obligations which it does not have or involve . . . .”
Kaiser’s advertising promises that Kaiser members will be provided with the highest quality, evidenced-based medical care (Exhibits 21-25, 27-29) which, with respect to pill splitting, is untrue. Additionally, Kaiser’s own pill splitting guidelines represent that its pill splitting policy is voluntary and that a patient has the right to refuse to split pills (Exh. 5), but since the patients are never told of that right (see Declarations of Larry and Leda Hayes and Sharon and Greg Rushford), and there is no system for monitoring whether patients are, in fact, given that option (see Exh. 7: Millares Deposition, 44:13-46:7), the promised “right” is illusory and the CLRA has been violated.
∙ Civil Code section 1770(a)(16) defines as an unlawful, unfair or deceptive act or practice the representation “that the subject of a transaction has been supplied in accordance with a previous representation when it has not.”
Kaiser has represented, both in its guidelines and in this action, that only limited medications will be split for cost containment purposes, that patients will be screened, instructed and trained with respect to splitting and that patients can voluntarily refuse to split. In fact, those statements are false. (Declarations of Larry and Leda Hayes; Declarations of Gary and Sharon Rushford.) Kaiser has not, therefore, supplied pharmacy benefits in accordance with its previous representations, in violation of the CLRA.
Kaiser’s pill splitting policy itself violates the CLRA and its implementation of the policy further violates the CLRA. Kaiser’s violation of the CLRA also constitutes a violation of the UCL and precludes summary judgment.
(3) Kaiser’s pill splitting policy also violates Penal Code section 550(b).
Along the same lines, Kaiser’s implementation of its pill splitting policy - which is in direct conflict with its promises and representations about the quality of its medical care and the parameters for its formulary decisions - violates Penal Code section 550(b)(1). That section provides as follows:
“(b) It is unlawful to do, or to knowingly assist or conspire with any person to do, any of the following:
“(1) Present or cause to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact.”
When Kaiser members seek prescription drug benefits, they have the right to rely on Kaiser’s advertising representations and contractual promises about those benefits to the effect that:* Its drug formularies are developed “to ensure that the most appropriate and highest quality pharmaceuticals are available for treating its members” and that the formularies are “quality-based” programs. (See Exhibit 23; emphasis added.)
* Its formulary principles are based on factors such as “safety, efficacy; patient convenience . . . quality of care” and that cost is the “last consideration.” (See Exhibit 23, emphasis added.)
* Its medical services are “high-quality, evidence-based.” (Exh. 25)
* Its formulary decisions (which include tablet splitting, see Exh. 29), will be based on a number of factors, particularly “safety and effectiveness.” (Exh. 28.)
Those statements are, in light of the development and implementation of Kaiser’s pill splitting policy, false with respect to members’ claims for pharmacy benefits. That being the case, there is a triable issue of fact as to whether Kaiser has violated Penal Code section 550(b)(1), thereby precluding summary judgment.
B. Kaiser’s representations regarding the quality of the medical care provided and the factors to be considered in establishing its formulary are likely to mislead.
Another violation under the UCL is the “fraudulent business practice” prong. Essentially, a defendant’s statement or conduct that is likely to mislead the audience to which it is addressed constitutes a violation of the UCL, even if there is no intent to mislead, even if there is no scienter, even if there is no reliance on the statement and even if there are no damages. (Committee on Children’s Televison v. General Foods Corp. (1983) 35 Cal.3d 197, 211; Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1267.)
Kaiser attempts to dismiss plaintiffs’ allegations under the fraud prong by asserting that nowhere in its advertising or contracts does Kaiser promise that it will always supply whole tablets rather than split-dose tablets. Although that literal promise is not made, the promises and representations that Kaiser does make, when coupled with the reality of its pill splitting policy - which is nowhere disclosed in either its advertisements or its contracts - demonstrates an actual and flagrant falsity.
(1) Kaiser’s formulary - to the extent it provides for pill splitting as a cost containment device - does not provide for a quality-based program predicated on safety, patient convenience and quality of care in which cost is the last consideration, as represented in Kaiser’s advertising.
Kaiser represents on its Internet web site that its drug formularies are developed “to ensure that the most appropriate and highest quality pharmaceuticals are available for treating its members” and that the formularies are “quality-based” programs. (See Exhibit 23; emphasis added.) Additionally, Kaiser represents that its formulary principles are based on factors such as “safety, efficacy; patient convenience . . . quality of care” and that cost is the “last consideration.” (See Exhibit 23, emphasis added.) Even in its contractual agreements, Kaiser promises that its formulary decisions (which include tablet splitting, see Exh. 29), will be based on a number of factors, and emphasizes “safety and effectiveness” as the primary factors to be considered. (Exh. 28.)
The problem, of course, is that with respect to pill splitting, each of these representations is false:
* Pill splitting is not safe: As demonstrated by the Duncan article, splitting of simvastatin results in significantly worse clinical outcomes for a significant number of people. (Spingarn Decl., paragraph 10C; Exh. 10.) In fact, for 15% of the people who split those tablets, they were exposed to as much as a 20% or more increase in cardiac risk. (Spingarn Decl., paragraph 10C; Haas Decl., paragraphs 5-8; Exhibit 10; Exhibit 11.)
* Pill splitting is not convenient for members: Patient compliance with medication dosing is reduced, overall, when pill splitting is instituted. In Duncan, supra, at p. 208, for example, the authors reported that “21% of patients reported that they had missed more half-tablet doses than whole-tablet” and noted that another survey (Falwell, attached as Exh. 12) reported that “17% of patients reported missing ‘a few more’ to ‘many more’” split doses than whole doses. Thus, for those patients at least, splitting resulted in less compliance with medication regimens. This not only implicates safety issues (since patients are not obtaining their full dosing), but obviously demonstrates a barrier to convenience.
