Albertsons' Pharmacies:
Complaint for Violations of CA Business and Professions Code Sections 17200, et seq.


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Copyright © 2003-2014
Privacy Rights Clearinghouse
Posted September 1, 2003

Jeffrey R. Krinsk, Esq. (109234)
Amy J. Lepine (203073)
FINKELSTEIN & KRINSK
501 West Broadway, Suite 1250
San Diego, CA 92101-3593
Telephone: 619/238-1333

Attorneys for Plaintiff

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN DIEGO

UTILITY CONSUMERS ACTION NETWORK On Behalf Of THE PRIVACY RIGHTS CLEARINGHOUSE, non-profit consumer organizations, on behalf of themselves and the general public,

Plaintiff,

v.

ALBERTSONS, INC.; SAV-ON-DRUG STORES, INC.; OSCO DRUG, INC.; JEWEL OSCO, INC.; and DOES 1 through 50, inclusive,

Defendants.

 

Case No. GIC 830069

COMPLAINT FOR UNFAIR BUSINESS PRACTICES AND UNTRUE OR MISLEADING ADVERTISING IN VIOLATION OF BUSINESS AND PROFESSIONS CODE SECTION 17200, ET SEQ. AND 17500, ET SEQ.

 


A Representative Action


Plaintiff UTILITY CONSUMERS' ACTION NETWORK ("U.C.A.N."), on behalf of THE PRIVACY RIGHTS CLEARINGHOUSE (" Privacy Advocate"), a non-profit consumer organization, is a highly-regarded consumer advocacy and education organization directing significant resources and effort to addressing privacy issues affecting California residents. Privacy Advocate brings this representative action as a private attorney general on behalf of itself and the California general public, seeking equitable remedies for Defendants' unlawful conduct as alleged herein. Plaintiff§s allegations as to itself are based upon its personal knowledge. All other allegations are based upon information and belief pursuant to the investigation of counsel or other evidence in filings, documents, or otherwise.

1. NATURE OF THE ACTION

1. Plaintiff brings this lawsuit against Defendants Albertsons, Inc., Sav-On Drug Stores, Inc., Osco Drug, Inc., Jewel Osco, Inc. (Collectively "Albertsons"), and Does 1 through 50, inclusive (with Albertsons, the "Defendants"), as a representative, private attorney general action on behalf of itself and the California general public pursuant to the California unfair competition law, Bus. & Prof. Code §§ 17200, et seq. (the "UCL"), and the California false advertising law, Bus. & Prof. Code §§ 17500, et seq. (the "UAL").

2. This action seeks to end the Albertsons' practice of improperly using and disclosing a consumer's private and confidential personal medical information, provided to an Albertsons pharmacy by a customer solely for the purpose of filling a prescription, for commercial purposes and pecuniary gain. Defendants undertake this process without customer knowledge or consent. This action also seeks restitution of the amounts paid Defendants for consumers personal medical information misused and improperly disclosed as hereafter elaborated.

3. Albertsons' unlawful conduct is central to its marketing program which allows Albertsons to take unfair advantage of its access to a customer's individually identifiable medical information which it improperly assembles for its commercial program (the "Drug Marketing Program"). The Drug Marketing Program is a scheme carried out by the Defendants throughout the period covered by the applicable statute of limitations which consists of the following wrongful acts and practices:

A. Consumers provide private and confidential medical information to Albertsons for the purpose of filling their prescription(s).

B. This information includes personally identifiable information including the pharmacy customer§s name, address, telephone number, the medication prescribed and, by deduction, the likely underlying medical condition.

C. This information is private, confidential and highly sensitive to consumers. Consumers do not expect use of their personal medical information or its disclosure (internally at Albertsons or otherwise) except in the manner and for the purpose of filling their prescriptions. Defendants' customers/consumers do not provide this information for any other use, do not authorize its disclosure or use for any other purpose and do not knowingly allow uses of their information apart from the purpose of receiving their medication.

