Legal Aspects of Health Care Administration

Legal Aspects of Health Care Administration

Preface He has achieved success who has lived well, laughed often and loved much; who has gained the respect of intelligent men and the love of

little children; who has filled his niche and accomplished his task; who has left the world better than he found it, whether by an improved poppy, a perfect poem, or a rescued soul; who has never lacked appreciation of earth’s beauty or failed to express it; who has always looked for the best in others and given them the best he had; whose life was an inspiration; whose memory a benediction.

—Bessie Stanley

egal Aspects of Health Care Administration, Thirteenth Edition, as with the previous 12 editions, continues to be the most comprehensive and

engaging book encompassing both the legal and ethical issues of healthcare administration. The Thirteenth Edition continues its tradition of providing a solid foundation in a wide range of current healthcare topics in an understandable format that carefully guides the reader through the complex maze of law and ethics, as well as an overview of practical ways to improve quality and safety in the delivery of patient care. As in previous editions, the Thirteenth Edition serves as a valuable tool for both undergraduate and graduate programs. Additionally, as has been well recognized by practicing healthcare professionals, Legal Aspects of Health Care Administration continues to be a valuable reference tool in their day-to-day work activities.

The author infuses life into the educational process through legal case studies that have been litigated in the courtroom or reported in the press, as well as real-world healthcare events through “reality checks” experienced by patients and healthcare professionals. The author’s approach inspires dynamic discussion and excitement in the learning process, thus creating an atmosphere of interest and participation, which is conducive to learning.

Although the court cases relating examples of malpractice are often mirror images of the failures of medicine, this Thirteenth Edition provides a comprehensive resource from which the reader will learn how the law, ethics, and medicine intertwine. The contents of this book serve as a reminder to its readers of the need to learn from the mistakes and tragedies experienced by others to avoid repeating them. The legal cases and resulting headlines should stand as a reminder of the responsibility that caregivers bear to the profession they have chosen.

With revised estimates that as many as 400,000 patients die each year as a result of medical errors, according to a September 2013 study reported in the Journal of Patient Safety, it is mandatory that caregivers be ever mindful of the




nature of the life-and-death settings within which they work. At the time of this writing the headlines continue to repeat themselves. For example, on December 4, 2014, an Oregon hospital’s medication error led to the death of a 65-year-old patient. This error resulted in three employees being placed on administrative leave. The knowledge gained here will help prevent caregivers from becoming the next headline.

Although there will always be a “next time” for human error, the reader who grasps the contents in this book and understands its lessons will better understand how failures can turn to success and the pain of past mistakes can turn to hope. The application of the knowledge gained from this book and in the classroom learning process will serve to improve the competency of the reader and the quality of life for the patient through an educational process that will help prevent further injury in the healing process.







About the Book Legal Aspects of Health Care Administration, Thirteenth Edition, lays a strong foundation in both health law and ethics. Chapter 1 begins with a review of hospitals through the ages, providing the reader with an overview of the historical development of hospitals as influenced by medical progress. This allows the reader to see the successes and failures of hospitals through the centuries and how history has a way of repeating itself, thus creating a need to learn from past mistakes in order to prevent repeating them. Chapter 2 continues with an introduction to government, law, and ethics.

Chapters 3 and 4 introduce the reader to negligence and intentional torts. Chapter 5 discusses tort reform and risk reduction, thus reducing the costs of health care. Chapter 6 reviews the criminal aspects of health care, and Chapter 7 reviews the basics of contract law as it pertains to healthcare professionals. The reader is then introduced to civil procedure and trial practice in Chapter 8. The reader’s journey continues with a discussion of corporate structure and related legal issues in Chapter 9. A review of medical staff organization and physician liability is covered in Chapter 10, followed by nursing and the law and common nursing practice errors in Chapter 11. Chapter 12 reviews the legal risks of various other hospital departments and healthcare professions.

Information management and patient records are reviewed in Chapter 13. Issues related to patient consent, rights, and responsibilities are reviewed in Chapter 14, followed by a discussion of ethical theories, principles, virtues, and values. Chapter 15 concentrates on healthcare ethics, theories, principles, and values. This review is followed by procreation and ethical dilemmas in Chapter 16, and end-of life issues in Chapter 17.

Legal reporting requirements are discussed in Chapter 18. Labor relations and employment-at-will, employee rights, and employee responsibilities are reviewed in Chapters 19 and 20, respectively. An overview of professional liability insurance, managed care, and national health insurance is provided in Chapters 21 and 22.

The practical application of the law and ethics in the healthcare setting is accomplished by interspersing the thoughts of great minds through Quotes, applicable News Clippings, provider and organizational experiences through Reality Checks, and patient experiences through legal rulings and summaries through Case Law. When reviewing the various cases, the reader should consider both the ethical and legal implications of a dilemma and how they intertwine with one another. It is important to recognize that the decisions in the cases described are generally governed both by applicable state and federal statutes and common law principles. When reviewing a case, the




reader must keep in mind that the case law and statutes of one state are not binding in another state.

There is no one magical legal or ethics book that can possibly compress into its pages the plethora of issues that have bombarded the healthcare industry. This book is merely a beginning of the study of legal and ethical issues and is an adventure that all caregivers should take. Although there is always much more that could be discussed on any one topic, the reader will understand that this book provides a solid foundation for practical everyday use as well as further study in the law and ethics.

Each life is like a novel. Filled with moments of happiness, sadness, crisis, defeat, and triumph. When the last page has been written, will

you be happy or saddened by what you read?

—Author Unknown

The Thirteenth Edition presents real-world life experiences that bring the reader through a journey of learning that provides an effective transitional stage from the classroom to the reality of the everyday work environment. When considering matters of law and ethics, healthcare professionals are usually considering matters of freedom in regard to personal choices, one’s obligations to other sentient beings, or judgments about human character and the right to choose. The author’s objective is to equip the reader with the background knowledge necessary to understand that legal and ethical behavior begins with recognizing that we have alternatives and choices in our behavior. To make good decisions, each individual must first understand that those decisions will only be as good as the knowledge and understanding he or she possesses of right and wrong. This book is not an indictment of any profession or organization. There is a deluge of ethical issues in every aspect of human existence. Although cultural differences, politics, and religion influence who we are, it is all of life’s experiences that affect who we become.

IT’S YOUR GAVEL . . . “It’s Your Gavel” boxes offer the reader an opportunity to make their own decisions about actual court cases. Many chapters begin with a case that has been reviewed by the courts in state or federal jurisdictions. After reviewing each case and subsequent relevant material, readers can take on the role of the fact finder and render a decision. Then, at the end of the respective chapters, the actual court findings and reasoning for each case are given in “The Court’s Decision” box.

▸ Case Presentation Format When reviewing the various cases in this book, the reader should consider what happened, why things went wrong, what the relevant legal issues are, and how the event could have been prevented. The reader should also




consider how, if one fact in a particular case changed, the outcome might have been different. What would that fact be? The cases presented in the text have been chosen because of the frequency of their occurrence. The general format for each boxed case review is as follows:

Title: Each case has a title that signals the type of case to be reviewed.

Case Citation: The case citation describes where a court’s opinion in a particular case can be located. It identifies the parties in the case, the text in which the case can be found, the court writing the opinion, and the year in which the case was decided. For example, the case citation of Bouvia v. Superior Court (Glenchur), 225 Cal. Rptr. 297 (Cal. Ct. App. 1986) is described as follows:

Bouvia v. Superior Court (Glenchur): Identifies the basic parties involved in the lawsuit 225 Cal. Rptr. 297: Identifies the case as being reported in volume 225 of the California Reporter on page 297 Cal. Ct. App. 1986: Identifies the case as being decided in the California Court of Appeals in 1986

Students who wish to research a specific case should visit a law school library, which provides access to various state and regional reporters.

Facts: A review of the material facts of the case is presented.

Issues: This is the disputed point or question the judge or jury must decide. The issues discussed in any given case are selected for review based on medical and legal pertinence to the healthcare professional. Although any one case in this text may have multiple issues, emphasis is placed on those issues considered to be more relevant for the reader in the context of the topic being discussed.

Holding: The court’s ruling based on the facts, issues, and applicable laws pertaining to a case is summarized.

Reason: The rationale for the court’s decision based on the facts, issues, and relevant laws surrounding a case is presented.

Author’s Note: This book is not a definitive treatise, but rather a portrait of the ever-evolving story of health care through the study of law and ethics. It is educational in nature and should not be considered a substitute for legal advice on any particular issue. Moreover, each chapter presents an overview, rather than an exhaustive treatment, of the various topics discussed.




The author, legal reviewers, and/or the publisher cannot be responsible for any errors or omissions, including additions to, interpretations of, and/or changes in the regulations presented in this book.







Acknowledgments The author especially acknowledges the staff at Jones & Bartlett Learning, whose guidance and assistance was so important in making this Thirteenth Edition a reality. Special thanks to Mike Brown, Director of Product Management at Jones & Bartlett Learning, who has once again been truly an amazing leader and mentor. I would like to thank Danielle Bessette, Product Specialist, who worked diligently and tirelessly with me on this Thirteenth Edition. I would also especially like to acknowledge Sophie Teague, Senior Marketing Manager, Brooke Haley, Production Assistant, and Merideth Tumasz, Rights & Media Specialist, who worked with me on the Thirteenth Edition. Thank you for allowing me to leave behind this legacy of writing.

I am grateful to the very special people in the more than 1,000 hospitals and ambulatory sites from Alaska to Puerto Rico with whom I have consulted, surveyed, and provided education over many years. Their shared experiences have served to remind me of the importance of making this book more valuable in the classroom and as a reference for practicing healthcare professionals.

To my students in healthcare law and ethics classes at the New School for Social Research, Molloy College, Long Island University–C.W. Post Campus, Saint Francis College, and Saint Joseph’s College; my intern from Brown University; my resident in hospital administration from The George Washington University; and those I have instructed through the years at various seminars, I will always be indebted for your inspiration.

Many thanks are also extended to all of the special people at the National Library of Medicine and the Library of Congress for their guidance over the years in locating research materials.




© Hein Nouwers/Shutterstock, Inc.





Hospitals Through the Ages I was created at the end of the Renaissance, watched pirates rule the oceans as Ivan the Terrible ruled Russia, and witnessed the arrest of

Galileo for believing the Earth revolved around the Sun.

—I Am History





The reader, upon completion of this chapter, will be able to:

Explain how societal conflicts due to politics, religion, and warfare have both impeded the growth of hospitals and contributed to their progress. Describe how advances in medicine led to the rise of the modern-day hospital and improved the quality of patient care. Describe how the knowledge gained from best practices (e.g., infection control) can lead to progress while at the same time result in patient harm if not consistently followed over time.

We can learn from history how past generations thought and acted, how they responded to the demands of their time and how they solved

their problems. We can learn by analogy, not by example, for our circumstances will always be different than theirs were. The main thing history can teach us is that human actions have consequences and that certain choices, once made, cannot be undone. They foreclose the possibility of making other choices and thus they determine future events.

—Gerda Lerner

This chapter provides the reader with notable historical events, from ancient civilizations to the present time, which continue to revolutionize the delivery of patient care. It provides a review of the advance of civilization as disclosed in the history of hospitals and medical achievements through the ages. A study of the past often reveals errors that then can be avoided, customs that persist only because of tradition, and practices that have been superseded by others that are more effective. The past may also bring to light long-abandoned practices, which may be revived to some advantage. The story of the birth and evolution of the hospital portrays the triumph of civilization over barbarism and the progress of civilization toward an ideal characterized by an interest in the welfare of the community.

This chapter reviews some of the most amazing medical discoveries and achievements in the history of medicine. It also describes some of the failures that continue to plague the healthcare industry. The importance of the study of history is undeniable. The Spanish philosopher George Santayana (1863– 1952) recognized this all too well when he said, “Those who do not remember the past are condemned to repeat it.” George Bernard Shaw (1856–1950), an Irish dramatist and socialist, recognized the tragedies of the history of civilization when he said, “If history repeats itself, and the unexpected always happens, how incapable must man be of learning from experience.” Yes, Santayana and Shaw are right: If we do not learn from the mistakes of the past, we are doomed to repeat them. Progress in health care will only prevail so long as advances in medicine are practiced by each new generation.





Although the struggle to progress is a road filled with many pitfalls, hope still looms.

Martin Makary wrote in the Wall Street Journal that “Medical errors kill enough people to fill four jumbo jets a week . . . To do no harm going forward, we must be able to learn from the harm we have already done.” If we do not learn from historical events to those of the present days, we are bound to repeat them. This chapter takes the reader on a journey from the past to the present, from which to spring forward on a better road that returns the people’s trust in the safety net of the nation’s hospital systems. Here, we go “back into the future” to bring forth the fruits of healthier hospitals and healthier lives. Let the reader now travel that road.





▸ EARLY HINDU AND EGYPTIAN HOSPITALS Two ancient civilizations, the Hindu (in what is now India) and the Egyptian, had crude hospitals. Hindu literature reveals that in the 6th century BC, Buddha appointed a physician for every 10 villages and built hospitals for the crippled and the poor. His son, Upatiso, built shelters for the diseased and for pregnant women. These examples probably moved Buddha’s devotees to erect similar hospitals. Despite a lack of records, historians agree that hospitals existed in Ceylon as early as 437 BC.

During his reign from 273 to 232 BC, King Asoka built 18 hospitals that hold historical significance because of their similarities to the modern hospital. Attendants gave gentle care to the sick, provided patients with fresh fruits and vegetables, prepared their medicines, gave massages, and maintained their personal cleanliness. Hindu physicians, adept at surgery, were required to take daily baths, keep their hair and nails short, wear white clothes, and promise that they would respect the confidence of their patients. Although bedside care was outstanding for those times, medicine was only beginning to find its way.

Egyptian physicians were probably the first to use drugs such as alum, peppermint, castor oil, and opium. In surgery, anesthesia consisted of hitting the patient on the head with a wooden mallet to render the patient unconscious. Surgery was largely limited to fractures, and medical treatment was usually given in the home. Therapy away from home was often available in temples, which functioned as hospitals.




▸ GREEK AND ROMAN HOSPITALS The term hospital derives from the Latin word hospitalis, which relates to guests and their treatment. The word reflects the early use of these institutions not merely as places of healing, but also as havens for the poor and weary travelers. Hospitals first appeared in Greece as aesculapia, named after the Greek god of medicine, Aesculapius. For many centuries, hospitals developed in association with religious institutions, such as the Hindu hospitals opened in Sri Lanka in the 5th century BC and the monastery-based European hospitals of the Middle Ages (5th century to 15th century AD). The Hotel-Dieu in Paris, a monastic hospital founded in 660 AD, is still in operation today.

In early Greek and Roman civilization, when medical practices were rife with mysticism and superstitions, temples also were used as hospitals. Every sanctuary had a sacred altar before which the patient, dressed in white, was required to present gifts and offer prayers. If a patient was healed, the cure was credited to miracles and divine visitations. If the patient remained ill or died, he or she was considered to be lacking in purity and unworthy to live.