* Cost is the only consideration: As admitted by Kaiser’s own Director of Drug Information Services, the only reason for the existence of the pill splitting policy at issue in this case is cost. (Exh. 7: Millares Depo., 42:24-43:16.) Thus, cost is not the last consideration, as promised in Kaiser’s advertising.
(2) Kaiser’s pill splitting policy does not provide its members with “high quality, evidence-based” medical care.
Kaiser promises “high-quality, evidence-based” medical care. (Exhs. 24, 25, 27.) But Kaiser’s pill splitting policy is not “high-quality” (Spingarn Decl., paragraphs 3-6, 8, 10, 11), nor is it “evidence-based.” In fact, the evidence is contrary to Kaiser’s representations that pill splitting is safe:
* As demonstrated by the Duncan article, splitting of simvastatin results in significantly worse clinical outcomes for a significant number of people. (Spingarn Decl., paragraph 10C; Haas Decl., paragraph 7; Exh. 10.)
* The pill splitting policy also increases the risk of non-compliance, meaning that more people will not be getting their medication, at all. (Spingarn Decl., paragraph 10D; Exhs. 10, 12.)
* Kaiser’s reliance on its own weight variation testing as a basis for establishing the safety of its policy is not supported by empirical evidence:
With respect to all but two of its “approved” drugs on the list, Kaiser relies on weight tests performed by its own pharmacy professionals to determine whether splitting results in ‘sufficiently’ equal doses. (Exhs. 5, 6; Exh. 7: Millares Depo., 66:25-67:11.) But there is no assurance that Kaiser members - who normally are not trained pharmacy professionals - can regularly duplicate the results obtained by Kaiser’s pharmacists in the weight tests. (Spingarn Decl., paragraph 10.) Indeed, since Kaiser depends on weight variability as a key component in its approval of drugs to be included in the pill splitting guidelines, it is Kaiser pharmacists who should be doing the splitting, not Kaiser patients. (Spingarn Decl., paragraph 10.)
In fact, clinical studies demonstrate that splitting of tablets by other than pharmacy professionals can vary by as much as 40%. (See, McDevitt JT, Gurst AH, Chen Y, Accuracy of Tablet Splitting, Pharmacotherapy, 18:193 (1998) (attached as Exhibit 8); Gupta P, Gupta K, Broken Tablets: Does the Sum of the Parts Equal the Whole?, American Journal of Hospital Pharmacy 45:1498 (July 1988) (attached as Exh. 9); Rosenberg JM, Nathan JP, Plankogiannis F, Weight Variability of Pharmacist-Dispensed Tablets, Journal of the American Pharmaceutical Association, 2002; 42:200-5 (attached as Exh. 15); Teng J, Song CK, Williams RL, et al., Lack of Medication Dose Uniformity in Commonly Split Tablets, Journal of the American Pharmaceutical Association, 2002; 42:195-9 (attached as Exh. 16); Peek, BT, Al-Achi, A, Coombs, SJ, Research Letter: Accuracy of Tablet Splitting by Elderly Patients, Journal of the American Medical Association, 2002:288, 4 (attached as Exh 17).)
Thus, once again, Kaiser’s pill splitting policy is in conflict with the empirical evidence and its medical care - in that respect, at least - is not “evidence-based.”
Thus, in any number of respects, Kaiser’s representations about the quality of its medical care and the factors for consideration in developing its formulary are inherently false, thus creating a triable issue of fact with respect to the UCL violations.
C. Kaiser’s pill splitting practice is also unfair.
As Kaiser acknowledges in its motion, a practice can be unfair, and in violation of the UCL, where the practice “offends an established public policy.” (Kaiser Brief, p. 18, lines 13-14, quoting from People v. Duz-Mor Diagnostics Lab, Inc. (1998) 68 Cal.App.4th 654, 662.) In fact, Kaiser’s policy does precisely that.
In obtaining approval for pharmaceuticals, a drug company is required to submit specific and detailed pharmacokinetic test results to the FDA regarding the drug, including data about how the drug metabolizes in the body and its dissolution rate, i.e., the rate at which the medication dissolves. (Spingarn Decl., paragraph 3.) This data is required to be submitted with respect to every dosage form the manufacturer proposes to produce and market. (Id.) In other words, it is not enough that the manufacturer submit this data and information about a 20 mg dosage form if the manufacturer also intends to market a 40 mg dosage form. (Id.) All the information and data must be submitted for each dosage form and the FDA approves the drug, based on that data, with respect to each dosage form. (Id.) A manufacturer would violate FDA regulations if it produced and marketed a dosage form that had not been specifically approved by the FDA. (Id.)
Additionally, a drug manufacturer cannot alter or change any aspect of its drugs’ formulations or forms without obtaining prior FDA approval. (Id., paragraph 4.) For example, if a manufacturer even wants to do nothing more than change the color of dye used in a previously approved drug, studies demonstrating that the change will not affect the pharmacokinetics of the drug must be performed and submitted to the FDA for approval before any change can be made. (Id.) The same requirement is true with respect to any change in the shape of a drug tablet. (Id.)
Furthermore, during manufacture and production of a pharmaceutical, even after approval, the drug manufacturer is required to test each lot of the drug on various parameters, including the dissolution rate of the lot. (Id, paragraph 5.) If the lot’s dissolution rate does not meet FDA requirements, it must be destroyed. (Id.) Splitting of tablets virtually always changes the dissolution rate. (Id.) In other words, a 20 mg half tablet of a drug will dissolve at a different rate than a whole 20 mg tablet of the same drug. (Id.)
The FDA regulations form a very strict and highly structured system for the regulation of pharmaceuticals. (Id, paragraph 6.) The purpose is to assure that drugs are not placed on the market unless they have demonstrated efficacy and safety and that the efficacy of the drug outweighs any possible or potential risks presented by the use of the drug. (Id.) Public health and safety is the ultimate goal of these regulatory processes and, as the FDA explains in several of its publications, some of which are attached as Exhibits 3 and 4, it is the “main consumer watchdog” protecting the health and safety of American consumers with respect to pharmaceuticals. (Id.)