D. Albertsons promotes their access to its customers'/consumers' confidential medical information to pharmaceutical companies anxious to increase the name recognition and sale of their drugs. Albertsons secretly enters into commercial arrangements with pharmaceutical companies willing to pay to participate in the Drug Marketing Program. Albertsons then allows these pharmaceutical companies to participate in using the consumers' medical information for direct marketing (either directly by Albertsons or through direct marketing services companies) that increases the sale of targeted drugs. The pharmaceutical companies fully finance the Drug Marketing Program.

E. Defendants' Drug Marketing Program has allowed and now allows pharmaceutical companies to advertise and market a drug of choice directly to thousands of screened and targeted consumers who use those drugs or who could be convinced to use or increase usage of specific drugs based on their medical conditions. Albertsons has carefully prepared and propitiously searches its pharmacy customer prescription database. Defendants use screening criteria furnished by the sponsoring pharmaceutical company to retrieve individual names, numbers and conditions filling a desired profile making the targeted Albertsons' customer receptive to the marketing and advertising pitch for the particular drug at issue. The pharmaceutical companies prepare and/or have final approval of the text of the direct marketing letters (sometimes phone calls) that result from the Drug Marketing Program.

F. The Drug Marketing Program is used by the pharmaceutical company paying Albertsons for its activities to increase the name recognition and brand loyalty to a particular drug, enhance goodwill associated with the providing of a drug, and/o increase medication sales through prescription renewals and by instigating new prescriptions for consumers "switched" to a replacement drug(s). The Drug Marketing Program allows Albertsons to, essentially, get a kickback for secretly trading its control of consumers' confidential medical information for pharmaceutical companies' enjoyment of this valuable information. The pharmaceutical company pays Albertsons for the Drug Marketing Program and the retrieval of the customer profiling by medication, medical condition or other similar factor. Albertsons initially receives a set amount per customer target with Albertsons' normal contract including an incentive payment for subsequent and enhanced sales of the drugs being marketed.

G. By way of illustration, the pharmaceutical giant AstraZeneca proceeded with Albertsons in a Drug Marketing Program designed to transfer customer loyalty to Nexium when its earlier heartburn medication went off-patent.

H. Albertsons never discloses the Drug Marketing Program to its customers and proceeds with the Drug Marketing Program without customer knowledge, authorization, or consent.

I. Albertsons does not disclose any aspect of the Drug Marketing Program to a customer's prescribing physician(s) (or other care giver) and proceeds without the physicians' knowledge, authorization, or consent.

J. Albertsons also does not disclose and attempts to conceal the actual purpose of the Drug Marketing Program and misleads consumers by cleverly disguising the direct marketing and advertising letters of the Program as being for the salutary purpose of "reminding" consumers to renew their prescriptions or "informing" them of drugs that are available for their medical conditions. Defendants stated health care rationale for the Drug Marketing Program is a sham.

4. Albertsons publicly disseminates misrepresentations to consumers regarding its use, disclosure, control, and protection of customer confidential and private medical information. Albertsons publicly assumes a stance acknowledging a consumer's legitimate and strong interest in maintaining the confidentiality and privacy of customer medical information. Albertsons holds itself out as being a professionally-run and trusted pharmacy complying with laws and regulations pertaining to pharmacy operation and protecting the confidentiality of consumers' medical information. Albertsons represents to its customers that it will not use prescription information except as has been authorized (consented to) by the customer or his/her legally authorized representative, prescriber, or similar medical professional. Albertsons further represents to customers that prescription information will not be improperly used or disclosed. Albertsons advertises that it employs stringent controls to ensure the confidentiality of medical information provided by its pharmacy customers. These representations are false. Albertsons routinely uses and discloses (particularly internally) consumers' medical information for commercial purposes without customer knowledge, authorization, or consent.

