Washington Supreme Court upholds doctor's right to sell medication

Some attorneys say state anti-kickback laws may come up in the courts more often as the practice of medicine continues to change.

By — Posted Nov. 20, 2006

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Washington physicians say a state Supreme Court ruling rejecting a unique interpretation of anti-kickback law in a "fen-phen" diet drug case will preserve convenient access to a number of products for patients.

But lawyers in the case say doctors could see more lawsuits trying to use state anti-kickback laws against them.

The Washington high court found that the 1949 Washington anti-kickback statute was meant to forbid illegal referrals or "unearned" profits from a third party, but not to prevent doctors from making money off the goods that they provide directly to patients, whether medications or medical equipment.

Criminalizing such sales would "lead to absurd consequences," including making patients criminally liable for buying drugs from doctors if the physicians profited from it, Judge Tom Chambers wrote in the Oct. 12 opinion.

Doctors praised the court's decisions as a proper interpretation of the Legislature's intent in passing the statute. More than half a dozen medical groups filed friend-of-the-court briefs supporting the doctor in the case. They include the Washington State Medical Assn., the Washington State Hospital Assn. and the Washington Academy of Eye Physicians and Surgeons.

"The Supreme Court wisely saw this as an anti-kickback statute that has to do with referrals and is not meant to regulate the internal workings of a physician practice," said WSMA counsel Andrew K. Dolan.

AMA policy allows doctors to sell health-related products out of their offices with several stipulations aimed at preventing financial and ethical conflicts of interest.

Because the Washington statute applies to every medical professional in the state, the court's decision affects patient care across the board, he added. Had the court loosely interpreted the law, doctors, pharmacists, hospitals or clinics that marked up the cost of medications, crutches or prosthetics, for example, would be committing a crime and breaching their duty to patients. The threat of violating the law would discourage medical professionals from offering those products to patients, Dolan said.

But plaintiff attorney Robert J. Crotty argues that a third party is not necessary to trigger the anti-kickback statute. The court's narrow interpretation of the law will make the statute hard to enforce when it is abused, he said.

The ruling also conflicts with the law's intent to protect patients' best interests, Crotty added. "It's hard to give objective advice to patients when [doctors] have an inventory of prescription drugs."

In a class-action lawsuit filed in 1998, a group of patients sued family physician Milan Jeckle, MD, alleging that they had been injured by fen-phen, the combination of fenfluramine or dexfenfluramine with phentermine, he sold to them out of his Spokane, Wash., weight-loss clinic.

One year before they filed their claims against Dr. Jeckle, patients Karen Wright, Rosa Lee Johnson and Karla Seastrom joined a nationwide federal class-action lawsuit against the products' manufacturer. They alleged injuries from the drug combination, which was linked to heart-valve damage and recalled by the Food and Drug Administration in 1997.

That lawsuit, settled in 2000, limited the potential liability of all doctors involved in prescribing the drugs, including Dr. Jeckle. He denies any wrongdoing.

In 2000, the plaintiffs refined their lawsuit against Dr. Jeckle by claiming that he had violated the anti-kickback provision of Washington's Consumer Protection Act when he profited from selling fen-phen to patients.

A trial court initially dismissed the case. But the plaintiffs appealed, arguing that Dr. Jeckle was not practicing medicine, and instead, was in the business of selling diet drugs.

The appeals court in 2001 agreed with the patients. It found that "not all aspects of the physician-patient relationship constitute health care," records state. Dr. Jeckle's advertising, marketing and sale of the diet drugs may "implicate the entrepreneurial aspects of medicine" and form a basis for an anti-kickback claim, the court ruled.

The case returned to a trial court, which in 2002 determined that the statute does not allow doctors to profit from selling prescription medications to their patients. An appeal by Dr. Jeckle sent the case to the Supreme Court, which disagreed with the trial judge.

Wright v. Jeckle was only the second case addressing Washington's anti-kickback law to reach the state Supreme Court. Some lawyers anticipate that state anti-kickback laws, many of which were passed in the 1950s in response to a crackdown by the Federal Trade Commission against illegal referrals, could come up in state courts more often.

"Anytime a physician has a type of practice that is profitable, attorneys may reach increasingly to consumer protection statutes," said Timothy M. Lawlor, a lawyer for Dr. Jeckle.

Plaintiff attorney Crotty said the courts might prompt legislative modifications that more clearly draw the line between doctors' financial and patient care decisions.

"There are similar statutes in a number of states, and the courts are going to have to look at them in terms of the way medicine is practiced and what legislatures intended when they were passed," Crotty said.

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Case at a glance

Karen Wright et al. v. Milan Jeckle, MD

Venue: Washington State Supreme Court
At issue: Whether a physician violated the state's anti-kickback law when he sold prescription drugs out of his office directly to patients at a profit. The court said no.
Potential impact: Doctors say the statute was meant to apply to third-party referrals and that the ruling prevents a broader interpretation of the statute that would criminalize the everyday activities of doctors, hospitals and pharmacists. The plaintiff attorney says the statute was meant to protect patients from doctors' conflicting business interests and prevent doctors from making money from the sale of drugs or other goods.

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