At the very least, the pill-splitting program initiated by Kaiser undermines the careful regulatory system established by the FDA. (Id., paragraph 8.) A drug manufacturer would be barred from producing “split-dose” forms of medications absent the approval of the FDA based on extensive supporting studies, including safety studies. (Id.) Yet, Kaiser’s pill-splitting policy simply side-steps this careful regulatory system by putting the onus on the patient to alter the approved forms of the drugs. (Id.) To do this for the sole purpose of cost savings and without any clinically-justified, medically-necessary purpose is insupportable, especially in light of the fact that Kaiser has not demonstrated that the practice is safe for everyone. (Id.) It is undoubtedly for this very reason that pill splitting as a cost containment device has been condemned by not only the Veterans Administration (Exh. 18), but the association of every state’s Boards of Pharmacy, the NABP (Exh. 20), the American Society of Consulting Pharmacists (Exh. 19) and the American Medical Association (see www.ama-assn.org/apps/pf_online? f_n=browse&doc=p.../H-115.973.HT).
Thus, Kaiser’s pill splitting policy does, in fact, violate a very important public policy: The strict and highly structured system for the regulation of the safety of pharmaceuticals.
And Kaiser’s argument that the practice is not unfair because members can decline to split pills is
spurious. In fact, the evidence suggests that patients are never told that they have an option when split
doses are dispensed to them. (Declarations of Larry and Leda Hayes and Sharon and Greg Rushford.)
Not knowing that there is a choice is virtually the same as having no choice at all. And Kaiser has no
way of monitoring its pharmacy operations to assure that, in fact, patients are informed that they can
refuse to accept split dose prescriptions. Thus, the only evidence before this Court is that patients are
not informed of their right to refuse split doses, thereby creating a triable issue of fact.
Kaiser’s last argument, that any inconvenience from pill splitting is far outweighed by the fact that pill splitting makes pharmacy benefits far more generally available (Kaiser Brief, pp. 19-21) must also be rejected. First, the issue presented in this case is whether Kaiser’s pill-splitting initiatives are unfair, unlawful or fraudulent and the cost of the medications at issue cannot justify the use of pill-splitting as a cost-containment device in the absence of demonstrated safety. (Spingarn Decl., paragraphs 3-6, 8, 10, 11; Exhibits 8-20.) Since pill splitting has not been demonstrated to be safe and has, in fact, proven to be unsafe, pill splitting for cost containment purposes is improper. (Spingarn Decl., paragraphs 3-6, 8, 10, 11; Exhibits 8-20.)
Second, Kaiser’s implied threat that if this Court does not find in favor of Kaiser in this action,
Kaiser will be forced to withdraw pharmacy benefits from its members in this State is nowhere supported
by affirmative or empirical evidence. Moreover, the evidence is actually to the contrary. As
demonstrated by Kaiser’s own press releases, there is no financial or public policy justification for cost
containment based on pill splitting in the context of the Kaiser system. As reflected in Exhibit 26, a news
release posted by Kaiser on its own web site, in the second quarter of this year alone, Kaiser posted a
$161 million profit in net income and $458 million in net income just in the first and second
quarters of this year. Even assuming that pill splitting saves Kaiser several million dollars per year, that
would not have a significant impact given Kaiser’s hundreds of million dollars a year in profit. Requiring
Kaiser to refrain from pill splitting for cost containment purposes would not justify elimination of pharmacy
benefits on economic grounds.
Given that Kaiser has no evidence that pill splitting is safe - and that the evidence is, in fact, to the contrary, i.e., pill splitting is not safe for everyone - given that pill splitting undermines the important public policies underlying the entire drug safety system represented by the FDA, given that pill splitting reduces compliance with medication regimens and given that patients are not adequately informed of the potential risks or Kaiser’s financial interest in pill splitting, triable issues of fact remain in dispute as to whether Kaiser’s pill splitting policy is unfair and in violation of the UCL. Kaiser’s motion must, therefore, be denied.
RESTITUTIONARY RELIEF MAY PROPERLY BE AWARDED IN THIS ACTION
Kaiser argues that since no claims for personal injury are made in this action, there is no money which can be restored to the victims of its pill splitting policy and, therefore, no restitutionary relief can be awarded. Kaiser’s argument is without legal support and distorts the purpose and value of the restitutionary remedy under the UCL.
The Supreme Court has repeatedly reiterated the importance of the restitutionary remedy under the UCL:
[A] court of equity may exercise the full range of its inherent powers in order to accomplish complete justice between the parties, restoring if necessary the status quo ante as nearly as may be achieved.
(People v. Superior Court (Jayhill Corp.) (1973) 9 Cal.3d 283, 286.)
Perhaps the strongest statement of the importance of the restitutionary remedy under the UCL came from the Supreme Court in Fletcher v. Security Pacific National Bank (1989) 23 Cal.3d 442, 451-453:
Defendant's reading of the statute overlooks the true breadth of the section. Contrary to defendant's assertion, section 17535 authorizes restitution not only of any money which has been acquired by means of an illegal practice, but further, permits an order of restitution of any money which a trial court finds "May have been acquired by means of any . . . (illegal) practice." (Emphasis added.) This language, we believe, is unquestionably broad enough to authorize a trial court to order restitution without requiring the often impossible showing of the individual's lack of knowledge of the fraudulent practice in each transaction. Hence defendant's argument clearly fails to defeat the class action.