5. The Defendants' Drug Marketing is harmful in many ways while being unfair and deceptive business practice(s) under the UCL that, among other things: (1) violates consumer privacy expectation(s) and privacy right(s); (2) violates legal obligations of medical confidentiality arising by virtue of a consumer's/customer's providing medical information to Defendants for the limited purpose of filling his/her prescription; (3) misappropriates and misuses confidential and sensitive medical information (including personally identifiable medical information) for purposes not permissible while making money without the authorization or consent of the customer and without compensating the customer for the value of his/her proprietary information; (4) subjects customers to or has them suffer believing he/she may be an object of the Defendants' practices exposing him/her to embarrassment, ridicule, job or family or social problems, emotional distress, and other harm inconsistent with a person's right to be let alone and/or be secure in depending on the limited circumstances under law allowing third party use of confidential medical information; (5) increases the risk that a consumer's/customer's medical information will be further used or disclosed inappropriately or unlawfully; (6) undermines the scope and effectiveness of the doctor-patient relationship; (7) deceives and misleads Albertsons' customers regarding the purpose of the letters (communications) they receive; (8) deceives and misleads customers/consumers into believing that the marketing and advertising letters have been approved by their physician(s); (9) deceives, misleads, and confuses customers/consumers while creating anxiety by their receiving letters as to some prescription drugs but not others; and (10) uses false and misleading advertising to sell drugs.

6. Defendants do not compensate the consumers for their medical information when stored, profiled, retrieved, used and/or disclosed. Thus, Defendants deny consumers the value of their information and never restore the money belonging to the customer/consumer.

II. JURISDICTION AND VENUE

7. This court has jurisdiction over this action pursuant to the California Constitution, Article VI, Section 10, Business and Professions Code Section 17203, Business and Professions Code Section 17535, and Code of Civil Procedure Section 382.

8. Venue is proper in this Court because a substantial or significant portion of the conduct complained of herein has occurred and will occur in this county as Albertsons pharmacies are prevalent and conduct business under the trade names "Albertsons"; "Sav-On-Drug Stores"; "Osco Drug, Inc."; and "Jewel-Osco." Defendants' business practices and wrongful acts have occurred and will occur in this county, and the adverse effects of Defendants' alleged wrongful conduct have harmed and will continue to harm the residents of San Diego County (and the remainder of the state).

9. Defendants actively participate in substantial business activities in California and this county and intentionally avail themselves of the advantages of doing business in California and this county. Albertsons extensively markets and advertises in California while soliciting and conducting its pharmacy operations throughout the state.

10. The amount of value of the equitable relief to which named Plaintiff is entitled and the pro rata share of the amount or value of the equitable relief to which each consumer is entitled is below $75,000.
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III. THE PARTIES

11. Plaintiff U.C.A.N., On Behalf of THE PRIVACY RIGHTS CLEARINGHOUSE ("PRC"), is an affiliate of the Utility Consumers' Action Network, a 501(c)(3) non-profit consumer advocacy organization with its PRC offices located at 3100 Fifth Avenue, San Diego, California. PRC is, and for years has been, an education, research and advocacy organization for the benefit of consumers. PRC operates a consumer complaint hotline and publishes guides for consumers including how to safeguard informational privacy and similar topics. Plaintiff asserts the cause of action of this lawsuit solely in its capacity as a private Attorney General pursuant to the provisions of Cal. Bus. & Prof. Code Section 17204 and seeks no specific relief on behalf of itself.

12. Defendant Albertsons owns and operates one of the largest drugstore chains in the United States. Albertsons conducts pharmacy and related operations that generate over $30 billion in revenue and purports to employ over 8,000 licensed pharmacists for this purpose. Albertsons wholly owns each of the other named Defendants.

13. The true names and capacities of those defendants sued herein under Section 474 of the Code of Civil Procedure as Does 1 through 50, inclusive, are presently unknown to Plaintiff and are therefore sued by such fictitious names. Plaintiff will timely seek to amend this Complaint and include those Doe defendants by their true names and capacities when they are ascertained. Each fictitiously-named defendant is responsible in some manner for the illegal conduct alleged herein.

14. At all times relevant to this Complaint, each of the named Defendants was an agent, representative, and/or employee of the other Defendants, and each Defendant was a principal actor for, or aided and abetted the misconduct of, the other Defendants or enabled same to take place. In doing the things alleged herein, each Defendant was acting within the course and scope of the agency, authority, representation, or retention granted by Albertsons acting with the consent, permission, participation, assistance, and authorization of Albertsons. The actions of each named Defendant were ratified and approved by Albertsons.

15. Albertsons is liable jointly and severally, as a direct participant in, and/or as the co-conspirator and/or aider and abettor of the wrongs complained of herein.

