Could Connecticut remove a pharmacy from its employee plan for refusing a covered prescription?

Plain-English summary

Connecticut's state employee health plan asked whether it could remove a network pharmacy that refused to dispense a covered prescription. The drug at issue was Plan B. In 2006, Attorney General Richard Blumenthal concluded that the refusal gave the plan cause to remove the pharmacy. He said the pharmacy benefits manager had to follow the termination notice provisions in its contract with the pharmacy.

The AG based the answer on the then-effective state employee benefits agreement, which covered prescription drugs without a general exemption for the disputed drug, and on the statute permitting a pharmacy to be excluded from a third-party prescription program for cause. He treated refusal to provide a covered drug as an adequate reason related to the pharmacy's assigned role in the network.

Currency note

This opinion was issued in 2006. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

State plan administrators at the time

The opinion said the benefits manager could remove a refusing pharmacy for cause, but its contract's notice provisions still governed the termination step. The AG did not treat the finding of cause as permission to skip those terms.

Network pharmacies and covered members at the time

The AG read the plan as requiring participating pharmacies to dispense covered prescriptions to eligible members. A pharmacy's refusal of one covered drug was enough, in his analysis, to support exclusion from that plan's network.

Common questions

Q: Could a Connecticut state plan drop a pharmacy that refused Plan B?
A: The 2006 AG opinion said yes, because Plan B was covered under the plan described to him and refusal was cause for removing that network pharmacy.

Q: Did finding cause end the pharmacy contract immediately?
A: No. The AG said the benefits manager should follow the termination notice requirements in the pharmacy contract.

Q: Was the opinion about every pharmacy in Connecticut?
A: No. It addressed pharmacies participating in the state employee prescription network under the benefits agreement and contract the AG reviewed.

Background and statutory framework

The Comptroller asked on behalf of the state's Health Care Cost Containment Committee. The plan's benefits manager contracted with pharmacies to fill covered prescriptions. The AG read the employee benefits agreement together with Conn. Gen. Stat. § 38a-471(f), which permitted exclusion from a third-party prescription program for cause. He concluded that refusing a covered drug qualified and said contract notice rules still applied.

Citations and references

Statutes cited in the opinion: Conn. Gen. Stat. § 38a-471(f); Conn. Gen. Stat. § 5-259(a).

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/2006-formal-opinions/honorable-nancy-wyman-comptroller-formal-opinion-2006004-attorney-general-state-of-connecticut

Original opinion text

Honorable Nancy Wyman, Comptroller, Formal Opinion 2006-004, Attorney General, State of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

March 2, 2006

The Honorable Nancy Wyman

Comptroller

Office of the Comptroller

55 Elm Street

Hartford, CT 06106

Dear Ms. Wyman:

On behalf of the Health Care Cost Containment Committee (the “Committee”), you have asked for a formal legal opinion concerning the Committee’s options if a pharmacy that is part of the State’s network of provider pharmacies refuses to dispense a certain prescription drug to covered members of the State’s prescription drug insurance plan. According to your letter, the Committee’s pharmacy benefits manager, Pharmacare, contracts with a network of pharmacies to fill prescriptions for individuals covered by the State’s plan. A particular network provider, with a number of pharmacy locations, has taken the position with Pharmacare that it will not fill prescriptions for a certain drug.1 You have asked “whether the Health Care Cost Containment Committee can remove the network provider from the list of approved network pharmacies for the failure to dispense a particular prescription drug on the list of covered prescriptions.” More specifically, you question whether “the position of the network provider constitute[s] cause for removal pursuant to Conn. Gen. Stat. § 38a-471(f)?”2

We conclude, as discussed below, that the refusal of a network provider to dispense a prescription drug covered under the State’s plan would give the Committee, acting through its benefits manager Pharmacare, cause to remove the pharmacy from the list of approved network pharmacies. If such action is taken, Pharmacare should adhere to the notice requirements set forth in the contract between Pharmacare and the pharmacy regarding termination of the contract.

Under state law, the Comptroller is required to arrange for group medical insurance coverage for state employees and certain other individuals pursuant to Conn. Gen. Stat. § 5-259(a). The selection of such coverage must be through a competitive selection process, Conn. Gen. Stat. § 5-259a, and must not impair existing rights under applicable collective bargaining agreements. Conn. Gen. Stat. § 5-259(j)(1). The current collective bargaining agreement between the State and the coalition of state employee unions, the State Employees’ Bargaining Agent Coalition (“SEBAC”) is SEBAC V, which governs the twenty year period from July 1, 1997, to June 30, 2017, and was ratified by the legislature in accordance with Conn. Gen. Stat. § 5-278(b) on April 27, 1997.

As amended by a Memorandum of Understanding dated April 29, 1999, SEBAC V requires the State to provide employees with five health insurance plans that are described in Exhibits 1A, B, C, D, and E to the 1999 Memorandum of Understanding. Each of the five plans covers prescription drugs. Significantly, there is no provision exempting any prescription drug from coverage under any of the plans. The only limitation on prescription drug coverage is that, in four of the five plans, oral contraceptives are covered “when medically necessary.” See 1999 SEBAC Memorandum of Understanding, Exhibits 1A through 1D.3 Thus, all prescription drugs must be provided under all five plans, including oral contraceptives deemed necessary in any individual case by a medical provider.