Secondly, inasmuch as "(p)rotection of unwary consumers from being duped by unscrupulous sellers is an exigency of the utmost priority in contemporary society" (Vasquez v. Superior Court (1971) 4 Cal.2d 800, 808, 94 Cal.Rptr. 796, 800, 484 P.2d 964, 968), we must effectuate the full deterrent force of the unfair trade statute. Indeed our concern with thwarting unfair trade practices has been such that we have consistently condemned not only those alleged unfair practices which have in fact deceived the victims, but also those which are likely to deceive them. (See, e. g. , Chern v. Bank of America, supra, 15 Cal.3d 866, 876, 127 Cal.Rptr. 110, 544 P.2d 1310; Payne v. United California Bank (1972) 23 Cal.App.3d 850, 856, 100 Cal.Rptr. 672; People ex rel. Mosk v. Lynam (1967) 253 Cal.App.2d 959, 61 Cal.Rptr. 800; In re Application of O'Connor (1927) 80 Cal.App. 647, 652, 252 P. 730; see also 28 Ops.Cal.Atty.Gen. 277, 279 (1956).) We do not deter indulgence in fraudulent practices if we permit wrongdoers to retain the considerable benefits of their unlawful conduct.
As one court has stated, "The injunction against future violations, while of some deterrent force, is only a partial remedy since it does not correct the consequences of past conduct. To permit the (retention of even) a portion of the illicit profits, would impair the full impact of the deterrent force that is essential if adequate enforcement (of the law) is to be achieved. One requirement of such enforcement is a basic policy that those who have engaged in proscribed conduct surrender all profits flowing therefrom." (Fns. omitted.) (S. E. C. v. Golconda Mining Co. (S.D.N.Y.1971) 327 F.Supp. 257, 259-260. See also S. E. C. v. Manor Nursing Centers, Inc. (2d Cir. 1972) 458 F.2d 1082, 1103-1105; S. E. C. v. Texas Gulf Sulphur Co. (2d Cir. 1971) 446 F.2d 1301, 1307-1308, cert. den. 404 U.S. 1005, 92 S.Ct. 561, 30 L.Ed.2d 558.) Thus a class action may proceed, in the absence of individualized proof of lack of knowledge of the fraud, as an effective means to accomplish this disgorgement.
In a similar context we have expressed our concern that wrongdoers not retain the benefits of their misconduct. In Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 63 Cal.Rptr. 724, 433 P.2d 732, a class action instituted to recover as damages overcharges allegedly made by the defendant, we noted that "It is more likely that, absent a class suit, defendant will retain the benefits from its alleged wrongs. A procedure that would permit the allegedly injured parties to recover the amount of their overpayments is to be preferred over the foregoing alternative. (Fn. omitted.)" (67 Cal.2d at p. 715, 63 Cal.Rptr. at p. 738, 433 P.2d at p. 746. See also Comment, Private and Public Remedies for Fraudulent Business Practices in California (1973) 6 Loyola L.A.L.Rev. 312; Comment, Fraudulent Advertising : The Right of a Public Attorney to Seek Restitution for Consumers (1973) 4 Pacific L.J. 168.)
. . . . Section 17535 authorizes a trial court to order a defendant, who carefully exploited an unfair trade practice so that the individual victims suffered only minor losses, to disgorge the resulting large and illicit sum of money. (See Blue Chip Stamps v. Superior Court, supra, 18 Cal.3d 381, 387, 134 Cal.Rptr. 393, 556 P.2d 755 (conc. opn. of Tobiner, J.).)
Finally, the basic equitable principles underlying section 17535 arm the trial court with broad discretionary power to order restitutionary relief in the present case in the absence of individualized proof of lack of knowledge. A court of equity may exercise its full range of powers "in order to accomplish complete justice between the parties, restoring if necessary the Status quo ante as nearly as may be achieved." (People v. Superior Court (Jayhill Corp.) (1973) 9 Cal.3d 283, 286, 107 Cal.Rptr. 192, 194, 507 P.2d 1400, 1402.) As we stated recently, "Even in the absence of the specific authorization contained in section 17535, a trial court has the inherent power to order restitution as a form of ancillary relief." (People v. Pacific Land Research Co. (1977) 20 Cal.3d 10, 19, fn. 9, 141 Cal.Rptr. 20, 25, 569 P.2d 125, 130. See also United Farm Workers v. Superior Court (1975) 47 Cal.App.3d 334, 344-345, 120 Cal.Rptr. 904.)
(Emphasis added unless otherwise indicated.)
The importance of the restitutionary remedy under the UCL was most recently confirmed by the Supreme Court in Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 126:
“Both consumer class actions and representative UCL actions serve important roles in the enforcement of consumers' rights. Class actions and representative UCL actions make it economically feasible to sue when individual claims are too small to justify the expense of litigation and thereby encourage attorneys to undertake private enforcement actions. Through the UCL a plaintiff may obtain restitution and/or injunctive relief against unfair or unlawful practices in order to protect the public and restore to the parties in interest money or property taken by means of unfair competition. These actions supplement the efforts of law enforcement and regulatory agencies. This court has repeatedly recognized the importance of these private enforcement efforts. (See La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 883, 97 Cal.Rptr. 849, 489 P.2d 1113; Vasquez v. Superior Court (1971) 4 Cal.3d 800, 807-808, 94 Cal.Rptr. 796, 484 P.2d 964; Daar v. Yellow Cab. Co. (1967) 67 Cal.2d 695, 715, 63 Cal.Rptr. 724, 433 P.2d 732.)
(Emphasis added.)
And, contrary to Kaiser’s assertion that, absent actual damages, a UCL action cannot lie, “under the UCL, a representative plaintiff need not prove that members of the public actually were deceived, relied upon the fraudulent practice, or sustained any damage. (Bank of the West v. Superior Court, supra, 2 Cal.4th at p. 1267, 10 Cal.Rptr.2d 538, 833 P.2d 545.)” (Prata v. Superior Court (2001) 91 Cal.App.4th 1128, 1144; emphasis added.)
Here, defendants have marketed and sold their product, i.e., a health care benefit plan, on the basis of promises and representations about the quality of care and the safety of the formulary decisions it makes. In violation of those promises, the pharmacy benefits and services supplied by Kaiser are not, in fact, of the highest quality and are not safe because Kaiser formulated and implemented a pill splitting policy as nothing more than a cost containment device - a policy that does not provide high quality care and which has not been proven safe.