FIRST CAUSE OF ACTION
(Violation of Cal. Bus. & Prof. Code §§ 17200, et seq. Alleged Against All Defendants)

16. Plaintiff incorporates by reference and realleges all paragraphs previously alleged herein.

17. Defendants§ acts and practices as described herein are (a) unlawful and (b) unfair business practices and are also (c) deceptive, untrue, or misleading advertising by Defendants, in violation of the UCL.

18. Defendants§ acts and practices are "unlawful" business practices that violate the following predicate statutes, provisions, regulations or constitutional provisions:

A. The California Constitution, Article I, Section 1, (protecting California residents' inalienable privacy rights);

B. The Confidentiality of Medical Information Act ("CMIA"), Civil Code §§ 56, et seq. which at § 56.10 provides:

Prohibition on Unauthorized Disclosure of Medical Information
(a) No provider of health care, health care service plan, or contractor 1 shall disclose medical information regarding a patient of the provider of health care or an enrollee or subscriber of a health care service plan without first obtaining an authorization. . . . (emphasis added)
* * * *

(d) Except to the extent expressly authorized by the patient or enrollee or subscriber or as provided by subdivisions (b) and (c), no provider of health care, health care service plan contractor, or corporation and its subsidiaries and affiliates shall intentionally share, sell, or otherwise use any medical information for any purpose not necessary to provide health care services to the patient. 2 (emphasis added)

(e) Except to the extent expressly authorized by the patient or enrollee or subscriber or as provided by subdivisions (b) and (c), no contractor or corporation and its subsidiaries and affiliates shall further disclose medical information regarding a patient of the provider of health care or an enrollee or subscriber of a health care service plan or insurer or self-insured employer received under this section to any person or entity that is not engaged in providing direct health care services to the patient or his or her provider of health care or health care service plan or insurer or self-insured employer. (emphasis added)

C. "Authorization" is a specific term with a precise meaning under the CMIA (as referred to in CMIA § 56.10 above) which is as follows:

§ 56.11 Standards for Authorizing Disclosure
Any person or entity that wishes to obtain medical information pursuant to subdivision (a) of § 56.10, other than a person or entity authorized to receive medical information pursuant to subdivision (b) or (c) of §§ 56.10, shall obtain a valid authorization for the release of this information.

An authorization for the medical information by a provider of health care, a health care service plan, or contractor shall be valid if it:

(a) Is handwritten by the person who signs it or is in typeface no smaller than 8-point type.

(b) Is clearly separate from any other language present on the same page and is executed by a signature which serves no other purpose than to execute the authorization.

(c) Is signed and dated . . . .

* * * *

D. Albertsons is subject to but has violated CMIA § 56.10 which specifies requirements relating to the preservation and storage of confidential medical information. § 56.101 of the Civil Code, which provides:

Destruction of Medical Records
Every provider of health care, health care service plan, pharmaceutical company, or contractor who creates, maintains, preserves, stores, abandons, destroys, or disposes of medical records shall do so in a manner that preserves the confidentiality of the information contained therein. . . .

E. Albertsons Drug Marketing Program violates § 4156 of California Business and Professions Code which makes it unlawful for a pharmacy corporation to engage in unprofessional conduct. Albertsons' "unprofessional conduct" includes violating Business and Professions Code § 651 (stated in B&PC § 652), as follows:

§ 4156: Unprofessional Conduct
A pharmacy corporation shall not do, or fail to do, any act where doing or failing to do the act would constitute unprofessional conduct under any statute or regulation. In the conduct of its practice, a pharmacy corporation shall observe and be bound by the laws and regulations that apply to a person licensed under this chapter. (emphasis added)

and

Code § 651: Professional Advertising Requirements
(b) It is unlawful for any person licensed under this division or under any initiative act referred to in this division to disseminate or cause to be disseminated any form of public communication containing a false, fraudulent, misleading, or deceptive statement, claim or image for the purpose of or likely to induce, directly or indirectly, the rendering of professional services for furnishing of products in connection with the professional practice or business for which he or she is licensed. A 'public communication' as used in this section includes, but is not limited to, communication by means of mail, television, radio, motion picture, newspaper, book, list or directory of healing arts practitioners, Internet, or other electronic communication.

