Pharmacy Benefits

Ruling Ties Employers’ Hands on Pharmacy Choice, Workers Get First Pick

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 the digital producer and a staff writer at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

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The Profession

Curt Gross

This director of risk management sees cyber, IP and reputation risks as evolving threats, but more formal education may make emerging risk professionals better prepared.
By: | June 1, 2018 • 4 min read

R&I: What was your first job?

My first non-professional job was working at Burger King in high school. I learned some valuable life lessons there.

R&I: How did you come to work in risk management?

After taking some accounting classes in high school, I originally thought I wanted to be an accountant. After working on a few Widgets Inc. projects in college, I figured out that wasn’t what I really wanted to do. Risk management found me. The rest is history. Looking back, I am pleased with how things worked out.

R&I: What is the risk management community doing right?


I think we do a nice job on post graduate education. I think the ARM and CPCU designations give credibility to the profession. Plus, formal college risk management degrees are becoming more popular these days. I know The University of Akron just launched a new risk management bachelor’s program in the fall of 2017 within the business school.

R&I: What could the risk management community be doing a better job of?

I think we could do a better job with streamlining certificates of insurance or, better yet, evaluating if they are even necessary. It just seems to me that there is a significant amount of time and expense around generating certificates. There has to be a more efficient way.

R&I: What was the best location and year for the RIMS conference and why?

Selfishly, I prefer a destination with a direct flight when possible. RIMS does a nice job of selecting various locations throughout the country. It is a big job to successfully pull off a conference of that size.

Curt Gross, Director of Risk Management, Parker Hannifin Corp.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

Definitely the change in nontraditional property & casualty exposures such as intellectual property and reputational risk. Those exposures existed way back when but in different ways. As computer networks become more and more connected and news travels at a more rapid pace, it just amplifies these types of exposures. Sometimes we have to think like the perpetrator, which can be difficult to do.

R&I: What emerging commercial risk most concerns you?

I hate to sound cliché — it’s quite the buzz these days — but I would have to say cyber. It’s such a complex risk involving nontraditional players and motives. Definitely a challenging exposure to get your arms around. Unfortunately, I don’t think we’ll really know the true exposure until there is more claim development.

R&I: What insurance carrier do you have the highest opinion of?


Our captive insurance company. I’ve been fortunate to work for several companies with a captive, each one with a different operating objective. I view a captive as an essential tool for a successful risk management program.

R&I: Who is your mentor and why?

I can’t point to just one. I have and continue to be lucky to work for really good managers throughout my career. Each one has taken the time and interest to develop me as a professional. I certainly haven’t arrived yet and welcome feedback to continue to try to be the best I can be every day.

R&I: What have you accomplished that you are proudest of?

I would like to think I have and continue to bring meaningful value to my company. However, I would have to say my family is my proudest accomplishment.

R&I: What is your favorite book or movie?

Favorite movie is definitely “Good Will Hunting.”

R&I: What’s the best restaurant you’ve ever eaten at?

Tough question to narrow down. If my wife ran a restaurant, it would be hers. We try to have dinner as a family as much as possible. If I had to pick one restaurant though, I would say Fire Food & Drink in Cleveland, Ohio. Chef Katz is a culinary genius.

R&I: What is the most unusual/interesting place you have ever visited?

The Grand Canyon. It is just so vast. A close second is Stonehenge.

R&I: What is the riskiest activity you ever engaged in?


A few, actually. Up until a few years ago, I owned a sport bike (motorcycle). Of course, I wore the proper gear, took a safety course and read a motorcycle safety book. Also, I have taken a few laps in a NASCAR [race car] around Daytona International Speedway at 180 mph. Most recently, trying to ride my daughter’s skateboard.

R&I: If the world has a modern hero, who is it and why?

The Dalai Lama. A world full of compassion, tolerance and patience and free of discrimination, racism and violence, while perhaps idealistic, sounds like a wonderful place to me.

R&I: What about this work do you find the most fulfilling or rewarding?

I really enjoy the company I work for and my role, because I get the opportunity to work with various functions. For example, while mostly finance, I get to interact with legal, human resources, employee health and safety, to name a few.

R&I: What do your friends and family think you do?

I asked my son. He said, “Risk management and insurance.” (He’s had the benefit of bring-your-kid-to-work day.)

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]