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Liability of Medical Directors of an Arizona Medical Marijuana Dispensary

Arizona Medical Marijuana Medical Director:
What will you get sued for?
Can You Protect Yourself and Your Family from Financial Ruin?

Disclaimer: I am not an attorney. I am the business manager for Arizona Medical Marijuana Medical Directors: AZMMMD.com. This article is strictly my opinion. It is not, nor should it be construed as offering: Advice, Instructions, Solutions, or anything other than my opinion on a subject: a subject that is changing everyday!

When I first examined the issue of the potential liability of the Medical Director of an Arizona medical marijuana dispensary I thought the answer was simple. I mean since the start of legalized medical marijuana in California, not one dispensary has been sued by a patient! In fact the only lawsuits I could find were municipalities suing dispensaries.

Unfortunately, after reviewing the final rules and having conversations with the Arizona Department of Health Services (ADHS) I now know the issue of Medical Director liability is complicated and may contain insurmountable problems for medical directors!

When you first read the job of the Medical Director it appears to be similar to a vendor providing a system for dispensary application and subsequent operation; similar to inventory control or security. However, on closer inspection of the rules and discussions with the ADHS it is MUCH, MUCH more then that!

First ask yourself: Why did Arizona require a Medical Director’s involvement in the dispensary application and operation process, but California and Colorado DID NOT?

We know the reason from discussions with the ADHS. It is control. ADHS wants someone with a license at stake (the Medical Director) to be responsible for certain elements of the dispensary application and operation process. How is this accomplished? What follows is the text of the ADHS rules that specify the duties of the Medical Director or that have an affect the Medical Director.

R9-17-310.A,2.e: Patient education and support, including:

i. Availability of different strains of marijuana and the purported effects of the different strains;

ii. Information about the purported effectiveness of various methods, forms, and routes of medical marijuana administration;

iii. Methods of tracking the effects on a qualifying patient of different strains and forms of marijuana; and

iv. Prohibition on the smoking of medical marijuana in public places;

R9-17-310.A.3: Maintain copies of the policies and procedures at the dispensary and provide copies to the Department for review upon request;

R9-17-312.E: A medical director shall not establish a physician-patient relationship with or write medical marijuana recommendations provide a written certification for medical marijuana for a qualifying patient.

R9-17-312.D: A medical director shall provide oversight for the development and dissemination of:

R9-17-314.A.5: A qualifying patient record is provided to the Department for review upon request;

R9-17-322.C. The Department shall deny an application for a dispensary registration certificate or a renewal if . . . The Department determines that the dispensary did not implement the policies and procedures or comply with the statements provided to the Department with the dispensary’s application.

These sections of the ADHS rules make a Medical Director responsible for activities that if not performed properly could result in the closure of the Dispensary. The Medical Director is responsible not only for development of educational materials and training, but also the “oversight” of the specific sections of the Qualifying Patient Records. The Qualifying Patient Records may be examined for compliance at anytime by ADHS. If the records are found non-compliant:

The dispensary could lose its license to operate. The Medical Director could be held responsible.

The ADHS will probably refer this to the appropriate medical board for disciplinary action. It will probably be a minor sanction, but who knows?

The dispensary owner will probably sue the Medical Director for lost revenue and/or business disruption. Easy to protect yourself from, but costly.

What is the biggest problem? A dispensary agent may knowingly or unknowingly dispenses medical marijuana to an unqualified person. If that were to happen, the dispensary agent will lose his/her dispensary agent license. R9-17-323.C.2. The Most Important Question: Is this activity Criminal? If it is who will the Attorney General of Arizona or County Attorneys prosecute? Will it be the dispensary agent, owners of the dispensary entity and/or the Medical Director???

I see this as the Medical Director’s biggest liability! Unless there is a law passed to specifically address this question. It is still illegal to sell marijuana in Arizona except when a licensed medical marijuana dispensary sells to a qualified patient who has a valid registry identification card. This is Arizona not California. It is not unreasonable to expect everyone involved with the dispensary to get arrested for selling medical marijuana to an unqualified person.

