$1.44M HIPAA Fine Against Walgreens Upheld

A Court of Appeals in Indiana upheld a Superior Court ruling from 2013 levying a $1.44M HIPAA fine against Walgreens and it’s pharmacist Audra Withers. The case looked at several important issues, including how strongly an employer could be held accountable for the actions of it’s professional employee.

The case surrounds the pharmacist disclosing prescription information about the ex-girlfriend of her husband, who had a child with the woman. The pharmacist reviewed the patients medical history in 2010, shared it with her husband who in turn shared the protected information with at least 3 others. Walgreens was found liable and appealed with the reasoning that they should not be held responsible for a professional pharmacist knowingly violating company policy and the law. Both courts disagreed.

The case presents concerning ramifications for employers of professional employees. Respondeat superior case law has generally protected employers from the unsanctioned actions of their employees, however the court did not protect Walgreens in this case. Regulatory investigations ad HIPAA fines are on the rise, pharmacies should carefully craft employee guidelines, handbooks and controls. In addition, reviewing insurance programs for regulatory coverage is paramount. Many malpractice policies over limited regulatory proceedings coverage, directors & officers as well as cyber liability coverage offer more comprehensive protection.

CVS Lawsuit over Blindness

Claudis Alston, a 65 year old Houston man with a series of aliments, was given a prescription to treat pink eye (Conjunctivitis). He was given a prescription for cortisporin ophthalmic suspension and went to his local CVS to fill it.
It is alleged that he was given a medicine for bacterial ear infections, neomycin-polymyxin-HC. After using the drops he is now blind in his left eye.

Because of Texas tort reform the maximum pain and suffering award for a case like this is $250,000. However, the public relations cost to CVS is likely to be much higher. The case illustrates the importance of proactively managing adverse and allegedly adverse events. Contact PharmacyLiability.com to discuss risk management practices and insurance products to minimize adverse publicity and verdicts when mistakes happen.








Proposed Settlement In New England Compounding Lawsuits

The trustee managing the New England Compounding Center has filed a proposed $100,000,000 settlement with victims and creditors. Over seven hundred people were sickened by tainted steroids and sixty four died.

The case is New England Compounding Pharmacy Inc., 12-bk-19882, U.S. Bankruptcy Court, District of Massachusetts (Boston). The original bankruptcy schedule of assets and liabilities can be found here.

The settlement is comprised of $47.75M from the owners assets, $20M in uncollected tax refunds and $10M from the sale of a related business. The owners will also turn over to the trustee $29M collectible under liability insurance policies. Despite only issuing a $6M limit policy Pharmacists Mutual will contribute $15M. Maxum Indemnity, which issued a $5M policy in excess of Pharm Mutual will pay $10.2M. Preferred Mutual Insurance Company, which insured an affiliated property business, will pay $3.75M.

The settlement does not include the payments made by insurances companies for the dozens of independent facilities and physician groups who were sued over the use of the tainted steroids.

The case shows the continued catastrophic nature of medical malpractice and product liability claims. Working with an pharmacy liability insurance broker and carefully managing contingent liability both up and down stream can help protect your business. Contact us today to discuss restructuring your insurance program to lower costs and increase coverage.

ADA Claim Against Walgreens for Anti-grazing Rule

The Equal Employment Opportunity Commission (EEOC) has convinced the U.S. District Court for the Northern District of California to allow a Americans with Disability Act (ADA) claim against Walgreens to move forward. The case surrounds the punishment of a diabetic worker who was caught “grazing”, she opened and ate a bag of chips without later paying for them. Although the chips were valued at $1.39 Walgreens says the policy is in place to reduce the $350M in annual theft losses it faces.

The court has essentially ruled that allowing the employee to steal must be accommodated because of her diabetes. What’s most worrying is the legal costs and potential penalties the pharmacy will face in defending it’s actions. The case is available here.

Employment related claims are rising in all areas of the economy, with retail and healthcare two of the hardest hit areas. Many pharmacies see themselves overlapping these two areas. Contact us today to discuss these issues with an employment practices insurance specialist.

Actress Katherine Heigl Sues Duane Reade

Actress Katherine Heigl has sued Duane Reade for $6M after the company used an unauthorized photo of her in an advertisement.

“Advertising Injury” is a standard General Liability coverage that would provide defense and indemnification costs for this type of situation. However, not all policies contain this coverage.

As pharmacies move from standard business owners policies to stand alone liability forms, the general liability coverage is often scaled back. The general liability coverage for a pharmacy is drive by bodily injury and property damage to non-patients – which generally provides coverage for trips and falls in the store and parking lot. Pharmacies, especially closed specialty operations, should ensure that their general liability includes personal and advertising injury. In the new media world this types of claims are expected to continue with regular frequency.