Because SEBAC V has been ratified by the General Assembly pursuant to Conn. Gen. Stat. § 5-278(b), the Comptroller’s obligation to comply with its terms, when approving pharmacies to provide prescription drug coverage as part of the State’s network of provider pharmacies, carries the force of law. If a pharmacy in the State’s provider network refuses to dispense a particular prescription drug to a covered member as prescribed by an approved medical provider, the Comptroller, through its agents, would have just cause, based on the requirements of SEBAC V as ratified by the General Assembly, to remove the pharmacy from its list of approved providers.

This conclusion is supported by Conn. Gen. Stat. § 38a-471(f), to which your letter refers. Conn. Gen. Stat. § 38a-471 is a health insurance statute governing “third party prescription programs.”4 Subsection (f) of 38a-471 provides that “[n]o administrator shall prohibit a pharmacy from enrolling in a [third party prescription] program except for cause, including, but not limited to, previous fraudulent use of program identification cards.”5

The focus of § 38a-471(f) is on the enrollment of pharmacies in third party prescription programs.6 Because the only manner in which a pharmacy may enroll in a third party prescription program and have its name added to the list of approved pharmacies is through a “contractual arrangement or agreement” with the program administrator, Conn. Gen. Stat. § 38a-471(a), section 38a-471(f) governs the circumstances under which a program administrator may refuse to contract with a pharmacy or network provider of pharmacies and thereby prohibit a pharmacy from enrolling in a third party prescription program.

Pursuant to section 38a-471(f), a program administrator may refuse to contract with a pharmacy “for cause.” The statute does not define the term “for cause,” other than to specify that it includes, but is not limited to, the previous fraudulent use of program identification cards. Id. Although the term “for cause” is not statutorily defined, the Connecticut Supreme Court considered the common meanings of the term in Fleet National Bank’s Appeal From Probate, 267 Conn. 229, 239-240 and n. 8 (2004). After a “comprehensive review” of dictionaries, provisions of the Connecticut General Statutes and state agency regulations, the Court concluded that “the phrase ‘for cause’ has been used interchangeably as meaning either ‘a good or adequate reason’ or ‘a reason related to the fitness of an individual to perform assigned duties.’” Id. at 240 n. 8.

Either or both definitions lead to the conclusion that the refusal of a pharmacy to dispense a drug covered by the State’s prescription drug plan would constitute “cause” to preclude the pharmacy from participating in the State plan. Because the State’s plans require participating pharmacies to dispense all prescription drugs to covered members, a pharmacy’s refusal to make one of those drugs available would constitute both a “good and adequate reason” not to contract with the pharmacy and “a reason related to the fitness of [the pharmacy] to perform assigned duties.” Either way, such refusal would constitute cause sufficient to preclude the pharmacy from enrolling in the State’s prescription program.

The fact that a pharmacy’s refusal to dispense a particular drug is cause sufficient to preclude it from participation in the third party prescription program in the first place means a fortiori that it must also be cause sufficient to remove it from the third party prescription program after enrollment. Accordingly, we conclude that the Committee, acting through its benefits manager, Pharmacare, would have cause to remove a pharmacy from its list of approved network pharmacies based on the pharmacy’s refusal to dispense a given prescription drug prescribed to a member. In doing so, the notice requirements set forth in the contract between Pharmacare and the pharmacy regarding termination of the contract should be followed.7

I trust that the foregoing answers your inquiry. Please do not hesitate to contact me if I may be of further assistance.

Very truly yours,

RICHARD BLUMENTHAL

1 We understand that the particular drug in question is the so-called Plan B morning after pill.

2 Conn. Gen. Stat. § 38a-471(f) states that “[n]o administrator shall prohibit a pharmacy from enrolling in a program except for cause, including, but not limited to, previous fraudulent use of program identification cards.”

3 The fifth plan contains no limitation.

4 A “third party prescription program” is “a system of providing for reimbursement for the cost of drugs or pharmaceutical services under a contractual agreement or agreement with a provider of such drugs or services.” Conn. Gen. Stat. § 38a-471(a).

5 The term “administrator” is defined as “the program administrator of a third party prescription program.” Conn. Gen. Stat. § 38a-471(a).

6 In searching for the meaning of a statute, a court looks “to the words of the statute itself, to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter.” Jagger v. Mohawk Mountain Ski Area, Inc., 269 Conn. 672, 679 (2004). As a starting point, we begin with the statutory language itself. Rocco v. Garrison, 268 Conn. 541, 550 (2004); Conn. Gen. Stat. § 1-2z. In the present case, the remaining factors shed no additional light on the meaning of Conn. Gen. Stat. § 38a-471(f) as it pertains to the question presented. As explained by Senator Fahey in urging passage of Conn. Gen. Stat. § 38a-471, of which subsection (f) is a part, “[t]his Bill is trying to help the pharmacies [by] giving them the ability to negotiate more reasonable prescription reimbursement schedules under the third party contract. . . . What we are trying to do with the entire Bill, with the two Amendments, is to solve the problem of pharmacies and pharmacists who have lost money because of fraudulent use of identification cards or a number of other things.” 24 Conn. S. Proc., pt. 18, 1981 Sess. 5731 and 5733 (June 2, 1981, trailer session)(remarks of Sen. Fahey). Nowhere in the statute’s legislative history is there any discussion of subsection (f).

7 We understand from your staff that the contract between Pharmacare and the pharmacy in question requires the pharmacy to dispense drugs covered by the State’s prescription drug plan and provides for termination of the contract in the event of material breach upon thirty (30) days written notice. We further understand that even in the absence of a material breach, the contract permits termination by either party, for any reason whatsoever, upon ninety (90) days written notice to the other party.