Greek temples provided refuge for the sick. One of these sanctuaries, dedicated to Aesculapius, is said to have existed as early as 1134 BC at Titanus. Ruins attest to the existence of another, more famous Greek temple built several centuries later in the Hieron, or sacred grove, at Epidaurus. Here, physicians ministered to the sick holistically in body and soul. They prescribed medications such as salt, honey, and water from a sacred spring. They gave patients hot and cold baths to promote speedy cures and encouraged long hours of sunshine and sea air, combined with pleasant vistas, as an important part of treatment. The temple hospitals housed libraries and rooms for visitors, attendants, priests, and physicians. The temple at Epidaurus even boasted what might be described as the site of the first clinical records. The columns of the temple were inscribed with the names of patients, brief histories of their cases, and comments as to whether or not they were cured.

The aesculapia spread rapidly throughout the Roman Empire, as well as through the Greek world. Although some hospitals were simply spas, others followed the therapy outlined by the leading physicians of the day. Hippocrates, for example, a physician born about 460 BC, advocated medical theories that have startling similarity to those of the present day. He employed the principles of percussion and auscultation, wrote intelligently on fractures, performed numerous surgical operations, and described such conditions as epilepsy, tuberculosis, malaria, and ulcers. He also kept detailed clinical records of many of his patients. Physicians like Hippocrates not only cared for patients in the temples, but also gave instruction to young medical students.







▸ HOSPITALS OF THE EARLY CHRISTIAN ERA Christianity and the doctrines preached by Jesus stressing the emotions of love and pity gave impetus to the establishment of hospitals, which, with the advance of Christianity, became integral parts of the church institution. These Christian hospitals, which replaced those of Greece and Rome, were devoted entirely to care of the sick, and accommodated patients in buildings outside the church proper.

A decree of Constantine in 335 AD closed the aesculapia and stimulated the building of Christian hospitals, which, during the 4th and 5th centuries, reached the peak of their development. Many were erected by the rulers of the period or by wealthy Romans who had converted to Christianity. By the year 500, most large towns in the Roman Empire had hospitals. Nursing, inspired by religion, was gentle and considerate, but soon began to discard the medical precepts of Hippocrates, Antyllus, and other early Greek physicians because of their pagan origins. Instead, health care turned toward mysticism and theurgy (the working of a divine agency in human affairs) as sources of healing.

Hospitals rarely succeeded during the centuries leading to the Middle Ages; only a few existed outside Italian cities. Occasional almshouses in Europe sheltered some of the sick, whereas inns along the Roman roads housed others. No provision appears to have been made for care of the thousands of helpless paupers who had been slaves and were later set free when Christianity was introduced into the Roman Empire.




▸ ISLAMIC HOSPITALS The followers of Mohammed were almost as dedicated as the Christians in caring for the sick. In Baghdad, Cairo, Damascus, Cordova, and many other cities under their control, luxurious hospital accommodations were frequently provided. Harun al-Rashid, the glamorous caliph (a title for a religious or civil ruler claiming succession from Mohammad) of Baghdad (786–809 AD), built a system of hospitals and paid the physicians himself. Medical care in these hospitals was free. Approximately four centuries later, in 1160, a Jewish traveler reported that he had found as many as 60 dispensaries and infirmaries in Baghdad alone. The Persian physician Rhazes, who lived from approximately 850 to 923 AD, was skilled in surgery. He is believed to be the first to use the intestines of sheep for suturing and to cleanse patient wounds with alcohol. He also gave the first rational accounts of smallpox and measles.

Islamic physicians like Rhazes received much of their medical knowledge from the persecuted Christian sect known as the Nestorians. Nestorius (Archbishop of Constantinople from April 428 to August 431) was driven into the desert with his followers after having been appointed patriarch of Constantinople and took up the study of medicine. The school at Edessa, in Mesopotamia, with its two large hospitals, eventually came under the control of the Nestorians, where they established a remarkable teaching institution. Eventually driven out of Mesopotamia by the orthodox bishop Cyrus, they fled to Persia, where they established the famous school at Gundishapur, which is considered to be the true starting point of Islamic medicine. Gundishapur was home to the world’s oldest known teaching hospital and also comprised a library and a university. It was located in the present-day province of Khuzestan, in southwestern Iran, not far from the Karun River.

Islamic medicine flourished up to about the 15th century. Physicians were acquainted with the possibilities of inhalation anesthesia. They instituted precautions against adulteration of drugs and developed a vast number of new drugs. Islamic countries also built asylums for the mentally ill 1,000 years before such institutions appeared in Europe. The people of Islam made a brilliant start in medicine, but never fulfilled the great promise that glowed in their early work in medical arts and hospitalization was never fulfilled. Wars, politics, superstitions, and a nonprogressive philosophy stunted the growth of a system that had influenced the development of hospitals.




▸ EARLY MILITARY HOSPITALS Engraved on a limestone pillar dating back to the Sumerians (2920 BC) are pictures that depict, among other military procedures, the assemblage of the wounded. The Book of Deuteronomy records that Moses established outstanding rules for military hygiene. Out of the urgency of care for the wounded in battle came much of the impetus for medical progress. Hippocrates is quoted as saying that “war is the only proper school for a surgeon.” Under the Romans, surgery advanced largely because of experience gained through gladiatorial and military surgery. Throughout the centuries, warfare has been a two-edged sword, producing tragic events while providing an environment for the advancement of surgery and medicine. From an ethical point of view, the question arises: What surgical and medical advancements might have been lost due to the failure of mankind to sit at the table of peace and compromise on differences based on logic and reason?




▸ MEDIEVAL HOSPITALS Religion continued to be the most important factor in the establishment of hospitals during the Middle Ages. A number of religious orders created hospitia, or travelers’ rests, and infirmaries adjacent to monasteries provided food and temporary shelter for weary travelers and pilgrims. One of these, the famous alpine hospice of St. Bernard, founded in 962, gave comfort to the weary and sent its renowned dogs to the rescue of lost mountain climbers.

The hospital movement grew rapidly during the Crusades, which began in 1096. Military hospital orders sprang up, and accommodations for sick and exhausted crusaders were provided along well-traveled roads. One body of crusaders organized the Hospitallers of the Order of St. John, which in 1099 established in the Holy Land a hospital capable of caring for 2,000 patients. Knights of this order took personal charge of service to patients and often denied themselves so that the sick might have food and medical care. For years, these institutions were the best examples of hospitals of that period.

Although physicians cared for physical ailments to afford relief, they rarely attempted to cure the sick. Dissection of a human body would have been sacrilege because the body was created in the image of God.

Finally, an active period of hospital growth came during the late 12th and early 13th centuries. In 1198, Pope Innocent III urged hospitals of the Holy Spirit to be subscribed for by the citizenry of many towns. He set an example by founding a model hospital in Rome, known as Santo Spirito, in Sassia. Built in 1204, it survived until 1922, when it was destroyed by fire. In Rome, nine other hospitals were founded shortly after completion of the one in Sassia; it is estimated that in Germany alone, 155 towns had hospitals of the Holy Spirit during early medieval times.

Although most hospitals constructed during the Middle Ages were associated with monasteries or founded by religious groups, a few cities, particularly in England, built municipal institutions. Like all hospitals of the period, the buildings were costly and often decorated with colorful tapestries and stained glass windows, but the interiors were frequently little more than large drafty halls with beds lining each side. Some hospitals were arranged on the ward plan, usually built in the shape of a cross. Floors were made of red brick or stone, and the only ventilation came from the cupola in the ceiling.

With the spread of leprosy during the 12th and 13th centuries, lazar houses sprang up, supplying additional hospital facilities. Made up of crude structures, lazar houses were usually built on the outskirts of towns and maintained for the segregation of lepers rather than for their treatment. Special groups of attendants, including members of the Order of St. Lazar, nursed the patients.




The group represented an important social and hygienic movement because their actions served to check the spread of epidemics through isolation. The group is credited for virtually stamping out leprosy.

During the same period of hospital growth, three famous London institutions were established: St. Bartholomew’s in 1137, St. Thomas’s before 1207, and St. Mary of Bethlehem in 1247. St. Bartholomew’s, founded by Rahere (reportedly the court jester of Henry I), cared for the sick poor but, unlike many hospitals of that day, was well organized. St. Thomas’s Hospital was founded by a woman who was later canonized St. Mary Overie. It burned in 1207, was rebuilt 6 years later, and was constructed again on a new site in 1228. St. Mary of Bethlehem was the first English hospital to be used exclusively for the mentally ill.

The Hotel-Dieu of Paris was probably typical of the better hospitals of the Middle Ages. Built at the beginning of the 13th century, the hospital provided four principal rooms for patients in various stages of disease, as well as a room for convalescents and another for maternity patients. Illustrations by artists of the time show that two persons generally shared one bed.

Heavy curtains sometimes hung from canopies over the bed to afford privacy, but this advantage was more than offset by the fact that the draperies, which were never washed, spread infection and prevented free ventilation. The institution was self-contained, maintaining a bakery, herb garden, and farm. Often, patients who had fully recovered remained at the hospital to work on the farm or in the garden for several days in appreciation for the care they had received.




▸ THE “DARK AGE” OF HOSPITALS Pictures and records of hospitals during the Middle Ages illustrate how many hospitals commonly crowded several patients into one bed regardless of the type or seriousness of the illness. A mildly ill patient might be placed in the same bed as an occupant suffering from a contagious disease. A notable exception to the general deterioration in medicine during this era was the effort of those monks who copied by hand and preserved the writings of Hippocrates and other ancient physicians.

The great Al-Mansur Hospital, built in Cairo in 1276, struck a contrast to the European institutions of the Middle Ages. It was equipped with separate wards for the more serious diseases and provided outpatient clinics. The handful of hospitals like Al-Mansur would lay the groundwork for hospital progress to come in later centuries.




▸ HOSPITALS OF THE RENAISSANCE During the revival of learning around the close of the 14th century, hundreds of medical hospitals in Western Europe received the new, more inquiring surgeons that the Renaissance produced. New drugs were developed, and anatomy became a recognized study. Ancient Greek writings were printed, and dissection was performed by such masters as Leonardo da Vinci, known as the originator of cross-sectional anatomy, and Andreas Vesalius, author of De Humani Corporis Fabrica (On the Fabric of the Human Body), on human anatomy. Hospitals became more organized. Memoranda from 1569 describe the duties of the medical staff in the civil hospital of Padua, a city that was home to the most famous medical school of the 16th century. These read:

There shall be a doctor of physic upon whom rests the duty of visiting all the poor patients in the building, females as well as males; a doctor of surgery whose duty it is to apply ointments to all the poor people in the hospital who have wounds of any kind; and a barber who is competent to do, for the women as well as the men, all the other things that a good surgeon usually does.

The practice of surgery during the Renaissance became more scientific and progressive. Operations for lithotomy and hernioplasty were undertaken without the use of anesthetics, and surgery was practiced by the long-robe surgeons, a small group who were educated in the universities and permitted to perform all types of operations, and by the short-robe surgeons, the barbers who, in most communities, were allowed only to leech and shave the patient, unless permission was granted to extend the scope of treatment. Both groups were regarded as inferior to physicians.

In 1506, a band of long-robe surgeons organized the Royal College of Surgeons of Edinburgh. By 1540, both the long- and short-robe surgeons in England joined to form the Company of Barber-Surgeons of London. In 1528, Thomas Linacre, physician to Henry VIII, founded and became the first president of the Royal College of Physicians of England.

Although English physicians were organized during the 16th century, Henry VIII of England ordered that hospitals associated with the Catholic Church be given over to secular uses or destroyed. The sick were turned out into the streets. Conditions in hospitals became so intolerable that the king was petitioned to return one or two buildings for the care of patients. Henry consented and restored St. Bartholomew’s in 1544. Practically the only hope for the sick poor from outlying towns was to journey many miles to London.

The dearth of hospitals in England continued throughout the 17th century, when the medical school was developed. The French and the English quickly





accepted what had originated in Italy—the first attempt to make medical instruction practical. St. Bartholomew’s took the lead in education by establishing a medical library in 1667 and permitted apprentices to walk the wards for clinical teaching under experienced surgeons.

In 1634, an outstanding contribution was made to nursing by the founding of the order of the Daughters of Charity of St. Vincent de Paul. Originating at the Hotel-Dieu of Paris as a small group of village girls who were taught nursing by the nuns, the order grew rapidly and was transplanted to the United States by Mother Seton in 1809.




▸ HOSPITALS OF THE 18TH CENTURY During the 18th century, the building of hospitals began to revive. Because of poverty, the movement made slow progress in England, but a few hospitals were built and supported jointly by parishes. By 1732, there were 115 such institutions in England, some of them a combination of almshouse and hospital. As hospitals grew in number, new advances in health care began.

The Royal College of Physicians established a dispensary where medical advice was free and medicines were sold to the needy at cost. Controversies and lawsuits, however, brought an untimely end to this early clinic. Not discouraged by this experience, the Westminster Charitable Society created a similar dispensary in 1715. The same organization, in 1719, founded Westminster Hospital, an infirmary built by voluntary subscription, in which the staff gave its services gratuitously. Ten years later, the Royal College of Physicians in Edinburgh opened the Royal Infirmary. London Hospital, another notable institution, was founded in 1740. Admission of charity patients to the London Hospital was apparently by an admission ticket. Among its historical relics is an admission card that had on the back of the card a representation of a biblical scene drawn by the artist William Hogarth.

In 1727, John Theophilus Desaguliers invented a machine for pumping fresh air into and foul air out of rooms. It was first used in prisons and public buildings and later installed in hospitals. Other mechanical improvements for the care of the sick were sadly wanting, but worse was the lack of cleanliness and the crude and careless treatment of patients.

In the Elizabethan period, with its materialistic and cold culture, the deterioration of hospital service that had set in under Henry VIII continued. The lowest point in the deterioration of hospitals came during the 18th and first half of the 19th centuries. Considering the increase in knowledge during the 18th century, development of educational opportunities, and steady growth in population and wealth, the few hospitals built at that time were inadequate. As far as hospital progress is concerned, the 18th century was not only decidedly uneventful; it was a period of regression. The full revival did not begin until well after the middle of the 19th century.

Antony van Leeuwenhoek (1632–1723) succeeded in making some of the most important discoveries in the history of biology. Although van Leeuwenhoek did not invent the first microscope, he was able to perfect it. His many discoveries included bacteria, free-living and parasitic microscopic protists, sperm cells, blood cells, and microscopic nematodes. His research opened up an entire world of microscopic life. Often referred to as the “father of microbiology,” van Leeuwenhoek had a pronounced influence on the




creation of the sciences of cytology, bacteriology, and pathology. His discoveries have forever improved patient care.




▸ EARLY HOSPITALS IN THE UNITED STATES Manhattan Island claims the first account of a hospital in the New World, a hospital that was used in 1663 for sick soldiers. Fifty years later, in Philadelphia, William Penn founded the first almshouse established in the American colonies. The Quakers supported the almshouse, which was open only to members of that faith. However, Philadelphia was rapidly growing and in need of a public almshouse. Such an institution for the aged, the infirm, and persons with mental illness was established in 1732. The institution later became the historic Old Blockley, which, in turn, evolved into the Philadelphia General Hospital.

