CHARLESTON – The West Virginia Supreme Court of Appeals has ruled that a lawsuit involving CVS Caremark and six West Virginia pharmacies should be dismissed and arbitration should be compelled.

The appeal originates from a dispute between a pharmacy network administrator and various West Virginia pharmacies that are network members, according to the Feb. 9 opinion.

Justice Robin Jean Davis authored the majority opinion.

Stemming from an order in McDowell Circuit Court that refused to compel arbitration, the appeal raises three dispositive issues challenging the circuit court’s rulings and the Supreme Court found that the circuit court erred in each of the challenged rulings.

The Supreme Court remanded the case for the entry of an order dismissing the case and compelling arbitration.

“Because we find that the parties delegated questions of arbitrability to the arbitrator, we do not address the remaining issues raised,” the opinion states.

Each of the six West Virginia pharmacies has an agreement with Caremark, which offers pharmacy benefit management services to insurers, third-party administrators, business coalitions and employer sponsors of group health plans.

In August 2011, the pharmacies filed a complaint against CVS/Caremark seeking injunctive relief for West Virginia code violations. Following an attempted removal to and remand from federal court, CVS/Caremark filed a motion to dismiss the complaint and to compel arbitration.

After a period of three years of discovery, the circuit court heard arguments on the motion and denied it by order entered on Jan. 19, 2016. The petitioner then appealed.

The Supreme Court stated that although the circuit court characterized the plaintiff pharmacies as being unsophisticated, they do not agree.

“To the extent the plaintiff pharmacies are businesses, they necessarily possess some level of experience in corporate dealings,” the opinion states. “Moreover, even if we agree that the plaintiff pharmacies were unsophisticated, their presumed lack of expertise likely would not absolve them from application of the AAA rules.”

The Supreme Court concluded that the incorporation of the American Arbitration Association rules into the arbitration agreements at issue constitutes clear and unmistakable evidence that the parties have agreed to delegate questions of arbitrability to the arbitrator and the circuit court erred in ruling otherwise.

The Supreme Court reversed the Jan. 19, 2016, order and remanded the case for the entry of an order dismissing the case and compelling arbitration.

West Virginia CVS Pharmacy is represented by Robert B. Allen and Pamela C. Deem of Kay Casto & Chaney; and Robert H. Griffith and Michael D. Leffel of Foley & Lardner.

McDowell Pharmacy, as well as the other five pharmacies, are represented by J. Mark Adkins and S. Andrew Stonestreet of Bowles Rice; Marvin W. Masters and April D. Ferrebee of the Masters Law Firm; H. Truman Chafin of the H. Truman Chafin Law Firm; and Anthony Majestro of Powell & Majestro.

W.Va. Supreme Court of Appeals case number: 16-0209

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