F. The UCL, Business and Professions Code §§17500, et seq., also prohibits untrue and misleading statements to consumers.

G. The Code of Pharmacy Regulations § 1704 (Title 16, Division 17), is violated by Albertsons conduct:

§ 1704: Unauthorized Disclosure of Prescriptions
No pharmacist shall exhibit, discuss, or reveal the contents of any prescription, the therapeutic effect thereof, the nature, extent, or degree of illness suffered by any patient or any medical information furnished by the prescriber with any person other than the patient or his or her authorized representative, the prescriber or other licensed practitioner than caring for the patient, another licensed pharmacist serving the patient, or a person duly authorized by law to receive such information.

19. Defendants' acts and practices as alleged herein are unfair because the utility of the conduct is outweighed by the gravity of the harm it causes and because if offends established public policy or is immoral, unethical, oppressive, unscrupulous, and substantially injurious to consumers. Defendants§ wrongful conduct includes violation of numerous consumer laws as alleged herein or violates the spirit of these laws or otherwise significantly threatens or harms consumers. Defendants§ wrongful conduct causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and is not outweighed by countervailing benefits to consumers or to competition.

20. Pursuant to California Business & Professions Code § 17203, Plaintiff, on behalf of the general public, seeks a temporary, preliminary and/or permanent order from this Court prohibiting Defendants from continuing to engage in the unlawful or unfair business acts or practices set forth in this Complaint and from failing to fully disclose the true facts as set forth herein, and or ordering Defendants or their representatives to stop misleading the public and engage in a corrective campaign, particularly in light of the public misperception created by Defendants§ and/or their representatives§ misstatement and omissions of material fact, as well as provide appropriate equitable monetary relief as the court deems just and appropriate to all persons with a vested interest therein.

21. Plaintiff, on behalf of the general public, also requests the Court issue and order granting the following injunctive and/or declaratory relief:

(a) That a judicial determination and declaration be made of the rights of the general public, and the corresponding responsibilities of Defendants;
(b) That Defendants§ representatives be ordered to cease and desist from making misrepresentations to the general public; and
(c) That Defendants be required to provide equitable monetary relief to the members or the general public adversely affected by the practices at issue.

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PRAYER FOR RELIEF

WHEREFORE, Plaintiff prays for judgment against Defendants, and each of them jointly and severally, as follows:
1. For the declaratory, equitable, injunctive, equitable monetary and/or other relief requested;
2. For attorneys§ fees pursuant to, inter alia, the private Attorney General doctrine and/or C.C.P. § 1021.5 as may be appropriate, and for costs of suit incurred herein; and
3. For such other and further relief as this Court may deem just and proper.

DATED: September 7, 2004

FINKELSTEIN & KRINSK

By:________________________________
Jeffrey R. Krinsk

Amy L. Lepine
501 West Broadway, Suite 1250
San Diego, California 92101-3579

Attorneys for Plaintiffs


1 Pharmacists and pharmacies are licensed pursuant to Chapter 9 of Division 2 of the Business and Professions Code and thus fall within the statutory definition relating to the regulation of health care set forth at CC '56.05(d). See Cal. Bus. & Prof. Code, '' 4001, et seq.

2 Effective January 1, 2004, this paragraph was amended to include the words "use for marketing" to clarify prohibited uses of confidential medical information (i.e. (d) Except to the extent expressly authorized by the patient or enrollee or subscriber or as provided by subdivisions (b) and (c), no provider of health care, health care service plan, contractor, or corporation and its subsidiaries and affiliates shall intentionally share, sell, use for marketing, or otherwise use any medical information for any purpose not necessary to provide health care services to the patient.

 

   

Copyright © 2004-2006. Privacy Rights Clearinghouse/UCAN. This copyrighted document may be copied and distributed for nonprofit, educational purposes only. For distribution, see our copyright and reprint guidelines. The text of this document may not be altered without express authorization of the Privacy Rights Clearinghouse. This document should be used as an information source and not as legal advice. PRC documents contain information about federal laws as well as some California-specific information. Laws in other states may vary. Overall, our information is applicable to consumers nationwide.

 



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