Philadelphia was the site of the first incorporated hospital in America, the Pennsylvania Hospital. Dr. Thomas Bond wanted to provide a place where Philadelphia physicians could treat their private patients. With the aid of Benjamin Franklin, Dr. Bond sought a charter for the Pennsylvania Hospital, which was granted by the Crown in 1751. Franklin assisted in designing the hospital. It included a central administration unit and two wings opened to the public. The first staff consisted of Dr. Phineas Bond, Dr. Lloyd Zachary, and the founder, Dr. Thomas Bond, all of whom gave their services without remuneration for 3 years.

Rich in the history of hospitals, Philadelphia is credited with the first quarantine station for immigrants (created in 1743) and the first lying-in hospital (established in 1762), a private institution owned by the noted obstetrician William Shippen. The quality of American health care seemed to be improving. However, by 1775 Dr. John Jones published a book calling attention to the frightful conditions that existed in hospitals. He charged that hospitals abroad were crowded far beyond capacity and that Hotel-Dieu of Paris frequently placed three to five patients in one bed—putting the convalescent with the dying and fracture cases with infectious cases. He estimated that one fifth of the 22,000 patients cared for at Hotel-Dieu died each year. Wounds were washed daily with a sponge that was carried from patient to patient. The infection rate was said to be 100%, and mortality after amputation was as high as 60%. Jones’s call to action had a positive effect on American health care.

As late as 1769, New York City, with nearly 300,000 inhabitants, was without hospitals. In 1771, a small group of citizens, Dr. Jones among them, formed the Society of the New York Hospital and obtained a grant to build a hospital. The society purchased a five-acre site and made plans for a model structure that would allow a maximum of eight beds per ward and provide improved ventilation. The hospital fell into the hands of the British troops during the American Revolution and was used as a barracks and military hospital.




During postwar reconstruction, the New York Hospital broadened its services. Under the supervision of Dr. Valentine Seaman, the hospital began providing instruction in nursing, and in 1779, it introduced vaccination in the United States and established an ambulance service. Other early American hospitals of historic interest include the first psychiatric hospital in the New World, founded in Williamsburg, Virginia, in 1773, and a branch of federal hospitals created by the passage of the U.S. Marine Hospital Service Act in 1798. Under this act, two marine hospitals were established in 1802: one in Boston and another in Norfolk, Virginia.

The Massachusetts General Hospital (MGH), which pioneered many improvements in medicine, originated in Boston. Its first patient, admitted in 1821, was a 30-year-old sailor.

More than a decade earlier, two Boston doctors had appealed to the city’s “wealthiest and most influential citizens” to establish a general hospital. The War of 1812 delayed the dream, but on July 4, 1818, the cornerstone was finally laid. The original building, designed by Boston’s leading architect, Charles Bulfinch, is still in use. One of the world’s leading centers of medical research and treatment has grown up around it. The original domed operating amphitheater, where anesthesia was first publicly demonstrated in 1846, is now a Registered National Historic Landmark. MGH has achieved countless medical milestones, including the first successful reattachment of a human limb.

In 1832, the Boston Lying-In Hospital opened its doors to women unable to afford in-home medical care. It was one of the nation’s first maternity hospitals, made possible because of fundraising appeals to individuals and charitable organizations.

Despite the increased number of institutions providing care for the sick, the first half of the 19th century stands as a dark period in hospital history. Surgeons of the day had sufficient knowledge of anatomy to lead them to perform many ordinary operations, and as a result, more surgery was most likely undertaken than during any previous era. Although the medieval and ancient surgeons had sought to keep wounds clean, even using wine in an attempt to accomplish this purpose, 19th-century surgeons believed suppuration (the production and discharge of pus) to be desirable and encouraged it. Hospital wards were filled with discharging wounds, which made the atmosphere offensive enough to warrant the use of perfume. Some patient wards had multiple patients with multiple conditions allowing for the spread of infections, as depicted in FIGURE 1-1.





FIGURE 1-1 Patient ward. © chippix/Shutterstock

Nurses of that period are said to have used snuff to make conditions tolerable. Surgeons wore their operating coats for months without washing. The same bed linens served several patients. Pain, hemorrhage, infection, and gangrene infested the wards. Mortality from surgical operations rated as high as 90– 100%. Nathan Smith, in the second decade of that century, advocated a bichloride of mercury solution for reducing infection, but his ideas were ignored.




▸ LATE 19TH CENTURY RENAISSANCE Florence Nightingale, the famous English nurse, began her career by training at Kaiserswerth on the Rhine in a hospital and deaconess home established in 1836 by Theodor Fliedner and his wife. Florence Nightingale wrote disparagingly of her training there, particularly of the hygiene practiced. Returning to England, she put her own ideas of nursing into effect and rapidly acquired a reputation for efficient work.

By 1854, during the Crimean War, the English government, disturbed by reports of conditions among the sick and wounded soldiers, selected Florence Nightingale as the one person capable of improving patient care. Upon her arrival at the military hospital in Crimea with a small band of nurses whom she had assembled, she found that the sick were lying on canvas sheets in the midst of dirt and vermin. There was neither laundry nor hospital clothing and beds were made of straw. She proceeded to establish order and cleanliness. She organized diet kitchens, a laundry service, and departments of supplies, often using her own funds to finance her projects. Ten days after her arrival, the newly established kitchens were feeding 1,000 soldiers. Within 3 months, 10,000 soldiers were receiving clothing, food, and medicine. As a result of her work, the death rate substantially declined. She has been credited with observing:

A good nursing staff will perform their duties more or less satisfactorily under every disadvantage. But while doing so, their head will always try to improve their surroundings, in such a way as to liberate them from subsidiary work, and enable them to devote their time more exclusively to the care of the sick.

Because of her organizational skills, many consider Florence Nightingale to be the first true healthcare administrator. Later she extended her administrative duties to include planning the details of sanitary engineering in a new military hospital.

As the field of nursing continued to progress, so did medicine. Dr. Crawford Williamson Long first used ether as an anesthetic in 1842 to remove a small tumor from the neck of a patient. He did not publish any accounts of his work until later. However, the discovery of an anesthetic is often attributed to Dr. W.T.G. Morgan, a dentist who developed sulfuric ether and arranged for the first hospital operation under anesthesia at MGH in 1846. Although not put to practical use immediately, ether soon took away some of the horror that hospitals had engendered in the public mind. Sir James Simpson first used chloroform as an anesthetic in 1847 for an obstetrical case in England.





The year 1847 was the year that the American Medical Association (AMA) was founded under the leadership of Dr. Nathan Smith Davis. The association, among its main objectives, strived to improve medical education, but most of the organization’s tangible efforts in education began at the close of the century. The AMA was a strong advocate for establishing a code of ethics, promoting public health measures, and improving the status of medicine.

The culmination of Florence Nightingale’s work came in 1860, after her return to England. There, she established the Nightingale School of Nursing at the St. Thomas’s Hospital. From this school, a group of 15 nurses graduated in 1863. They later became the pioneer leaders of nurse training.

In 1886, the Royal British Nurses’ Association (RBNA) was formed. The RBNA worked toward establishing a standard of technical excellence in nursing. A charter granted to the RBNA in 1893 denied nurses a register, although it did agree to maintain a list of persons who could apply to have their name entered thereon as nurses.

The first formally organized American nursing schools were established in 1872 at the New England Hospital for Women and Children in Boston (Brigham and Women’s Hospital), and then in 1873 at Bellevue, New Haven, and Massachusetts General Hospitals. In 1884, Alice Fisher was appointed as the first head of nurse training at Philadelphia Hospital’s (renamed as the Philadelphia General Hospital in 1902) nurses’ training program. She had the distinction of being the first Nightingale-trained nurse recruited to Philadelphia upon recommendation by Florence Nightingale.

Mrs. Bedford Fenwick, a nurse leader in the English nurse registration movement, traveled to Chicago in 1893 to arrange for nursing exhibits to be displayed in the women’s building at the World’s Fair.

This event showcased America’s social, cultural, and scientific advances and its growing cultural parity with Western Europe. This was the first major exposition in which women played a prominent role. Integral to the fair was a series of Congresses that provided an international platform for discussion of social issues. The Congress on Hospitals, Dispensaries, and Nursing, a section of the International Congress of Charities, Correction, and Philanthropy, particularly focused on health care issues.”

As part of the Congress on Hospitals and Dispensaries, the nursing section included papers on establishing standards in hospital training schools, the establishment of a nurses association, and nurse registration. The group formulated plans to improve nursing curriculum and hospital administration in the first concerted attempt to improve hospitals through a national organization.






Progress in Infection Control Dr. Ignaz Philipp Semmelweis of Vienna, Austria, unknowingly laid the foundation for Louis Pasteur’s later work. In 1847, at the Vienna Lying-In Hospital, Europe’s largest teaching obstetrical department, he boldly declared that the alarming number of deaths from puerperal fever was a result of infection transmitted by students who came directly from the dissecting room to take care of maternity patients. “Puerperal fever is due to an infection, most often of the placental site within the uterus. If the infection involves the bloodstream, it constitutes puerperal sepsis.” Semmelweis noted that Division 1 of the hospital was a medical student–teaching service and Division 2 was used for midwife trainees. Maternal deaths for Division 1 averaged 10%, whereas the rate for Division 2 averaged 3%. Medical students performed autopsies; midwives did not. As a result of these findings, an order was posted on May 15, 1847, requiring all students to scrub their hands in chlorinated lime until the cadaver smell was gone. The order was later revised to include hand washing between patients.

Despite having made bitter enemies, Semmelweis had the satisfaction of seeing the mortality rate in his obstetrical cases drop from 9.92% to 1.27% as a result of the aseptic technique he developed. A few years later, Louis Pasteur, a French chemist and microbiologist, demonstrated the scientific reason for Semmelweis’s success when he proved that bacteria were produced by reproduction and not by spontaneous generation, as was then generally believed. From his work came the origin of modern bacteriology and clinical laboratories.

Despite the attention given to the control of infections in hospitals, adherence to hand-washing protocols continues to be a problem well into the 21st century, as noted by the following reality check and depicted in FIGURE 1-2.





FIGURE 1-2 Patient Room. © Monkey Business Images/Shutterstock


Sheri was a healthy 30-year-old female until she suddenly experienced neck pain with a numbness radiating down her left arm. She was diagnosed with cervical rib outlet syndrome and agreed to a surgical procedure by Dr. Botchit for removal of her first cervical rib. Sheri was admitted to a postsurgical care unit at a major teaching hospital. Upon entering her assigned four-bed room, she and her husband Bill observed a bloody suction bottle hanging from the wall at the head of her assigned bed. The bed rails were rusting with dried bloody body fluids from a previous patient. They were uneasy about having a surgical procedure performed but they decided the physician’s skills were more important than an unclean room. Bill commented, “Well, at least the sheets appear clean.”

Elda, the first patient on the left upon entering the room greeted Sheri and Bill. She said, “The room isn’t very clean is it? Could you watch out for the nurses?” She then smiled as she removed Tylenol from her bedside table. She took a few and said, “I don’t want my doctor to cancel my surgery, so I have to lower my temperature before the nurses retake my temperature. I think I have an infection. I have waited so long to get my surgery scheduled. I am just so worried my surgery will be canceled.”




The morning following surgery, a third-year resident entered the room with three first-year residents and beginning with Elda, examined each of four postsurgical patients. Elda was a postsurgical amputee, who was later diagnosed with a staph infection. Sheri was the fourth patient to be examined in the room. Even though each of the patient’s wounds had been examined and dressings changed, the physicians failed to change their surgical gloves between patients. Following examination of Sheri, they proceeded to remove their gloves and tossed them in Sheri’s bedside wastebasket. They then washed their hands at the only sink in the room, which was by Sheri’s bedside.

Sheri’s temperature began to rise. Bill asked if a wound culture had been taken. Carol, the nurse manager after checking Sheri’s chart said, said, “No culture was ordered.” He asked, “Can you please have a culture ordered?” The nurse replied that she would call Dr. Green to see if he would order a blood culture.” Bill asked, “Who is Dr. Green?” Carol replied, “Dr. Green is covering for Dr. Botchit while he is on vacation. Dr. Botchit left on a family skiing trip the day after surgery to Aspen, Colorado.”

Bill learned the following day that the blood tests came back positive for a staph infection and learned that no antibiotics had been prescribed by Dr. Green. Bill became increasingly concerned about the lack of care and went back to the nursing station to describe his concern about the lack of treatment for Sheri. Carol suggested that he call Dr. Green.

Bill placed a call to Dr. Green and relayed his concern about his wife’s deteriorating health. Dr. Green returning Bill’s call said, “I hear you are unhappy with my care. I am merely providing coverage for Dr. Botchit. I have my own patients to be concerned with and treat.” Bill replied, ”Well if you are covering for another physician you need to address my wife’s infection.” Dr. Green replied, “I am doing a favor for Dr. Botchit by covering his patients as well as mine. I will get to the hospital when I can!”

Upon returning to his wife’s bedside, Sheri looked up at him and said, “The priest was here and administered last rites to me.” Looking at his mother-in- law, who was trying to be strong, holding back the tears, Bill devotedly said, “I will fix this.” He called Dr. Field, who he knew was a physician educator at the medical center, and explained his concerns. Dr. Field said, “I can help. I will get a team of infectious disease specialists to Sheri’s bedside. They are the best in the city, probably the world. But please do not use my name in any dispute that you may have with Dr. Botchit or Dr. Green.” Sheri survived but the staph infection had taken its toll on her immune system.




Sheri and Bill never thought much about it at the time, but in hindsight, Elda’s infection was most likely the contributing factor to the staph infections that eventually affected the other three patients in the room. History repeated itself. Despite being adopted by the hospital, the CDC hand- washing guidelines, which could have helped prevent the infection, were not followed,.

This reality check illustrates how the failure to follow established protocols in the prevention of infections can have disastrous consequences for patients. Progress in the delivery of patient care can move forward only as long as complacency does not stymie progress.

This case also provides an important lesson for patients who treat themselves, masking their physical symptoms, as in this case where the patient took Tylenol to hide her fever, an indicator that the patient may have an active infection. Staff should be alert to patients who self-treat and confiscate all home and store bought medications upon admission to the hospital. The lessons here also apply to family members, who must not honor patient requests for medications.

This reality check serves as a reminder that history continues to repeat itself. Strict adherence to CDC guidelines and hospital policy must become the norm and not the exception for acceptable hand hygiene in order to prevent the spread of infection by both caregivers and patients. The Joint Commission’s (TJC) 2017 Hospital Accreditation Standards recognize the importance of complying with hand hygiene guidelines. The standards require hospitals and other accredited TJC organizations to follow current CDC or World Health Organization guidelines for hand hygiene. When hand-washing guidelines have to be declared a TJC national patient safety goal, it would appear that caregivers have much to learn from Dr. Semmelweis, who determined in 1847 that poor hand-washing technique can be attributed to being a major cause of hospital-acquired infections. Dr. Ernst von Bergmann’s introduction of steam sterilization in 1886 and Dr. William Stewart Halsted’s introduction of rubber gloves in 1890 aided in reducing the incidence of hospital-acquired infections.

