Monthly Archives: June 2014

Are You Practicing Legally?

My law practice takes me inside a lot of pharmacies. Also, pharmacists have been e-mailing or calling me for years with legal questions. This has increased substantially in volume in the last few years. I put this down to increased pressures at work from larger workloads as well as government and third party oversight. From what I observed, these pharmacists were performing his/her duties to the best of their knowledge, but not quite in compliance with the law. Many times when I spoke up, the reply was, “I didn’t know that” or “I thought my way was correct.” These pharmacists were trying to do the right and legal thing; most often, they were simply unaware of a new or change in the law.
The following is a list of the top ten issues I encountered in that time period. Please remember that this is a general overview and should not be relied upon as specific legal advice for a specific set of circumstances. Also keep in mind that the law changes. Everything mentioned below is subject to change, possibly even before publication.

1. Faxes for controlled substances. These are legal; I just have never seen it done right. The correct way to receive a faxed CS Rx is that the prescriber must fax the Rx using a KY controlled substance blank. The blank must have the word “Faxed” written on it as well as the name of the person sending. The pharmacist must sign.
But I saw numerous faxes on regular paper or prescription forms that did not meet the KY requirements. When these come through, the pharmacist must get a verbal Rx from the prescriber, writing “Confirmed by Sandy, John Smith, RPh” or simply rewriting the Rx onto another blank. But I saw numerous Rxs being filled without any notation that the prescriber had been contacted and I rarely saw a pharmacist signature.
Someone is going to argue that faxing a KY CS blank will bring out the latent “VOID” pattern and most Rxs will be difficult, if not impossible, to read. True. Still, this is the law, until the Board makes changes.
2.At the time of this writing, receiving CS Rxs by e-prescribing is allowed in KY.  Look for a safety verification stamp as part of the Rx.  if it is not there, confirm by telephone with the prescriber and take as a verbal. Watch out! Most e-prescribing programs do not recognize tramadol as a CS, because it is not a CS by any federal standard (yet).  What most pharmacists fail to do here, even if it is legitimately sent, is to sign the e-Rx for a CS.

3.APRNs can only write for a 30 day supply of ADD/ADHD drugs if they are associated with a psychiatrist, psych clinic or mental health facility. Otherwise, if the APRN is not so associated, you may fill the prescription but just for a 72 hour supply.

4.Physician Assistants may only practice when in the same facility as their supervising physician. A prescription called in after hours from the PA’s home (I even had one stop by my pharmacy) is of questionable legitimacy. Keep in mind that your liability will go through the roof if the Rx causes harm and it is discovered the PA wrote it when not in proximity to the supervising physician.

5.Going in early and staying late to handle the prescription load? While this is laudable…. Stop. Most malpractice insurance policies will not cover you for errors made when the pharmacy is not open or you are not on the clock. Check your policy before engaging in professional duties outside posted hours. If you call and ask your insurer about this and someone tells you that you are covered, do not take their word for it—get it in writing.

But what if closing time comes and you are in the middle of filling a prescription?  Your malpractice remains in place for “carryover,” work that is begun before closing time and extends a short time after.
6.The minimum BMI for an anorexiant prescription is 27 (25 with associated co-morbidities). Few prescribers seem to know this—I argued with one doc who prescribed for a patient whose BMI was 23.6 (she wanted to lose 5 pounds to fit into her wedding dress, the story from the doctor went!). If you see the patient, you can make a judgment call. But I suggest requiring the prescriber to supply you with the BMI before filling.

7.What can you change, add or modify on a controlled substance prescription, especially a C-II? A very complicated issue over the years. In September 2008, the Board newsletter included an excellent article spelling out just what can be added, modified, etc. I suggested then and continue to suggest that every pharmacy print out that article and keep it on a bulletin board for easy reference. It Is available on the Board website under “Newsletters.”

8.C-II prescriptions where the third party will not pay for the entire quantity prescribed. Can you make a second fill for the remainder and let the patient pay cash? Yes, IF your computer system assigns the same Rx number to the prescription. If the computer will not do this and instead assigns a different Rx number, you may not do the cash partial fill. A C-II prescription cannot have two numbers assigned to it. (This is not a discussion of the 72 hour partial fill in cases where the patient cannot afford the entire prescription or the pharmacy does not have the entire amount in stock, but these situations do also require a single prescription number.)

9.Interns may give or take transfers of prescriptions, but the prescriptions may not be for controlled substances. Those, per the DEA, must still be done by pharmacists.

10.Professional judgment trumps the policy of an owner, corporation or even the PIC. If a decision is made on the basis of professional judgment, that decision belongs to the pharmacist on duty and no one else. The example I am most asked about is displaying and/or selling pseudoephedrine products. If in a pharmacist’s professional judgment, these should be hidden rather than displayed, that pharmacist’s decision overrules an owner’s policy to display.  I plan to cover PIC/professional judgment vs. employer/owner in more detail in the near future.