Thus, Kaiser has taken money from its members in the form of premium dollars
and has
engaged in an unfair, unlawful and fraudulent business practice which results in the provision of benefits
which are worth less than what was paid for them. Kaiser has, therefore, sold something it has not
delivered. Its members have paid for something they have not received. Kaiser has, therefore, through
this practice, obtained money to which it is not entitled and its members have the right to obtain
restitution of the difference between what they bought and what they got.
This case is no different than if Kaiser were selling cars rather than health care services. If a car
dealer advertised that its cars had the best quality air bags but actually delivered a car with low-quality air
bags, there can be no dispute that a UCL action could lie to require the car dealer to repay to the car
purchasers the difference between the value of the car with high-quality air bags and the value of the car
with low quality air bags. The same is true here.
And the Supreme Court held in Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, it is not necessary that the money the defendant is ordered to “restore” to the victims of its unfair business practice be money which the victim once possessed and which was taken from the plaintiff by the defendant’s unfair business practices. As the court stated, the “concept of restoration or restitution, as used in the UCL, is not limited only to the return of money or property that was once in the possession of the person.” (Id., at p. 178.) Rather, the court only required that the money have been “acquired” by the defendant by means of the unlawful business practice. The Cortez court held that because the defendant in that case owed a legal obligation to pay wages, the employees’ right to those wages constituted a property right which could be the subject of a restitutionary order under section 17203.
Additionally, in Cortez, the court held that for UCL purposes, it would recognize “that restitutionary awards encompass quantifiable sums one person owes to another.” Obviously, the amount of insurance benefits wrongfully withheld by Kaiser in applying its pill splitting policy constitutes quantifiable sums it owes to its members who were dispensed split tablet doses pursuant to the pill splitting initiatives. As such, those payments can properly form the basis of a restitutionary award under the UCL. Thus, like the wrongfully-withheld back pay in Cortez, the wrongfully-withheld policy benefits are a property right that can properly be the subject of a restitutionary order under section 17203.
And Kaiser’s reliance on the decision in Day v. AT&TCorporation (1998) 63 Cal.App.4th 325 for the proposition that restitution cannot be awarded where the plaintiff seeks recovery because the defendant did not provide a service as advertised is wholly misplaced. In Day, the defendant phone company sold pre-paid phone cards by advertising that a certain number of minutes were available per card, but failed to provide notice in their advertising that partial minutes used would be rounded up to the next full minute. The appellate court held that a cause of action under the UCL had been stated, but held that restitutionary relief could not be obtained only because it was barred under the federal filed rate doctrine. There is, of course, no such doctrine barring restitutionary relief in the context of this case and the Day court’s conclusion that restitution would otherwise be an appropriate remedy compels the same conclusion here.
Kaiser’s reliance on Maio v. Aetna, Inc. (3rd Cir. 2000) 221 F.3d 472 is similarly misplaced. That action was not brought under California’s UCL but was brought under the federal Racketeer Influenced and Corrupt Organizations Act (RICO). As the court held there, a RICO plaintiff has standing only upon showing an actual out-of-pocket loss and equitable principles such as those applied in a UCL claim do not apply to RICO. As the Cortez court made clear, restitution under the UCL may be recoverable even in the absence of an actual out-of-pocket loss.
Similarly, in American Suzuki Motor Corp. v. Superior Court (1995) 37 Cal.App.4th 1291, the court determined that the plaintiffs could not establish damages under a breach of warranty cause of action. The case had nothing to do with the recoverability of restitutionary remedies under the UCL.
Finally, as a matter of equity, Kaiser should not be allowed to retain the illicit profits it gained through is massive, unconsented experiment on its own patients, in which Kaiser subjected its members to the risk of harm from pill splitting. If Kaiser is not required to disgorge the profits it obtained as the result of this practice, it will have no incentive to refrain from devising other such cost containment policies in the future. If the worst that can happen is that it may eventually be enjoined from engaging in such a practice, but will be allowed to keep all the money it can acquire in the meantime, there is no reason not to give it a try..
Moreover, allowing Kaiser to retain its illicit profits will encourage other managed care companies to establish pill splitting policies as a cost containment device. Those entities can, like Kaiser, derive millions of dollars in additional profit from the practice and then merely stop if and when the practice is challenged. That this is a real possibility is acknowledged in a recent study touting the cost benefits of pill splitting, but which also acknowledged that it did not establish the safety of pill splitting. In Stafford RS, Radley DC, The Potential of Pill Splitting to Achieve Cost Savings, American Journal of Managed Care, 8:706, 711, fn. 11 (August 2002) (attached as Exhibit U to the Declaration of Helene Lipton), the study authors acknowledged that this lawsuit raised legitimate cause for concern about the safety of a system-wide pill splitting policy. Dr. Stafford, the author of that study, was subsequently quoted as saying that many private insurers already use pill splitting as cost containment devices and that more are likely to follow: “I think it’s inevitable that health plans will take a closer look at this.” (Exh. 33.)
Thus, permitting Kaiser to avoid an order requiring restitution of the profits it illegally gained from engaging in this practice will do nothing to discourage other managed care entities from doing precisely the same thing. But if Kaiser is not allowed to retain its ill-gotten gain, that will send a message to the rest of the industry that it must not engage in this kind of practice. Thus, the equitable balance must tip in favor of permitting the restitutionary claim to go forward.
PLAINTIFFS NEED NOT PROVE ACTUAL DAMAGES
IN ORDER TO PREVAIL UNDER THE CLRA
Kaiser’s effort to obtain summary judgment on the CLRA cause of action should be rejected for any one of several reasons.
First, at Kaiser’s behest, the CLRA claim was relegated to arbitration. Kaiser’s effort to have this Court adjudicate those claims should be construed as a waiver of the right to arbitrate the CLRA claim and the CLRA claims should be ordered back to this Court for determination. (McConnell v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1980) 105 Cal.App.3d 946, 951; Christensen v. Dewor Developments, Inc. (1983) 33 Cal.3d 778, 782; Doers v. Golden Gate Bridge, Hwy. & Transp. Dist. (1979) 23 Cal.3d 180, 188.)