By the end of the century, Dr. Joseph Lister carried Pasteur’s work a step further and showed that wound healing could be hastened by using antiseptics to destroy disease-bearing organisms and by preventing contaminated air from coming into contact with these wounds. Lister was not content with obtaining better results in his own surgical cases; he devoted his life to proving that suppuration is dangerous and that it could be prevented or reduced by the use of antiseptics to destroy disease-bearing organisms. Despite his successful work and eloquent pleas, his colleagues persisted in following their old methods. Years after his discovery, they continued to deride him and his





technique, which consisted of spraying carbolic solution so profusely about the operating room that both surgeons and patients were drenched. The use of antiseptics and the techniques of using them continued to improve. Eventually even the skeptics were impressed by the clinical results in reducing infection rates. Surgeons, at last, realized that they could undertake major operations with less fear of morbidity and mortality.

Discovery of Anesthesia As the 19th century neared its close, surgery was becoming more frequent. The discovery of anesthesia and the principle of antiseptics were two of the most significant influences in the development of surgical procedures in the modern hospital. Anesthesia improved pain control, and hygiene practices helped reduce the incidence of surgical site infections. Although patients did not immediately flock to hospitals as a result of these discoveries, these innovations set the stage for the remarkable growth of the 20th century.

Modern Hospital Laboratory The study of cytology originated around the middle of the 19th century and influenced the development of the modern hospital clinical laboratory. The cell theory was first advanced in 1839 by the German anatomist Theodor Schwann and was further developed by Dr. Jacob Henle, whose writings on microscopic anatomy appeared in 1850. Rudolf Virchow, known as the Father of Pathology, was the most eminent proponent of the cell theory. His studies in cellular pathology supported further research in the etiology of disease.

Changing Hospital Structure With nursing, anesthesia, infection control, and cytology under way, a change in hospital structure began in the last quarter of the 19th century. Buildings of the Civil War days were still in use, with as many as 25 to 50 beds in a ward with little provision for segregating patients. In New York City in 1871, Roosevelt Hospital was constructed on the lines of a one-story pavilion with small wards, and this set the style for a new type of architecture that came to be known as the American plan. A noteworthy feature was ventilation by means of openings in the roof, which was an improvement in hospital construction. Hospitals had been characterized by a lack of provision for ventilation. Dr. W.G. Wylie, writing in 1877, said he favored this type of building, but he advocated that it be a temporary structure only, to be destroyed when it became infected.

As noted in the following reality check, hospital construction and building maintenance programs are essential in preventing the spread of infections.

All caregivers must be observant of the cleanliness of the environment within which they care for patients. FIGURE 1-3 illustrates the not so uncommon finding of soiled vents and ducts by those who inspect hospitals. Such findings contribute to the spread of infections between staff and patients. Caregivers




who observe such issues should notify designated staff members who are responsible for ensuring the correction of such environmental deficiencies.

FIGURE 1-3 Soiled vents and ducts. © decoplus/Shutterstock


Mark was assigned a 3-day survey at Anytown Medical Center (AMC). During a tour of the hospital’s facilities, Robin, AMC’s survey coordinator, Bill, the building engineer, and Jack, the maintenance supervisor, accompanied Mark. While conducting the building tour, Mark had asked to see the neonatal intensive care unit (NICU). After being introduced to Helen, the NICU nurse manager, Mark and Robin gowned up to enter into the nursery with Helen. Bill and Jack waited in the hospital corridor. Mark noticed during his tour of the nursery a door marked “Sterile Supply Storage.” Mark looked at Helen and asked, “Can we enter the storage room?” Helen replied, “Sure thing.” Upon entry to the room Mark observed that cardboard boxes marked “sterile supply” were stored on the floor. He glanced up at the ceiling tiles and noticed that they were damp and had green and black mold. Mark asked for a flashlight to look at the air vents and ducts. He observed a significant amount of mold on the exhaust vents. He shined the flashlight up into the vent and observed that the air ducts had a buildup of mold. Robin, somewhat concerned, said, “We can get this all cleaned up before the end of the survey.” Mark said, “I am also concerned




that the sterile supplies stored on the floor, even though in cardboard boxes, have been compromised. The cardboard boxes are damp from mopping of the floor. Let’s go out to the corridor and speak to Bill and Jack. After Mark described what he saw in the clean storage area, Bill replied, “Oh, there was a toilet that overflowed in a patient bathroom a few weeks ago in the floor above. Jack interrupting said, “Well, I do not recall seeing a maintenance slip from the NICU describing the problem.”

The risks of infection in healthcare settings require healthcare organizations to provide continuing education and training for caregivers. Documentation of in-service training should be placed in employee personnel files. It is important for managers to be alert to and correct hazardous conditions observed in the working environment. Both hospital surveyors (e.g., TJC) and state inspectors, as part of their training, are required to observe the working environment and employees who may breach infection control protocols, such as following proper hand hygiene prior to caring for each patient. Breaches in protocol that are observed are included in both state and TJC formal reports pertaining to the hospital’s compliance with infection control standards. Hospitals are required to develop, implement, monitor, and improve the environment to help prevent the spread of infections.

Changing Hospital Function Promoted by the wealth of bacteriologic discoveries, hospitals began to care for patients with communicable diseases. During the decade from 1880 to 1890, the tubercle bacillus was discovered, and Louis Pasteur developed vaccines for anthrax and rabies. He also developed the process for pasteurization. Robert Koch isolated the cholera bacillus, diphtheria was first treated with antitoxin, the tetanus bacillus and the parasite of malarial fever were isolated, and inoculation for rabies was successful. “On March 24, 1882, Robert Koch announced to the Berlin Physiological Society that he had discovered the cause of tuberculosis.” Treatment of patients with some of these infections necessitated isolation, and hospitals were the logical place for observation of communicable diseases. Consequently, at the end of the century, in addition to their many surgical cases, hospitals were crowded with large numbers of patients suffering from scarlet fever, diphtheria, typhoid, and smallpox, all of which were contagious diseases.

Discovery of the X-Ray Wilhelm Conrad Röntgen’s discovery of the X-ray in 1895 was a major scientific achievement. The first use of the X-ray symbolizes the beginning of the period that necessitated equipment so costly that the average practitioner could not afford to install it. The natural result was the founding of community hospitals in which physicians could jointly use such equipment. Nineteenth-





century inventions also included the clinical thermometer, the laryngoscope, the Hermann von Helmholtz ophthalmoscope, and innumerable other aids that have led to more accurate diagnoses.

Although the medical and nursing professions of the later half of the 19th century did not reap the full reward of their discoveries, they provided the 20th century with a firm foundation upon which to build.




▸ 20TH-CENTURY PROGRESS The treatment of metabolic diseases and nutritional deficiencies, the importance of vitamins, and the therapy of glandular extracts played an important role in the advancement of medicine in the 20th century. As early as 1906, Frederick Gowland Hopkins began investigations into vitamins. Two years later, Carlos Finlay produced experimental rickets by means of a vitamin-deficient diet. This, in turn, was followed by Kurt Huldschinsky’s discovery that rickets could be treated successfully with ultraviolet light. In quick succession came Casimir Funk’s work with vitamins, Elmer McCollum’s discovery of vitamins A and B, Joseph Goldberger’s work in the prevention of pellagra, and Harry Steenbock’s irradiation of foods and oils. Other outstanding contributions to the science of nutrition include Frederick Banting’s introduction of insulin in 1922, the studies in anemia carried out by Dr. George Hoyt Whipple and Dr. Frieda Robscheit-Robbins, a pathologist who worked with Dr. Whipple. This led to Dr. George R. Minot and Dr. William P. Murphy’s successful treatment of pernicious anemia. This achievement was considered a major advancement in the treatment of noninfectious diseases. As a result of their research, Hoyt, Minot, and Murphy were awarded the Nobel Prize in Physiology or Medicine.

Dr. Willem Einthoven invented the electrocardiograph (ECG) in 1903. The machine measures the electrical changes that occur during contractions of the heart muscle. The ECG records these graphically, thus allowing the physician to diagnose abnormalities in a patient’s heartbeat. He coined the term electrocardiogram for this process, marking the beginning of an era of diagnostic and therapeutic aids. Shortly after that invention came the first basal metabolism apparatus, then the Wassermann (August Von) test in 1906, and tests for pancreatic function. Invention of the fluoroscopic screen followed in 1908. Subsequently, the introduction of blood tests and examinations of numerous body secretions required well-equipped and varied laboratories. Concurrent with this progress in the field of internal medicine was the introduction of radium for the treatment of malignant growths, increasing the use of the clinical laboratory for microscopic examination of pathologic tissue and developments in antibiotics. The result of these many new aids was the conquest of diseases formerly regarded as incurable, which in turn, resulted in improved public confidence in hospitals. The discovery of the structure of DNA is by far one of the most famous scientific discoveries of the 20th century.

The discovery in 1953 of the double helix, the twisted-ladder structure of deoxyribonucleic acid (DNA), by James Watson and Francis Crick marked a milestone in the history of science and gave rise to modern molecular biology, which is largely concerned with understanding how genes control the chemical processes within cells. In short order, their discovery yielded ground-breaking insights into the genetic code and protein synthesis.




During the 1970s and 1980s, it helped to produce new and powerful scientific techniques, specifically recombinant DNA research, genetic engineering, rapid gene sequencing, and monoclonal antibodies, techniques on which today’s multi-billion dollar biotechnology industry is founded. Major current advances in science, namely genetic fingerprinting and modern forensics, the mapping of the human genome, and the promise, yet unfulfilled, of gene therapy, all have their origins in Watson and Crick’s inspired work.

The 20th century was also characterized by rapid growth in nursing education. The earlier schools were maintained almost entirely to secure nursing service at a low cost. The nurse’s duties were often menial, hours long, and classroom and laboratory study almost entirely lacking. Nurses themselves had begun to organize for educational reforms. By 1910, training increasingly emphasized theoretical studies. This movement was largely a result of the work of organizations such as the American Nurses Association and the National League for Nursing, along with the organization of the Committee on the Grading of Nursing Schools. In 1943, the U.S. Cadet Nurse Corps was organized to spur enrollment of student nurses in nursing schools to help meet the shortages caused by enlistment of graduate nurses for military service. As a result, efforts increased to train practical nurses and nurses’ aides in order to relieve the shortage of graduate nurses.

Reform in medical education began early in the century and was almost wholly a result of the efforts of the Council on Medical Education and Hospitals, which was established in 1905 by the AMA. Immediately after its organization, this council began inspection of medical schools. The council, by establishing standards and by grading the schools, brought about gradual elimination of most of the unethical, commercial, and unqualified institutions.

A great stimulus to the profession of hospital administration has been the work of the American Hospital Association. Organized in 1899 as the Association of Hospital Superintendents, it took its present name in 1907. Since its inception, the organization has concerned itself particularly with the problems of hospital management. As early as 1910, the association held educational programs for hospital chief executive officers and trustees. The American College of Surgeons was founded in 1913 under the leadership of Dr. Franklin H. Martin, the first director general of the organization. One of the most dramatic achievements of the American College of Surgeons was the hospital standardization movement that began in 1918. The founders drew up what was known as “The Minimum Standard,” a veritable constitution for hospitals, setting forth requirements for the proper care of the sick. An annual survey of all hospitals having 25 or more beds made the standard effective. When the first survey was conducted, only 89 hospitals in the United States and Canada could meet the requirements.





The hospital standardization movement focused its efforts on the patient, with the goal of providing the patient with the best professional, scientific, and humanitarian care possible. The growth of this movement is remarkable, given that participation in hospital standardization programs is voluntary. Following several name changes over the years, The Joint Commission today conducts unannounced accreditation surveys, with emphasis on ongoing improvements in the quality of patient care.

The years following 1929 will long be remembered as one of the most trying periods in the history of hospitals. Due to critical economic conditions, many institutions found it difficult to keep their doors open. A declining bed occupancy and an ever-increasing charity load, coupled with steadily decreasing revenues from endowments and other sources of income, created hardships on private institutions. Fortunately, however, every economic crisis brings forth new ideas and means and methods of organization to benefit humanity.

In the latter half of the 20th century, competition among hospitals began to grow as for-profit hospital chains began to spring up and compete with nonprofit organizations. Advances in medical technology, such as computed tomography (CT), magnetic resonance imaging (MRI), positron emission tomography (PET) scanners, and robotic surgery, as well as an ever-growing list of new medications, have revolutionized the practice of medicine. During this period, less invasive surgical procedures and a trend toward care in outpatient settings has reduced the need for lengthy stays in hospitals and various long-term care facilities. Laparoscopic surgery, performed through one or more small incisions using small tubes and tiny cameras and surgical instruments, has proven to be one of the remarkable movements forward in the history of surgical procedures.





So how safe is your hospital? Two new rating systems help you check before you check in. Hospital safety score (,

launched in June (2012), assigns grades of A, B, C, D or F to more than 2,600 U.S. hospitals based on 26 safety measures and standards—from hand- washing policies to foreign objects left in body cavities after surgery. Nearly half of the hospitals received a C or lower.

—Bill Hogan

The struggle for hospitals to survive continues well into the 21st century but the news is not always kind. In the nation’s capital, one would dream that it would represent the “model city of hope” for the healthcare system. But all to often we learn of its failures and not its progress. Howard University Hospital, for example, opened its doors in 1863 as Freedman’s hospital, and it provided care to the freed African American slaves. It soon “became an incubator for some of the brightest African American slaves.” But over the past decade, the once-grand hospital that was the go-to place for the city’s middle-class black patients has been beset by financial troubles, empty beds, and an exodus of respected physicians and administrators, many of whom said they are fed up with the way it is run.” This follows the closure of DC General Hospital, which many had hoped would be rebuilt. Other hospitals, including the VA system, have struggled and continue to struggle, some even to survive. The overflow of patients into the city’s remaining hospitals affects the ability of those hospitals to handle the needs of patients. Many physicians now tell their patients, “My goal is to get you in and out of the hospital as fast as I can. I don’t want you to get sicker.” The challenges remain as history repeats itself.


. . . Nearly 80 have closed since 2010, including 9 in Tennessee, more than in any state but Texas. Many more are considered fragile—downstream victims of federal health policies, shifts in medical practice, and the limited tolerance of distant corporate owners for empty beds and financial losses.

In every rural community, the ripple effects of a lost hospital are profound, reverberating beyond the inability of would-be patients to get immediate care.

—Amy Goldstein, The Washington Post, April 12, 2017






The delivery of health care in the modern hospital continues to be the revolutionary product of a long and arduous struggle. The continuing stream of new medicines and treatments, as well as legal, financial, and human resource issues, continues to test the healthcare system. Many of today’s healthcare challenges have carried over from the 20th century. The challenges include exorbitant malpractice awards, excessive insurance premiums, high expectations of society for miracle drugs and miracle cures, fairly balancing the mistakes of caregivers with the numerous successful events, negative press that increases public fear, and numerous ethical dilemmas involving abortion, human cloning, physician-assisted suicide, how to fairly distribute limited resources, and the dwindling number of rural hospitals, are but a few of the challenges of the 21st century.