Non-compete Clauses

With employment contracts and contracts to sell (pharmacies), the non-compete, or non-competition, provision is often considered one of the primary reasons for the contract to be created.  The non-compete clause restricts the employee from working for a competitor or anyone else where the employment could or would directly or indirectly interfere with the current business of the former employer or buyer.

While the pharmacist cannot be prohibited from working in her profession overall, reasonable restrictions can be imposed.  Generally, there are two: time and proximity.  Most non-compete clauses forbid employment that would interfere with the former employer or buyer for anywhere from one to three years.  Occasionally this number may be as high as five years, but courts demand the time period be reasonable and three years has been overwhelmingly held as the outermost time period.  Then, the pharmacist may not work in a location within a reasonable geographic area from the former employer or buyer.  Often, this is determined as a number of miles from the former location.  Here, reasonableness is more determined by demographics.  Thus, in a densely populated metropolitan area, the geographic distance could be a few city blocks, while in a sparsely populated area with few pharmacies, the departing pharmacist could be reasonably told that she could not seek employment anywhere in the entire county.

Courts in Kentucky are not big fans of non-compete clauses.  Indeed, they have a reputation for seeking means to vitiate the provisions.  However, many survive because those same courts love contracts and do their best to preserve them.

Lawsuits over contracts are quite often over the non-compete clause and alleged violations of it.  Below are a few examples of cases:

Case #1:

Pharmacists Jack and Jill decide to sell their independent pharmacy to Big Chain.  Big Chain submits a contract to buy their store with a non-compete clause: neither Jack nor Jill may work in a manner that directly or indirectly interferes with BC’s business within a 2 mile radius for two years.  Jack and Jill sign.

Just weeks later both Jack and Jill are sick of retirement.  Jack goes to work for a nutritional IV pharmacy three hundred yards from their former location.  Jill goes to another independent pharmacy half a mile from the BC purchase and works as a fry-cook at the pharmacy’s grill.

Big Chain files a lawsuit against one of them.  Who was it?

Jill, of course.  Jack is within the geographic area but a nutritional pharmacy does nothing like what a Big Chain retail pharmacy does; he cannot directly or indirectly interfere with BC’s business.

Jill is indirectly interfering with BC.  How?  Her mere presence, the court held, could attract former customers to her current place of employment.  “If it is good enough for Jill to cook there, it is good enough for me to fill my prescriptions there” is what both BC and the court thought former customers of Jill’s would think.

Case #2:

Three pharmacists working at Home Health Pharmacy, where only IV meds are prepared, want to leave. The owner reminds them of a two year, two mile radius non-compete clause in their contracts.  The pharmacists agree and resign.

One pharmacist leaves the county and goes to work for another IV med pharmacy.  Another takes a job at a local retail independent, well within the two mile distance.  The last is hired by an IV nutritional pharmacy, also within two miles of the former employer.

Home Health sues the third pharmacist working at the IV nutritional pharmacy.  Pharmacist denies the allegation of having violated the non-compete clause, stating that preparing IV meds and IV nutrition are separate types of work and her being at the new location does not directly or indirectly interfere with Home Health’s business.

The court sides with Home Health.  Here is where this one gets hard.  The court agrees that the two businesses are separate in their type of pharmacy.  However, the IV nutritional pharmacy previously had all the equipment to do what Home Health does, and now, the court says, in this pharmacist they have the requisite knowledge.  IV nutritional pharmacy will be unable, in all likelihood, to remain out of competition with Home Health as it would now be so easy for them to do so.  It would be like a pharmacist leaving Big Chain Pharmacy and going down the street three blocks to work for Independent Pharmacy.  Ultimately, the pharmacist, perhaps without even saying anything, is more likely than not to use his knowledge of Big Chain’s business strategies to undercut Big Chain and help his new employer.  The court holds that the third pharmacist must leave the IV nutritional pharmacy for the duration of the non-compete clause’s provisions.

Contractual Issues

Contracts are a big part of pharmacy, indeed, one of the mainstays of success.  Contracts for sale, purchases, equipment, maintenance and repair, and employment are just a few of the many examples pharmacists utilize the contract to aid them in providing services to the public.  Below are a few cases where contracts were the focal point of the legal dispute.

Case #1:

Sam Pharmacist signed a contract during his fourth year of pharmacy school to work for ZZZ Pharmacy Chain.  The contract stated that upon passing the licensure exam he was to report to the ZZZ pharmacy supervisor in his hometown of Elsewhere, KY.  Then he would be assigned a store.

Upon presenting himself to the PS, Sam was told that there were no current openings.  PS thanked him for his diligence in coming to see him (the PS) and then wished him well in his career.  Three months later, Sam found a job for $10,000 a year less than ZZZ had offered.  Sam sued ZZZ for breach of contract, lost wages, and specific performance.