Jim Mc Cready
602 578-4385
[email protected]

By On the Net|2015-04-06T18:51:47-07:00April 22nd, 2011|Legal Issues, Medical Directors|1 Comment

DHS Prohibits Medical Directors from Issuing Certificates to Any Patients

As regular readers of this blog may recall, I recently posted an article entitled “Can the Medical Director of an Arizona Medical Marijuana Dispensary also Write Certifications for Qualifying Patients? Good Question.” Well, I spoke with Don Herrington, Asst. Director of ADHS, today and. according to him, the answer is NO.

At issue was the changed language of R9-17-313.E in the final rules which seemed to indicate that a medical director could write certifications for qualifying patients as long as the patient did not obtain the marijuana from the dispensary with which the director was associated:

“A medical director for a dispensary shall not provide a written certification for medical marijuana for a qualifying patient obtaining medical marijuana from the dispensary.”

While Mr. Herrington acknowledged that the wording in the foregoing rule might well be interpreted to allow medical directors to write certifications, he informed me that it was still DHS’s intention that medical directors not do so for any patients no matter which dispensary they used. Apparently DHS is concerned about a conflict of interest occurring, the logic of which escapes me. He said that DHS may publish a clarification of the rule before the end of the year.

Mr. Herrington did add that physicians who eventually become dispensary medical directors may write certifications up until the time when their medical directorship becomes active, which is presumably when the dispensary opens its doors for business.

In my opinion, this rule is unfair to both medical directors and their patients. Medical directorships are part time positions, and many, if not most, medical directors are also involved in direct patient care. This rule, as interpreted by DHS, deprives medical directors who are also clinicians from writing certifications for their patients who have conditions which may benefit from medical marijuana. It would also require the patients of medical directors in private practice who qualify for medical marijuana to go elsewhere for written certifications.

Jason E. Gittman, MD, FCCP
http://www.medlawconsults.com/

[email protected]

By Jason Gittman MD|2011-04-07T17:00:25-07:00April 7th, 2011|Medical Directors|1 Comment

Medical Directors and the Arizona Medical Marijuana Dispensary Application Process

by James Mc Cready, Managing Director
Arizona Medical Marijuana Medical Directors

The Arizona Department of Health and its director Bill Humble have made a tremendous step forward in the use of Medical Directors to assist in the application process and ongoing management of the Medical Marijuana Dispensaries; to be opened in Arizona, in 2011. Their efforts should ensure the first true “Medical Marijuana” program is established in Arizona.

The Arizona Department of Health has provided a number of important control mechanisms for the Dispensary Applications Process. We believe these steps are necessary to provide a complete and fair mechanism for Dispensary Certification. These measures will ensure the Dispensaries receiving certificates will provide the “Qualifying Patients”, “Designated Caregivers”, the citizens of Arizona, and the State Government of Arizona with the necessary guarantees of Ownership Qualification, Business Operation, Inventory Control, Security, Patient Record Keeping, Education and Support required by the new law.

Medical Directors will be an integral part of the Dispensary Application Process and subsequent Dispensary Operation. For the purposes of our discussion we will focus on the Dispensary Application Process only.

If you are applying for an Arizona Medical Marijuana Dispensary Certificate you will need a Medical Director before you send your application to the Arizona Department of Health. Here are the things you need to know according to Draft 01/31/11 (Remember the Final Draft will be out 3/28/11 and will give us the final word on these requirements):

1. The Medical Director must be an: Medical Doctor, Naturopathic Medical Doctor, Doctor of Osteopathy, or a Homeopathic Medical Doctor with an active Arizona License Number, which you will need to include on your application (Conversation with AZ Dept. of Health).

a. If you are a physician considering becoming a Medical Director. We are recommending to our physicians not to provide their name or license # for application process; UNLESS there is an independent contractor agreement in effect. We are also recommending other specific terms to protect the physician and dispensary, which are outside the scope of this article.