According to a study written by Sy Mukherjee in ThinkProgress, there is an increased risk of dying in rural hospitals.

Critical access hospitals (CAHs) are medical providers located in America’s most isolated regions, serving rural communities that do not otherwise have easily available access to care. Since the closest alternatives to these hospitals are usually over 35 miles away, they provide an essential resource for Americans living in secluded communities—and therefore receive enhanced funding from the federal government to carry out their work. But according to a Harvard School of Public Health study, death rates at these hospitals are significantly higher than national averages— and are on the rise.

As advances in medicine rapidly move the nation’s healthcare system in the direction of high-cost care and treatment, small rural hospitals are increasingly unable to meet the challenges of both procuring expensive capital equipment and attracting qualified specialists. This, in turn, is leading to the demise of rural hospitals’ ability to provide the more complex care available in modern medical centers.

Translational Medicine Translational medicine began to be recognized as a significant development at the end of the 20th century and well into the 21st century. Both the researcher and the practitioner began to better understand the importance of knowing each other’s contribution in the healing process.

The translation of biomedical discovery into clinical benefit is the essence of translational medicine, which continued to experience remarkable growth in 2012. The University of Dundee, Scot., for example, received almost £12 million ($19.2 million) for the completion of a Centre for Translational and Interdisciplinary Research, and a £24 million ($38.4 million) Institute for Translational Medicine was slated for development in Birmingham, Eng. Scientists continued to work to coordinate the





application of new scientific knowledge in clinical practice with basic observations and questions in the laboratory.

Minimally Invasive Surgery The ever-evolving precision of minimally invasive surgery (MIS) will catapult medicine into a limitless future of exotic discoveries. MIS allows physicians to use a variety of techniques to operate with less damage to body tissues than with open surgery and is believed by some surgeons to be more noteworthy than the discovery of anesthesia. MIS is associated with less pain, a shorter hospital stay, fewer complications and medical errors, while improving the accuracy of complex surgical procedures. Decision making during surgery often involves thousands of pieces of information that are considered during a surgical procedure. This can lead to increased physician fatigue and the possibility of human error. MIS reduces the fatigue factor by assisting the surgeon in the decision-making process by reducing the time required for a surgical procedure, and the surgeon concentrates on the surgical skills necessary for completing a successful surgery. The bells and whistles and blinking lights become less of a distraction, by allowing the surgeon to concentrate on the surgical field (e.g., patient’s abdomen).

Robotic surgery provides a magnified 3-D view of the surgical site and helps the surgeon operate with precision, flexibility, and control. The popular da Vinci System robotic equipment is used for cardiac, colorectal, general, gynecologic, head and neck, thoracic, and urologic surgical procedures. It allows surgeons to operate through several small incisions with enhanced vision, precision, and control inside the human body.

Surgical Simulation Training Advances in surgical simulation training (SST) will enhance the training of residents, enabling them to transition more effectively to performing more precise surgical procedures with fewer errors and improved patient outcomes. Pilots are trained in a simulator before ever flying a plane. Surgeons have historically been in the dark stages of SST, even though “they are in charge of carrying out the procedures that may either save or kill the patient at hand.” The patient will one day no longer be the experimental subject in the hands of a surgeon-in-training. Surgical simulation, so long waited for, will produce a generation of surgeons who have practiced surgical procedures, just as pilots do before flying a plane.

Social Media Impacts on Caregivers The advent of social media has raised concern among caregivers and hospitals. Patients post both positive and negatives reviews on the World Wide Web (e.g., Healthgrades, Facebook, GooglePlus, Twitter, YELP, ZocDoc). Reviews may include long waits and rude staff members, which can affect a physician’s social media ratings. Patients who complete multiple forms prior to an office visit often discover the physician has not reviewed them.







Instead, the physician conducts a hurried review of the documents at the time of a patient’s scheduled appointment, reviewing with patients the ailments with which they are familiar and not addressing or leaving less time to discuss the patient’s current concerns, reason for being there, and the treatment plan. Unfortunately, patients who experience long waits to see their physicians often tarnish their physician’s reputation by posting negative remarks. It is not the wait time that should be judged. It is the skills of a physician in diagnosis and presentation of treatment options that makes the difference in the quality of life. Not only are physicians impacted by the challenges of social media, but hospitals are also concerned with their image in the community. All care organizations and caregivers must be sensitive to the fact that social media will not go away, and the concerns of patients need to be addressed in a positive way by addressing the concerns of the community.

National Health Insurance The Patient Protection and Affordable Care Act (PPACA), passed by Congress and signed by President Barack Obama on March 23, 2010, was designed to ensure that more Americans receive healthcare benefits. The costs, however, associated with national health insurance continue to rise. Insurance premiums have risen by as much as 10% in 2017 for those who are not eligible for subsidies. “Aetna, Humana and United HealthCare Group said they would stop selling Obamacare policies in most states next year, citing financial losses due to a flood of older, sicker enrollees and not enough young, healthy people to offset the costs.”

As healthcare politics continue to rage on in Congress, the greatest health challenge of the 21st century requires that each member of society take a more responsible and proactive role in his or her health and well-being by maintaining a healthy lifestyle.

Boutique Medicine The problem of accessibility to care is further exacerbated by an increasing number of physicians who turn to boutique medicine, a plan of care whereby a patient pays an annual retainer fee in exchange for expedited access to a physician for health care. As a result, physicians who elect to practice boutique medicine find it necessary to limit the number of patients they can treat due to the need to be readily available to patients in their practice. In other words, increased access leads to fewer patients, and arguably, better care for those who can afford the fees.

Medical Errors Plague Hospitals The uncanny number of medical errors described in the following news feature quote illustrates the depth of the failure to understand what history has taught us.





Hospital-acquired infections (HAIs) continue to be a major concern in healthcare facilities. The results of a project known as the HAI Prevalence Survey were published in 2014.

The Survey described the burden of HAIs in U.S. hospitals, and reported that, in 2011, there were an estimated 722,000 HAIs in U.S. acute care hospitals. . . . Additionally, about 75,000 patients with HAIs died during their hospitalizations. More than half of all HAIs occurred outside of the intensive care unit.

In a special issue of Emerging Infectious Diseases, Dr. William R. Jarvis, Associate Director for Program Development, Division of Health Care Quality Promotion (currently Hospital Infections Program), Centers for Disease Control and Prevention, writes:

Over the past two decades, acute-care facilities have become smaller and fewer, but the hospitalized patient population has become more severely ill and more immuno-compromised and thus at greater risk for hospital- acquired infections. At the same time, the proportion of the U.S. population 65 years of age has increased, as have the number of long-term care facilities and the number of beds in these facilities. This trend is expected to continue for the next 50 years. . . .

Infection control personnel will need to expand their efforts to match the expansion of the healthcare delivery system. Enhanced administrative support for programs to prevent infections and medical errors will be needed if we are to reduce the risk of infection and other adverse events and improve the quality of care in the entire spectrum of health-care delivery. Now, instead of the acute-care facility being the center of the infection control universe, the infection control department has become the center of the diverse health-care delivery system. Infection control departments will need to expand their surveillance of infections and adverse events and their prevention efforts to all settings in which health care is delivered.

Infection control issues have been a reoccurring theme throughout the ages. Hospital-acquired infections are a leading cause of injury and unnecessary death. Such infections have been linked to unsanitary conditions in the environment and poor practices that can lead to cross-contamination between patients, visitors, and caregivers (e.g., hand-washing technique, sterile gowning procedures, improper disposal of contaminated clothing, failure to follow recognized protocol for sterilizing hospital instruments, and equipment). The CDC has estimated that infections that are acquired by patients during their hospital stay, known as “nosocomial bloodstream infections” are a leading cause of death in the United States. If we assume a nosocomial infection rate of 5%, of which 10% are bloodstream infections, and an attributable mortality rate of 15%, bloodstream infections would represent the




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eighth leading cause of death in the United States.” It has been estimated that the total number of infections have resulted in as many as 100,000 deaths and added billions of dollars in additional healthcare costs. These numbers do not reflect infections that have occurred in physicians’ offices, nor do they account for the pain and disabilities suffered by patients who have been the recipient of a hospital-acquired infection.


It’s a chilling reality—one often overlooked in annual mortality statistics: Preventable medical errors persist as the No. 3 killer in the U.S.—third only to heart disease and cancer—claiming the lives of some 400,000 each year. At a Senate hearing Thursday, patient safety officials put their best ideas forward on how to solve the crisis, with IT often at the center of discussions.

—McCann, Erin, Healthcare IT News, July 18, 2014







The maintenance of hospitals today is a result of the human emotions of fear, pity, and sympathy, together with civic consciousness and

religious zeal. If society has changed, human nature has remained much the same, for it was with these fundamental emotions which led ancient peoples to build hospitals for their sick and injured.

—Malcolm T. MacEachern, MD, CM, DSc, LLD

The pinnacle of the evolution of the hospital has not been reached, nor has the final page of its colorful history been written. As long as there remains a humanitarian impulse and as long as a society feels compassion, love, and sympathy for its neighbors, there will be hospitals. In the past, hospitals changed as conditions changed. In the future, they will continue to change to meet the needs of their communities. Healthcare leaders of the 21st century must understand their roots. They must understand the historical value of knowing the past and possess the vision to preserve the good, the courage to expunge the bad, and the passion to create an even better healthcare system, one that provides quality care for all. With each new discovery comes a new challenge.




▸ CHAPTER REVIEW 1. The evolution of the hospital traveled a long, tortuous road, struggling

along a hazardous path from India and Egypt to Greece and Rome, to the Islamic countries, to England, France, Germany, Spain, Italy, and on to America.

The existence of hospitals is evidence of a high degree of civilization, in which people are interested not only in the well- being of themselves and their families, but that of the greater community.

2. Religion played an important role in the development of hospitals.

Faith healing was practiced in India and Egypt thousands of years ago. Aesculapia (hospital temples) were numerous in ancient Greece and Rome and were dedicated to the god of medicine. Hospitals in the early Christian era and in the Middle Ages were an integral part of the church. Not until abuses crept into their administration under ecclesiastical authority in the 15th and 16th centuries were some of religious hospitals taken over and managed by civil bodies.

3. The development of the hospital has not been a smooth and easy advance.

Centuries of experiments, scientific discoveries, and public enlightenment were necessary to break down the barriers of ignorance and prejudice. The evolution was accomplished in cycles, with alternating dark and golden ages. Never has the hospital possessed the quality and quantity of scientific care for the sick that it has today, never before has its influence been so extensive and so widespread, and never before has it played such an important role in the life of the community. During all of this growth and development, hospitals benefited by technical and scientific developments.

4. The primary function of the hospital is to care for the sick and injured.

The scope of services offered by hospitals continues to expand.

a. Treating the sick and injured b. Preventing illness c. Prolonging purposeful life




5. National health insurance helps ensure more Americans will receive healthcare benefits, although the costs associated with it will require more collaboration among politicians, caregivers, and receivers of care well into the future.




▸ REVIEW QUESTIONS 1. Describe various historical events that have led to the growth of

hospitals and at times impeded their progress over the centuries. 2. Describe advances in medicine that have contributed to improving the

quality of patient care. 3. Who is often recognized as being the first hospital administrator and

what major contributions did she make to nursing in the improvement of patient care?

4. What data did Semmelweis collect, and what was the significance of those data as related to performance improvement in the present-day hospital?

5. Describe how social media can have a negative or positive impact on caregivers and healthcare facilities.

6. Discuss the advancements in medicine and the challenges facing hospitals today.





1. Wisdom Quotes, “Gerda Lerner Quote,”

2. “How to Stop Hospitals From Killing Us,” The Wall Street Journal, September 21, 2012.

3. Malcolm T. MacEachern, Hospital Organization and Management (Berwyn, IL: Physician’s Record Company, 1957), 10.

4. Mass Moments, “Massachusetts General Hospital Admits First Patient, September 3, 1821,”

5. Mary Ann Byrnes, “Non-Nursing Functions: The Nurses State Their Case,” American Journal of Nursing 82 (1982): 1089.

6. Carrie Howse, “Registration—A Minor Victory,” Nursing Times 85 (1989): 32.

7. BioPortfolio, “Florence Nightingale in Absentia: Nursing and the 1893 Columbian Exposition,” Nightingale-In-Absentia-Nursing-And-The-1893-Columbian- Exposition.html

8. MedicineNet, “Medical Definition of Fever, puerperal,”

9. The Joint Commission, 2017 Hospital Accreditation Standards, NPSG.07.01.01-07.06,01.

10. Centers for Disease Control and Prevention, “Historical Perspectives Centennial: Koch’s Discovery of the Tubercle Bacillus,” Morbidity and Mortality Weekly Report 31, no. 10 (1982): 121–123.

11. U.S. National Library of Medicine, “Profiles in Science: The Francis Crick Papers,”

12. “Grading Hospital Safety,” AARP Bulletin, November 2012.

13. Cheryl W. Thompson, “Howard: A Hospital in Turmoil,” The Washington Post, March 26, 2017, at A1.

14. Sy Mukherjee, “STUDY: An Increasing Number of Patients at Isolated Rural Hospitals Are Dying, ThinkProgress, April 3, 2013. isolated-rural-hospitals-are-dying-175393ac39c5

15. Encyclopedia Britannica, “Translational Medicine: Year In Review 2012,”




16. da Vinci® Surgery, “Minimally Invasive Surgery,”

17. Rifat Latifi. “Surgical Decision-making Process: More Questions Than Answers,”

18. Insurers Exit ObamaCare, National Health Insurance, AARP Bulletin, October 2016.

19. Erin McCann, Deaths by Medical Mistakes Hit Records,” Healthcare IT News, July 18, 2104. mistakes-hit-records

20. Centers for Disease Control and Prevention, “Healthcare-Associated Infections: HAI Data and Statistics,”

21. William R. Jarvis, “Infection Control and Changing Health-Care Delivery Systems,” Emerging Infectious Diseases, Centers for Disease Control and Prevention,

22. Centers for Disease Control and Prevention, “You’re your Hands,” CDC Features, Centers for Disease Control and Prevention,

23. Richard P. Wenzel and Michael B. Edmond, “The Impact of Hospital-Acquired Bloodstream Infections,”




© James Steidl/ShutterStock, Inc.





Government, Law, and Ethics As the patriots of seventy-six did to the support of the Declaration of Independence, so to the support of the Constitution and Laws, let

every American pledge his life, his property, and his sacred honor—let every man remember that to violate the law, is to trample on the blood of his father, and to tear the character of his own, and his children’s liberty. Let reverence for the laws, be breathed by every American mother, to the lisping babe, that prattles on her lap—let it be taught in schools, in seminaries, and in colleges; let it be written in Primers, spelling books, and in Almanacs—let it be preached from the pulpit, proclaimed in legislative halls, and enforced in courts of justice. And, in short, let it become the political religion of the nation; and let the old and the young, the rich and the poor, the grave and the gay, of all sexes and tongues, and colors and conditions, sacrifice unceasingly upon its altars.

