Opinion
No. X07-CV05-4003840-S
April 27, 2006
MEMORANDUM OF DECISION
The plaintiffs are forty-one drugstores who seek a temporary injunction against the defendants, PharmaCare Management Services, Inc. (PharmaCare), CVS Corporation, and CVS Pharmacy, Inc. In a verified complaint the plaintiffs base their claims for preliminary injunctive relief on allegations of violations of the Connecticut Unfair Trade Practices Act (CUTPA), tortious interference with business relationships, and the remedy provided under General Statutes § 42-115e. From March 14 to 16, 2006, the court heard evidence on this request for temporary injunction.
"A temporary injunction is a preliminary order of court, granted at the outset or during the pendency of an action, forbidding the performance of the threatened acts described . . . until the rights of the parties . . . shall have been finally determined by the court." Deming v. Bradstreet, 85 Conn. 650, 659 (1912). The primary purpose of a temporary injunction is to maintain the status quo until the rights of the various parties can be sorted out, after a hearing on the merits. Clinton v. Middlesex Assurance Co., 37 Conn.App. 269, 270 (1995).
Effect of § 42-115e
Usually, in order for the court to issue a temporary injunction the applicant must establish 1) a reasonable probability of success on the merits at a final hearing; 2) irreparable injury unless the injunction is granted; and 3) no adequate remedy at law. Covenant Radio Corporation v. Ten Eighty Corporation, 35 Conn.Sup. 1, 3, (1977). If irreparable injury is demonstrated, the trial court ought to issue the temporary injunction unless it is clear that the plaintiff will not prevail at the trial on the merits. Olcott v. Pendleton, 128 Conn. 292, 295 (1941). However, where the legislature has provided for injunctive relief by statute, our Supreme and Appellate Courts have held that such statutory provision relieves a governmental applicant from the burden of proving the absence of an adequate remedy at law and the specter of irreparable injury. Gelinas v. West Hartford, 225 Conn. 575, 588 (1993); Farmington v. Viacom Broadcasting, Inc., 10 Conn.App. 190, 197 (1987).
In the present case, the CUTPA count avers that the defendants are engaged in a variety of deceptive trade practices which are damaging the plaintiffs' businesses. The tortious interference count incorporates these same allegations by reference as the basis for liability.
The Unfair Sales Practice Act, General Statutes ch. 736, includes § 42-I15e which vests the trial court with discretion to grant injunctive relief under certain circumstances. That section reads as follows:
(a) A person likely to be damaged by a deceptive trade practice of another may be granted an injunction enjoining such practice under the principles of equity and on terms that the court considers reasonable. Proof of monetary damage, loss of profits, competition, actual confusion or misunderstanding or intent to deceive is not required. Relief granted for the copying of an article shall be limited to the prevention of confusion or misunderstanding as to source.
(b) The court in exceptional cases may award reasonable attorneys fees to the prevailing party. Costs or attorneys fees may be assessed against a defendant only if the court finds that he was willfully engaged in a deceptive trade practice.
(c) The relief provided in this section is in addition to remedies otherwise available against the safe conduct under the common law or other statutes of this state.
Before the court can determine whether § 42-115e(a) relieves the plaintiffs of the necessity of demonstrating inadequate legal remedy and irreparable injury, the court must address two threshold issues. First, does the statutory injunction exception apply to temporary as well as permanent injunctions; and second, does the benefit of the exception extend to private parties as well as governmental entities.
Applicability of § 42-115e to Temporary Injunctions
The court holds that the rule eliminating the need for the applicant to prove a lack of adequate legal remedy and irreparable harm applies for both temporary and permanent injunctions.
Because rulings on temporary injunctions are normally unappealable, it is unsurprising that the court's research discloses no appellate level decision explicating this issue. Our trial court decisions are split on this question, compare e.g., Hartford Municipal Employees Association v. Hartford, Superior Court Hartford J.D., CV 05-4017166 (December 7, 2005), Satter, J., exception applies; with Canterbury v. Kukevitch, Superior Court, Windham J.D., CV 03 70337 (June 17, 2003), Foley, J., exception inapplicable. ( 35 Conn. L. Rptr. 14).
