CVS Caremark, a benefits management company pursuing cost containment, introduced rules that require patients using specialty drugs to pay higher prices if they go outside the company’s in-house distribution system, specifically its home-delivery service or pickup at a CVS pharmacy.

Five John Doe HIV/AIDS patients who use specialty drugs with employer-sponsored healthcare plans sued CVS claiming, firstly, that CVS’s policy change amounts to discrimination under the Affordable Care Act (ACA) by treating consumers of specialty drugs differently from consumers of non-specialty drugs. Secondly, and crucially for our purposes, they claim that the ACA, by incorporating Section 504 of the Rehabilitation Act of 1973, creates a cause of action for discrimination based on this so-called disparate impact. (Like the later and better-known Americans with Disabilities Act (ADA), Section 504 bans discrimination on the basis of disability, but each law applies in some situations in which the other doesn’t.)

The question presented is whether Section 504 creates a cause of action for so-called disparate impact. The Ninth Circuit ruled that it did, finding that “practices that are not intended to discriminate” can still have a “disproportionately adverse effect” that can give rise to a Section 504 claim. But this holding rests on dubious statutory interpretation.

In deciding whether to recognize disparate impact claims, courts consider the differing wording found in each discrimination statute. For example, the Court found the intentionally broad language of “otherwise adversely affect” in Title VII of the Civil Rights Act of 1964 to open the door to disparate impact claims. Section 504 was patterned after a different part of the law, Title VI, which prohibits a person’s “be[ing] excluded from participation in, be[ing] denied the benefits of, or be[ing] subjected to discrimination”. Significantly, Section 504’s language limits coverage further by including the word “solely”.

Cato has joined the Washington Legal Foundation in an amicus brief urging the Supreme Court to overrule the Ninth Circuit and instead adopt the Sixth Circuit’s reasoning in Doe v. Blue Cross Blue Shield of Tenn., Inc, where on materially identical facts the Court held the benefit plans did not discriminate on the basis of disability because they were “neutral on [their] face.”

Today’s Supreme Court also shuns the creation of implied causes of action not clearly authorized by a statute. Such creation endangers the separation of powers by arming judges with effectively legislative—rather than judicial—power.

Every facially neutral cost-management policy affects beneficiaries differently. Affirming the Ninth Circuit’s ruling would open the floodgates for such challenges, create a vast administrative burden for providers and lead to increased premium costs for employers and employees alike. The Court can avert these foreseeable consequences by giving the statute’s language its most natural meaning.