Second, as demonstrated, above, in section 2.A.(2), triable issues of material fact remain in dispute as to whether Kaiser violated the CLRA.
Finally, nothing in the CLRA requires proof of actual damages different from the restitutionary relief available under the UCL in order to obtain injunctive or restitutionary relief, attorneys’ fees and punitive damages under the CLRA. While the statute provides that actual damages are recoverable under the CLRA (Civil Code section 1780(a)(1)), the statute also provides that anyone suffering “any” damage can bring an action, including claims for injunction, restitution, attorneys’ fees and punitive damages. (Civil Code section 1780(a)(2)-(4).) As demonstrated, above, every Kaiser member has suffered some monetary injury with respect to the pill splitting policy because they have purchased and paid for benefits they have not received. That is sufficient to afford standing under the CLRA.
Indeed, to hold otherwise would render the provisions of the CLRA discussed above absolutely illusory. For example, by definition, a consumer is necessarily damaged when a defendant violates section 1770(a)(5), i.e., representing that services have benefits that they do not have. Inherent in the fact that the defendant sold services on the basis of such a representation is the fact that the consumer received something less than they were paying for and were, thereby, injured. (Outboard Marine Corp. v. Superior Court In and For Sacramento County (1975) 52 Cal.App.3d 30 [alleged conduct of manufacturer and manufacturer's sales representative in fraudulently concealing dangerous defects and falsely representing capabilities of off-road vehicle fell within the activities proscribed by the Consumers Legal Remedies Act].)
Accordingly, triable issues of fact remain in dispute as to whether Kaiser violated the CLRA and the remedies to be afforded under it.
KAISER HAS NOT DEMONSTRATED THAT ANY CHANGE HAS OCCURRED
SINCE ITS DEMURRER ON THE ABSTENTION ISSUES AND THERE IS,
THEREFORE, NO BASIS FOR GRANTING SUMMARY JUDGMENT ON THAT GROUND
In demurring to the complaint in this action, Kaiser asserted the very same arguments, based on the very same evidence as presented here, contending that this Court should abstain from acting on these issues because of pending investigations by the Board of Pharmacy and the Attorney General’s office. The only difference between the situation then and the situation now is that more than a year has passed and those agencies have still taken no action whatsoever with regard to the issue - implying the likelihood that they are awaiting the results in this case before proceeding. If, as requested by Kaiser, no action is taken by this Court, there is every reason to believe that no action will be taken by the agencies. Indeed, if they were intent on pursuing this issue it is inevitable that something would have occurred in the interim since the demurrer on this issue was heard. Since nothing has happened, the only logical conclusion is that nothing will and that if this Court does not act, Kaiser will escape retribution for engaging in this practice.
Further, as discussed in plaintiffs’ opposition to Kaiser’s demurrer on this issue, neither abstention nor primary jurisdiction doctrines should be applied in this case.
A. Not all defendants are subject to regulation by the “investigating” agencies.
First, as Kaiser itself conceded in its demurrer, not all the defendants named in this action are subject to regulation by the referenced government agencies. (Kaiser Demurrer, Memorandum of Points and Authorities, p. 5, footnote 8.) For example, Kaiser acknowledges that the Board of Pharmacy has no jurisdiction over the health plan or the doctor’s group. (Id.) Similarly, it acknowledges that the DMHC has no regulatory authority over the hospital group or the doctors’ group. Thus, even assuming the agency investigations were on-going (which Kaiser has not shown), or would otherwise implicate the primary jurisdiction doctrine (which they do not), abating this action would not be appropriate because those investigations cannot resolve the issues with respect to all the defendants.
B. Primary jurisdiction does not apply because none of the governmental agencies have any pervasive and self-contained system of administrative procedure to deal with the precise issue in this case: Pill-splitting.
The primary jurisdiction doctrine does not apply in the first instance. Kaiser’s reliance on the Supreme Court’s decision in Farmers Ins. Exch. v. Superior Court (1992) 2 Cal.4th 377 for the proposition that this action should be stayed pending administrative review of the issues pursuant to the primary jurisdiction doctrine is interesting, to say the least. Indeed, the analysis used by the Court in Farmers unequivocally demonstrates that application of the primary jurisdiction doctrine is not appropriate here.
In Farmers, the court held that the primary jurisdiction doctrine applies in an action only where the administrative agency at issue has at its “disposal a ‘pervasive and self-contained system of administrative procedure’ to deal with the precise questions involved.” (Farmers, at p. 396, emphasis added.) Indeed, the Court noted, resort to primary jurisdiction is not appropriate where the agency has “no special expertise that would warrant prior resort to its procedures.” (Id.) Simply put, Kaiser has failed to demonstrate that either the Board of Pharmacy or the DMHC has any “pervasive and self-contained administrative procedure” that deals with the precise questions involved, i.e., pill-splitting.
Although Kaiser attempts to construe this action as one that attacks its general business practices, which might fall under the general administrative functions of the DMHC, such a characterization is inappropriate. Plaintiffs here are not discharging a shotgun blast at all of Kaiser’s conduct or practices. Rather, this case is a rifle-shot: It deals with pill-splitting only. Nothing more and nothing less. That is the “precise question involved” in this case and there is nothing in any of Kaiser’s evidence or arguments that demonstrates that either agency has the required pervasive regulatory scheme designed to deal with pill-splitting.