This court discerns no logical reason, procedural or substantive, to distinguish between temporary and permanent injunctions which arise from statutory authority. "The rationale underlying this rule, that the complainant is relieved of his burden of proving irreparable harm and no adequate remedy at law is that the enactment of the statute by implication assumes that no adequate alternative remedy exists and that the injury was irreparable, that is, the legislation was needed or else it would not have been enacted." Johnson v. Murzyn, 1 Conn.App. 176, 180-81 (1984). (Emphasis added.) Such statutes conclusively create a legislative presumption "that there is no adequate legal remedy." Burns v. Barrett, 212 Conn. 176, 193 (1989). It is the creation of specific statutory authority to issue an injunction itself which implies that irreparable harm exists if the prerequisites of the statute are satisfied. This implication ought to be drawn regardless of the length of time the injunction will endure.
Also, judicial determinations whose effect survive only until final judgment, such as prejudgment remedies or arrest warrants, typically employ a less onerous standard, viz, probable cause, than the level of proof necessary to prevail at trial. It would be anomalous if the burden on the applicant to secure a temporary injunction exceeds that needed by the same party in the same case to obtain a permanent injunction.
The court concludes that, if a complainant can meet the criteria set forth in the pertinent statute conferring upon the court the power to issue injunctive relief, then the presumption of irreparable harm and a lack of adequate legal remedy applies to temporary as well as permanent injunctions.
Governmental Versus Private Parties
Every appellate decision that the court has found regarding the elimination of the burden of proving irreparable injury and insufficient legal remedy when the legislature provides, by specific statutory enactment, for injunctive relief has dealt with injunctions sought by governmental entities. Again, the court perceives no sound reason why the conclusive presumption of irreparable harm and the absence of adequate legal remedy evaporates when a private party attempts to rely on such a statutory provision. The rationale for the presumption recited above in Burns v. Barrett appears just as pertinent regardless of the character of the complainant.
Where the legislature has spoken and afforded the opportunity for injunctive relief to private entities, if certain delineated circumstances arise, then the need to demonstrate the lack of an adequate remedy at law and irreparable harm, as under common-law principles, is eliminated. This is especially applicable to § 42-115e(a) where the statute expressly lists several circumstances that the complainant is absolved from proving in order to empower a court to grant injunctive relief. The complainant need not prove "monetary damage, loss of profits, competition, actual confusion or misunderstanding or intent to deceive." Also, subsection (c) of § 42-115e provides that any injunction issued under its authority is in addition to common-law remedies.
Finally, our Supreme Court has recognized that private parties may obtain injunctions without having to establish irreparable injury or inadequate legal remedy in certain scenarios, e.g. to enforce restrictive covenants. Manley v. Pfeiffer, 176 Conn. 540, 544 (1979); Hartford Electric Light Co. v. Levitz, 173 Conn. 15, 22 (1977). If irreparable harm and an absence of sufficient legal remedy can be dispensed with as a predicate for injunction under the common law for private entities, the court sees no reason why such dispensation would be inappropriate for private parties employing a statutory source for injunctive relief.
Therefore, the court holds that a private litigant requesting a temporary injunction under § 42-115e is relieved of the burden of establishing no adequate remedy at law and irreparable injury.
Probability of Success on the Merits
The court now turns to the particular deceptive practices alleged in the verified complaint to determine the probability the plaintiffs will prevail on the merits, whether the prerequisites of § 42-115e(a) have been demonstrated, and whether a balancing of the equities merits issuance of a temporary injunction to maintain the status quo. Toward that end, the court makes the following findings of fact.
The State Office of the Comptroller is responsible for, among other matters, overseeing the implementation of the nine state and municipal employees' retirement plans, the deferred compensation plans for state employees, and the medical, dental, and prescription drug benefit plans for state employees. Since June 2004, Thomas Woodruff has been Director of the state employees benefit division at the Comptroller's Office, and he is charged with enforcing such plans for the Comptroller's Office.
