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Food City Fueled an Opioid Firestorm, Says Tennessee AG, and It Should Pay

Food City executives turned the grocery chain into ground zero of the region's opioid crisis, building a massive pill pipeline, ignoring illegal secondary sales in its parking lots and squashing neighborhood complaints, the Tennessee Attorney General’s office says in a lawsuit filed Thursday.

“Over the last 15 years, Food City has sold massive quantities of opioids, persistently failed to maintain effective controls against diversion, and taken affirmative steps to undermine its own opioid diversion controls and those of others,” wrote attorneys with the office of state Attorney General Herbert Slatery III.

Slatery’s office filed a lawsuit Thursday against the retail grocer in Knox County Circuit Court. It spans more than 200 pages. It is the fourth in a chain of legal actions designed to claw back profits from those whom Slatery says are responsible for Tennessee’s opioid epidemic — legal makers, distributors, prescribers and dispensers — to offset what it has cost the state to deal with it.

“Food City and its executives enacted policies and hired and retained employees to ensure that Food City’s opioid sales pipeline continued to flow despite knowing that its pharmacies were acting as conduits for enormous amounts of diverted and illegitimate opioid prescriptions based on specific information and data they had collected about the providers and clinics who wrote the substantial majority of opioid prescriptions filled at its pharmacies,” the lawyers wrote.

Tammy Baumgardner, a Food City spokeswoman, emailed Knox News a statement Thursday in which the company's leaders deny Slatery's allegations.

"(Food City) vehemently disagrees with the allegations contained in the lawsuit and will vigorously defend itself through the litigation process," the statement read.

"The lawsuit’s allegations are grossly incorrect and unfair regarding Food City’s approach to serving its pharmacy customers."

The rise in opioid sales corresponded to a rise in the rate of Tennessee babies born addicted to opioids, which shot to triple the national average from 2009 to 2012. The rate of opioid-related overdose deaths also has steadily climbed. More than 1,300 Tennessee residents died from overdoses in 2018.

Tennessee prescribers wrote more than 81 opioid prescriptions for every 100 residents, the third-highest rate in the country in 2018.

Food City has a long history in East Tennessee but opened its first store in Grundy, Virginia, a poor coal-mining community, in 1955. Today, the chain pulls in $2.5 billion annually with 130 stores in southwest Virginia, Eastern Kentucky and East Tennessee.

A trio of legal specialists in Slatery’s office — Brant Harrell, Rob Mitchell and Maggie Rowland — contend in the lawsuit that Food City built its grocery empire on the backs of opioid addicts and helped pill mills flourish.

Knoxville, the lawsuit says, was the epicenter for Food City’s drive to fill its pharmacy shelves with the highly addictive prescription painkillers and its tills with cash.

In three months in late 2011, a single Food City store — the Bearden location at 5941 Kingston Pike — ordered more opiates than pharmacies in 38 states and the District of Columbia, the lawsuit alleges.

Executives ordered pharmacy employees to throw a party for a pill mill — shorthand for a sham medical office that trades opioids for cash — to keep the overprescribing doctor happy and sending opioid addicts to the nearest Food City pharmacy, the lawsuit alleges. That doctor is now headed to federal prison for his role in flooding the region with opioids.

Incriminating Internal Records

There are hundreds of lawsuits being filed across the U.S. against opioid makers, distributors and some chain pharmacies, all alleging greed corrupted the pharmaceutical industry and medical community when opioid addiction rates began skyrocketing.

A federal global settlement of many of those lawsuits was announced this week in a case involving Purdue Pharma, a family-owned drug manufacturer infamous for its role in fueling the crisis that now is filing for bankruptcy.

Harrell, Mitchell and Rowland have been spearheading the Tennessee attorney general's effort to hold opioid makers, distributors and dispensers financially accountable through the Tennessee Consumer Protection Act and the state’s public nuisance laws.

The trio began using the power of investigative subpoena, acquiring internal records of drug makers, including Purdue and Endo, and using them to file lawsuits against both drug manufacturers, using the companies’ own words in the 2018 and 2019 actions.

Those lawsuits revealed how opioid makers had misdirected the Food and Drug Administration with reports by fake pain treatment advocacy groups, targeted soldiers and the elderly with ad campaigns, and lobbied state legislatures, including Tennessee’s, to pass laws requiring doctors to prescribe opiates if patients insist.

Both firms denied the allegations. Purdue’s bankruptcy has essentially deep-sixed the attorney general’s lawsuit, for now at least. Slatery is among state attorneys general negotiating terms of the global federal settlement.

The drug makers insisted the lawsuits be filed under seal, but Knox News fought both efforts and won. The news organization successfully blocked a sealing order in the third lawsuit the trio of assistant attorneys general filed in late 2019.