2. The Medical Director can not establish a doctor patient relationship with or provide a written certification for medical marijuana for a qualifying person (R9-17-312 E).

a. If you a re a physician considering becoming a Medical Director. We are recommending to our physicians not to provide a written certification for medical marijuana for any qualifying person. In other words if you are going to become a Medical Director you can not prescribe Medical Marijuana. This is an extremely important consideration. This will have to be a section in your independent contractor agreement. If the Dispensary losses it’s certificate to operate due to your prescription activities. You would be held responsible for the loss of the business. The cost to you would tremendous to you professionally and financially.

3. The Medical Director will need to provide “Policies and procedures that comply with the requirements in this chapter (R9-17-303) for:

a. Qualifying patient recording keeping (for further details see R9-17-312 C and R9-17-312 C)

b. Patient education and support (for further details see R9-17-312 C and R9-17-312 C)

If you a re a physician considering becoming a Medical Director here is what you will need to develop for your Dispensary:

1. Develop and provide training to the dispensary’s dispensary agents at least once every 12 months from the initial date of the dispensary’s registration certificate on the following subjects:

a. Guidelines for providing information to qualifying patients related to risks, benefits, and sides effects associated with medical marijuana.

b. Guidelines for providing support to qualifying patients related to the qualifying patient’s self-assessment of the qualifying patient’s symptoms including a rating scale for pain, cachexia or wasting syndrome, nausea, seizures, muscle spasms, and agitation.

c. Recognizing signs and symptoms for substance abuse.

d. Guidelines for refusing to provide medical marijuana to an individual who appears to be impaired or abusing medical marijuana.

2. Assist in the development and implementation of review and improvement processes for patient education and support provided by the dispensary.

3. Educational materials for qualifying patients and designated caregivers that include:

a. Alternative medical options for the qualifying patient’s debilitating medical condition.

b. Information about possible side effects of and contraindications for medical marijuana including possible impairment with use and operation of a motor vehicle or heavy machinery, when caring for children, or of job performance.

c. Guidelines for notifying the physician who provided the written certification for medical marijuana if side effects or contraindications occur.

d. A description of the potential for differing strengths of medical marijuana strains and products.

e. Information about potential drug-drug interactions, including interactions with alcohol, prescription drugs, non-prescription drugs, and supplements.

f. Techniques for the use of medical marijuana and marijuana paraphernalia.

g. Information about different methods, forms, and routes of medical marijuana administration.

h. Signs and symptoms of substance abuse, including tolerance, dependency, and withdrawal.

i. A listing of substance abuse programs and referral information;

4. A system for a qualifying patient or the qualifying patient’s designated caregiver to document the qualifying patient’s pain, cachexia or wasting syndrome, nausea, seizures, muscle spasms, or agitation that includes:

a. A log book, maintained by the qualifying patient and or the qualifying patient’s designated caregiver, to track the use and effects of specific medical marijuana strains and products.

b. A rating scale for pain, cachexia or wasting syndrome, nausea, seizures, muscles spasms, and agitation.

c. Guidelines for the qualifying patient’s self-assessment or, if applicable, assessment of the qualifying patient by the qualifying patient’s designated caregiver.

d. Guidelines for reporting usage and symptoms to the recommending physician providing the written certification for medical marijuana and any other treating physicians.

5. Policies and procedures for refusing to provide medical marijuana to an individual who appears to be impaired or abusing medical marijuana.

Our next article will deal specifically with the Legal Exposures and problems you will have as an Arizona Medical Marijuana Dispensary Medical Director. We will also discuss some possible solutions. However, as a licensed Physician you know that some challenges in practice are only resolved by a different and larger insurance policy.

If you are considering applying for Medical Marijuana Dispensary Certificate or a Physician looking to become a Medical Director as contact us Arizona Medical Marijuana Medical Directors (AZMMMD) at 602 578-4385. We offer a FREE Consultation to discuss your particular concerns.