As a result of collective bargaining, the Health Care Cost Containment Committee (HCCCC) was formed to attempt to restrain surging health care expenses arising under the various health benefit plans available to state employees. The HCCCC is composed of representatives from the Office of Policy and Management, labor unions, and budget analysts. Director Woodruff chairs the HCCCC and attends to the committee's administrative needs. The HCCCC reviews all proposals from third parties concerning the implementation of employee health care plans and makes recommendations regarding these proposals to the Comptroller. Ultimately, the Comptroller chooses the proposals which will effectuate the benefit plans.
In late 2004, the HCCCC issued a request for proposal (RFP) with respect to the third-party administration of the state employees' prescription drug benefit plan, which administration would commence July 1, 2005. This third-party administrator is called the Pharmacy Benefits Manager (PBM). During 2004, the incumbent PBM was Anthem Prescription. The HCCCC hired a consultant to assist in the search for and recommendation regarding the new PBM.
The RFP generated the receipt of seventeen proposals. After initial scrutiny, the HCCCC pared the list of candidates to eight. The list was further shortened to three finalists, viz. MedCo, Anthem Prescription, and PharmaCare. Director Woodruff led an interview subcommittee which reviewed the finalists' revised proposals and heard their presentations.
Some background information is useful at this point. Once a PBM is selected, the Comptroller negotiates a contract with the PBM to set the rate at which the PBM will be compensated by the state. The PBM, in turn, separately negotiates with interested prescription drug providers to reach agreements with each individual provider as to the rates the PBM will compensate that particular provider. The providers comprise many retail pharmacy chains, independent drugstores, and online prescription drug companies. The providers who contract with the PBM are known as "network providers."
It is common for a PBM to be affiliated with a large pharmacy chain which may also become a network provider. In the present litigation, PharmaCare is a wholly-owned subsidiary of CVS Corporation, and CVS Pharmacy, Inc., a provider, is a sibling corporation of PharmaCare. It should be observed that one of the plaintiffs, Brooks Pharmacy, Inc., is a subsidiary of a corporation which has another subsidiary that is a PBM for a prescription drug plan for college students.
It is also common, when a PBM is associated with a network provider, that the affiliated provider will offer discount prices for plan members with respect to nonprescription products. Such discount arrangements are known as "affinity programs."
In the present case, Director Woodruff suggested to PharmaCare that the creation of an affinity program through CVS drugstores would enhance PharmaCare's chances for recommendation by the HCCCC to be the new PBM. PharmaCare and CVS Pharmacy, Inc. adopted the state's suggestion and agreed to offer a twenty per cent discount to state employees on certain store brand, nonprescription merchandise at CVS drugstores.
Based on several factors, including the proposed affinity program, in April 2005 the HCCCC unanimously recommended to the Comptroller that PharmaCare become the new PBM, and the Comptroller followed this recommendation. The state regarded the twenty percent discount program as part of the PBM contract with PharmaCare. The affinity program was dubbed the "CVS Health Advocate Plan." The Comptroller's Office, through Director Woodward, retained the right to preview and approve or reject all materials to be disseminated by PharmaCare to state employees.
When some drugstores learned that PharmaCare had been chosen as the new PBM, they contacted the Connecticut Pharmacists Association (Association) with several concerns regarding Pharmacare's assumption of that role. On May 18, 2005, Margherita Giuliano, Executive Vice President of the Association, wrote to Attorney General Blumenthal about these concerns and the Association's desire that a firewall exist between PharmaCare and the other CVS entities. The Attorney General relayed these concerns to PharmaCare, and, on May 25, 2005, it replied by letter reassuring the Attorney General that "a clear firewall" between PharmaCare and its parent and sibling CVS companies had been erected. The firewall segregated PharmaCare confidential knowledge from CVS and vice versa. The firewall was prevented from feeding business information obtained from other network providers to CVS and blocked CVS from leaking information obtained by CVS from its relationships with other PBMs to PharmaCare.
The materials which the Comptroller had to review and approve before PharmaCare could send them to prescription drug benefit plan members included the member's prescription drug identification card, a booklet describing the prescription drug benefits available, an introductory letter from PharmaCare, and later a CVS Health Advocate Plan card needed to utilize the twenty percent discount for nonprescription purchases at CVS.