Second, under Farmers, the primary jurisdiction does not apply where the factual issues in the case are not of a sufficiently complex or technical nature that they would be beyond the usual competence of the judicial system. (Id., at p. 396.) Indeed, where there is no paramount need for specialized agency fact-finding expertise before permitting an aggrieved person to pursue his or her related non-statutory claims and remedies in court, the doctrine does not apply. (Id.) That, too, precludes application of the primary jurisdiction doctrine in this case because there has been no showing by Kaiser that any agency fact-finding expertise is necessary or that the issues are so complex or technical that agency input is required. The issue here is simple: Is it illegal, unfair or fraudulent for Kaiser to experiment with pill splitting where there is no clinical or therapeutic benefit - and where a potential actual risk has been demonstrated in clinical studies - and where the only purpose is to save itself money? There is no governmental agency expertise needed to answer that question. This Court is more than adequately capable of resolving that issue, and should be permitted to do so. (See, also, Cundiff v. GTE California, Inc. (2002) 101 Cal.App.4th 1395.)
C. Litigation of these issues under the consumer interest statutes is not limited under Samura.
Nor does the decision in Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 Cal.App.4th 1284 help Kaiser’s position here. Indeed, like the Farmers case, it actually defeats Kaiser’s argument.
In Samura, the court held that where there are specific regulatory provisions whose enforcement is entrusted solely to the Commissioner of Corporations (now the Director of the DMHC), a UCL action cannot lie as to misconduct in violation of those provisions. But, the Samura court held, where the conduct is not expressly proscribed by the Health & Safety Code or the regulations promulgated pursuant to it, or where the conduct is proscribed but enforcement is not limited to the Commissioner, a UCL action can lie. (Samura, at 1299 [“But, despite the existence of a statutory enforcement scheme, Samura may still sue to enjoin acts which are made unlawful by the Knox-Keene Act.”].)
Again, Kaiser has failed to inform plaintiffs or this Court of any enforcement scheme in the Knox-Keene Act or elsewhere that addresses, regulates or deals with the pill-splitting issue. That being the case, there is no appropriate basis for application of the primary jurisdiction doctrine.
And not one of the cases cited by Kaiser for application of that doctrine provides that primary jurisdiction applies simply because a governmental agency is independently investigating the misconduct. The existence of an investigation in no way creates a ‘pervasive and self-contained system of administrative procedure’ which does not otherwise exist. Thus, the mere pendency of the purported investigations does not implicate the primary jurisdiction doctrine.
That, of course, raises another issue: Are the investigations actually pending and on-going? The Board of Pharmacy “investigation” consisted of an inquiry letter dated February 2000 - nearly 3 years ago - and Kaiser’s response sent the same month. Kaiser does not indicate that any other communications or activity have occurred since that time. Obviously, there is no pending “investigation” at this point that has any implication with respect to this case. Similarly, the DMHC’s subpoena was issued over eighteen months ago. Kaiser has not indicated whether, in fact, it has had further contact with the DMHC regarding this issue or what the on-going activity may be.
More importantly, even if the DMHC is acting on this issue, that does not preclude this Court from exercising jurisdiction under the UCL and the CLRA. First, both of those statutory schemes specifically provide that their remedies are to be cumulative to all other possible remedies and penalties available under the laws of this state. (Business & Professions Code section 17205 [“Unless otherwise expressly provided, the remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state.”]; Civil Code section 1752 [“The remedies provided herein for violation of this title or for conduct proscribed by any section of this title shall be in addition to any other procedures or remedies for any violation or conduct provided for in any other law.”] Thus, nothing this Court does with respect to this action will impair or impede the actions taken by the DMHC. And the converse is true, as well. Since the remedies are cumulative, plaintiffs are entitled to seek those remedies - especially given the fact that Kaiser has provided no information about how any actual damages, punitive damages or treble damages plaintiffs would otherwise be entitled to under the CLRA could be paid to the class through any governmental agency action. That, in fact, was the conclusion of the appellate court in Cundiff v. GTE California, Inc. (2002) 101 Cal.App.4th 1395, in which the court held that even if the Public Utilities Commission had conducted an investigation of the misconduct alleged in the UCL case and found in favor of the defendant, that would not preclude the UCL action. Additionally, the court found, the Public Utilities Commission had no more expertise with respect to the deceptive practices alleged than would the court and that the trial court’s sustaining of the demurrer on the grounds of primary jurisdiction was, therefore, error. As in Cundiff, it would be highly inappropriate to stay this action, even if there were actual, on-going investigations, and thereby delay the remedies that could not be provided to plaintiffs through any other means.
D. The doctrine of equitable abstention is irrelevant to the issues in this case.
Nor does the doctrine of equitable abstention apply in this context. In Wolfe v. State Farm Fire & Cas. Ins. Co. (1996) 46 Cal.App.4th 554, the court refused to proceed in an action seeking to force California insurers to issue earthquake insurance where the issue was being addressed by the Legislature. The appellate court upheld that decision on the basis that, because of the Northridge Earthquake and the resulting complex economic issues that resulted, the trial court’s discretionary decision to stay out of the issue was appropriate. Indeed, the appellate court’s rationale was derived from several other cases, all dealing with complex economic policies. Despite Kaiser’s elaborate attempt to create a complex economic issue by tying in high pharmaceutical prices and the implied threat that Kaiser may have to eliminate pharmacy benefits if it is not allowed to continue its existing pill splitting practices, the reality is that the argument is nothing but an unsupported facade. Indeed, it is obvious from Kaiser’s huge quarterly profits that it could withstand the loss of the illicit gains generated by its pill splitting policy even if it were forced to abandon it altogether. Thus, there is, in reality, no demonstrated complex economic policy issue involved in pill-splitting and there is no indication that the Legislature is acting to do anything about it.
Similarly, the issues in Diaz v. Kay-Dix Ranch (1970) 9 Cal.App.3d 588 implicated larger, societal and economic problems about whether, when and how the issue of illegal immigration and the need for minimum-wage labor should be addressed. No such pervasive economic interests - especially ones that must necessarily be resolved by the federal government in order to assure nationwide consistency and constancy - are present in this case. On the contrary, this case is much simpler: Kaiser should be stopped from profiting from pill splitting at the expense of - and potential risk to - its members.
