On October 12, 2006 the Washington Supreme Court issued a unanimous decision in Wright v. Jenkel allowing physicians to sell goods, supplies, and over the counter supplements for profit.

This case arose from a lawsuit against Milan Jeckle, MD who operated the Spokane Valley Medical Clinic. Dr. Jeckle was sued for injuries caused by his prescribing and selling diet drugs such as “fen-phen.”

The original personal injury claims were based upon the anti-rebating statute, RCW 19.86.010. The Court looked at the history of RCW 19.86 and noted that it was enacted in 1949, a time when the Federal Trade Commission and many other states were showing great interest in passing “anti-kickback legislation.” This push for anti-kickback legislation was in response to a number of high profile scandals including the American Optical kickback scheme. In American Optical, the Justice Department brought a class action lawsuit in 1948 against approximately 2000 physicians for conspiring to influence patients to have their prescriptions filled at American Optical. American Optical would then inflate the charge and give a kickback to the referring doctor. It was against this background that RCW 19.86.010 and its companion statutes were adopted. The actual text of RCW 19.86.010 provides:

“It shall be unlawful for any person...to pay, or offer to pay or allow, directly or indirectly, to any person licenced by the state of Washington...in the practice of medicine and surgery, drugless treatment in any form, dentistry, or pharmacy and it shall be unlawful for such person to request, receive, or allow...a rebate, refund, commission, unearned discount or profit by means of a credit or other valuable consideration in connection with the referral of patients...or in connection with the furnishings of medical, surgical, or dental care, diagnoses, treatment or service, on the sale, rental, furnishing or suppling of clinical laboratory supplies or services of any kind, drugs, medication, or medical supplies, or any other goods, services or supplies prescribed for medical diagnoses, care or treatment.” (Emphasis added) RCW 19.86.010.

Though the court indicated that the statute was “not a model of clarity” it did interpret the statute to mean:

“The first clause prohibits paying anything of value in return for a referral. The second clause prohibits receiving anything of value in return for referring patients. RCW 19.86.010. But the statute does not prevent a patient from paying a healthcare provider for services rendered or prescriptions received. Nor does it prevent a healthcare provider from making a profit on furnishing goods or care to patients.”

Essentially, the court ruled that RCW 19.86.010 prohibits taking an “unearned...profit” from a third party, such as when a licenced healthcare professional is paid an unearned profit by another person who is permitted to furnish/sell something to a patient who has been prescribed by the professional, i.e. kickback.

The court was also clear on what is still prohibited:

“The first clause prohibits paying anything of value in return for referral. The second clause prohibits receiving anything of value in return for referring patient.”

In essence, the Supreme Court found that, RCW 19.86.010 does not prohibit furnishing goods, supplies, or over the counter supplements at a profit. However, providers in Washington still need to be very careful that they are not receiving a profit for referring patients to another provider of business for such goods and supplies.

When your patient is involved in a motor vehicle collision, the treatment, goods, and supplies you provide or prescribe, as long as your documentation validates that they are reasonable and necessary, are covered under the patient’s PIP insurance. If PIP is exhausted or not available, then only those items covered in the patient’s healthcare insurance policy will be covered. If there is no PIP coverage or health insurance coverage excludes the treatment, goods, and/or supplies, then the at-fault insurer will be responsible for the patient. However, the at-fault insurer pays only at the time your patient signs a release of claim to settle the entire case.

If your patient needs treatment, goods, or supplies, prescribe them. If your patient needs legal counsel, we hope they will consider us.