Attention Health Care Providers: Opioid Liability Litigation Is a Dangerous Emerging Risk. Here’s What You Need to Know

As the opioid epidemic rages on, a lack of consistent standards of care exposes healthcare providers to liability. Insurers are formulating a response.
By: | December 21, 2018 • 5 min read

Opioid addiction has caused thousands of deaths, damaged families, and ruined countless lives. State attorneys general have already pursued pharmaceutical companies for failing to warn of addiction risk. Litigation has expanded to include actions against prescribers and pharmacy benefit managers (PBMs).


Healthcare providers across the supply chain could be targeted for failing to control the epidemic. The potential for litigation is only the latest emerging risk in an already challenging medical professional liability (MPL) market.

Leo Carroll, SVP and Head of Healthcare for BHSI, discusses how widespread opioid addiction may will impact liability risk for the healthcare industry, and how MPL underwriters could should respond.

R&I: America’s opioid crisis has been ongoing for more than a decade, and people are seeking accountability. How big is the exposure for the healthcare industry?

Leo Carroll: Opioid-related liability and litigation is a complex challenge in healthcare today. To date, over 200,000 deaths have been attributed to the opioid epidemic, and that may be understated. In 2017 according to the CDC, there were over 70,000 deaths in the United States while the estimated number of addicts is in the millions.

Leo Carroll, SVP and Head of Healthcare, BHSI

Some have compared the opioid litigation to tobacco and asbestos, but there’s a key difference: In most cases, the fatal opioids were legally prescribed and FDA approved, yet not enough was done to respond and change course once the addiction problem was identified. The problem is huge, and healthcare providers may be asked to account for their role in prescribing these drugs.

R&I: Are you seeing meaningful change physicians’ approach to prescribing opioids and hospital oversight of these drugs?

LC: There is a universal effort underway to address over-prescribing, but implementation varies state-to-state and practitioner-to-practitioner.

One root question is what the medical community considers an appropriate dose. Let’s say a patient has a surgical procedure and significant pain during recovery. Pain management is critical, but how many pills should the doctor prescribe? Opinions and practices vary.

Health systems are making an effort to rein in problem areas, but creating uniform standards – and addressing those who fall outside of them – is difficult.

Most health systems have mechanisms to identify outliers —those employed doctors who prescribe opioids beyond the organization’s guidelines. Hospitals may also suggest doctors consider non-opioid alternatives to bring prescribing patterns more in line with the health system’s target.

But, it’s exceptionally difficult to impose a single standard on physician practices. There is plenty of legitimate, necessary use of opioids. In fact, the overwhelming majority of what we see in the organizations we insure is very strong oversight and risk-control. Health systems are making an effort to rein in problem areas, but creating uniform standards – and addressing those who fall outside of them – is difficult. And when standard of care in this area lacks consistency and allows for judgment calls, liability exposure and litigation risk increase.

R&I: How do you see litigation trends unfolding?

LC: Initial class actions targeted opioid manufacturers and distributors, but that may evolve. There have been individual claims brought against physicians and hospitals. These could gain momentum. In St. Louis for example, a single physician was sued by a single claimant who said his addiction to opioids impaired his ability to work and ruined his life. The jury believed the doctor should have recognized the signs of addiction and cut off the prescriptions. They awarded the plaintiff $15 million, which was upheld under appeal.

This may be indicative of the public’s desire for accountability or wanting to send a strong message to practitioners for not protecting the wellness of patients. This desire for accountability may point plaintiffs in other directions as well.

R&I: What other types of healthcare organizations may be targeted?

LC: The potential sources of recovery from manufacturers and distributors are finite and may fall short to cover the legitimate suffering, pain and damages of those struggling. During the first quarter of 2018, we saw some action taken against PBMs. Health plans closely aligned with PBM’s, or that own a PBM, are watching litigation trends closely.

R&I: What do hospitals and health systems need to do better?

LC: Health systems are paying close attention to monitoring and responding to the controls they have in place. They are establishing and executing on clear plans aimed to stem this epidemic and address non-compliance among staff. I’ve met with both existing and prospective customers who openly share their plans, and we discuss questions like, ‘When did you implement these controls addressing addiction risk?’ ‘What are the results and consequences for non-compliance?’

The more information that is shared, the more efficiently we as a marketplace can move toward solutions that support healthcare organizations in their mission to provide safe pain management in patient care.

The increased transparency and collaboration among health systems can promote sharing of best practices to help standardize an approach.

R&I: What about from the carrier’s perspective? How has the healthcare liability market responded to risks connected to opioid abuse?

LC: Similar to the healthcare industry, the insurance industry’s response has been varied in terms of underwriting opioid exposure.


But I’ve observed an increasing focus on the underwriting of this risk. The industry is recognizing it needs to do more. Many have been gathering as much information as possible around risk management practices, loss data, and government regulations (which again, vary by state). It’s important to avoid the temptation to over-react or broad-brush healthcare risks. Carriers need to distinguish between health plans, physicians, hospitals and senior care operators. Each represents a distinct role in the delivery of care, and each may have a distinct role in addressing opioid abuse. Underwriters aiming to differentiate their analysis and coverage approach for each of these segments.

R&I: How are insurers working together with healthcare providers to address the problem?

LC: The more information that is shared, the more efficiently we as a marketplace can move toward solutions that support healthcare organizations in their mission to provide safe pain management in patient care.

From my perspective, healthcare providers that openly share their protocols for oversight and policies to address opioid addiction offer a significant opportunity for learning, collaboration, and ultimately solutions. We as carriers do not presume to have all the answers, but we stand ready to support our customers and work toward a solution. &

Click here to read Part 1 about changes in the MPL market.

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

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.


That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.


Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]m