James Mc Cready, Managing Director
Arizona Medical Marijuana Medical Directors
AZMMMD.com
602 578-4385

By On the Net|2011-03-24T16:02:24-07:00March 24th, 2011|Medical Directors|Comments Off

Question: One of the members of a limited liability company that intends to obtain a license to operate a medical marijuana dispensary in Arizona is a medical doctor. Can the doctor serve as the medical director for the LLC or any other dispensaries?

Answer: Yes unless the third draft of the Arizona Department of Health Services rules provides otherwise.

By On the Net|2011-02-18T07:04:25-07:00February 18th, 2011|Legal Issues|Comments Off

Question: Are there any special clauses my dispensary should include in its contract with its medical director?

Answer: Yes. The contract should be an independent contractor agreement, not an employment agreement. The contract should contain the standard clauses found in a good lawyer drafted independent contractor agreement plus the following clauses unique to this agreement:

The medical director will provide the specific duties of the medical director set forth in the rules.

The medical director must obtain and maintain at all times a dispensary agent registration from the Arizona Department of Health Services. See R9-17-309.A.4.b., which states:

“A dispensary shall . . . Not allow an individual who does not possess a dispensary agent registry identification card issued under the dispensary registration certificate to: . . . Serve as the medical director for the dispensary“

The medical director will comply with the applicable laws contained in Arizona Revised Statutes Section 36-2801 et.seq (Arizona’s medical marijuana statutes), and all applicable DHS rules in effect as of the date of the agreement and during the term of the agreement.

The doctor represents and warrants that he or she satisfies all of DHS’ requirements to be a medical director not later than April 1, 2012.

The doctor will obtain a license from Arizona Department of Health Services to be a medical director not later than April 1, 2012.

If at any time the medical director ceases to be eligible to be a dispensary agent or if he or she cannot perform his or her duties for any reason, the contract must terminate without prior notice to the medical director.

The contract terminates if the dispensary loses its dispensary registration certificate or ceases to operate.

The medical director must grant a license to the dispensary to copy and use the copyrighted content the medical director gives to the dispensary as required under the rules.

The medical director must represent and warrant that all content he or she gives to the dispensary does not infringe on anybody’s copyrights.

The medical director must maintain at all times the types of insurance appropriate for the position in amounts not less than $500,000 or what is recommended by the medical director’s insurance agent.

The medical director must give to the dispensary proof of insurance satisfactory to the dispensary.

The medical director’s insurance company must be instructed to notify the dispensary of any change to or cancellation of any insurance policy.

The compensation payable to the medical director will be reduced by X percent for every additional dispensary the doctor acts as the medical director, but the compensation will not ever be less than Y percent of the compensation payable if the doctor is a medical director for only the dispensary. If I’m representing a dispensary, I’ll try to put this clause in because the duties of the medical director are nonexistent once he or she does the initial set up so why should a doctor who is a medical director for multiple dispensaries get paid the same as a doctor who is the medical director for a single dispensary?

By Richard Keyt|2012-08-18T09:20:26-07:00February 15th, 2011|DHS Rules, Legal Issues, Medical Directors, Questions People Ask|Comments Off

Will any Arizona Doctor Agree to be the Medical Director of an Arizona Medical Marijuana Dispensary?

The Arizona Department of Health Services’ January 31, 2011, second draft of the rules require that every Arizona medical marijuana dispensary have a medical director on the premises or on call. Proposition 203 contains no such requirement. Why DHS put the medical director requirement in the rules is beyond me. I do not understand the purpose of the medical director unless it is to increase the cost of the products sold by the dispensary. Most doctors are not willing to act as a medical director for a pot clinic and of those that are, not many are willing to do so for free.

I wonder if any doctor will actually take the position as medical director of an Arizona medical marijuana dispensary. The big unknown at this time is whether a doctor who is the medical director of a dispensary can purchase malpractice insurance and products liability insurance. I’m guessing that medical malpractice insurance would not cover the doctor because the doctor’s activities as a medical director do not involve the practice of medicine. The medical director does not see patients. The rules state,”A medical director shall not establish a physician-patient relationship with . . . a qualifying patient.” If the medical director cannot purchase appropriate insurance, why would any doctor be the medical director of an Arizona medical marijuana dispensary?

