Food City seeks to spread blame in opioid lawsuit brought by Tennessee Attorney General

AG accuses grocery chain of padding profits through sales of “massive quantities” of opioids

By: - May 17, 2022 6:01 am
Eighty percent of drug overdose deaths in Tennessee during 2020 came from prescription and synthetic opioids.(Photo: Mint

Eighty percent of drug overdose deaths in Tennessee during 2020 came from prescription and synthetic opioids.(Photo: Mint Images/Getty Images)

When a Bearden homeowners association blew the whistle on the high levels of opiates a Food City grocery store pharmacy was shelling out to pill mill patients, the company’s chief executive officer called it a lie.

When a Knoxville weekly newsmagazine reported the Westwood Homeowners Association’s claims and exposed a slew of opiate-related crimes in the same pharmacy’s parking lot — as well as its ties to a Bearden pill mill — Food City Chief Executive Officer Steve Smith threatened to pull its advertising from the publication’s owner.

When the Tennessee Attorney General’s office filed a lawsuit last year chockfull of Food City internal records backing up the association’s claims and the Metro Pulse reporting, the firm labeled the litigation a smack in the face to grocery store workers everywhere.

Now, with a judge refusing the firm’s bid to have that lawsuit tossed and the records underlying it destroyed, Food City is again on the attack, branding a laundry list of citizens, companies, state and federal regulators and leaders equally guilty in fueling the opioid epidemic.

Food City, a grocery chain with $2.5 billion in annual sales and 130 stores in Tennessee, Virginia and Kentucky, is now claiming “comparative fault” in defense of the state’s lawsuit, records reviewed by the Tennessee Lookout.

The firm argues in its motion that even if the grocery store intentionally sought to profiteer from opioids, there are lots of dirty hands in the creation of an epidemic that claims the lives of more than 3,000 Tennesseans annually.

Tennessee overdose deaths, 2020. Source: Tennessee Department of Health

“For instance, the state of Tennessee, the (Tennessee Bureau of Investigation) and the Tennessee Board of Medical Examiners were informed about the prescribing frequencies of all prescribing physicians and health care providers licensed by the state of Tennessee,” the motion stated.

“Despite the state of Tennessee having records of all opioids being dispensed in Tennessee, the state of Tennessee took little to no action to prevent physicians and medical providers from overprescribing opiates,” the motion stated.

The motion blames federal authorities, including the U.S. Drug Enforcement Administration, for failing to police opioid makers and distributors; doctors for overprescribing the addictive painkillers; Food City’s competitors for seizing the opportunity to profiteer from overprescribing doctors; pill mills for catering to addicts; and citizens for abusing the pills.

Each of those groups, the firm insisted in the motion, should bear blame alongside Food City and pay a share in any damages a jury might assess the grocery chain.

A hearing on that motion and other matters in the state’s lawsuit against the grocery chain is set for Wednesday in Knox County Circuit Court.

‘Trappings of legitimacy’

The state contends the “comparative fault” claim is just another example of the grocery chain’s “aggressive” tactics to both profiteer from opioid addiction and silence its critics.

The state’s lawsuit relies upon firm’s own records, including email exchanges between Smith and other corporate officers, to detail Food City’s rise from independent grocer catering to rural Appalachian communities to one of the region’s biggest grocery chains via those tactics.

“One of the ways that Food City has been able to compete against larger market players is with opioids,” the lawsuit stated. “Other considerations aside, opioids offer money-making opportunities that other pharmaceutical products do not.

“As a medium-sized regional supermarket chain, Food City found itself in an apparent sweet spot —smaller than major pharmacy chains that attracted attention and resources from the DEA and the Department of Justice, but much larger than independent pharmacies, which often attracted the attention from local law enforcement.”

– Lawsuit filed by Tennessee Attorney General Herbert Slatery

“On the grocery side of its business, Food City exists within an industry that is highly competitive and that operates on tight margins,” the lawsuit stated. “As part of an intentional, corporate-driven strategy to maximize profit centers elsewhere, 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.

“Food City sold opioids by filling prescriptions written by high-volume providers and pill mills that most of its competitors would not sell,” the lawsuit continued. “The company also sold opioids in combinations — (labeled the) ‘holy trinity’ of opioids, anti-anxiety medication, and muscle relaxers) — that most of its competitors would not sell and that its own compliance auditors told Food City and its executives were sought by those who illicitly seek pain medications.

“Over the last 15 years, Food City has sold massive quantities of opioids, has continued to fail to maintain effective controls against diversion, and has taken affirmative steps to undermine its own opioid diversion controls and those of others,” the lawsuit stated.

Opioid prescription trends, Tennessee. Source: Tennessee Department of Health

According to records contained in the lawsuit, Food City executives partnered with opioid suppliers to fly below the DEA’s radar by gaming order thresholds, used multiple suppliers to keep the addictive drugs flowing and pushed its pharmacists to fill as many opioid prescriptions as they could.

The firm offered discounts to opiate addicts, traded prescriptions for cash, partnered with notorious pill-mill operators, ignored drug deals and drug-related crimes in pharmacy parking lots and filled opiate prescriptions from other countries and states as far away as Hawaii, the lawsuit alleged.

“Food City actively partnered with known pill mills that directed their patients to have their prescription filled at Food City — something that its larger competitors would not do or were reluctant to do,” the lawsuit stated.

“As a result of corporate directives that emphasized the profit potential of opioids, Food City quickly became known as the pharmacy where you could purchase massive quantities of opioids, cheaply and with minimal hassle,” the lawsuit stated.