A breach of contract is a failure to meet an important facet or provision of the contract.  This means that the breach must be material, so damaging to the intent of the contract that the document ( or part of it) is thus rendered void.  When this occurs, the party in breach must make things right and put the injured party in a place where he would have been if the breach had not occurred or where the injured party would have been if the contract had never been created.  Sam has suffered substantial economic loss relying on the agreement.  Thus, ZZZ must pay Sam for the three months lost pay.  The question of making up the annual loss gets a little more complicated.  There must be a calculation to see whether Sam’s new job will catch up and erase the deficit he now earns as compared to the expected ZZZ salary.  Once so calculated, Sam will get an additional sum.

Specific performance bestows upon the injured party what he originally bargained for.  In this case, that would be the ZZZ job.  Specific performance is usually not granted as it is too difficult to make parties upset and angry with each other now get along as if nothing has happened.  Imagine a contract between a famous painter and a family wanting a family portrait painted by that artist.  The artist breaches.  Specific performance?  Who would want a portrait painted not by a caring painter but by an angry sullen artist?  The result would more than likely not be what the family wished for from the painter.  Thus, in this case, with bad feelings between ZZZ and Sam, the court would not grant him his original job; bad feelings between employer and employee would make for a bad working relationship.

Case #2:

Nice Nursing Home has a contract with Indie Pharmacy to supply all its patients’ medicines for $50,000 a month.  This agreement works well for over two years.  Then, XYZ Pharmacy chain builds a store in town and offers Nice NH to handle their medicine needs for $44,000 a month.  Nice NH goes to Indie and tells Indie what XYZ has offered.  Indie offers to re-negotiate the contract to $48,800 a month, to which Nice NH says “thanks, but no.”  Then Indie reminds Nice NH that the parties still have 3 years on their contract.

Nice NH refuses the next order from Indie and signs a contract with XYZ.  Indie sues Nice NH for breach of contract.  Nice NH closes its doors, and then contests the lawsuit because there is a provision ending the contract if one or the other entities closes.  Then Nice NH puts all its patients in two wings of Extralarge Nursing Home and provides the staff to take care of them.  Indie looks into this and discovers that XYZ is supplying the meds for the agreed upon XYZ price of $44K a month.  Indie goes back to court.

And wins.  The court holds that Nice NH did not really close its doors if all it did was move the patients.  They still remain under the control of Nice NH, who is still providing both the staff and meds for just those patients.  Closing, the court states, is a cessation of business, not just the cessation of use of a facility.  Nice NH continued its business and there were “new” doors opened at Extralarge.

So does Indie get $50K a month for the remainder of the contract? Maybe, maybe not.  Since specific performance here is not that out of line, the original contract can be put back in place and yes, Indie would get the $50K a month.  Or Nice NH could stay with XYZ and just pay Indie that portion of the $50K that was profit, since the meds would no longer have to be purchased.  Not too likely, as Nice NH would probably be out more money paying two providers.

Case #3:

Potter’s Pharmacy supplies Hogwarts Nursing Home with meds every month.  In May, somewhere near the mid-part of the five year contract for services and drugs between these parties, Potter’s is destroyed by a tornado.  It will be six months before Potter’s can re-open.  Hogwarts is forced to find another source of drugs and the new pharmacy charges Potter’s $7,500 a month more.

When Potter’s re-opens, at the same time Hogwarts finds yet another source of medications that will charge Hogwarts $500 less a month than Potter’s.  Hogwarts ignores Potter’s announcement that services are about to resume and signs a contract with the new guys in town.  Potter’s sues for resumption of the contract or else asks the court to hold Hogwarts in breach.  Hogwarts in response countersues for its six month $45K loss in having to pay over its contracted amount while Potter’s was closed.

Let’s do the second part first.  Hogwarts does not get the $45K.  The court held that the tornado was an act of God or nature, an act that neither party in the contract could foresee or prevent.  With the store destroyed, Potter’s was released from the contract due to impossibility of performance.  Had the store’s destruction been due to negligence by Potter’s that would be another story, but here the store was leveled by an act that could not be controlled by Potter’s.  That Hogwarts suffered damages is sad but not Potter’s responsibility.  Or in less proper vernacular, s**t happens.

Now, what about Potter’s suing for resumption of the contract?  Not very likely.  However, unless the contract has a provision that Potter’s can be closed for up to six months without vitiating the contract, the court is going to hold that six months is an unreasonable amount of time for Hogwarts to have to temporarily replace Potter’s services and then be forced to go back to them.  Instead, it is far more likely that this amount of time is unreasonable and Hogwarts has the right to negotiate for new services elsewhere long before 180 days.  Potter loses this argument.