We all know that litigators love to sue anybody within 100 miles of an incident. Consider what might happen if a patient were to buy a THC laced brownie that caused permanent bodily harm or that killed the patient. Who do you think will be sued? I submit that the defendants in the lawsuit will be the dispensary, the medical director, the infusion company that made the brownie, the cook who actually cooked the brownie and possibly the officers and directors who failed to adopt an product inspection system that would have detected the harmful brownie. The plaintiff may sue the medical director for medical malpractice and for products liability. Can the medical director purchase malpractice insurance and products liability insurance?

I am not a litigator. I don’t sue people. Maybe I am completely off base. If I am wrong, please let me know. I’d love to publish an article from somebody in the know that can explain the potential liability of the medical director and what types of insurance the medical director will need and if it is possible for the medical director and/or the dispensary to purchase the insurance.

Suggestion to Arizona Department of Health Services: You have a medical director. If you think dispensaries should have a medical director why not require your medical director to be the medical director of all dispensaries and charge each dispensary $500 a month? Your medical director can then prepare the literature and patient brochures the medical director thinks is appropriate and DHS can sell them to the dispensaries for distribution to patients.

See Will Humble’s unconvincing and nonsensical blog post on why a medical director is necessary and my comments about his reasoning.

An Arizona Physician’s Comments to the Above Article

I was intrigued by your recent post. I am not a attorney, but as a physician with my own medical-legal consulting firm, I do not see much risk of a dispensary’s medical director being sued for medical malpractice. The primary reason for this is that there is no physician-patient relationship – not even contact – between a dispensary customer and the medical director, so by definition, there can be no medical malpractice. (more…)

By Richard Keyt|2011-02-11T18:37:01-07:00February 9th, 2011|Medical Directors, Stories & Articles|Comments Off

Why Every Arizona Medical Marijuana Dispensary Must Hire a Primary & an Alternate Medical Director

The rules of the Arizona Department of Health Services require that every Arizona medical marijuana dispensary have a medical director. See “What is a Medical Director & Why Does Every Arizona Medical Marijuana Dispensary Need One?” If an operating dispensary were to suddenly lose its medical director, the dispensary would be in jeopardy of losing its Dispensary Registration Certificate, i.e., its license to grow and sell medical marijuana.

A dispensary could lose its medical director if the doctor were to:

die
become incapacitated or incompetent
lose his or her license to practice medicine
refuse to provide services even though it might be a breach of contract
suffer health problems
or experience any of an infinite number of events that result in no further services.

I could be wrong, but I’m pretty sure that no dispensary owner would want to risk losing the Dispensary Registration Certificate because of the loss of its medical director. Because the risk of the medical director could stop providing services at any time and cause the dispensary to lose its license and because the financial consequences so great, every dispensary should enter into a written contract with at least one other doctor to be an alternate medical director who automatically becomes the primary medical director if for any reason the primary medical director ceases to be the medical director.

By Richard Keyt|2012-08-18T09:21:18-07:00January 19th, 2011|Legal Issues, Medical Directors|Comments Off

Question: I am an Arizona physician who is considering offering my services to be the medical director of an Arizona medical marijuana dispensary. Does every dispensary need a medical director? What are the duties of the medical director under the Arizona Department of Health Services rules?

Answer: The Arizona Department of Health Services rules require that every Arizona medical marijuana dispensary hire a medical director. Proposition 203 did not contain a requirement for a medical director, but DHS decided in its wisdom that every dispensary should spend a lot of money to hire a medical director who must be doctor of medicine who holds a valid and existing license to practice medicine pursuant to A.R.S. Title 32, Chapter 13 or its successor or a doctor of osteopathic medicine who holds a valid and existing license to practice osteopathic medicine pursuant to A.R.S. Title 32, Chapter 17 or its successor and who has been designated by a dispensary to provide medical oversight at the dispensary. R 9-17-312.

