Are you at legal risk for the millennium bug?

How to protect your agency from litigation

While most businesses have to worry about management and technical issues surrounding the year 2000 (Y2K) problem, health care organizations must worry about liability issues, too. (For more information about the Y2K problem, see related stories pp. 177-180.)

According to John Gilliland, JD, of the law firm Gilliland & Associates in the Cincinnati suburb of Crestview Hills, KY, you face liability issues if a system failure causes harm to a patient. For example, a nurse may miss a crucial visit to a patient because scheduling software was not Y2K-compliant.

In such cases, you first need to determine if the software manufacturer is liable for that mistake, rather than you, says Gilliland. "The problem is that while the Universal Commercial Code states that someone who makes a product gives an implied warranty, software companies typically have language with their product stating that you waive that warranty," he explains. "If you are buying a turn-key computer system, as many home health organizations do, you have to look in the contract to see what promises have been made."

If you haven’t waived the warranty, then you have to worry about which state law will apply — the law where the program was made, where it was sold, or where it was run. If you have a contract with a software company, there is usually language in the document which addresses the problem.

Even if you have waived your warranty, you may still have recourse, says Gilliland. If you have written information from the company stating that its product is Y2K-compliant, and if a failure of that program or system causes injury to a patient, you probably have a good case to claim back damages.

Another potential legal problem could arise if you can’t make payroll because you have a cash flow problem. "Most states have laws requiring that payroll be made regularly, and if you fail to make payroll, you can be subject to penalties and fines," Gilliland says. "Make sure that you have a way to deal with the situation if there are three or four months where money isn’t coming in. You can hope that enforcement agents will be a little understanding of the problem, but you can’t count on that."

Law firms are already gearing up for what they expect to be a passel of millennium bug claims, says Gilliland. The best way to protect yourself is to start up a Y2K-compliance program and be able to document that you have shown reasonable care to prevent a problem.

Where to Find Help On-line


The place to go for information and numerous links to other Y2K sites.


It has advice from the Small Business Administration.


This site is a great resource for health care-specific Y2K information.


This site offers testing programs that can be downloaded from the Web. However, they won’t test critical operating-system software.