—Abraham Lincoln





The reader, upon completion of this chapter, will be able to:

Explain the development and sources of law. Discuss how case law differs from statutory and administrative law. Describe what is meant by conflict of laws. Describe the three branches of government. Describe what is meant by separation of powers. Describe the organizational structure of the Department of Health and Human Services. Describe the functions of various government ethics committees. Explain the term political malpractice.

Laws are the very bulwarks of liberty; they define every man’s rights, and defend the individual liberties of all men.

—J. G. Holland

This chapter introduces the reader to the development of law in the United States, the functioning of the legal system, and the roles of the three branches of government in creating, administering, and enforcing the law. It lays a foundation for the understanding of the legal system that is needed before one can appreciate or comprehend the specific laws and principles relating to health care. The reader is also introduced to the term political malpractice, as well as a variety of government ethics committees that address ethical conduct within the various branches of government.




▸ DEVELOPMENT OF LAW Scholars often define the law as a system of principles and processes by which people in a society deal with disputes and problems, seeking to solve or settle them without resorting to force. Simply stated, laws are rules of conduct enforced by government, which imposes penalties when prescribed laws are violated.

U.S. Supreme Court Justice Oliver Wendell Holmes said that the law “is a magic mirror, wherein we see reflected not only our own lives but also the lives of those who went before us.” Chief Justice John Marshall, in delivering his opinion to the court in Marbury v. Madison, said,

The very essence of civil liberty certainly consists in the right of every individual to claim the protection of the laws, whenever he receives an injury. One of the first duties of government is to afford that protection. [The] government of the United States has been emphatically termed a government of laws, and not of men. It will certainly cease to deserve this high appellation, if the laws furnish no remedy for the violation of a vested right.

Laws govern the relationships between private individuals and organizations and between both of these parties and government. Public law is the term used to describe “The laws that cover administration, constitution, and criminal acts. It controls the actions between the citizens of the state and the state itself. It deals with the government’s operation and structure.” The purpose of public law is to attain what society deems to be valid public goals. One important segment of public law, for example, is criminal law, which prohibits conduct deemed injurious to public order and provides for punishment of those proven to have engaged in such conduct.

In contrast, private law is concerned with the recognition and enforcement of the rights and duties of private individuals. Tort and contract actions are two basic types of private law. In a tort action, one party asserts that the wrongful conduct of another has caused harm, and the injured party seeks compensation for the harm suffered. A contract action involves a claim by one party that another party has breached an agreement by failing to fulfill an obligation. Either remuneration or specific performance of the obligation may be sought as a remedy. Without an organized, clear system of laws that regulate society, anarchy would clearly arise.

Public Policy as a Principle of Law Public policy is the principle of law that holds that no one can lawfully do that which tends to be injurious to the public or against the public good. The sources of public policy “include legislation; administrative rules, regulations,







or decisions; and judicial decisions. In certain instances, a professional code of ethics may contain an expression of public policy.”4




▸ SOURCES OF LAW The basic sources of law are common law, which is derived from judicial decisions; statutory law, which emanates from the federal and state legislatures; and administrative law, prescribed by administrative agencies. In those instances in which written laws are either silent, vague, or contradictory to other laws, the judicial system often is called on to resolve those disputes until such time as appropriate legislative action can be taken to clear up a particular legal issue. In the following sections, the sources of law that formed the foundation of our legal system are discussed.

Common Law Common law refers to the body of principles that evolve from and expand upon judicial decisions that arise during the trial of court cases. Many of the legal principles and rules applied today by courts in the United States have their origins in English common law.

Because a law could never cover every potential human event that might occur in society, the judicial system is doubly necessary. It not only serves as a mechanism for reviewing legal disputes that arise in the written law, but it is also an effective review mechanism for those issues in which the written law is silent or in instances of a mixture of issues involving both written law and common law decisions. For example, in the Cruzan v. Director, Missouri Department of Health case, the U.S. Supreme Court based its decision on the consideration of existing statutory law and prior judicial decisions.

Common Law in England

Law reflects to a large degree the civilization of those that live under it. Its progress and development are mirrors not merely of material prosperity but of the method of thought and of the outlook of the age.

The common law of England is much like its language: as varied as the nations that peopled its land in different locations and different periods. Parts of the common law are derived from the Britons, Romans, Saxons, Danes, and Normans.

To recount what innovations were made by the succession of these different nations, or estimate what proportion of the customs of each go to the composing of our body of common law, would be impossible at this distance of time. As to a great part of this period, we have no monuments of antiquity to guide us in our inquiry; and the lights which gleam upon the other part afford but dim prospect. Our conjectures can only be assisted by the history of the revolutions effected by these several nations.







The Romans governed the island as a province from the time of Claudius (AD 43) until AD 448. It was a time of peace and cultivation of the arts. Roman laws were administered as laws of the country. When the Romans left Britain to attend to their own domestic safety, the Picts and the Scots clashed with inhabitants of southern England. Unable to oppose the attack, these southern inhabitants appealed to the Saxons for assistance. The Saxons, who came from German lands, drove the northern invaders back inside their own borders. The Saxons also had to contend with Danish raiders from the 8th to the 11th centuries.

The law in England before the Norman Conquest in 1066 was dispensed primarily by tradition and local custom and mostly dealt with violent crimes. The kings during this period were concerned more with enforcing customary law than with amending it. The courts mainly consisted of open-air meetings where no records were maintained. “For the Anglo-Saxons justice was a local matter, administered chiefly in the shire courts, and was largely dependent upon local customs, preserved in the memory of those persons who declared the law in the court.” The Saxons operated with the goal of exterminating the Britons and destroying all their monuments and establishments. Subsequently, the native Briton customs and laws fell out of favor. The Britons were forced into the mountains of Wales, dividing the remainder of the dominion into seven independent kingdoms.

These kingdoms were, for a time, independent of one another. A variety of laws grew among the Saxons themselves, as well as among the Danes, who, following a treaty in Northumberland, were considered in some measure to be part of the nation. Toward the later part of Saxon times, the kingdom was governed by a variety of laws (Mercian Law, West-Saxon Law, and Danish Law) and local customs. All British and Roman customs that survived the times were buried within one of the three laws, which governed all of England.

Following their conquest in 1066, the Normans had little regard for Anglo- Saxon laws. They considered themselves apart from such laws.

It is obviously impossible to attempt an adequate picture of Anglo-Saxon life. It was a wild time. Men lived in terror of the vast forests, where it was easy to be lost and succumb to starvation, of their fellow man who would plunder and slay, and above all of the Unknown, whose inscrutable ways seemed constantly to be bringing famine and disaster. The uncertainties of modern life pale into insignificance when regarded from the standpoint of these men. It is natural, therefore, that their law should reflect their reaction against the environment. It was conservative and harsh. Violence, robbery and death formed its background.









The principal change introduced by the Norman Conquest was that the king’s court opened for disputes about land tenure. Land disputes involved the Saxons who held the land before the conquest and the Normans who dispossessed them. Evidence in such disputes was often the result of oral testimony from neighboring landowners. Although no professional judiciary yet existed, the king’s representatives held trials before the county courts, and a cleric often presided.

Soon, a system of national law began to develop based on custom, foreign literature, and the rule of strong kings. The first royal court was established in 1178. This court, enlisting the aid of a jury, heard the complaints of the kingdom’s subjects. Because there were few written laws, a body of principles evolved from these court decisions, which became known as common law. Judges used these court decisions to decide subsequent cases. As Parliament’s power to legislate grew, the initiative for developing new laws passed from the king to Parliament.

Common Law in the United States During the colonial period, English common law began to be applied in the colonies. In the vast new country with its abundance of natural resources, English common law could not be adopted exactly; the law was thus adapted to meet the needs of the new land. Compared to England, the New World glistened with land, timber, and minerals, so the law would have to aid the new society in mastering the land.

In an 1829 U.S. Supreme Court decision, Joseph Story wrote, “The common law of England is not to be taken in all respects to be that of America. Our ancestors brought with them its general principles, and claimed it as their birthright but they brought with them and adopted only that portion which was applicable to their situation.”

After the American Revolution, each state, with the exception of Louisiana, adopted all or part of the existing English common law and added to it as needed. Louisiana civil law, by contrast, is based to a great extent on French and Spanish laws and, especially, on the Code of Napoleon. As a result, there is no national system of common law in the United States, and common law on specific subjects may differ from state to state.

Case law, derived from judicial decisions, did not easily pass from colony to colony. There were no printed reports to make transfer easy, although in the 18th century, some manuscript materials did circulate among lawyers. These could hardly have been very influential. No doubt custom and case law slowly seeped from colony to colony. Travelers and word of mouth spread the knowledge of living law. It is hard to say how much this occurred, and thus, it is hard to tell to what degree there was a common legal structure.






Judicial review became part of the law in the decade before the federal Constitution was adopted. Courts began to assert their power to rule on the constitutionality of legislative acts and to void unconstitutional statutes.

Today, cases are tried applying common law principles unless a statute governs. Although statutory law has affirmed many of the legal rules and principles initially established by the courts, new issues continue to arise, especially in private law disputes, which require decision making according to common law principles. Common law actions are initiated mainly to recover monetary damages or possession of real or personal property.

State Decisions Not Binding on Other States When a higher state court has enunciated a common law principle, the lower courts within the state where the decision was rendered must follow that principle. A decision in a case that sets forth a new legal principle establishes a precedent. Trial courts or those on equal footing are not bound by the decisions of other trial courts. Also, a principle established in one state does not set precedent for another state. Rather, the rulings in one jurisdiction may be used by the courts of other jurisdictions as guides to the legal analysis of a particular legal problem. Decisions found to be reasonable are followed, and decisions found to be unreasonable are not followed.

For example, in Lebron v. Gottlieb Memorial Hospital, the plaintiffs challenged the caps on noneconomic damages contained in an Illinois act. In this case, the Supreme Court of Illinois agreed with the plaintiffs that a $500,000 limit on noneconomic damages was arbitrary and violated the state’s constitution.

The defendants referred the court’s attention to statutes limiting noneconomic damages in medical malpractice cases that have been adopted in other states. The defendants contended that the limits on damages contained in the act are well within the range of reasonable limits adopted by these states. The court reviewed the statutes cited by the defendants and observed that the limitations on noneconomic damages adopted in other states vary widely.

For example, the California statute provides simply: “In no [medical malpractice] action shall the amount of damages for noneconomic losses exceed two hundred fifty thousand dollars ($250,000).” In contrast, the Florida statute sets up a more complex scheme, in which the damages cap may be as low as $150,000 and as high as $1.5 million, depending on whether the medical negligence is attributable to a practitioner or nonpractitioner, the negligence results in a permanent vegetative state or death, the negligence caused a catastrophic injury to the patient, or the negligence occurred during the provision of emergency care.







On what basis defendants have determined that such disparate provisions are all reasonable is not known, and it is not for the Supreme Court of Illinois to judge the reasonableness of other states’ legislation. The “everybody is doing it” mentality is hardly a valid test for the constitutionality of the statute. Although decisions from other jurisdictions can provide guidance, “This court’s jurisprudence of state constitutional law cannot be predicated on the actions of our sister states.”

The position of a court or agency, relative to other courts and agencies, determines the place assigned to its decision in the hierarchy of decisional law. The decisions of the U.S. Supreme Court are highest in the hierarchy of decisional law with respect to federal legal questions. Because of the parties or the legal question(s) involved, most legal controversies do not fall within the scope of the Supreme Court’s decision-making responsibilities. On questions of purely state concern—such as the interpretation of a state statute that raises no issues under the U.S. Constitution or federal law—the highest court in the state has the final word on interpretation of the law.

Common Law Principles The following are explanations of some of the more important common law principles:

Precedent. A precedent is a judicial decision that may be used as a standard in subsequent similar cases. A precedent is set when a court decision is rendered that serves as a rule for future guidance when deciding similar cases. Res judicata. In common law, the term res judicata—which means “the thing is decided”—refers to that which has been previously acted on or decided by the courts. According to Black’s Law Dictionary, it is a rule where “a final judgment rendered by a court of competent jurisdiction on the merits is conclusive as to the rights of the parties and their privies, and, as to them, constitutes an absolute bar to subsequent action involving the same claim, demand, or cause of action.” Stare decisis. The common law principle stare decisis (“let the decision stand”) provides that when a decision is rendered in a lawsuit involving a particular set of facts, another lawsuit involving an identical or substantially similar situation is to be resolved in the same manner as the first lawsuit. A lawsuit is decided by applying the rules and principles of prior cases. In this manner, courts arrive at comparable rulings. Sometimes, slight factual differences may provide a basis for recognizing distinctions between the precedent and the current case. In some cases, even when such differences are absent, a court may conclude that a particular common law rule is no longer in accord with the needs of society and may depart from precedent. Principles of law are subject to change, whether they originate in statutory or in common law. Common law principles may be modified, overturned, abrogated,






or created by new court decisions in a continuing process of growth and development to reflect changes in social attitudes, public needs, judicial prejudices, or contemporary political thinking.

First Medical Malpractice Common Law Case The first common law case in the United States in which a physician was held legally responsible for negligence occurred as early as 1794. In Cross v. Guthery, the court heard that when Mrs. Cross complained that there was something wrong with her breast, her husband sent for Dr. Guthery. The doctor examined Mrs. Cross, diagnosed her ailment, and removed her breast. Shortly after the surgery, she bled to death. Guthery expressed his regrets to her husband and then sent him a bill for 15 pounds. Mr. Cross hired a lawyer, who persuaded a jury to dismiss Guthery’s bill and award Mr. Cross 40 pounds as compensation for the loss of his wife’s companionship. Since that time, physicians have experienced recurring periods of substantial increases in the number of malpractice cases. The first such increase occurred in the 15 years prior to the Civil War. Another rise in the number of malpractice cases and ever-increasing concern about them occurred at the beginning of the 20th century. By 1941, The Journal of the American Medical Association published studies showing that 1,296 malpractices had occurred between 1900 and 1940, with more than 500 between 1930 and 1940. The increase in malpractice cases was attributed to substantial malpractice awards, high patient expectations, new diagnostic procedures, and erosion of the physician–patient relationship.

The Harvard Medical Malpractice Study, commissioned by the state of New York to determine the rate of medical injury in New York hospitals, revealed that 3.7% of patients entering New York hospitals in 1984 were injured by the care provided. One tenth of those who were treated negligently filed malpractice suits. The research group conducting the study suggested that “only one claim makes its way into the tort system for every eight cases of injury caused by medical negligence.” The study, which cost $3.1 million and ran 1,200 pages, was funded by the state and a grant from the Robert Wood Johnson Foundation. It involved 4 years of research and included the review of more than 30,000 medical records.

