Inside This Article:
- Alabama’s attorney general filed a lawsuit alleging that a medical spa administered non-FDA-approved versions of GLP-1 weight loss drugs without informing patients that the formulations were not authorized.
- The situation underscores growing concerns as medspas rapidly expand weight loss offerings amid strong consumer demand and uneven regulatory oversight.
- Allegations involving drug misrepresentation or lack of informed consent can lead to costly liability claims for medspa operators.
- Healthcare Liability Insurance coverage can help medspa owners mitigate risks as the industry grows.
Alabama’s attorney general recently filed a lawsuit against a medical spa alleging that it administered unapproved versions of GLP-1 weight loss drugs to patients without informing them that the formulations were not authorized by the FDA. The clinic, Aurora IV & Wellness in Cullman, was temporarily shut down until a court could review the case, according to the Alabama Political Reporter.
The medspa was allegedly using compounded forms of semaglutide and tirzepatide that were “not intended for human consumption” and meant for research purposes only, violating the state’s Deceptive Trade Practices Act, the publication reported.
The lawsuit comes amid a rapid expansion in the medspa industry, as well as heightened scrutiny of weight loss injectables. In September, the FDA issued a warning about unapproved versions of GLP-1 drugs and the risks they could pose to patients.
With drugs that are “so popular and heavily used,” it is almost “predictable” that some companies would attempt to cut corners, said Lily Chetosky, Broker, Professional Liability, Burns & Wilcox, Chicago, Illinois. Still, the claim that patients were not informed about the unauthorized status of the drugs is a “shock,” she said.
“My hope is that the clients who were given these unapproved drugs will not be heavily affected,” Chetosky said.
When a medspa provider is accused of improper drug sourcing, misrepresentation of what is being administered, or failures in informed consent, the resulting lawsuits, regulatory inquiries, and reputational damage could be extremely costly, said Caileb Newby, Broker, Professional Liability, Burns & Wilcox, Brokerage Division, San Francisco, California. Professional Liability Insurance is essential for these facilities, he said.
“Any claim can be catastrophic, especially within the health care space,” Newby said, pointing to the rising risk of nuclear verdicts. “That claim could easily be millions of dollars. Any loss with the wrong jury could blow up to be quite sizable.”
Medspas see growing demand, evolving oversight
The medical aesthetics space has expanded rapidly over the past several years, with the American Med Spa Association reporting that the industry has grown by at least $2 billion annually in recent years, according to Allure. Data released in March 2025 showed that GLP-1 medications were contributing about 15% of monthly revenue at medspa practices offering them, American Spa reported.
While offering GLP-1 injections may contribute to the industry’s growth, they can also expose clinics to new regulatory and operational risks, Chetosky said.
“We saw the change in landscape when the materials were scarce, making companies compound [GLP-1 medications] with acetate,” she said. While availability has improved, consumer demand continues to rise, and regulatory oversight is working to catch up. “Since we have now seen this for a couple years, the legislature and protocols are getting better and more comprehensive,” she said.
As the industry evolves, medspa owners should have strict protocols in place regarding informed consent for patients and ensure that their Professional Liability Insurance, also known as Errors & Omissions (E&O) Insurance, Healthcare Liability Insurance or Medical Malpractice Insurance, will cover any new services they introduce.
“Knowing your coverage applies to the services you are providing, in the event that something happens with said services, is key,” Newby explained. “Finding out that you do not have coverage, or that you have an exclusion, at the time of a claim is the worst-case scenario.”
Finding out that you do not have coverage, or that you have an exclusion, at the time of a claim is the worst-case scenario.
Liability challenges for medspa operators
As medspas expand their range of services, the breadth of potential liability widens. “Medspa lawsuits can be financially devastating, especially if there is a class-action lawsuit,” Chetosky said.
Medspa lawsuits can be financially devastating, especially if there is a class-action lawsuit.
Professional Liability Insurance policies are designed to respond to allegations that a provider’s actions or decisions caused harm. In addition to claims over misrepresentation or a lack of informed consent, lawsuits could also stem from adverse reactions to treatments, dosing errors, or contaminated products, she said. Even lawsuits that do not result in a large judgment can generate significant legal expenses and disrupt day-to-day operations, making insurance protection essential.
“This is the main coverage that is needed for medspas,” Chetosky said. “Medical Malpractice Insurance is very important due to the ever-changing legislation around these services.”
Medical Malpractice Insurance is very important due to the ever-changing legislation around these services.
The sector includes a broad mix of procedures and involves staff with varying levels of medical training, Newby said. To obtain Professional Liability Insurance, carriers will often want to know about the experience of the medspa’s medical director, the qualifications of providers, and the scope of services being offered. Certain procedures, such as cryotherapy, may be more challenging to insure.
“Some markets are willing to consider those more challenging exposures, with higher premiums,” Newby said. “Knowing what they are doing, their size, and their game plan helps me route what market will be best for it. Sharing all of that information is important. If it is a startup, having some qualified individuals involved at that junction is going to add more comfort on the underwriting side.”
In addition to Professional Liability Insurance, medspas typically also need to carry Commercial General Liability (CGL) Insurance, Cyber & Privacy Liability Insurance, Management Liability Insurance, and other policies. Coverage for Personal and Advertising Injury is also important, particularly in the event that a medspa faces claims over marketing brand-name GLP-1 medications but administering different versions, Newby said.
Weight loss, ‘scope of practice’ exclusions
Chetosky emphasized the need for medspas to examine policy wording closely, especially when offering GLP-1-related services. Some Professional Liability Insurance policies may exclude non-FDA-approved medications, research-grade compounds, off-label use, or weight loss services overall. There may also be “‘scope of practice’ exclusions if nurses or staff perform tasks outside what their license permits,” she said.
Additional endorsements may be necessary for telehealth services or for the handling of compounded GLP-1 medications, Chetosky noted.
As the medspa industry grows, more insurance markets are entering the space, but policy language continues to vary widely, making it essential for providers to understand exactly how each coverage applies to the services they offer.
“There is a lot of emerging risk within the medspa space,” Newby said. “As we learn more about these emerging exposures, there are more markets willing to consider coverage for it. Whatever services you are providing, having good, informed consent and risk transfer is important. That way, your patients know the risk they are taking on.”
There is a lot of emerging risk within the medspa space. … Whatever services you are providing, having good, informed consent and risk transfer is important.
