Modern Healthcare – August 19, 2019

10 Modern Healthcare | August 19, 2019

By Tara Bannow

Legal

Lawsuit against Community Health

Systems gets class-action status

THE TAKEAWAY

The EPA regulation

will force healthcare

facilities to change

how they dispose

of some hazardous

materials.

By Alex Kacik

Regulation

Drug disposal rule puts a stop to

flushing hazardous materials

THE TAKEAWAY

The health system’s

leaders are accused

of failing to disclose

an alleged fraud that

hurt its stock price.

A FEDERAL JUDGE granted class-ac-

tion status to shareholders suing Com-

munity Health Systems over the hospital

chain’s leaders failing to disclose an al-

leged fraud that hurt its stock price and

downplaying the scandal’s impact.

The U.S. District Court

for Middle Tennessee

certified the class in the

$891 million securities

fraud lawsuit to include

anyone who bought stock

in Franklin, Tenn.-based

CHS between July 27,

2006, and April 8, 2011,

excluding company executives, officers

and directors and their immediate fam-

ily members and legal representatives,

among others.

U.S. District Judge Eli Richardson ap-

pointed NYC Funds, a group of pension

funds serving more than 750,000 active

and retired NYC employees, as the class

representative. NYC Funds,

which has about $194 bil-

lion in assets managed by

outside managers, acquired

about 825,000 CHS shares

during the class period.

Richardson also ap-

pointed White Plains, N.Y.,

law firm Lowey Dannen-

berg as class counsel.

The exact number of people who

acquired CHS stock during the class

period is unknown, but court records

show at least 834 major institutional

investors owned CHS common stock

during the period.

CHS spokeswoman Tomi Galin wrote

in an email that the company has ap-

pealed the judge’s decision to certify the

class. “Community Health Systems be-

lieves this consolidated matter is with-

out merit and will vigorously defend this

case,” she said.

The investors originally wanted the

class to include people who bought stock

until Oct. 26, 2011, but Richardson deter-

mined those who bought stock after April

2011 had access to vital information that

those who bought it before April 2011 did

not have. That’s the month CHS’ alleged

Medicare fraud came to light. l

A NEW FEDERAL RULE goes into effect

this week prohibiting healthcare organi-

zations from flushing hazardous waste

pharmaceuticals into the sewer sys-

tem, which will cause some providers,

distributors and pharmacies to change

their protocol and processes.

Starting Aug. 21, drugs like opioids

and chemotherapies need to be dis-

posed of through the proper channels

rather than down the drain. Under the

presiding Resource Conservation and

Recovery Act, flushing hazardous drugs

down the drain or toilet has been per-

mitted, despite the growing awareness

of the possible environmental damage.

Elise Paeffgen, an attorney in Alston

& Bird’s environment, land use and nat-

ural resources group, said there’s been

limited effort nationally to halt hazard-

ous waste from entering sewer systems.

This rule applies a hard stop. “It’s defi-

nitely a big change for a lot of facilities,”

he said.

The Environmental Protection Agen-

cy’s final rule will also clear up conflicting

regulations and ease some requirements,

which health systems are applauding.

Certain states will adopt the federal

rules in their entirety, while others will

take a more stringent approach ap-

plied over the next two years. What’s

left will be a patchwork of state laws

that health systems will have to navi-

gate if they operate or dispose of waste

in multiple states.

Across Cleveland Clinic’s network of

hospitals in northeast Ohio, it will cost

the system about $500,000 a year to set

up hazardous waste collection bins in

each nursing unit, train employees and

pay for a third party to properly dispose

of the materials, said Scott

Knoer, Cleveland Clinic’s

chief pharmacy officer.

“The regulations need to

catch up—you shouldn’t

be flushing chemothera-

pies and narcotics down

the drain,” he said, adding,

“Even though it is a good

thing, healthcare costs keep rising and

reimbursement isn’t going to go up,

which makes it tough.”

Comparatively, Sioux Falls, S.D.-

based Sanford Health changed its

disposal practices in 2014, so it’s al-

ready mostly in compliance, said Mark

O’Brien, the system’s pharmacy oper-

ations supervisor. But since the not-

for-profit health system operates in

multiple states, it has to keep a close

eye on state laws, he said. O’Brien said

he was appreciative that the new rule

streamlined conflicting controlled

substance regulations from the Food

and Drug Administration and the Drug

Enforcement Administration.

Another potential benefit to health-

care facilities involves empty pharma-

ceutical containers, Paeffgen said. Triple

rinsing containers with acute waste is no

longer required.

“As far as the management of pharma-

ceuticals that are sent to the

reverse distributor, most of

the requirements will be

easier after the final rule is

implemented,” Paeffgen

said. “But for a lot of health-

care facilities that weren’t

focused on waste manage-

ment, it will feel like a lot.” l