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Utah almost gave company legal immunity against harm from anti-malarial drugs

Before plan was scrapped, agreement would have put taxpayers on the hook for legal claims, documents show

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The Capitol in Salt Lake City is pictured on Friday, Jan. 25, 2019.

Utah State Capitol in Salt Lake City

Silas Walker, Deseret News

SALT LAKE CITY — Before state officials scrapped their plan to distribute controversial anti-malarial drugs to treat patients with COVID-19, they were also working on an agreement to give legal immunity to a company that would have played a part in that plan.

That’s even as the executive director of the state’s Division of Risk Management, which acts as the state’s insurance agency, raised alarms about the agreement, warning that it would be unusual to grant a third-party company legal immunity for “simple negligence,” and could cost the Utah Department of Health taxpayer money if patients treated with hydroxychloroquine or chloroquine were harmed and sued.

That’s according to official state emails and drafts of the agreement obtained by the Deseret News, which show Utah Attorney General’s Office attorneys and legislative attorneys exchanging drafts of the agreement with SafeLane Health — a firm that created the tool that would have been used to help patients be assessed for state distribution of hydroxychloroquine or chloroquine — even after that executive director, Brian Nelson, raised concerns in a March 23 email.

“(SafeLane Health) is not a governmental entity,” Nelson wrote. “I generally decline to approve indemnification/defense agreements that cover the negligence of private third parties. Moreover, if (SafeLane Health) is sued, it will not have the protection of governmental immunity and the tort caps. In short, the Risk Management Fund is neither designed nor funded to assume these potential risks, but these are unusual times.”

Nelson continued: “If the fund declines to approve this proposed indemnification agreement, (the state health department) will be solely responsible for defending and indemnifying (SafeLane Health) out of its own budget.”

Nelson sought explicit approval — understanding taxpayers would be on the hook if the company got sued — while acknowledging the plan already had support.

“I understand this important collaboration may have the blessing of legislative leadership and the governor’s office,” Nelson wrote. “Before I can commit to obligate the Risk Fund in this endeavor, however, I respectfully request authorization from executive and legislative branch leadership with the understanding that the fund may need financial assistance in the future should I be directed to approve the indemnification agreement. I sincerely appreciate your guidance and direction.”

Controversy has swirled around hydroxychloroquine and chloroquine for COVID-19 treatment, especially after President Donald Trump touted it. Medical professionals have been split on the drugs’ use, as some studies have shown they can be harmful to some patients.

The Food and Drug Administration in April cautioned against using the drugs to treat COVID-19 outside of a hospital setting or clinical trial, noting reports of serious heart rhythm problems in patients with COVID-19 treated with hydroxychloroquine or chloroquine.

Email correspondence shows attorney general’s office attorneys and legislative attorneys continued exchanging drafts and edits to the agreement the day after Nelson raised his concerns. The third draft of the agreement still included an indemnification clause for SafeLane, limited to claims arising from the public’s use of the assessment tool during the declared public health emergency.

The third draft of the agreement would have defended and indemnified SafeLane “against any legal or administrative claims asserted against SafeLane arising from the public’s use of the assessment, including but not limited to claims of personal injury related to the use of the assessment,” except if the claims come from “gross negligence, recklessness, and/or intentional wrongdoing,” according to the draft. That would not exempt “simple” negligence, however, according to Nelson.

Attorneys worked on the agreement as state officials — including Dr. Joseph Miner, executive director of the Utah Department of Health, and Dr. Marc Babitz, the deputy director of the Utah Department of Health — were finalizing a standing order meant to facilitate the distribution of the drugs, which would have allowed Utahns to bypass their own doctors and use SafeLane’s online screening tool to determine whether they could receive the drugs directly from a pharmacist.

Miner and Babitz — despite disagreements over the drugs with Utah state epidemiologist Dr. Angela Dunn and concerns raised by other physicians in the community — worked closely on the plan with Dan Richards, owner of Meds in Motion (the pharmacy that later sold 20,000 doses of hydroxychloroquine and chloroquine to the state before it was refunded amid outrage), and Dr. Kurt Hegmann, a University of Utah physician.

Hegmann is also president of SafeLane Health, the company that would have been granted legal immunity.

Nelson, reached by the Deseret News on Tuesday, referred questions about the immunity agreement to the governor’s office.

Ultimately, the agreement was never finalized after Gov. Gary Herbert decided against issuing the standing order, according to Paul Edwards, communications director of the state’s COVID-19 Community Task Force.

“The governor was interested in innovative ways to deal with the pandemic and found the idea of using drugs off-label in ways that may be beneficial intriguing, but he was not at all comfortable with the idea that people would be given drugs without close consultation with their own physician,” Edwards said.

The immunity agreement was no longer relevant without the standing order.

But to Rep. Suzanne Harrison, D-Salt Lake City, the immunity agreement, even though they were just drafts and never finalized, raises more concerns about state officials’ relationships with those executives.

“This shows a concerning pattern of state leaders having too cozy of a relationship with individual companies and putting their interests ahead of taxpayer accountability and patient safety,” said Harrison, who is a physician and a vocal critic of state officials’ plans to use hydroxychloroquine and chloroquine as well as the multimillion-dollar, no-bid contracts state officials had executed with companies including Nomi Health, whose executive had pitched the plan to distribute the drugs as part of a public-private partnership in response to the pandemic.

“Why should taxpayers pay the hospital bills for people hurt because of the irresponsible actions of private companies?” Harrison added.

“While I understand that these decisions were made in the context of the uncertainty and urgency of the moment, this amount of risk-taking with public money is still troubling.”

In addition to the immunity agreement, legislators also sought to include a similar immunity clause for a person who provides “assistance to an agency of the state to manufacture, distribute, dispense, administer, or provide qualified treatment” in SB3002, a bill to allow legal immunity to physicians who prescribe experimental medications to COVID-19 patients. But that specific language was successfully struck from the bill in a House amendment by a physician, Rep. Ray Ward, R-Bountiful, before it was approved in April’s special session.

Edwards said questions about granting too much immunity to businesses are “very valid concerns,” but the fact that the agreement was never finalized shows “the system worked.”

“Trying to accommodate the innovation and come up with some way of thinking about it, that’s the job of the attorney, to look for ways to help facilitate getting to an outcome,” Edwards said. “But, you know, the concerns about the indemnification were raised, and nothing ever came of it.”

Edwards added: “I appreciate the overall concern about protecting state resources — that’s something we worry about all the time, and that’s why we have people like Brian Nelson in place to ask the questions as these things are moving forward.”

Senate President Stuart Adams, who emails show had asked legislative attorneys to review the immunity agreement and was an early backer of the state’s plan to distribute the anti-malarial drugs, said in a statement, “The legislative attorneys informed me it would be challenging to reach an understanding of this nature.”

“Following the review, nothing was agreed upon or materialized,” Adams said. “I remain committed to addressing COVID-19 health concerns and its impact on Utahns and the state budget thoroughly and responsibly.”