KNOXVILLE, Tenn. (WJHL) — K-VA-T (Food City stores) has agreed to pay $44.5 million as part of settling a 2021 lawsuit that accused the supermarket chain of unlawful opioid sales at its pharmacies, Tennessee Attorney General Jonathan Skrmetti’s office announced Thursday.
“Every entity that contributed to the opioid crisis must be held accountable,” Skrmetti said in a news release. “Our Consumer Protection Division remains relentless in the pursuit of justice and I am proud of their aggressive enforcement in this case.”
“By paying a hefty price to resolve past misconduct, Food City provides critical resources to save lives and protect families and can now get back to the business of serving its customers and supporting Tennessee communities.”
A total of $1.9 million will go directly to seven Northeast Tennessee counties over the course of the payments, which begin in 2024 and end in 2029. All of those counties are in a group of 38 East Tennessee counties that receive some additional funds due to being within Food City’s market area.
Food City also agreed to an array of “injunctive relief” measures designed to prevent future instances of similar conduct. Those include providing additional training to pharmacy staff, updating its prescription validation process, and monitoring and reporting data related to suspicious activity, the release says.
The validation process requires Food City pharmacists to adhere to an exhaustive list of “red flags” that could indicate a prescription for a controlled substance, if filled, might be diverted or misused. The original lawsuit accused Food City of ignoring such red flags, contrary to standard training, as it allegedly dispensed “massive quantities” of opioids, including by allegedly “filling prescriptions written by high-volume providers and pill mills that most of its competitors would not sell.”
The chain also must provide annual data reports for each of its retail pharmacies in Tennessee that “contain data on cash, high MME (morphine milligram equivalent) patients, and cocktail prescriptions, as those terms are commonly understood in the industry.”
That requirement also includes listing the top 25 prescribers of designated controlled substances from Food City’s retail dispensing data. The controlled substances listed include oxycodone, hydrocodone, hydromorphone, tramadol, oxymorphone, morphine, methadone and fentanyl.
Food City also has agreed to provide specific employment opportunities to Tennesseans who are in recovery from opioid addiction. The settlement agreement requires Food City to “use its best efforts” to find non-profits that operate substance abuse programs including a work program component.
The company is supposed to inform the programs about various employment opportunities and also coordinate regarding employment processes for those applicants — and to generate an annual report on these efforts.
A settlement in a civil lawsuit does not equate to admission of any of the plaintiffs’ allegations, and in a statement, Food City said K-VA-T “has continually disputed any allegations of misconduct made in these actions.” It added it believes “the settlement agreement is in the best interest of all parties and will contribute to opioid-related programs that are being established as a result of the previous settlements with national retailers and distributors.”
Then-Attorney General Herbert Slatery III sued the Abingdon, Va.-based chain in February 2021 for allegedly violating the Tennessee Consumer Protection Act, as well as violating the state’s public nuisance statute at three Knoxville-area stores that the state claimed sold particularly high amounts of opioids over more than a decade.
The lawsuit claimed “Food City zeroed in on opioid sales at its in-store pharmacies and engaged in a series of unlawful acts that led it to become one of the biggest sellers of highly-diverted opioids in Tennessee.” It said the company did so “as part of an intentional, corporate-driven strategy to maximize profit centers elsewhere,” meaning outside of the tight margin core grocery business.
The suit also accused Food City of “endangering the health of Tennesseans and interfering with the commercial marketplace.”
Food City wrote in its statement that the cases, filed in Knox County and Sevier County, “are examples of cases brought nationwide against manufacturers, distributors, and retailers of prescription opioid products.”
Most of the settlement funds will support opioid abatement efforts in East Tennessee. They’ll be administered through the Tennessee Opioid Abatement Council.
The council funds “programs, strategies, expenditures and other actions designed to prevent and address the misuse and abuse of opioid products and treat or mitigate opioid use or related disorders…” according to a Tennessee state website.
Food City ranked 68th on the most recent “Progressive Grocer 100” list published in 2022, with reported revenues of $3.1 billion for 2021. Kroger, the nation’s fourth-largest chain on the list, agreed to a national opioid settlement earlier this month that will cost it about $1.4 billion.
Food City also wrote in its statement that it is “committed to the communities it serves and has pledged its support of local drug rehabilitation centers and their efforts to assist persons in recovery to lead more productive lives.”
The entire statement from Food City is below:
K-VA-T Food Stores, Inc. announced today that it has entered into an agreement to end two opioid-related cases in Knox County and Sevier County Tennessee.
The cases are examples of thousands of cases nationwide brought against manufacturers, distributors, and retailers of prescription opioid products. The allegations in these two actions focus primarily on circumstances from more than a decade ago. K-VA-T has continually disputed any allegations of misconduct made in these actions. The agreement states that it is not an admission or evidence of any liability or wrongdoing. K-VA-T believes the settlement agreement is in the best interest of all parties and will contribute to the opioid-related programs that are being established as a result of the previous settlements with national retailers and distributors.
K-VA-T is committed to the communities it serves and has pledged its support of local drug rehabilitation centers and their efforts to assist persons in recovery to lead more productive lives.