Nor does the decision in Desert Healthcare Dist. v. PacfiCare, FHP, Inc. (2001) 94 Cal.App.4th 781, 795-796 warrant application of the abstention doctrine in this case. As the court noted there:
The instant case is a perfect example of when a court of equity should abstain. Desert Healthcare essentially argues that PacifiCare abused the capitation system by transferring too much risk to its intermediary without adequate oversight. In order to fashion an appropriate remedy for such a claim, be it injunctive or restitutionary, the trial court would have to determine the appropriate levels of capitation and oversight. Such an inquiry would pull the court deep into the thicket of the health care finance industry, an economic arena that courts are ill-equipped to meddle in. As such, there is no proper role for the court of equity to play in the instant dispute.
There is no deep economic thicket to be pulled into in this case. Kaiser uses pill splitting solely as a cost containment device. Pill splitting has not only not been proven safe, its has real, demonstrable risks that have been verified in clinical studies. Kaiser’s profits are more than adequate to absorb the additional costs if it must abandon its current pill splitting policy and be required to honor its advertising and contractual promises. While pharmaceutical costs may be rising, that does not justify allowing Kaiser to risk the health and safety of its members through an unwarranted, unjustified and unsafe pill splitting policy. Absention in this case would, in reality, be abdication of the Court’s obligations to assure that this State’s consumers are protected from unfair, unlawful and fraudulent business practices such as this.
Nor would resolution of the issues presented to this Court constitute an unwarranted interference with the application of pharmacy law. First, of course, Kaiser’s pill splitting policy neatly - and, no doubt deliberately - side-steps any applicable regulations by making sure that it is Kaiser patients and not Kaiser pharmacists who are doing the splitting. It is offensive that Kaiser would now attempt to invoke pharmacy regulations in an effort to maintain this practice.
It is especially ironic that Kaiser argues that it is the Board of Pharmacy that should decide what pills can be split. (Kaiser Brief, p. 33, lines 10-12.) Kaiser contends that the Board of Pharmacy should make the call on what pills can be split - but the Board has not approved any pills for splitting as a cost containment device. That being the case, Kaiser has admitted that its policy is improper.
Moreover, the California Board of Pharmacy is a member of the National Association of Boards of Pharmacy - which has a resolution condemning pill splitting as a cost containment practice. (See Exh. 20.) Thus, it can be taken as a given that the California Board of Pharmacy would not approve of tablet splitting in this context. But its failure to take action to date on the issue supports the conclusion that if this Court does not act, the conduct will not be addressed or rectified.
This Court is more than adequately equipped and competent to examine, address and resolve the issue in this case and does not need the assistance of any governmental agency expertise to know that what Kaiser is doing is wrong. That being the case, neither primary jurisdiction nor equitable abstention is necessary or desirable.
Given that there is no justification for a stay in this action, Kaiser’s motion should be denied.
FURTHER DISCOVERY IS NECESSARY
The evidence makes clear that there are triable issues of material fact in dispute in this case which preclude the summary determinations requested by Kaiser. If, however, the Court believes that, based on the present record, summary judgment could be granted, plaintiffs respectfully request than summary judgment be denied pending further discovery pursuant to Code of Civil Procedure section 437c(h). (Bahl v. Bank of America (2001) 89 Cal.App.4th 389; Frazee v. Seely (2002) 95 Cal.App.4th 627.) As set forth in the Declaration of Sharon J. Arkin, further discovery is necessary and appropriate with respect to the following non-exclusive list of areas for discovery:
a. A survey of Kaiser patients to whom split-dose prescriptions have been dispensed in order to assess the extent of screening conducted prior to dispensing split-doses to them, to determine whether, in fact, they have been informed and/or understand whether they have the right to refuse split-dose prescriptions, to determine whether they understood from Kaiser’s advertising and other representations that they might be subject to split-dose prescriptions, to determine whether they believe that split-dose prescriptions constitute the highest quality medical care, to determine whether they were informed that the only purpose in split-dose prescriptions was cost-containment for Kaiser’s benefit, whether they were informed that split-dose prescriptions have never been determined by clinical studies to be safe for everyone and that split-dose prescriptions may result in some risk of worse clinical outcomes.
b. Discovery of the financial incentive plans for pharmacy professionals and the doctors group in order to determine whether doctors and pharmacists have a financial incentive to dispense split-dose prescriptions;
c. Discovery of Kaiser’s financial standing in order to determine the cost savings generated by the pill splitting initiative, as compared with Kaiser’s overall financial standing;
d. Discovery regarding the importance of the provision of pharmacy benefits in Kaiser’s marketing studies and analysis is important to demonstrate that the provision of pharmacy benefits is an important selling point in Kaiser’s marketing of its plans and that Kaiser would not be likely to limit or eliminate pharmacy benefits even if it could not longer engage in a blanket pill splitting program as a cost containment device;
e. Discovery regarding the manner and method by which Kaiser calculates premiums and assesses the cost of the health plan benefits in order to demonstrate the value of the health plan the members thought they were purchases versus the value of the health plan the members actually received.
CONCLUSION
Kaiser’s pill splitting policy is demonstrably not safe. It undermines the careful FDA structure for assuring safety and efficacy in prescription drugs. It violates the provider’s standard of care and Kaiser’s fiduciary duty to its members. It puts Kaiser’s members at demonstrable risk of injury for no other purpose that its own financial benefit. Even if accepted at face value, the written policy as currently promulgated is not being followed, is not monitored and is not being enforced, thereby putting Kaiser members at substantial risk of injury. It is obvious that no agency or entity is going to do anything about this problem except this Court. It is imperative that Kaiser be stopped from putting its own financial interests above the safety of its members
.
Dated: October 10, 2002 ROBINSON, CALCAGNIE & ROBINSON
TRIAL LAWYERS FOR PUBLIC JUSTICE
DAVIS LEVIN LIVINGSTON GRANDE
By:________________________________
SHARON J. ARKIN
Attorneys for Plaintiffs