The Arizona Department of Health Services rules (R 9-17-312) for Arizona medical marijuana dispensaries require that every dispensary contract with a medical director who shall provide oversight for the development and dissemination of educational materials for qualifying patients and designated caregivers. Here is the text of R9-17-312:

A. A dispensary shall appoint an individual who is a physician to function as a medical director.

B. During hours of operation, a medical director or an individual who is a physician and is designated by the medical director to serve as medical director in the medical director’s absence is:

1. On-site, or

2. Able to be contacted by any means possible, such as by telephone or pager.

C. A medical director shall:

1. Develop and provide training to the dispensary’s dispensary agents at least once every 12 months from the initial date of the dispensary’s registration certificate on the following subjects:

a. Guidelines for providing information to qualifying patients related to risks, benefits, and sides effects associated with medical marijuana;

b. Guidelines for providing support to qualifying patients related to the qualifying patient’s self-assessment of the qualifying patient’s symptoms including a rating scale for pain, cachexia or wasting syndrome, nausea, seizures, muscle spasms, and agitation;

c. Recognizing signs and symptoms for substance abuse; and

d. Guidelines for refusing to provide medical marijuana to an individual who appears to be impaired or abusing medical marijuana; and

2. Assist in the development and implementation of review and improvement processes for patient education and support provided by the dispensary.

D. A medical director shall provide oversight for the development and dissemination of:

1. Educational materials for qualifying patients and designated caregivers that include:

a. Alternative medical options for the qualifying patient’s debilitating medical condition;

b. Information about possible side effects of and contraindications for medical marijuana including possible impairment with use and operation of a motor vehicle or heavy machinery, when caring for children, or of job performance;

c. Guidelines for notifying the physician who provided the written certification for medical marijuana if side effects or contraindications occur;

d. A description of the potential for differing strengths of medical marijuana strains and products;

e. Information about potential drug-drug interactions, including interactions with alcohol, prescription drugs, non-prescription drugs, and supplements;

f. Techniques for the use of medical marijuana and marijuana paraphernalia;

g. Information about different methods, forms, and routes of medical marijuana administration;

h. Signs and symptoms of substance abuse, including tolerance, dependency, and withdrawal; and

i. A listing of substance abuse programs and referral information;

2. A system for a qualifying patient or the qualifying patient’s designated caregiver to document the qualifying patient’s pain, cachexia or wasting syndrome, nausea, seizures, muscle spasms, or agitation that includes:

a. A log book, maintained by the qualifying patient and or the qualifying patient’s designated caregiver, to track the use and effects of specific medical marijuana strains and products;

b. A rating scale for pain, cachexia or wasting syndrome, nausea, seizures, muscles spasms, and agitation;

c. Guidelines for the qualifying patient’s self-assessment or, if applicable,assessment of the qualifying patient by the qualifying patient’s designated caregiver; and

d. Guidelines for reporting usage and symptoms to the physician providing the written certification for medical marijuana and any other treating physicians; and

3. Policies and procedures for refusing to provide medical marijuana to an individual who appears to be impaired or abusing medical marijuana.

E. A medical director shall not establish a physician-patient relationship with or provide a written certification for medical marijuana for a qualifying patient.

By Richard Keyt|2011-02-12T08:51:04-07:00January 19th, 2011|DHS Rules, Legal Issues, Medical Directors, Questions People Ask|Comments Off

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Question: One of the members of a limited liability company that intends to obtain a license to operate a medical marijuana dispensary in Arizona is a medical doctor. Can the doctor serve as the medical director for the LLC or any other dispensaries?

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Question: Are there any special clauses my dispensary should include in its contract with its medical director?

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Question: I am an Arizona physician who is considering offering my services to be the medical director of an Arizona medical marijuana dispensary. Does every dispensary need a medical director? What are the duties of the medical director under the Arizona Department of Health Services rules?

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