In anticipation of the July 1, 2005, PBM transition date from Anthem prescription to PharmaCare, PharmaCare received approval from the state for issuance of the following material: the PharmaCare Prescription Drug card; the booklet explaining coverage under the state employees' prescription drug benefit plan; notification that the recipient would, in the near future, receive a second identification card, viz, the PharmaCare Health Advocate card entitling the recipient to the twenty percent CVS discount on certain nonprescription merchandise and the details of that program; a frequently asked questions and answers section; a partial list of participating network providers; and a telephone help line number and website to which a member might resort to ascertain if the member's current pharmacy was a network provider as well as other information. These materials were mailed to members before the July 1, 2005, start date. In addition, labor unions which represented groups of state employees published information at the unions' websites concerning PharmaCare's role as successor PBM and the CVS discount.
During August 2005, the PharmaCare Health Advocate Card, whose design and issuance were expressly approved by the Comptroller's Office, were mailed to members along with an explanatory letter, also sanctioned by Director Woodruff. This discount card resembles a plastic credit card and contains on its face the PharmaCare logo prominently displayed on the top half of the card, the Connecticut state seal shown in the lower left corner, and the CVS logo present in the lower right corner. The back of this card explains the terms of the nonprescription merchandise discount. Additional facts will be recounted as necessary.
The plaintiffs' specific claims of unfair and deceptive trade practices which form the bases for the CUTPA and tortious interferences counts are alleged in paragraph 178 of the verified complaint and may be summarized as follows.
1. That the defendants misrepresent the establishment of a firewall between PharmaCare and the other CVS companies;
2. That PharmaCare, through its website, customer service phone line, and written correspondence with members, misleads the members as to which pharmacies are network providers, to the detriment of the plaintiffs;
3. That the defendants intentionally communicated false and misleading information to members when PharmaCare took over as PBM and caused long-term misunderstanding regarding that changeover;
4. That PharmaCare misuses its position as PBM to supply to members CVS discount information and cards concerning the CVS discount program without affording the same opportunity and access to members to competing pharmacies within the network in violation of General Statutes § 38a-471(f);
5. That PharmaCare initially conveyed false and deceptive responses to non-CVS network providers regarding the affinity program and the opportunity for competitors to CVS drugstores to offer similar discounts;
6. That PharmaCare refuses to assist non-CVS network providers to the extent it assists CVS drugstores regarding advertising and discount program information;
7. That the design and dissemination of the PharmaCare Health Advocate Program discount card and accompanying materials to members intentionally, deceptively, and unfairly creates the impression that CVS drugstores are the only pharmacies approved by the state for use by members under the prescription drug benefit plan; and
8. That PharmaCare systematically favors CVS drugstores and steers members to these pharmacies by incorrectly reporting CVS drugstores as closest to the members' residence or by unfairly giving CVS drugstores unwarranted prominence when listing participating pharmacies.
As noted above, in order for the plaintiffs to secure a temporary injunction they must demonstrate a reasonable probability of success on the merits of the CUTPA and/or tortious interference claims. Therefore, the court must evaluate both the likelihood that the plaintiff will prove their allegations at trial and the likelihood that any defense will defeat their claims.
Tortious Interference Claim
The elements of a claim of tortious interference with business expectancies are 1) that a business relationship existed between the plaintiff and another party; 2) the defendant intentionally interfered with that business relationship while knowing of the relationship; and 3) as a result of the interference, the plaintiff suffered actual loss. Downes-Patterson Corp. v. First National Supermarkets, Inc., 64 Conn.App. 417, 429-30 (2001).
In this case, the plaintiffs' allegations of misconduct in the tortious interference count are identical to their allegations of CUTPA violations. Essentially, the plaintiffs contend that the defendants' unfair and deceptive trade practices created confusion and misunderstanding among state employee prescription drug benefit plan members who then erroneously believed that they were required to have their prescriptions filled at CVS drugstores and that the PharmaCare affinity discount program unfairly lures and has lured patrons of the plaintiffs' pharmacies away from them and to CVS drugstores.
No evidence was deduced that any defendant had actual knowledge that a particular member patronized a particular plaintiff's pharmacy. This is fatal to the tortious interference claim. Tortious interference requires proof that a defendant intentionally interfered with a known business relationship. It is insufficient to allege and prove that the defendant knew or ought to have known that its practices had a tendency or potential, however strong, to interfere with a competitor's business generally. The defendant must intentionally and knowingly target a specific business relationship or relationships. Thus, there is little likelihood that the plaintiffs will prevail at trial on this count.
