On the continuum of possible defendants in a lawsuit for damages arising from use of drugs with dangerous side effects, it seems, however, that boards of trustees and plan sponsors are farthest away from potential liability. It is easy to imagine issues of liability surrounding a doctor prescribing the drug, or a pharmacist dispensing the drug, or a regulator approving the drug. But it is difficult to construct a theory of liability on the plan sponsor.
Most health and welfare trusts include, in their benefits plans, a provision for reimbursement of prescription drugs. Drug plans are typically one of two types: reimbursement is either guided by a drug formulary or the plan requires payment for all drugs, with express exceptions. In some cases, the trustees or plan administrator, though responsible for administering the plan, have no control over its design— that is within the realm of the plan sponsor.
There is no question that trustees have fiduciary obligations to the beneficiaries of their plans and operate under a high standard of care. However, that standard of care surely does not extend to medical responsibility for the health and well-being of their members. They do have an obligation to act in the best interests of their members, and to administer their plans fairly and even-handedly, but they have absolutely no input into the private decisions of individual members to take certain drugs. Plan administrators are not medical experts—their role is focused on ensuring that their members receive satisfactory benefits coverage commensurate with the funding to the plan.
TRUSTEE DECISIONS
To the extent that trustees have control over which drugs will be reimbursable under the plans they administer, the decision about what to cover rarely includes a comprehensive consideration of the use and effect of such drugs, let alone their safety to the user. The overriding factor in these decisions is typically (and legitimately)the anticipated cost to the plan of including a drug for coverage [witness the refusal of many to cover Viagra, which was thought likely to impose enormous increased costs, and the recent decision of the Supreme Court of Canada in Auton (funding for autism therapy)which implies that cost impact is a legitimate consideration].
Plan administrators rely on governmental approval as the sign that drugs are safe enough for public consumption, and do not (and should not have to)inquire beyond that. For trustees, the decision to cover drugs in a plan is often a balance between the needs of individual members and the overall costs that must be borne by the collective. Provided the trustees engage in that balance and give full consideration to the interests on both sides, it is difficult to see how they could be offside their fiduciary obligations.
Susan Philpott is a partner with Toronto-based Koskie Minsky.
sphilpott@koskieminsky.com
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