Does a Pharmacy Have Liability Related to Handling Prior Authorization Requests?

AUGUST 15, 2018
Joseph L. Fink III, BSPharm, JD, DSc (Hon), FAPhA
ISSUE OF THE CASE
When an insurer requires prior authorization (PA) from a prescriber to cover the expense of a medication and the patient allegedly is told that the pharmacist would contact the prescriber to pursue that but the communication fails and the patient dies, what is the liability of the pharmacy?

FACTS OF THE CASE
A patient in New England had started on topiramate (Topamax) for a seizure disorder after she experienced the first episode. Upon presenting her second prescription for the medication, the pharmacist informed her that her health insurance underwriter would not cover the cost of additional prescriptions for that medication without PA documentation from her prescribing physician. The patient was directed to contact the prescriber for PA that so the insurer’s expectation related to coverage could be met.

When the patient had her second seizure, she presented a prescription at the same pharmacy and was told that the insurance company had denied coverage for the expense because it had not received the PA documentation. The pharmacy said that it could not provide the medication unless she paid for it in full. The patient made 4 additional attempts to have the medication dispensed with the expense covered by the insurer, all of which came up short. The patient’s stepfather had contacted the prescriber’s office by telephone several times to discuss the need for PA and to secure that documentation. These attempts all occurred after the office was first notified of the need for PA in July. At the end of October, the patient died after experiencing a third seizure.

The administratrix of the estate of the deceased patient, the person wrapping up her affairs because she did not have a will, filed a lawsuit against the neurologist, the group practice that employed him, and the national pharmacy chain whose employees had declined the prescription without payment and who had discussed the need for PA with her and her relatives.

Inclusion of the pharmacy in the lawsuit was based on the fact that the computer software used by the chain permitted the pharmacist to send a courtesy facsimile to the prescriber when the health insurer declined coverage because PA had not been provided. The operating policies of the pharmacy chain did not require that those steps be taken, the software did not maintain a record of such communications dispatched to the prescriber, and the records did not reflect whether the communication had been received on the other end. The argument advanced by the plaintiff’s estate was that the pharmacists had told the family that they would send fax communications and telephone the prescriber’s office to pursue the PA.

The pharmacy chain moved for summary judgment of the claims against it. This means that no factual issues remain in the case to necessitate a trial and the matter can be decided by the presiding judge. 

THE RULING
The court ruled in favor of the pharmacy chain.

THE COURT’S REASONING
The pharmacy chain had advanced the argument that it neither owed the patient a legal duty to ensure that she received her antiseizure medication nor had it voluntarily assumed a legal duty to notify the prescriber that PA was required to secure coverage of the expense. The response from the patient’s family was that statements by the pharmacy staff members that they would fax a communication to the prescriber and try to contact him by phone led to the pharmacy assuming a legal duty to ensure that the patient received her medication.

The court ruled that the mere act of telling the patient and the family members that pharmacy staff members would make the contacts with the prescriber did not create a legal duty to do so, because the staff also told the family members to contact the prescriber, which they attempted unsuccessfully. The court ruled that “the plaintiff has not demonstrated that she will be able to prove at trial that [the pharmacy chain’s] offer to contact the doctor would reduce the risk of harm.”

The family advanced the argument that it would not be burdensome to place a duty on the pharmacy staff members to notify the physician when PA is required for coverage. Nonetheless, the court stated that inferring such a duty “would place a burden on pharmacies, obligating them to monitor or supervise the prescribing physicians and, in effect, to share in the responsibility to provide the health insurer with the needed prior authorization information.”

The family has appealed the matter, so this may not be the final word on this case. 
 
Joseph L. Fink III, BSPharm, JD, DSc (Hon), FAPhA, is a professor of pharmacy law and policy and the Kentucky Pharmacists Association Endowed Professor of Leadership at the University of Kentucky College of Pharmacy in Lexington.

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