Contact an expert pharmacy broker today to discuss your options.

Indiana Pharmacy Board Head Investigated

The former president of the Indiana Board of Pharmacy and Walgreens are under investigations for $100M project. William J. Cover worked for Walgreens as corporate manager for pharmacy affairs but also served as president of the Board of Pharmacy in Indiana. During this time it’s alleged violated ethics codes when he pushed state officials to meet with his employer across the border in Illinois to push through the project rather than recuse himself from the project.

The full story is available here.

The investigation brings about an insurance issue many pharmacies ignore, coverage for regulatory investigations. Most pharmacies are concerned about lawsuits for bodily injury brought under either professional liability (malpractice) or general (products) liability, many of those would be shocked to learn that this is not comprehensive coverage. Director’s and Officer’s coverage is generally bought to protect against lawsuits from investors and creditors but many policies contain coverage for regulatory investigations and their ensuing costs.

Defending your organization from even the smallest of investigations can be catastrophically costly. Contact PharmacyLiability.com to discuss protecting your directors and officers from the costs of regulatory proceedings.

Pharmacy Insurance Market Update

The pharmacy malpractice market continues to face turbulence with reports that prominent carriers are pulling back on coverage for specialty operations. This follows Hartford’s recent retreat from writing pharmacy liability coverage.

Our brokers are working at a feverish pace to find new homes for our clients, old and new. We encourage compounding pharmacies other specialty operations to contact us early, ideally four months before their renewal. We are having great success placing insurance at costs below expiring.

The biggest issue clients are facing is whether to move to claims made policy form or stay on occurrence. Occurrence policies cover claims based on the year of injury, no matter when a lawsuit is brought or the error is discovered. These policies are cleaner but more expensive and increasingly harder to find.

Many faculties facing a difficult insurance market have decided to move to claims made coverage. On a move to claims made the company sets a “retroactive date”, which will not change in the years to come. Any claims made during the policy period from events after that date will be covered. Because of this step up in exposure the pricing starts out low and moves up over a period of three to five years.

Moving to a claims made policy generally lowers costs in the short term and opens up a number of new markets. Our belief is that competition lowers pricing and there are almost ten times as many markets writing claims made coverage than occurrence. The more markets we can approach on a clients behalf the better terms we can secure. Despite several high profile claims scaring several companies away from specialty pharmacies we still have underwriters who view the space as a good risk.

Underwriters prefer claims made policies because they are easier to price. When an error is made that leads to a pharmacy malpractice claim the eventual settlement could take a decade to play out. Actuaries and underwriting managers prefer the ability to tweak rates quickly as needed, writing coverage on a claims made basis allows them to move their underwriting guidelines quicker than if they had written occurrence policies.

The main concern with claims made policies is the “tail” or “extended reporting period”. If a facility had purchased occurrence coverage they could stop buying at any time and be covered for any claims after ceasing operations. With a claims made policy there is always a pool of uncovered liabilities that must be covered if the pharmacy closes or is sold.

Contact PharmacyLiability.com today to discuss better ways to protect your organization is a tough liability environment. We are dedicated to our clients and work hard to drive the best deals possible.

FDA Commissioner Pushes Congress to Regulate Compounding Pharmacies

A FDA commissioner is pushing congress to further regulate compounding pharmacies after several public contamination incidents.  The call to action appears in their official blog.

The complaints center around the fact that pharmacies are regulated by the states, giving the FDA no direct oversight. Dr Hamburg points out that the FDA has partnered with states to inspect thirty facilities in the last two months.

PharmacyLiability.com is working with clients to insure the increasing costs of regulation, contact us today to discuss better protecting your organization.

Compounding Pharmacy Sued for Eye Dye Contamination

Franck’s Compounding Lab is facing five federal lawsuits over alleged contamination of Brilliant Blue G, a stain used during eye surgery. The first of the lawsuits was filed in September 2012.

The cases are sure to shed additional regulatory scrutiny and continue the interest of plaintiff attorneys on bringing actions against pharmacies.

Contact PharmacyLiability.com today to discuss better protecting your organization from the costs of investigations and litigation.

Rite Aid Pays $20.9M to Settle Overtime Suits

Rite Aid has agreed to pay $20.9M to settle 14 lawsuits alleging violations of the Fair Labor Standards Act. It was alleged that they misclassified salaried managers and assistant managers to avoid paying overtime.

Contact PharmacyLiability.com today to ensure your insurance program properly covers emerging regulatory risks and their skyrocketing costs.