The number of malpractice suits is staggering. Critics say that the system fails by making too little information known. A report by the Physician Insurers Association of America, which represents 50 malpractice insurance companies covering 50% of private physicians in the United States, claims that breast cancer accounts for more medical malpractice claims than any other medical condition. Delayed diagnosis is common among both younger and older women. The report focuses on 487 lawsuits in which damages were awarded for delayed diagnosis. The most common reasons for delay were misdiagnosis, failure to follow up, and false-negative mammograms. The next most common medical diagnoses involving malpractice suits were infant brain








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damage, pregnancy, and heart attacks. Not much has changed since this study was conducted. Misdiagnosis and failure to follow up remain high on the list of common malpractice claims. The long list of news articles on misdiagnoses continues to flow as physicians often rely on technology to make their diagnoses, as Ms. Sandra B. Goodman well describes in the news feature below.


Doctors at a Northern California hospital, concerned that a 40-year-old woman with sky-high blood pressure and confusion might have a blood clot, ordered a CT scan of her lungs. To their surprise, the scan reveals not a clot but large cancers in both breasts that have spread throughout her body. Had they done a simple physical exam of the woman’s chest, they would have been able to feel the tumors. So would the doctors who saw her during several hospitalizations over the previous two years, when the cancer might have been more easily treated.

Failure to diagnose a patient’s disease is sometimes due to the difficulty associated with evaluating vague symptoms that can often mimic more common and treatable ailments. The complexity associated with diagnosing rare autoimmune diseases, such as scleroderma and lupus, often results in a delayed diagnosis. In 2012, misdiagnosis accounted for 34% of malpractice claims. Surgery accounted for 24%, treatment 18%, obstetrics 11%, and medication related 4%, monitoring 3%, anesthesia 3%, and other 4% of claims made. Actual numbers are increasingly difficult to determine due to unpublished out-of-court settlements.

Statutory Law Statutory law is written law emanating from a legislative body. Although a statute can abolish any rule of common law, it can do so only by express words. The principles and rules of statutory law are set in hierarchical order. The Constitution of the United States adopted at the Constitutional Convention in Philadelphia in 1787 is first in the hierarchy of enacted law. Article VI of the Constitution declares:

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.








The clear import of these words is that the U.S. Constitution, federal law, and federal treaties take precedence over the constitutions and laws of the states and local jurisdictions. Statutory law may be amended, repealed, or expanded by action of the legislature, as was the case with the Bill of Rights, which details the first 10 amendments to the U.S. Constitution, and other amendments to the Constitution, such as the 14th Amendment, which provides that a state cannot act to deny equal protection of the laws to any person. If a state or a political subdivision of a state, whether through its executive, judicial, or legislative branch, acts in such a way as to deny unfairly to any person the rights accorded to another, the amendment has been violated.

Fourteenth Amendment to the U.S. Constitution

Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law, which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.

States and local jurisdictions can only enact and enforce laws that do not conflict with federal law. Statutory laws may be declared void by a court; for example, a statute may be found unconstitutional because it does not comply with a state or federal constitution, because it is vague or ambiguous, or, in the case of a state law, because it is in conflict with a federal law.

In many cases involving statutory law, the court is called on to interpret how a statute applies to a given set of facts. For example, a statute may state merely that no person may discriminate against another person because of race, creed, color, or sex. A court may then be called on to decide whether certain actions by a person are discriminatory and therefore violate the law.

Administrative Law Administrative law is the extensive body of public law issued by either state or federal agencies to direct the enacted laws of the federal and state governments. It is the branch of law that controls the administrative operations of government. Congress and state legislative bodies realistically cannot oversee their many laws; therefore, they delegate implementation and administration of the law to an appropriate administrative agency. Healthcare organizations, in particular, are inundated with a proliferation of administrative rules and regulations affecting every aspect of their operations.

31 87



The Administrative Procedures Act describes the different procedures under which federal administrative agencies must operate. The act prescribes the procedural responsibilities and authority of administrative agencies and provides for legal remedies for those wronged by agency actions. The regulatory power exercised by administrative agencies includes power to license, power of rate setting (e.g., Centers for Medicare and Medicaid Services [CMS]), and power over business practices (e.g., National Labor Relations Board [NLRB]).

Rules and Regulations Administrative agencies have legislative, judicial, and executive functions. They have the authority to formulate rules and regulations considered necessary to carry out the intent of legislative enactments. Regulatory agencies have the ability to legislate, adjudicate, and enforce their own regulations in many cases.

Rules and regulations established by an administrative agency must be administered within the scope of authority delegated to it by Congress. Although an agency must comply with its own regulations, agency regulations must be consistent with the statute under which they are promulgated. An agency’s interpretation of a statute cannot supersede the language chosen by Congress. An executive regulation that defines some general statutory term in a too restrictive or unrealistic manner is invalid. Agency regulations and administrative decisions are subject to judicial review when questions arise as to whether an agency has overstepped its bounds in its interpretation of the law.

§702: Right to Review

A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. . . .

§706: Scope of Review

To the extent necessary . . . the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall

(1) compel agency action unlawfully withheld or unreasonably delayed; and (2) hold unlawful and set aside agency action, findings, and conclusions

found to be

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory jurisdiction, authority, or limitations, or short of

statutory right;







(D) without observance of procedure required by law; (E) unsupported by substantial evidence in a case subject to sections

556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or

(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.

In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.

Recourse to an administrative agency for resolution of a dispute is generally required prior to seeking judicial review. The Pennsylvania Commonwealth Court held in Fair Rest Home v. Commonwealth, Department of Health that the Department of Health was required to hold a hearing before it ordered revocation of a nursing home’s operating license. The Department of Health failed in its responsibility when “in a revocation proceeding it [did] not give careful consideration to its statutorily mandated responsibility to hear testimony.”

Regulations and decisions of administrative agencies reviewed by the courts may be upheld, modified, overturned, or reversed and remanded for further proceedings. For example, the owner and operator of a licensed residential care facility brought an action challenging regulations, promulgated by the Arkansas Department of Human Services (DHS) through its Office of Long Term Care (OLTC), governing administration of medicines in residential care facilities.

The owner challenged two OLTC regulations that required the following:

1. Under no circumstances shall an operator or employee or anyone solicited by an operator or employee be permitted to administer any oral medications, injectable medications, eye drops, eardrops, or topical ointments (both prescription and nonprescription drugs).

2. In addition, any owner and/or operator of a Residential Care Facility who is a licensed nurse who administers any medication to a resident will be in violation of operating an unlicensed nursing home.

The circuit court in this case held that the regulations were invalid, and the DHS appealed. The Supreme Court reversed the circuit court’s decision by holding the regulations reasonable in light of the distinctions between residential care facilities and nursing homes.

Conflict of Laws When state and federal laws conflict, resolution can be sought in the appropriate federal court. The following case illustrates how federal and state









laws may be in conflict. The plaintiff in Dorsten v. Lapeer County General Hospital brought an action against a hospital and certain physicians on the medical board, alleging wrongful denial of her application for medical staff privileges. The plaintiff asserted claims under the U.S. Code for sex discrimination, violations of the Sherman Antitrust Act, and the like. The plaintiff filed a motion to compel discovery of peer review reports to support her case. The U.S. District Court held that the plaintiff was entitled to discovery of peer review reports despite a Michigan state law purporting to establish an absolute privilege for peer review reports conducted by hospital review boards.





▸ GOVERNMENT ORGANIZATION The three branches of the federal government, as illustrated in FIGURE 2-1, are the legislative, executive, and judicial branches. A typical example of a state government organization is illustrated in FIGURE 2-2. A vital concept in the constitutional framework of government on both federal and state levels is the separation of powers. Essentially, this principle provides that no one branch of government is clearly dominant over the other two; however, in the exercise of its functions, each may affect and limit the activities, functions, and powers of the others.

FIGURE 2-1 Government of the United States.




FIGURE 2-2 Example of a state government organization.

Legislative Branch On the federal level, legislative powers are vested in the Congress of the United States, which consists of the Senate and the House of Representatives. The function of the legislative branch is to enact laws, as well as amend or repeal existing legislation and to create new legislation. The legislature determines the nature and extent of the need for new laws and for changes in existing laws. Committees of both houses of Congress are responsible for preparing federal legislation. There are 16 standing committees in the Senate and 19 in the House of Representatives, all of whose membership are appointed by a vote of the entire body.

Legislative proposals are assigned or referred to an appropriate committee for study. The committees conduct investigations and hold hearings where interested persons may present their views regarding proposed legislation. These proceedings provide additional information to assist committee members in their consideration of proposed bills. A bill may be reported out of a committee in its original form, favorably or unfavorably; it may be reported out with recommended amendments; or the bill might be allowed to lie in the committee without action. Some bills eventually reach the full legislative body, where, after consideration and debate, they may be approved or rejected.

The U.S. Congress and all state legislatures are bicameral (consisting of two houses), except for the Nebraska legislature, which is unicameral. Both houses in a bicameral legislature must pass identical versions of a legislative proposal before the legislation can be brought to the chief executive (president or governor).

Executive Branch The primary function of the executive branch of government on the federal and state level is to administer and enforce the law. The chief executive, either the president of the United States or the governor of a state, also has a role in the creation of law through the power to approve or veto legislative proposals.

The U.S. Constitution provides that the president of the United States holds the executive power. The president serves as the administrative head of the




executive branch of the federal government. The executive branch includes 15 executive departments (see Figure 2-1), as well as a variety of agencies, both temporary and permanent.

The cabinet is composed of 15 executive department heads. Each department is responsible for a different area of public affairs, and each enforces the law within its area of responsibility. For example, the DHHS administers much of the federal health law enacted by Congress. Most state executive branches are also organized on a departmental basis. These departments administer and enforce state law concerning public affairs.

On a state level, the governor serves as the chief executive officer. The responsibilities of a state governor are provided for in the state’s constitution. The Massachusetts State Constitution, for example, describes the responsibilities of the governor as presenting an annual budget to the state legislature, recommending new legislation, vetoing legislation, appointing and removing department heads, appointing judicial officers, and acting as Commander-in-Chief of the state’s military forces (the Massachusetts National Guard).

Judicial Branch

As I have said in the past, when government bureaus and agencies go awry, which are adjuncts of the legislative or executive branches, the

people flee to the third branch, their courts, for solace and justice.

—Justice J. Henderson, Supreme Court of South Dakota

The function of the judicial branch of government is adjudication—resolving disputes in accordance with law. As a practical matter, most disputes or controversies that are covered by legal principles or rules are resolved without resort to the courts.

Alexis de Tocqueville (1805–1859), a foreign observer commenting on the primordial place of the law and the legal profession, stated:

Scarcely any political question arises in the United States that is not resolved, sooner or later, into a judicial question.

—Alexis de Tocqueville (1805–1859)

The decision regarding which court has jurisdiction—the legal right to hear and rule on a particular case—is determined by such matters as the locality in which each party to a lawsuit resides and the issues of a lawsuit. Each state in the United States provides its own court system, which is created by the state’s constitution and statutes. Most of the nation’s judicial business is reviewed and acted on in state courts. Each state maintains a level of trial courts that have original jurisdiction, meaning the authority of a court to first







conduct a trial on a specific case, as distinguished from a court with appellate jurisdiction, where appeals from trial judgments are held. This jurisdiction may exclude cases involving claims with damages less than a specified minimum, probate matters (i.e., wills and estates), and workers’ compensation. Different states have designated different names for trial courts (e.g., superior, district, circuit, or supreme courts). Also on the trial court level are minor courts, such as city, small claims, and justice of the peace courts. States such as Massachusetts have consolidated their minor courts into a statewide court system.

Each state has at least one appellate court. Many states have an intermediate appellate court between the trial courts and the court of last resort, which is the state supreme court in most states. Where this intermediate court is present, there is a provision for appeal to it, with further review in all but select cases. A state’s highest appellate tribunal is seen as the final arbiter for a state’s system of jurisprudence. FIGURE 2-3 depicts a typical state court system.

FIGURE 2-3 Typical state court system.

The trial court of the federal system is the U.S. District Court. There are 94 district courts in the 50 states (the larger states having more than one district




court) and one in the District of Columbia. The Commonwealth of Puerto Rico also has a district court with jurisdiction corresponding to that of district courts in the different states. Generally, only one judge is required to sit and decide a case, although certain cases require up to three judges. The federal district courts hear civil, criminal, admiralty, and bankruptcy cases.

The U.S. Circuit Court of Appeals is the appellate court. There are 12 regional courts in various cities and the 13th judicial court is located in Washington, DC. Their main purpose is to review cases tried in federal district courts within their respective circuits, but they also possess jurisdiction to review orders of designated administrative agencies and to issue original writs in appropriate cases. These intermediate appellate courts were created to relieve the U.S. Supreme Court of deciding all cases appealed from the federal trial courts.

The Supreme Court, the nation’s highest court, is the only federal court created directly by the Constitution. Eight associate justices and one chief justice sit on the Supreme Court.

The court has limited original jurisdiction over the lower federal courts and the highest state courts. In a few situations, an appeal will go directly from a federal or state court to the Supreme Court, but in most cases, review must be sought through the discretionary writ of certiorari, an appeal petition. In addition to the aforementioned courts, special federal courts have jurisdiction over particular subject matters. The U.S. Court of Claims, for example, has jurisdiction over certain claims against the government. The U.S. Court of Appeals for the Federal Circuit has appellate jurisdiction over certain customs and patent matters. The U.S. Customs Court reviews certain administrative decisions by customs officials. Also, there is a U.S. Tax Court and a U.S. Court of Military Appeals. The federal court system is illustrated in FIGURE 2- 4.




FIGURE 2-4 U.S. federal court system.

Separation of Powers The concept of separation of powers, a system of checks and balances, is illustrated in the relationships among the three branches of government with regard to legislation. On the federal level, when a bill creating a statute is enacted by Congress and signed by the president, it becomes law. If the president vetoes a bill, it takes a two-thirds vote of each house of Congress to override the veto. The president also can prevent a bill from becoming law by avoiding any action while Congress is in session. This procedure, known as a pocket veto, can temporarily stop a bill from becoming law and may permanently prevent it from becoming law if later sessions of Congress do not act on it favorably.

The Supreme Court may declare a bill that has become law invalid if it violates the Constitution. “It is not entirely unworthy of observation, that in declaring what shall be the Supreme law of the land, the Constitution itself is first mentioned; and not the laws of the United States generally, but those only made in pursuance to the Constitution, have that rank.”

Even though a Supreme Court decision is final regarding a specific controversy, Congress and the president may generate new, constitutionally





sound legislation to replace a law that has been declared unconstitutional. The procedures for amending the Constitution are complex and often time consuming, but they can serve as a way to offset or override a Supreme Court decision.