That lawsuit, also filed in Knox County Circuit Court, targeted drug distributor AmerisourceBergen. Using that opioid distributor’s internal records, the Tennessee AG's lawyers exposed how pharmacies, including those owned by Food City, were fueling the opioid epidemic and ignoring signs of criminality.

Thursday’s lawsuit takes direct aim at Food City executives for “knowingly” endangering the public with its opioid dispensing practices. The firm denies it.

Food City CEO and Executives Accused

The lawsuit alleges Food City President and Chief Executive Officer Steve Smith and Director of Pharmacy Operations Mickey Blazer and other executives negotiated deals with drug distributors to avoid detection by the U.S. Drug Enforcement Administration and keep its pharmacies stocked.

It alleges the grocery retailer partnered with notorious pill mill operators to fill all prescriptions and do it cheaper than pharmacy rivals. Food City even offered a discount card for pill mill patients, the lawsuit alleges.

Among the allegations in the lawsuit:

  • Soliciting secondary suppliers when its main opioid supplier cut down on its supplies to pharmacies in Knoxville suspected of illegally dispensing the painkillers.

  • Created contingency plans to keep a steady flow of opioids if any of its suppliers tried to curtail orders.

  • Lobbied for ever-increasing order thresholds.

  • Pressured pharmacy employees to boost opioid sales and tied bonuses to opioid prescriptions filled.

  • Threatened to fire pharmacy employees with low opioid sales.

  • Ordered pharmacists to order outrageous quantities of opioids just to ensure its most lucrative pharmacies — those in Knoxville — were stocked.

  • Shifted opioid orders from low-performing pharmacies to the more lucrative ones — without filing any paperwork.

  • Sold individual customers thousands of opioids at a time — amounts that would be fatal if taken as prescribed.

  • Specifically catered to pill mills where prescribers were trading prescriptions for the “holy trinity” — a drug cocktail of opioids , depressants and muscle relaxers — for cash. That cocktail helps ease opioid addicts’ withdrawal symptoms.

  • Ignored overdoses and drug-related crimes in its parking lots while hiring security to guard its opioids and drug-dispensing profits.

  • Verbally and publicly attacked Bearden residents who complained more than a decade ago that the Food City pharmacy at 5941 Kingston Pike was illegally dispensing opioids and fueling drug-related crimes while quietly settling a lawsuit over an overdose death tied to the same pharmacy months earlier.

  • Sold opioids to customers at its Kingston Pike location who traveled with prescriptions in hand from Alaska, Arizona, California, Colorado, Hawaii, Montana, New Jersey, New York, Oklahoma, Pennsylvania, Texas, Utah, Washington, Wisconsin and Wyoming, and at least three foreign countries — Australia, Canada and Poland.

Food City Responds at Length

"(Food City leaders) recognized during the relevant time period that a few of its pharmacies dispensed a high volume of pain management prescriptions," wrote Baumgardner, the Food City spokeswoman, in her statement to Knox News.

"Therefore, the company contracted with independent auditors and experts in pharmacy best practices to assure that its dispensing practices were compliant with all state and federal regulations," the statement says.

"(Food City) has regularly been subject to oversight and inspection by state and federal regulators, including the Tennessee Board of PharmacyFood City pharmacies filled prescriptions written by physicians and healthcare professionals licensed by the State of Tennessee and registered with the U.S. Drug Enforcement Administration.

"The methods, practices and physician perspectives on pain management have changed dramatically over the past decade or more, and it is unfortunate that this course of action was pursued more than a decade after most of the allegations cited by the Attorney General’s office allegedly occurred," the statement reads. "The Attorney General unfortunately has joined the nationwide bandwagon led by the plaintiff’s bar in bringing meritless attacks against pharmacies, having failed to make measurable progress in its efforts to hold manufacturer, distributors, and physicians accountable."

Knox News obtained records late last year that showed Food City attorneys have been negotiating with Slatery's office for months to settle the lawsuit before it was made public.

Food City leaders were poised to ink a settlement late last year but walked away from it, records show. Just as Slatery's office prepared to make the lawsuit public, the firm's lawyers reached out again to try to broker a settlement.

The firm said in its statement Food City leaders "cooperated fully with the Attorney General’s investigation prior to the filing of this complaint, and K-VA-T’s attempts to resolve this matter with the Attorney General were rejected."

"It is particularly troubling that the Attorney General chose this particular time amid the already challenging COVID-19 burdens to attack a local business that the State of Tennessee has deemed essential - a company that is an employer of thousands of Tennesseans during the worst economic environment in recent history," the statement read. "However, (Food City) will expend its time and resources to defend itself to correct the serious misrepresentations made by the Attorney General."

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