If ED nurses or physicians are diverting drugs, a state board investigation, malpractice lawsuit, or both are possible. Further, the hospital is legally exposed, says Allan Tobias, MD, JD, “if they were told about it and did nothing, or if they should have known about it by their internal procedures.” Hospital administrators typically testify, “We acted as soon as we found out.”

“This, of course, says nothing about how they should have known, by their own policies and procedures, that should have alerted them,” says Tobias, a Walnut Creek, CA-based healthcare consultant and lawyer. If a plaintiff attorney can prove the EP defendant was impaired and medical malpractice can be proven, “this will never see a courtroom,” Tobias adds.

Such a case would settle out of court quickly as it would be impossible to defend. The plaintiff attorney will explore whether there was a history of impairment and whether anyone else saw the EP diverting or using drugs. “But there still must be medical malpractice proven the usual way,” Tobias notes.

Kimberly New, JD, BSN, RN, a partner at Diversion Specialists, a Knoxville, TN-based consulting firm that specializes in the prevention, detection, and response to drug diversion by healthcare personnel, says these factors leave a hospital exposed legally:

  • Not putting appropriate controls in place;
  • Prior similar diversion and no remedial action;
  • Patients not receiving appropriate pain control;
  • Patients exposed to bloodborne pathogens due to the ED provider’s tampering with injectables;
  • Data that reflected diversion was happening, yet no one did anything about it.

The fact the ED provider is not a hospital employee does not protect the hospital. “If the ED provider is a credentialed provider, the hospital can still face potential liability,” New cautions.

Hospitals leaders can expect to be asked these questions at depositions:

  • What are you doing to detect diversion?
  • What are your policies regarding diversion prevention?
  • Are staff following these policies?
  • How long did it take to respond to the diversion event after suspicion was raised? Why did it take so long?
  • How many diversion cases are identified each year?
  • What are the details of recent cases?
  • What type of pre-employment screening is conducted?

Even if the diverting individual is an EMS provider who is not affiliated with the hospital, the hospital still may be legally exposed if there was gross negligence in preventing diversion. “The reaction of hospitals varies,” New observes. “They often say they are doing their best and that the diversion couldn’t be prevented.”

Since direct care providers typically use the drugs they are stealing, patients could be harmed as a result. “If the provider is impaired and provides negligent care, the diversion issue could and probably would arise in the litigation,” New predicts.

Plaintiff attorneys can prove a bad outcome happened because of an impaired ED nurse or physician in several ways. If doses that were ordered can be proven to have been diverted, the patient usually can show unrelieved pain. Negligent care due to impairment also might be proven. “There have recently been a number of reported ED diversion cases on point,” New adds.

Some hospitals seemed to do surprisingly little to prevent diversion. “There have been instances where people had dispensing mechanisms in isolated areas that were close to bathrooms, making it easy to conceal diversion,” says R. Stephen Stigall, JD, an attorney in the Cherry Hill, NJ, office of Ballard Spahr.

If an ED nurse is fired for drug diversion, and a prospective employer calls for a reference, hospitals often withhold the information. This is largely due to concerns about patient privacy regulation. The hospital says the employee was terminated but will not elaborate further; Stigall says there is nothing wrong with a matter-of-fact response such as, “The employee was diverting drugs.”

“There is a culture of silence to some degree. But if an employee is caught, I would not be silent about it,” says Stigall, cautioning that the fired employee could sue the hospital for defamation. “Those suits, because truth is an absolute defense, could be dismissed rather easily.”

Still, a civil lawsuit could be the least of a hospital’s problems when it comes to drug diversion. “Criminally, the hospital itself can get into hot water with the Department of Justice [DOJ]. That is what should have the rapt attention of general counsel at hospitals,” Stigall underscores.

In 2017, the DOJ announced a resurgence and vigilance in prosecuting those involved in the opioid trade. Of particular interest to hospital leadership, says Stigall, is the responsible corporate officer doctrine. This says that even if higher-ups do not know about subordinates’ illegal activity (such as drug diversion), the leaders still can be held criminally liable for failure to impose appropriate safeguards to prevent it.

“That is very scary if you carry it to its logical conclusion,” says Stigall, who offers this scenario: An ED nurse is going to the automated medication dispenser and pulling fentanyl or oxycodone pills, diverting these instead of giving them to the intended patient. The DEA comes to the hospital for an onsite inspection and discovers that the ED nurse has been diverting pills.

“They would probably charge the nurse. But they could also hold the hospital, or the people involved in the direct chain of command over the nurse, criminally liable — if it’s a significant enough case,” says Stigall, noting that some cases have involved thousands of diverted pills. Some recent examples:

In 2014, a health system agreed to pay a $1.55 million fine to resolve a criminal investigation involving the diversion of more than 20,000 oxycodone pills because its compliance procedures and controls failed to detect and prevent the diversion.

In 2015, a hospital agreed to pay $2.3 million to resolve a criminal investigation in which a DEA audit revealed that more than 20,000 pills had been diverted and an investigation revealed that two nurses were responsible for the diversion of at least 16,000 oxycodone pills.

On Nov. 8, 2017, the DOJ charged a nurse with accessing secured automatic dispensing machines and removing hydromorphone from vials intended for patients, replacing the solution with a saline solution. “If convicted, the nurse faces four years’ imprisonment and a $250,000 fine,” Stigall reports.

Several recent prosecutions have involved the responsible corporate officer doctrine. “One made it all the way to the Supreme Court, which declined to review the case, leaving the responsible corporate officer doctrine intact,” Stigall says.1

What should hospital leaders do if drug diversion is discovered? One possibility is to immediately bring it to the attention of the DOJ. “The hope is that the hospital gains credit for cooperating and, therefore, doesn’t get tagged for criminal liability,” Stigall offers.

Showing that the hospital discovered the diversion on its own and turned it over to the state “would be a very good defense,” Stigall says. “The catch-22 is that the DOJ may say, ‘Thank you very much. Now, here’s a criminal indictment for failure to supervise.’”

Several company executives have been charged with violations of the Controlled Substances Act. “I don’t think it will be a far stretch before we start to see this used more frequently for the hospital setting,” Stigall predicts.

Stigall says the only good response, to avoid liability under the responsible corporate officer doctrine, is to truthfully state: “This was beyond our control.”

“That’s probably your only defense,” Stigall says. Some hospitals implement checks and compliance based on the DOJ’s own guidance.2 “If it happens, you can point to those and say, ‘We did everything we possibly could, and yet the person got away with it,’” Stigall says.


  1. United States v. DeCoster, No. 15-1890 (8th Cir. 2016).
  2. U.S. Department of Justice, Criminal Division, Fraud Section. Evaluation of Corporate Compliance Programs. Updated April 2019. Available at: http://bit.ly/2SZ4CY8. Accessed Aug. 1, 2019.