CUTPA
The court finds that the plaintiffs' claims which are based on the twenty percent discount or affinity program pertaining to nonprescription products at CVS drugstores, the issuance of the PharmaCare Health Advocate Program cards, the explanatory materials accompanying this discount promotion, and PharmaCare's refusal to pmote discount programs for other network providers besides CVS drugstores did not generate any CUTPA violation.
CUTPA contains a statutory exemption from liability for "[t]ransactions or actions otherwise permitted under law as administered by any regulatory board or officer acting under statutory authority of the state," General Statutes § 42-110c(a)(1). The Comptroller's office has the authority and duty to negotiate for and oversee implementation of the state employees prescription drug benefit plan by the PBM, General Statutes § 5-259. Under General Statutes § 3-117(a), the Comptroller's Office bears responsibility to insure that the PBM contract was properly drawn and executed in compliance with the Comptroller's procedures.
Director Woodruff was and is a state officer charged with the duty to supervise health insurance plans for the benefit of state employees. Woodruff suggested that PharmaCare's proposal to become the new PBM include an affinity program which would sweeten PharmaCare's chances of selection for the position. PharmaCare needed Woodruff's express approval for the discount program, the contemplated notification process for both PharmaCares takeover as PBM and the Health Advocate Program for nonprescription CVS products, and the materials mailed to state employees regarding these matters including both the prescription drug benefit identification card and the CVS discount card. Also, Woodruff approved the release by PharmaCare of members' names and addresses to CVS Pharmacies in order to effectuate and coordinate the CVS discount program which Director Woodruff had solicited.
PharmaCare lacks any authority to share this state personnel information with any network provider until that network provider first obtains approval for proposed discount plans from Director Woodruff. Additionally, the PBM administers only prescription drug benefit plans and not nonprescription programs. Director Woodruff explicated this arrangement to network providers during a meeting with network providers at the Attorney General's Office and invited other network providers to submit to him any such discount programs they wished to initiate. To date, the comptroller's office has received no submissions. In sum, without the Comptroller's permission, PharmaCare had no legal power to supply the names and addresses of state employee prescription drug benefit plan members to network providers.
The provisions of CUTPA are remedial and should be liberally construed to provide legal recourse against unfair methods of competition and deception. Norman Josef Enterprises v. Connecticut National Bank, 230 Conn. 486, 509 (1994). At a trial on the merits, the burden will be on the defendants to show they fall within the exception to CUTPA liability set forth in § 42-110c(a), Id. However, a complainant cannot use CUTPA to make an "end run" around government action. McCutcheon and Burr, Inc. v. Berman, 218 Conn. 512, 530 (1991). The court concludes that, at trial, § 41-110c(a) will likely be found to exonerate the defendants regarding their activities surrounding the genesis of, notification concerning, and implementation of the twenty percent nonprescription CVS product discount.
In general, there are two distinct types of exemptions to unfair trade practices law which legislatures have adopted relating to government oversight, J. Sheldon and C. Carter, Unfair and Deceptive Acts and Practices (6th Ed. 2004), § 2.3.3.2. One type excuses from liability "regulated practices." This statutory exemption is very broad and excludes from legal scrutiny entire fields, trades, or professions which are already extensively regulated by other statutory schemes or agency law. CT Page 7718 Id. The second type of exemption excepts from liability "permitted practices," which exemption pertains only to particular activities specifically allowed or authorized by a regulatory body or official. Id.
Section 42-110c(a)(1) is an example of this second kind of exemption. Our CUTPA law only exempts from liability specific, permitted acts rather than entire trades or fields of commercial endeavor. Although our appellate tribunals have sometimes been murky concerning this important distinction, an excellent analysis of this exception to CUTPA can be found in State v. Tomasso, Superior Court, Waterbury C.L.D., d.n. X02-CV04-4002651 (April 1, 2005), Schuman, J. (39 Conn. L. RPtr. 127). This court adopts the reasoning of State v. Tomasso, supra, and regards § 42-110(a)(1) as removing CUTPA liability only for particular practices which are specifically allowed or sanctioned by governmental authority.
