Pharmacy Benefits

Ruling Ties Employers’ Hands on Pharmacy

A Kentucky Supreme Court ruling confirms and codifies employee choice in matters of pharmacy.
By: | September 7, 2017 • 3 min read

Injured workers wishing to choose their own pharmacy can now do so with impunity in Kentucky, thanks to an August 2017 ruling from the state’s supreme court.


Although workers in the state had been choosing where to fill prescriptions for more than two decades, the court ruling codified the practice and gave workers the chance to bypass insurers’ preferences when obtaining a refill.

In March 2010, KESA, The Kentucky Workers’ Compensation Fund, initiated fee disputes in five workers’ comp claims. In all five cases, the injured workers reported difficulty in getting their medications on time, so they turned to Injured Workers Pharmacy, a mail-order business that sells medications on a lien basis.

IWP takes orders from an injured workers’ treating physician rather than from KESA’s pharmacy benefits manager. The business then bills the insurer for payment. A key point of dispute: While KESA’s PBM negotiates price adjustments with pharmacies, IWP refuses price negotiation, arguing its drugs are based on commercially published average wholesale prices that are within Kentucky’s fee schedule.

Ruling Favors Workers

Although the workers in question reported difficulty in getting their medications on time, KESA argued that was no excuse to turn to IWP as an alternative. In the organization’s eyes, these workers sidestepped official channels and were receiving benefits they weren’t authorized for.

KESA informed the employees of its decision to no longer pay for prescriptions filled through IWP, initiating the medical fee disputes.

In 2013, the claimants and KESA made their way to court.

“Since medicines are ‘medical services,’ and a pharmacist provides that medical service, a pharmacist is a medical provider.” — Justice Michelle M. Keller, writing for the Kentucky Supreme Court

Kentucky law permits workers to choose their own “medical provider,” but the question remained whether pharmacies qualified as providers. KESA cited a 2009 opinion written by the attorney general at the time, which stated that pharmacies are not medical providers.

The court reviewed the opinion but concluded that the attorney general’s opinion ignored an earlier Workers’ Compensation Board order from 1996. The order explicitly stated that pharmacies were medical providers.

KESA was ordered to pay IWP the average wholesale prices for the injured employees’ prescriptions, according to court record. On appeal, the Workers’ Compensation Board affirmed the ruling.

The Power of a Single Word

The Kentucky Supreme Court had an interesting decision to make: What did the term “medical provider” encompass?

The court found no concrete definition of the term in the statute it came from, so it turned to the Kentucky definition of “medical services,” which was defined as “medical, surgical, dental, hospital, nursing and medical rehabilitation services, medicines, and fittings for artificial and prosthetic devices.”

“As did the Court of Appeals, we hold that the plain meaning of these two statutes is that a medical provider is one who provides medical services,” the high court wrote. “Since medicines are ‘medical services,’ and a pharmacist provides that medical service, a pharmacist is a medical provider.”

A similar case appeared in Louisiana a month prior to the Kentucky ruling. Burgess v. Sewerage & Water Board of New Orleans found claimant Darvel Burgess filing a disputed claim for compensation after his employer refused to pay for his prescription medications issued through IWP. A Louisiana statute read that workers have the option to choose their treating physician. In Kentucky, the same statute uses the word provider.


The Louisiana court’s decision hinged upon that one-word difference: Injured Louisiana workers have a right to pick a “physician,” not a “provider.” The high court reasoned that “physician” is a “very specific term,” one that cannot be interpreted to also mean “pharmacy provider.”

“While the injured employee is entitled to choose his treating physician under [Louisiana law], we hold the law does not provide the employee a right to choose a specific pharmaceutical provider,” the court ruled.

Autumn Heisler is a staff writer at Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

2017 Risk All Stars

Immeasurable Value

The 2017 Risk All Stars strengthened their organizations by taking ownership of improved risk management processes and not quitting until they were in place.
By: | September 12, 2017 • 3 min read

Being the only person to hold a particular opinion or point of view within an organization cannot be easy. Do the following sound like familiar stories? Can you picture yourself or one of your risk management colleagues as the hero or heroine? Or better yet, as a Risk & Insurance® Risk All Star?


One risk manager took a job with a company that was being spun off, and the risk management program, which was built for a much larger company, was not a good fit for the spun-off company.
Rather than sink into inertia, this risk manager took the bull by the horns and began an aggressive company intranet campaign to instill better safety and other risk management practices throughout the organization.

The risk manager, 2017 Risk All Star Michelle Bennett of Cable One, also changed some long-standing brokerage relationships that weren’t a good fit for the risk management and insurance program. In her first year on the job she produced premium savings and in her second year is in the process of introducing ERM company-wide.

Or perhaps this one rings a bell. The news is trickling out that a company is poised to dramatically expand, increasing the workforce three- or four-fold. Having this knowledge with certainty would be a great benefit to a risk manager, who could begin girding safety, workers’ comp and related programs accordingly. But things sometimes don’t work that way, do they? Sometimes the risk manager is one of the last people to know.

The Risk All Star Award recognizes at its core, creativity, perseverance and passion. The 13 winners of this year’s award all displayed those traits in abundance.

In the case of 2017 Risk All Star winner Steve Richards of the Coca-Cola Bottling Company, the news of an expansion spurred him to action. He completely overhauled the company’s workers’ compensation program and streamlined its claim management system. The results, even with a much higher headcount, were reduced legal costs, better return-to-work experiences for injured workers and a host of other improvements and savings.

The Risk All Star Award recognizes at its core, creativity, perseverance and passion. The 13 winners of this year’s award all displayed those traits in abundance. Sometimes it took years for a particular risk solution, as promoted by a risk manager, to find acceptance.

In other cases a risk manager got so excited about a solution, they never even considered getting turned down. They just kept pushing until they carried the day.


Butler University’s Zach Finn became obsessive about what he felt was a lackluster effort on the part of the insurance industry to bring in new talent. The former risk manager for the J.M. Smucker Co. settled on the creation of a student-run captive to give his risk management students the experience they would need to get hired right out of college.

The result was a better risk management program for the university’s College of Liberal Arts and Sciences, and immediate traction in the job market for Finn’s students.

A few of our Risk All Stars told us that the results they are achieving were decades in the making. Only by year-in, year-out dedication to gaining transparency about her co-op’s risks and learning more and more about her various insurance carriers, did Growmark Inc.’s Faith Cring create a stalwart risk management and insurance program that is the envy of the agricultural sector. Now she’s been with some of her insurance carriers more than 20 years — some more than 30 years.

Having the right idea and not having a home for it can be a lonely, frustrating experience. Having the creativity, the passion and perhaps, most importantly, the perseverance to see it through and get great results makes you a Risk All Star. &


Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, perseverance and passion.

See the complete list of 2017 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]