Case Law and Legislative Highlights Affecting Managed Care

Cincinnati—Recent years have seen legislative changes that have had an impact on managed care pharmacists. Laws and regulations such as the Patient Protection and Affordable Care Act, the Health Insurance Portability and Accountability Act (HIPAA), the Health Information Technology for Economic and Clinical Health Act (HITECH), the Employee Retirement Income Security Act (ERISA), Medicare Part D, state laws governing pharmacy benefit management, and regulations impacting accountable care organizations were discussed at a Contemporary Issues session at the AMCP meeting.

William Stilling, JD, attorney at law, Parsons Behle & Latimer, Salt Lake City, Utah, began his presentation with an overview of the duty to warn principle in the context of managed care pharmacy. He provided citations of case law that demonstrated 2 views of the duty to warn principle. In the first view, a pharmacist filling a prescription or providing counsel to a patient is considered a “professional providing a service of value” [with a duty to warn]. In the second view, requiring a “pharmacist to warn of potential risks associated with a drug” would interject the pharmacist into the physician-patient relationship and interfere with ongoing treatment. “We believe that duty, and any liability arising therefrom, is best left with the physician” [McKee v American Home Products, Corp, 782 P.2nd 1045 (Wash 1989)].

Mr. Stilling also cited a Nevada case (Klasch v Walgreen Co.) where Walgreens filed a motion for summary judgment on the basis that the Learned Intermediary Doctrine (LID) limits the pharmacists liability to do nothing more than correctly fill a prescription as written. In that case, the court agreed that the LID applies to protect pharmacists in Nevada and therefore, “Nevada pharmacists have no duty to warn their customers of the generalized risks inherent in the prescriptions they fill.” The doctrine prevents pharmacists from constantly second-guessing a prescribing physician’s judgment simply in order to avoid his or her own liability to the customer, Mr. Stilling commented.

Mr. Stilling then mentioned a case related to covenants not to compete applied to managed care pharmacists. In the case cited (Saban v Caremark), Saban had signed a noncompetition clause that prevented him from “directly or indirectly” engaging in competition with Caremark or affiliated companies for 1 year after termination. Several months after being hired by Caremark, Saban resigned to take a job at SXC Health Solutions. Saban then sought declaratory relief for the court to declare the noncompetition clause he had signed with Caremark invalid.

Caremark counterclaimed for breach of contract and sought an injunction to prevent Sabon from taking the new job. The Court granted the temporary (14 day) injunction and then denied Caremark’s request for an injunction to enforce the noncompetition clause. The final holding was that the noncompetition clause was unreasonably broad and restrictive.

Mr. Stilling then briefly mentioned HIPAA because the 2009 HITECH Act has expanded HIPAA jurisdiction to businesses other than covered entities and the Office of Civil Rights has “stepped up enforcement,” he said. HITECH was part of the American Recovery and Reinvestment Act of 2009. HITECH’s goals were to provide incentives to healthcare providers to adopt electronic health record systems, establish unified standards and certification processes, and protect the privacy of health information.

To protect the privacy and security of health information, HITECH strengthened and expanded HIPAA by creating breach notification requirements, more onerous penalties, and application of HIPAA directly to business associates.

The session continued with an overview of the False Claims Act that imposes civil liability on “[a]ny person” who “knowingly presents, or causes to be presented, to…the United States…a false or fraudulent claim for payment or approval” [31USC§3729(a)].

Mr. Stilling also discussed ERISA and its implications for managed care pharmacists, noting that ERISA always governs the employee benefit plan, with application of the law varying according to status: if self-insured, ERISA governs the benefits directly; if fully insured, ERISA governs the plan, but state law may govern the insurer and benefits provided through the insurer; if partially insured, state law may govern the insured portions.