Nonaction by governmental agencies or officials does not equal permission. Sing v. John L. Scott, Inc., 83 Wn.App. 55, 68-70 (Wash.App. 1996). The agency or official must engage in overt and affirmative action to approve the course of conduct which is claimed to be an unfair or deceptive trade practice. Id.
Certainly, misrepresenting the nature of a publication or product as "official" or governmentally blessed can be an unfair and/or deceptive trade practice. Skinder-Strauss Associates v. Massachusetts Continuing Legal Education, Inc., 914 F.Sup. 665, 682 (D.Mass. 1995); Nester's Map and Guide Corp. v. Hagstrom Map Company, Inc., 760 F.Sup. 36, 36-37 (E.D.N.Y. 1991). Such practices include portraying oneself as occupying a special status with respect to governmental entities or having official "patina." Skinder-Strauss Associates v. Massachusetts Continuing Legal Education, Inc., supra.
However, in the present case all communications from PharmaCare to members regarding the CVS discount program, the issuance of the Health Advocate Program card, the use of the image of the state seal, and the information booklet introducing PharmaCare as the replacement PBM for Anthem Prescription were reviewed by Director Woodruff of the Comptroller's Office and explicitly approved by him for distribution. Conduct specially approved by the governmental official with supervisory power over the conduct cannot constitute an unfair or deceptive trade practice. Bober v. Glaxo Wellcome P.L.C., 246 F.3d 934, 941 (7th Cir. 2001).
Our Supreme Court has recognized this principle in the context of entities which have a contractual relationship with a municipal agency. In Lawson v. Whitey's Frame Shop, 241 Conn. 678 (1997), the plaintiffs had their cars impounded by order of the Hartford Police Department because of allegedly unpaid parking tickets. The City of Hartford had a contract with the defendant for the towing and storage of impounded vehicles. The private contractor refused to release impounded cars back to the plaintiffs until all parking fines, towing expenses, and storage charges were paid. The defendant's contract with the city also provided that any vehicles which remained unclaimed could be disposed of by the sale procedure outlined in General Statutes § 14-150 for abandoned vehicles. After the appropriate time elapsed, the defendants used this procedure to sell the plaintiffs' cars. The plaintiffs sued the defendant for conversion and violation of CUTPA. The trial court ruled in favor of the plaintiffs on the CUTPA count.
On appeal, our Appellate Court affirmed this ruling, 42 Conn.App. 599 (1996). The Appellate Court rejected the defendant's contention that § 42-110c(a)(1) was applicable and exempted the defendant from CUTPA liability because the defendant adhered to the process set forth in the contract with the municipality. Id., 616. The basis for the Appellate Court's rejection of this argument was that the defendant's conduct fell outside of the scope of the contract. Id.
Our Supreme Court reversed both the Appellate Court and the trial court decisions and held, instead, that the city had acted within its municipal powers in contracting with the defendant for the towing, storage, and disposal of impounded vehicles. Lawson v. Whitey's Frame Shop, supra, 684-85. Because the defendant's contract with the city directed it to take the actions the defendant took and the defendant acted in good faith relying on the contract, no CUTPA violation occurred. Id., 688.
In the present matter, the defendants kept the Comptroller's Office apprised of its plans to implement the CVS discount program which the Comptroller's Office had not only sanctioned but solicited. No correspondence or materials were mailed to members without review by and the express consent of the Comptroller's Office. This is not a case where the officials of the Comptroller's Office were themselves misled or unfairly manipulated into conferring uninformed permission. The defendants engaged in precisely the activity expected by the Comptroller's Office and for the very purposes sanctioned by that Office, i.e. to convince the Comptroller to select PharmaCare as the new PBM, to provide members with discounts for nonprescription CVS brand products, and to promote CVS drugstores.
Any disadvantages to competitors of CVS drugstores by virtue of the creation of the CVS discount program, any confusion among members generated by the issuance and arrival of the discount card, its design, and any accompanying material, and PharmaCare's allowing CVS drugstore access to members' names and addresses while refusing to supply the same to other network providers results from practices specifically permitted and sanctioned by the Comptroller's Office. These activities, which might otherwise be viewed as unfair or deceptive trade practices, are statutorily exempt by virtue of § 42-100c(a)(1).
