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CVS Pharmacy, Inc. v. Bostwick - 9/1/2021

Arizona Supreme Court holds the exclusive right for a hospital to recover from a third-party tortfeasor is through Arizona’s medical lien statutes and that a pharmacy does not owe a duty to a hospital for direct economic harm caused by the opioid crisis.

A hospital sued a pharmacy for damages, alleging the pharmacy’s negligent distribution of opioids fueled the opioid epidemic and foreseeably caused economic harm to the hospital.

When the pharmacy’s motion to dismiss was denied, it filed a special action in the Court of Appeals.  After the appellate court declined jurisdiction, the Arizona Supreme Court granted review to determine (1) whether a hospital may directly recover from a third party the costs of uncompensated medical care provided to patients whose need for treatment the third party allegedly caused, and (2) whether a pharmacy that self-distributes prescription opioids to its affiliated pharmacies owes a duty to a hospital that incurs costs to treat opioid-addicted patients.  The Court found for the pharmacy on both issues, reversing and remanding to the trial court.

The Court first explained that the uncompensated medical care the hospital was required to provide to opioid-addicted patients is a form of “indirect” damage to the hospital and such claims are foreclosed by Arizona’s medical lien statutes.  The statutes create an otherwise non-existent right of a hospital to recover its charges for care and treatment against third-party tortfeasors liable to a patient.

The Court then explained the hospital’s other costs—such as additional training, security, and programs needed to manage the opioid crisis—were a form of “direct” damages for which negligence actions may be brought.  However, the Court found there was neither a special relationship (such as a contract or agreement) nor public policy (such as a statute or common law) creating a legally cognizable duty of care which would allow the hospital to assert a negligence claim against the pharmacy here.  The Court also noted the absence of precedent for a party to recover for purely economic harm against a third-party.

The Court recognized the “tremendous” economic and human costs imposed by the opioid crisis on society and hospitals, but stated it is for the legislature, not the courts, to alleviate those costs.

Justice Bolick authored the unanimous opinion. 

Disclosure: Osborn Maledon attorneys were involved with this case.

Posted by: Payslie M. Bowman

Posted On: 9/16/2021