Who is liable when drugs are diverted? Hospital may pay for theft by contractor
A New Hampshire hospital is fighting to have staffing agencies foot most of the bill for criminal acts by a contract worker, which raises the question of who is ultimately responsible for damages caused by drug diversion.
If the offender was provided by a staffing agency, does that exonerate the hospital? Are they both liable for damages? The ongoing case involving Exeter (NH) Hospital might offer guidance eventually, but risk managers and legal experts say the answer might never be certain.
Technician David M. Kwiatkowski was arrested on July 19, 2012, after suspicion that he had stolen Fentanyl from patients at Exeter Hospital and other facilities. In trying to hide his theft, Kwiatkowski infected at least 32 patients with hepatitis C. (For more details about the crime, see the story on p. 63.)
On July 25, 2012, a class action lawsuit was filed on behalf of patients infected with hepatitis C at Exeter Hospital. The hospital sued Kwiatkowski, the American Registry of Radiologic Technologists (ARRT), which credentialed Kwiatkowski, and four staffing agencies involved with placing him at Exeter and other facilities. The hospital contends that the staffing agencies should bear most of the cost of settlements paid to infected patients.
The ARRT had moved to have Exeter Hospital’s complaint dismissed and said that the hospital failed to state a claim and that Kwiatkowski’s conduct was criminal in nature, thus making ARRT not liable for his actions. Exeter Hospital refuted the motion and said that the ARRT should be held responsible because it knew of Kwiatkowski’s actions and failed to stop them, which caused patients to be infected with hepatitis C.
On May 6, 2014, a federal judge rejected Exeter Hospital’s argument that its lawsuit against the four staffing agencies should remain in state court. U.S. Judge Paul Barbadoro, JD, decided the federal court has jurisdiction. In addition, a court ruling in the Exeter case so far has established that Kwiatkowski was acting outside of his role as a radiology technician, and this ruling helps the staffing agencies avoid liability.
No easy solution for diversion
No matter how the court rules on the liability issue, risk managers still are challenged by the need to vet contracted staff for diversion or other problems, says Leilani Kicklighter, RN, ARM, MBA, CPHRM, LHRM, a patient safety and risk management consultant with The Kicklighter Group in Tamarac, FL, and a past president of the American Society for Healthcare Risk Management (ASHRM).
The best strategy might be to treat the contracted staff person as a regular employee, as far as any background checks and vetting procedures, she says. "The contracted staff member may not be a user, but may be a diverter, so drug testing wouldn’t identify that situation," she says. "It is possible the contracted party became a user or diverter after their relationship with the contractor."
All employees, including those contracted from agencies, should be trained in the same policies and procedures, and this orientation and subsequent training should be documented for everyone, says R. Stephen Trosty, JD, MHA, CPHRM, president of Risk Management Consulting in Haslett, MI, and a past president of ASHRM.
This step will at least show that there are clearly delineated policies, that the employee received orientation in them and has received required updated training. This step also would assist with an inspection by The Joint Commission that looks at orientation and training of employees and reviews employee files for documentation. (For more on mitigating liability, see story on p. 64. For more on challenges posed by drug diversion, see story on p. 64.)
Take charge: Vet contractors
Drug diversion usually doesn’t involve denying a patient needed medication, says Yale H. Bohn, JD, until recently vice president and general counsel at Princeton (NJ) Healthcare System. After 10 years at the hospital, he is special counsel with Pepper Hamilton in Princeton, NJ.
At his former hospital, like most others, drug diversion was more likely to involve theft from the facility’s drug storage and supply chain, along with staff taking extra medication not used by the patient.
"Taking it directly from the patient who needs it does elevate the seriousness of the problem, because you immediately harm the patient or interfere with proper treatment," Bohn explains. "That is as opposed to a staff member’s diversion and abuse possibly leading to some patient harm."
Risk managers should encourage a culture that has no tolerance for diversion and which guarantees a dramatic response from management, Bohn says. "Employees need to know that this is important, and that they are going to be watched," he says. "You have to deal severely with the person when drug diversion is discovered. You can’t just give someone a slap on the wrist."
Trosty says employees must understand to report employees whom they suspect of stealing drugs. This reporting must be strictly confidential and must be protected while an investigation is being conducted, he says. The risk manager should lead the investigation, Trosty suggests, but at a minimum should be notified of reports and the investigation results, he says.
Hard to avoid liability
Bohn doubts that hospitals will get much traction with saying that a staffing agency should bear most or all liability for drug diversion by a contract worker.
"The courts are going to say you have responsibility for a v ulnerable population, and that gives you a duty of care that is higher than your normal duty of care to another person," Bohn explains. "So if you bring in a contracted physician or staff member, that person has to go through the same credentialing process as any other member of your staff. I was never comfortable with a contract agency doing that for us."
Hospitals that make a good faith effort to vet contracted staff and don’t rely on the staffing agency’s assurance will have a strong argument for avoiding liability from a rogue employee, Bohn says. "If the hospital doesn’t do all those things, the hospital should be liable, and I think the courts would agree," he says.
Hospitals will find it difficult to escape liability in a drug diversion case that causes patient harm, says Effie D. Silva, JD, partner with the law firm of McDermott Will & Emery in Miami. In addition civil lawsuits, they can be accused of failing to comply with state statutes and regulations regarding controlled substances, and failure to guard against tampering and theft.
"These are the negligence claims that hospitals need to keep in mind when dealing with staffing agencies, some of which are giving the green light to folks who are terribly addicted and manage to have their history not follow them," Silva says.
Court records have established that, in some instances, the staffing agencies knew of Kwiatkowski’s drug diversion but did not act to warn others or bar him from employment, but that inaction still does not establish liability, Silva explains.
Hospitals should consider beefing up their oversight of staffing agencies, perhaps requiring proof of any complaints against a staff person, insisting on drug testing by the agency, or even hiring a separate human resources administrator to oversee staffing agencies, she suggests. "The ruling should be a shock to hospitals, telling them that even if you have a solid program for investigating employees and addressing drug diversion, you might have to police or regulate these staffing agencies that come into your controlled environment," Silva says. "Do you want to spend the money now or later, when you have a claim related to diversion?" (For more information on this topic, see our publisher’s award-winning Hospital Report blog at http://bit.ly/1l0PViV.)
- Yale H. Bohn, JD, Special Counsel, Pepper Hamilton, Princeton, NJ. Telephone: (609) 951-4112. Email: firstname.lastname@example.org.
- Leilani Kicklighter, RN, ARM, MBA, CPHRM, LHRM, The Kicklighter Group, Tamarac, FL. Telephone: (954) 294-8821. Email: email@example.com.
- Effie D. Silva, JD, Partner, McDermott Will & Emery, Miami. Telephone: (305) 329-4452. Email: firstname.lastname@example.org.
- R. Stephen Trosty, JD, MHA, ARM, CPHRM, President, Risk Management Consulting, Haslett, MI. Phone: (517) 339- 972. Email: email@example.com.
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