American Medical News
By — Posted Aug. 12, 2013
Washington Representatives of those who died or were injured in a multistate fungal meningitis outbreak may have new opportunities for filing third-party product liability claims following a judge's declaration of insolvency for the facility that has been linked to the outbreak. Some health care observers, however, question how successful these cases would be if brought against physicians involved in the patients' care.
The outbreak, which to date has sickened nearly 750 people across the nation and killed 63, was linked to contamination of injectable steroids provided by the New England Compounding Center in Framingham, Mass. The Centers for Disease Control and Prevention had detected the presence of Exserohilum rostratum in sealed vials of preservative-free methylprednisolone acetate produced by NECC. The compounding center suspended production soon after the outbreak and eventually filed for Chapter 11 bankruptcy.
Meningitis cases traced to the outbreak spanned about 20 states, but they were concentrated in Michigan and Tennessee. Responding to a motion brought by Bertram Walker Bryant, Jr., a Tennessee man whose wife died during the outbreak, Henry J. Boroff, a U.S. bankruptcy judge in Springfield, Mass., declared NECC insolvent on July 24.
The judge's ruling comes as no surprise, said Laura Carpenter, CEO and founder of Arizona-based Bula: Pharmacy Law Intelligence and a principal at Carpenter Law Firm. “It was obvious from the beginning that as large as the number of people that were harmed, one small entity was not going to be able to have the funds to compensate everyone.”
What the insolvency ruling does is provide another avenue for product liability claims that alleged victims of the outbreak presumably could bring against other facilities and physicians involved in ordering the drugs, Carpenter said. “Depending on the state, there can be a strict liability on product liability. What that basically means is if something's wrong with the product, it's easier to prove wrongdoing on the part of the physician or hospital. So it may be an easier claim to get some money for.”
Boroff's ruling holds relevance in Tennessee, which has a product liability law that required judicial insolvency before a strict liability case could be brought against a person who administered such injections or a company that bought them, said Michael D. Galligan, a Tennessee attorney representing Bryant. The judge's ruling is applicable to states other than Tennessee, depending on what their laws are, although not all states with strict liability laws have the same requirements on insolvency as Tennessee, he clarified.
Some observers said that bringing such claims against physicians might prove to be difficult. Frank B. O'Neil, senior vice president and chief communications officer for the national medical liability carrier ProAssurance Corp., said he has not found any prior instances in which physicians were held to have committed malpractice in the event they used an approved product in the normal course of providing medical treatment to a patient.
“That doesn't mean that there can't be lawsuits filed, and that doesn't mean that physicians won't need a strong defense, but in the past it has not been shown that physicians are held liable under product liability theory,” he said. Such a decision would bring up the question of whether physicians would be expected to test every drug they administer, he added.
In Tennessee, product liability statute stipulates that actions may be brought against “a manufacturer or seller of a product,” said Yarnell Beatty, vice president of advocacy for the Tennessee Medical Assn. Beatty noted that a physician administering a compounded drug to a patient would not be considered to be a manufacturer of the compounded drug.
Because physicians are not in the business of selling compounded drugs, they most likely would not be considered a seller, either, Beatty said, adding that physicians are paid by third parties to administer compounded drugs that are deemed appropriate for a patient's medical condition.
But Galligan interprets the statute differently. A physician or other health care professional is a seller under Tennessee's products liability law in the event he or she owns or runs a clinic that administers and separately bills for items such as steroid injections, he said. “Many times the doctors are the ones running the clinic. And this wouldn't be based on them actually injecting the patient themselves, it would be based on them managing the clinic” that bought the compounded drug from NECC.
The Tennessee Medical Assn. has been following this issue closely since the fungal meningitis situation first appeared, “working with state health officials to communicate important information during the tracking and follow-up process with patients who may have received tainted injections. We will continue to alert members to any developments affecting them and their patients,” Beatty said. “While there is no doubt that the personal injury lawyers representing the patients in this tragic situation will try to extend liability to the physicians and facilities where the drugs were dispensed, since NECC is declared insolvent, it will be up to future court proceedings to determine if their argument will fly.”
Organized medicine has been calling for tighter restrictions on compounding pharmacies. At its House of Delegates Annual Meeting in Chicago in June, the American Medical Association approved recommendations to mandate compliance with current United States Pharmacopeia and National Formulary regulations on safety, uniformity and quality of compounding medications, as well as support efforts to subject compounding facilities to state board of pharmacy oversight.
Pharmacy compounding involves a process in which licensed pharmacists work with separate ingredients to create a tailor-made drug for an individual patient. Although traditional compounding is conducted by pharmacists for individual prescriptions, the AMA calls for facilities that mass-produce compounded products to be recognized as “compounding manufacturers” that are subject to Food and Drug Administration regulations.