Consequently, the court determines that the plaintiffs are unlikely to prevail at a trial on the merits as to the plaintiffs' CUTPA claims emanating from the offer, existence, and implementation of the CVS twenty percent discount program and the failure to provide similar access to member information to other network providers.
The remaining alleged CUTPA violations center on the prominent positioning of CVS pharmacies in the individualized booklets sent to members and the steering of members to CVS drugstores via the PharmaCare telephone help line. The court addresses these allegations separately.
The informational booklet that PharmaCare sends to new members is personalized in various ways including a listing of nine network provider drugstores near the member's residence. PharmaCare generated these sites using a proximity locator computer program developed by the United States Postal Service. Instead of producing the nine closest provider pharmacies to the member's residence, the program ascertains the network provider pharmacies closest to the population center for the zip code in which the member resides. The court regards this variation as benign.
Originally, however, PharmaCare had arranged the listing of the nearby pharmacies so that, if CVS drugstores were among the nine to be displayed, the CVS pharmacies would appear most prominently. This was achieved by listing the CVS pharmacies in the upper left corner leaving the less conspicuous slots for non-CVS locations. After receiving complaints from other network providers, the Comptroller's Office had PharmaCare reprogram the listing in the booklets in order of proximity to the population center of the particular zip code without discrimination. This modification was made in July 2005, very shortly after PharmaCare became the PBM.
As mentioned above, the purpose of a temporary injunction is not remedial but rather aims to maintain the status quo while the disputed issues can be resolved by trial. Assuming, arguendo, that PharmaCare's original listing practice violated CUTPA, that practice ceased in July 2005, and the court foresees no likely resumption of that tactic. Therefore, injunctive relief is unnecessary to maintain the status quo.
It does appear, however, reasonably probable that the plaintiffs will prevail on the merits in demonstrating that PharmaCare's help-line personnel unfairly directed callers who requested addresses of nearby participating pharmacies to CVS drugstores much more frequently than to other pharmacies. This practice clearly gave CVS drugstores unjustified advantage over competitors. It also misleads members who might otherwise prefer other pharmacies based on proximity, convenience, familiarity, or for other reasons. PharmaCare is required to act neutrally toward network providers with respect to the prescription drug needs of the members of the plan. Unquestionably, PharmaCare and the CVS entities are engaged in trade or commerce.
A practice violates CUTPA when the "cigarette rule" criteria are satisfied. Ventres v. Goodspeed Airport, 275 Conn. 105, 154-55 (2005). Under that rule a practice is unfair when it:
(1) . . . without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise [and] . . . is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) . . . is immoral, unethical, oppressive, or unscrupulous; (3) . . . causes substantial injury to consumers, competitors, or other business persons. Id.
It is unnecessary that all three criteria be met. Id. A practice may be unfair depending on the extent to which it meets, to a greater or lesser degree, one or more of the three criteria. Id.
Exploiting the PBM help line to misdirect members disproportionately to CVS drugstores at the expense of other network providers and causing inconvenience to members appears to satisfy the cigarette rule. Customer confusion and misunderstanding generated by a help line, which presumes to accomplish the opposite, creates the potential for loss of business for CVS competitors. This ascertainable loss as a result of an unfair trade practice in a commercial setting would constitute a violation of CUTPA.
Consequently, under § 42-115e, in order to maintain the status quo while this litigation is pending, the court enjoins PharmaCare from allowing help line operators to steer members to CVS drugstores by highlighting the availability of CVS drugstore locations exclusively or predominantly or by giving CVS drugstores priority unwarranted by geographic proximity to members. To achieve this goal, help line personnel must list participating pharmacies either alphabetically or in order of proximity using the United States Postal Services locator program results or other neutral methodology. The intent of this temporary injunction is to insure that members' inquiries through the help line are responded to by PharmaCare personnel in a neutral manner.
The court dispenses with the bond requirement of General Statutes § 52-472 because there is adequate resources among the plaintiffs to cover all damages should they fail to prosecute this action.