“Food City used the trappings of legitimacy from its grocery store business, in part, to become an outlier of outliers even among high-volume opioid sellers,” the lawsuit continued. “As a medium-sized regional supermarket chain, Food City found itself in an apparent sweet spot —smaller than major pharmacy chains that attracted attention and resources from the DEA and the Department of Justice, but much larger than independent pharmacies, which often attracted the attention from local law enforcement.”

CEO ‘proud of our Food City pharmacies’

The lawsuit and Food City’s internal records also lay bare the details surrounding the firm’s reaction to the first media account of potential problems with the grocery chain’s relationship with a notorious pill mill in Bearden — then known as Bearden HealthCare Associates — whose owner was later prosecuted federally.

The Westwood Homeowners Association, whose residents lived near the Bearden pill mill and the Food City pharmacy that catered to it, had complained about both in a monthly newsletter.

“According to experts within the Knoxville Police Department, Bearden Food City pharmacy dispenses the highest volume of narcotic drugs in the state of Tennessee,” the newsletter stated. “According to eyewitnesses and police reports, during the spring of 2008, some pharmacy customers were mugged as they left the store and their prescriptions stolen, some at gunpoint. Several shoppers had observed drug deals taking place in the parking lot.”

The Metro Pulse, which is now shuttered, weeks later published an article entitled “Drug Zone?” that confirmed the validity of the claims in the Westwood newsletter and added more claims of wrongdoing by Food City and the Bearden pill mill.

“Bearden and Food City both responded forcefully to the Metro Pulse article after its publication,” the state’s lawsuit stated. “Bearden … filed a libel suit against members of the Westwood Homeowners Association based on the four paragraphs contained in the neighborhood news bulletin. The lawsuit was later dismissed.”

Food City CEO Smith penned an “open letter” he insisted be published in the Metro Pulse in its entirety. In it, he called comments from Westwood residents “reckless” and “unfounded.”

“I cannot let the libelous publication of unsubstantiated rumors go without an appropriate response,” he wrote. “We are all very proud of our Food City pharmacies. Food City Pharmacy associates are truly healthcare professionals … I’m at a loss to know how to completely satisfy someone who expresses dislike for any pharmacy operating close to their home because ‘it might attract undesirables’ as suggested by the resident.

“Food City is in the business to serve all Knoxville area customers, not judge them,” Smith said.

According to the lawsuit, Smith also “threatened to pull future advertising by Food City in the Knoxville News Sentinel, which through its parent company, E.W. ScrippsCompany, owned the Metro Pulse at the time.”

The lawsuit and Food City’s internal records reveal Food City’s Bearden pharmacy not only partnered with the Bearden pill mill to fill its suspect prescriptions but threw a party for the clinic to keep its business. The lawsuit also shows Food City quietly settled a wrongful death lawsuit involving dispensing to Bearden pill-mill patients around the same time as the Westwood complaints.

‘Zombie apocalypse’

Emails contained in the lawsuit also show the grocery chain’s own pharmacists questioned the filling of prescriptions from pill mills and overprescribing doctors — and complained about criminal activity both inside and outside the pharmacies.

In one email, a pharmacist at a Food City store in Bristol offered a blunt assessment of what would happen if the grocery chain tightened down on its supply of opiates.

“This is phase one of the zombie apocalypse,” the unidentified pharmacist wrote. “Phase two is increased robberies and other violent crimes. Drug addicts move to whatever other drug is available.

“The ones who shift to bath salts become temporary zombies, super-strong, incoherent, etc.,” the pharmacist wrote. “If you haven’t seen bath salt highs, watch one or two on YouTube. At this time, we thought the movies were fantasy. Get prepared and have a nice day.”

A Food City representative did not immediately respond to a request for comment on Wednesday’s hearing and the comparative fault claim.

Food City spokeswoman Tammy Baumgardner has said in a previous statement issued when the state’s lawsuit was filed last year that the grocery chain is innocent and the lawsuit claims false.

Tennessee Attorney General Herbert Slatery. (Photo: tn.gov)
Tennessee Attorney General Herbert Slatery. (Photo: tn.gov)

“(Food City) recognized during the relevant time period that a few of its pharmacies dispensed a high volume of pain management prescriptions,” Baumgardner wrote.

“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 read.

The lawsuit against Food City is the fourth in a chain of legal actions filed by Tennessee Attorney General Herbert Slatery III and his staff against drug makers, distributors, prescribers and dispensers.

Slatery has said the lawsuits represent an effort to claw back profits from those responsible for Tennessee’s opioid epidemic to offset what it has cost the state to deal with it. The effort has been spearheaded by Senior Assistant Attorney General Brant Harrell and Assistant Attorneys General Margaret Rowland and Robert Mitchell.

The trio are using the Tennessee Consumer Protection Act and the state’s public nuisance laws as underpinning and internal records acquired through investigative subpoenas as evidence.

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Jamie Satterfield
Jamie Satterfield

Jamie Satterfield is an investigative journalist with more than 33 years of experience, specializing in legal affairs, policing, public corruption, environmental crime and civil rights violations. Her journalism has been honored as some of the best in the nation, earning recognition from the Scripps Howard Foundation, the Society of Professional Journalists’ Sigma Delta Chi Awards, the Green Eyeshade Awards, the Tennessee Press Association, the Tennessee Managing Editors Association, the First Amendment Center and many other industry organizations. Her work has led to criminal charges against wrongdoers, changes in state law and citations in legal opinions and journals. She was married to the love of her life for 28 years and is now a widow and proud mother of two successful children of good character and work ethic.

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