▸ DEPARTMENT OF HEALTH AND HUMAN SERVICES The Department of Health and Human Services (DHHS) is a cabinet-level department within the executive branch of the federal government (FIGURE 2- 5). The DHHS has been charged with the responsibility for developing and implementing appropriate administrative regulations for carrying out national health and human services policy objectives. The Department of Health and Human Services was created on April 11, 1953 to strengthen “the public health and welfare of the American people by making affordable and quality health care and childcare accessible, ensuring the safety of food products, preparing for public health emergencies, and advancing the diagnosis, treatment, and curing of life threatening illnesses.” It is also the main source of regulations governing the healthcare industry. The secretary of the DHHS, serving as the department’s administrative head, advises the president with regard to health, welfare, and income security plans, policies, and programs. The DHHS is also responsible for many of the programs designed to meet the needs of senior citizens, including Social Security benefits (e.g., retirement, survivors, disability), Supplemental Security Income (which ensures a minimum monthly income to needy persons and is administered by local Social Security offices), Medicare, Medicaid, and programs under the Older Americans Act (e.g., in-home services, such as home health and home- delivered meals, and community services such as adult day care, transportation, and ombudsman services in long-term care facilities).





FIGURE 2-5 Organization of the Department of Health and Human Services.

Administration on Aging The Administration on Aging (AOA) is the principal agency designated to carry out the provisions of the Older Americans Act of 1965, which, as amended, focuses on improving the lives of senior citizens in areas of income, housing, health, employment, retirement, and community services. The AOA develops policies, plans, and programs designed to promote the welfare of the aging population. It promotes their needs by planning programs and developing policy, procedural direction, and technical assistance to states and Native American tribal governments.

Centers for Medicare and Medicaid Services The Centers for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration, was created to combine under one administration the oversight of the Medicare program, the federal portion of the Medicaid program, the State Children’s Health Insurance Program, and related quality assurance activities.

Medicare is a federally sponsored health insurance program for persons 65 years of age, as well as certain diseases and disabilities of all disabled persons. It has four complementary parts A, B, C, and D:




Medicare Part A

Medicare Part A helps pay for the costs associated with hospital care. Part A can also help cover the cost of hospice, home health care and skilled nursing facilities. Part A pays about 80 percent of Medicare-approved, inpatient costs for the first 60 days of hospitalization. Patients who have longer hospital stays are required to pay a larger share of the costs, thus emphasizing the importance of having supplemental insurance.

Medicare Part B

Medicare Part B helps pay for medical costs associated with physician visits, some home health care, medical equipment, outpatient procedures, rehabilitation therapy, laboratory tests, X-rays, mental health services, ambulance services, and blood. Preventive care, such as flu shots, are also covered.

Medicare Part C

Medicare Part C helps pay for hospital and medical costs not covered by Parts A and B. Part C private insurance plans are offered through private health insurance companies that are approved by Medicare. They are referred to as Medicare Advantage Plans. They generally cover more of the costs the patient would have to pay for out of pocket with Medicare Parts A and B. Part C plans also put a limit on what you pay out of pocket in a given year. Some of these plans cover preventive dental, vision, and hearing costs.

Medicare Part D

Medicare Part D helps pay for prescription drugs and is available through private health insurance companies. Called prescription drug plans, they commonly cover brand-name and generic drugs. Coverage can differ from one insurance carrier to the next. Part D is optional and available to those who are enrolled in Medicare Parts A and B and most Medicare Advantage plans.

Medicaid, Title XIX of the Social Security Act Amendments of 1965, is a government program administered by the states that provides medical services (both institutional and outpatient) to the medically needy. Federal grants, in the form of matching funds, are issued to those states with qualifying Medicaid programs. Medicaid is jointly sponsored and financed by the federal government and several states. Medical care for needy persons of all ages is provided under the definition of need established by each state. Each state sets its own criteria for determining eligibility for services under its Medicaid program.

The Health Insurance Portability and Accountability Act of 1996 The CMS is responsible for implementing various provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The administrative simplification provisions of HIPAA require that the DHHS




establish national standards for electronic healthcare transactions and national identifiers for providers, health plans, and employers. It also addresses the privacy of health data.

Public Health Service The mission of the Public Health Service (PHS) is to promote the protection of the nation’s physical and mental health. The PHS accomplishes its mission by coordinating with the states in setting and implementing national health policy and pursuing effective intergovernmental relations; generating and upholding cooperative international health related agreements, policies, and programs; conducting medical and biomedical research; sponsoring and administering programs for the development of health resources, the prevention and control of diseases, and alcohol and drug abuse; providing resources and expertise to the states and other public and private institutions in the planning, direction, and delivery of physical and mental healthcare services; and enforcing laws to ensure drug safety and protection from impure and unsafe foods, cosmetics, medical devices, and radiation- producing objects. Within the PHS are smaller agencies responsible for carrying out the purpose of the division and DHHS; these agencies are described next.

National Institutes of Health The National Institutes of Health (NIH) is the principal federal biomedical research agency. NIH is considered to be the largest biomedical research agency in the world.

NIH’s mission is to seek fundamental knowledge about the nature and behavior of living systems and the application of that knowledge to enhance health, lengthen life, and reduce illness and disability. It is responsible for conducting, supporting, and promoting biomedical research.

The goals of the agency are:

to foster fundamental creative discoveries, innovative research strategies, and their applications as a basis for ultimately protecting and improving health; to develop, maintain, and renew scientific human and physical resources that will ensure the nation’s capability to prevent disease; to expand the knowledge base in medical and associated sciences in order to enhance the nation’s economic well-being and ensure a continued high return on the public investment in research; and to exemplify and promote the highest level of scientific integrity, public accountability, and social responsibility in the conduct of science.

Centers for Disease Control and Prevention





The Centers for Disease Control and Prevention (CDC) was established as an operating health agency within the Public Health Service by the Secretary of Health, Education, and Welfare on July 1, 1973. It is the lead federal agency charged with protecting the public health of the nation by providing leadership and direction in the prevention and control of diseases and other preventable conditions and responding to public health emergencies. It administers national programs for the prevention and control of communicable and vector- borne diseases and other preventable conditions. It develops and implements programs in chronic disease prevention and control, including consultation with state and local health departments. It develops and implements programs to deal with environmental health problems, including responding to environmental, chemical, and radiation emergencies. The CDC also serves to help other nations as they struggle with communicable diseases.

Food and Drug Administration The Food and Drug Administration (FDA) is responsible “for protecting the public health by assuring the safety, effectiveness, quality, and security of human and veterinary drugs, vaccines and other biological products, and medical devices. The FDA is also responsible for the safety and security of most of our nation’s food supply, all cosmetics, dietary supplements and products that give off radiation.”

Substance Abuse and Mental Health Services Administration The Substance Abuse and Mental Health Services Administration’s mission is to reduce the impact of substance abuse and mental illness on America’s communities.

Health Resources and Services Administration The Health Resources and Services Administration (HRSA) is the primary federal agency for improving access to healthcare services for people who are uninsured, isolated, or medically vulnerable. Its mission is to improve health and achieve health equity through access to quality services, a skilled health workforce, and innovative programs. HRSA takes a comprehensive approach to addressing human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS) with activities taking place across multiple bureaus and offices designed to deliver care to people living with HIV or AIDS, expand and strengthen the HIV care workforce, and improve access to and the quality of HIV care and treatment.

Agency for Healthcare Research and Quality The Agency for Healthcare Research and Quality (AHRQ) provides evidence- based information on healthcare outcomes, quality, cost, use, and access. Information from AHRQ’s research helps people make more informed decisions and improve the quality of healthcare services.

Agency for Toxic Substances and Disease Registry





The mission of the Agency for Toxic Substances and Disease Registry (ATSDR) is to prevent or mitigate harmful exposures and related diseases by applying science, taking responsive action, and providing trustworthy health information.

Indian Health Service The Indian Health Service (IHS) is an operating division within the DHHS that provides a comprehensive federal health program for American Indians and Alaska Natives who belong to federally recognized tribes. “The Indian Health Care Improvement Act (IHCIA), the cornerstone legal authority for the provision of health care to American Indians and Alaska Natives, was made permanent when President Obama signed the bill on March 23, 2010, as part of the Patient Protection and Affordable Care Act.”47





I weep for the liberty of my country when I see at this early day of its successful experiment that corruption has been imputed to many

members of the House of Representatives, and the rights of the people have been bartered for promises of office.

—Andrew Jackson

Ethics and the law are not mutually exclusive—they are intertwined. Without the two, we would become a lawless land. The words of Abraham Lincoln and Andrew Jackson, so eloquently spoken, resonate true today. Political corruption, antisocial behavior, declining civility, and rampant unethical conduct have heightened discussions over the nation’s moral decline and decaying value systems. The numerous instances of questionable political decisions, executives with shocking salaries, dishonesty at work and in school, the entertainment industry, and dishonest news reporting, have all contributed to this decline. Legislators, investigators, prosecutors, and the courts have been quick to speak moral truths but continue to be slow in action. The question remains: Can the decline in ethical behavior be reversed, as citizens struggle with a broken legal system inundated with new laws? The answer is more likely to be a return to practicing the virtues and values upon which this nation was founded. Ethics and the law are not mutually exclusive—they are intertwined throughout the text, providing an overview of government agencies designed to protect each individual’s rights (e.g., the right to privacy and self- determination).

Executive Branch: Office of Government Ethics The Office of Government Ethics (OGE) is an agency within the executive branch of government. The agency was established by the Ethics in Government Act of 1978. Originally within the Office of Personnel Management, OGE became a separate agency on October 1, 1989. The Office of Government Ethics exercises leadership in the executive branch to prevent conflicts of interest on the part of government employees, and to resolve those conflicts of interest that do occur. In partnership with executive branch agencies and departments, OGE fosters high ethical standards for employees and strengthens the public’s confidence that the government’s business is conducted with impartiality and integrity.

The OGE website provides information about the agency and services it provides. The site helps people understand the executive branch ethics program and its effort to reach federal employees and the general public. Common ethical issues discussed on the website include gifts from outside sources, gifts between employees, conflicting financial interests, remedies for financial conflicts of interest, impartiality in performing official duties, seeking





other employment, misuse of position, outside activities, postemployment, representation to government agencies and courts, supplementation of salary, financial disclosure, informal advisory letters and memorandum and formal opinions, DAEOgrams (memoranda to agency ethics officials providing guidance on how to interpret and comply with modifications or new issuances of ethics laws, policies, and procedures; copies of the memoranda released since 1992 are available in the DAEOgrams section of the OGE website), and contractors in the workplace.

The public may lose confidence in the integrity of Government if it perceives that an employee’s Government work is influenced by personal interests or by payments from an outside source. An executive branch employee’s Government work may have the potential to benefit the employee personally, affect the financial interests of the employee’s family, or involve individuals or organizations with which the employee has some past, present, or future connection away from the employee’s Government job. Separately, an employee might be offered a payment from a non- Federal source, such as a former employer, either before or after entering Government. Accordingly:

An employee may be disqualified from working on a particular Government matter. An employee may be prohibited from holding specified property. An employee may be prohibited from accepting a payment from a non-Federal source.

U.S. House of Representatives: Committee on Ethics The Committee on Ethics is designated the “supervising ethics office” for the House of Representatives. The jurisdiction of the Committee on Ethics is derived from authority granted under House Rules and federal statutes.

The Committee on Ethics is unique in the House of Representatives. Consistent with the duty to carry out its advisory and enforcement responsibilities in an impartial manner, the Committee is the only standing committee of the House of Representatives with its membership divided evenly by party. These rules are intended to provide a fair procedural framework for the conduct of the Committee’s activities and to help ensure that the Committee serves the people of the United States, the House of Representatives, and the Members, officers, and employees of the House of Representatives.

The scope of the Committee’s jurisdiction under the various authorizing rules and statutes involves duties and responsibilities related to:

Jurisdiction over all bills, resolutions, and other matters relating to the Code of Official Conduct.






Recommend administrative actions to establish or enforce standards of official conduct. Investigate alleged violations of the Code of Official Conduct or of any applicable rules, laws, or regulations governing the performance of official duties or the discharge of official responsibilities. Report to appropriate federal or state authorities substantial evidence of a violation of any law applicable to the performance of official duties that may have been disclosed in a committee investigation. Consider requests for written waivers of the gift rule. Provide oversight over foreign gifts and gifts to superiors and other federal employees. Prohibit members, officers, and employees of the House of Representatives from soliciting or receiving gifts.

The official Code of Conduct for the House of Representatives can be found on its Committee on Ethics website at

Senate: Select Committee on Ethics

(a) The ideal concept of public office, expressed by the words, “a public office is a public trust,” signifies that the officer has been entrusted with public power by the people; that the officer holds this power in trust to be used only for their benefit and never for the benefit of himself or of a few; and that the officer must never conduct his own affairs so as to infringe on the public interest. All official conduct of Members of the Senate should be guided by this paramount concept of public office.

The U.S. Senate Select Committee on Ethics consists of six members of the Senate, three of whom shall be selected from members of the majority party and three shall be selected from members of the minority party. The committee is responsible for investigating complaints involving a violation of the franking statute; financial disclosure statements; outside employment with respect to members, officers, and employees of the Senate; foreign gifts and decorations; gifts to an official superior or receiving gifts from employees with a lower salary level; and prohibitions against members, officers, and employees of the Senate soliciting or receiving gifts.

The Senate Select Committee on Ethics is authorized to receive and investigate allegations of improper conduct that may reflect upon the Senate, including violations of law, violations of the Senate Code of Official Conduct, and violations of rules and regulations of the Senate; recommend disciplinary action; recommend additional Senate rules or regulations to insure proper standards of conduct; and report violations of law to the proper federal and state authorities.

U.S. Judicial Code of Conduct










As with other branches of government, federal judges are expected to abide by a code of conduct that includes ethical principles and guidelines. “The Code of Conduct provides guidance for judges on issues of judicial integrity and independence, judicial diligence and impartiality, permissible extrajudicial activities, and the avoidance of impropriety or even its appearance.” The Code of Conduct for United States Judges includes the following ethical canons:

Canon 1: A Judge Should Uphold the Integrity and Independence of the Judiciary

Canon 2: A Judge Should Avoid Impropriety and the Appearance of Impropriety in all Activities

Canon 3: A Judge Should Perform the Duties of the Office Fairly, Impartially and Diligently

Canon 4: A Judge May Engage in Extrajudicial Activities that are Consistent with the Obligations of Judicial Office

Canon 5: A Judge Should Refrain from Political Activity

Office of Congressional Ethics The Office of Congressional Ethics (OCE) was created in March 2008 as an independent, nonpartisan office, governed by a board comprising private citizens, which provides more public review and insight into the ethical conduct of members of the House of Representatives. The OCE reviews allegations of misconduct against members, officers, and staff of the House and, when appropriate, refers matters to the House Committee on Ethics. The OCE is not authorized to determine if a violation occurred, nor is it authorized to sanction members, officers, or employees of the House or to recommend sanctions. The OCE is not able to provide advice or education on the rules and standards of conduct applicable to members, officers, and employees of the House. The mission of the OCE and its board is to assist the House in upholding high standards of ethical conduct for its members, officers, and staff and, in so doing, to serve the American people. The board of directors consists of eight members, who are private citizens and cannot serve as members of Congress or work for the federal government. Additional information regarding the work of the OCE is available at its website

As the reader will note, there are a variety of laws and agencies that provide oversight and regulations that are designed to protect the rights and safety of all citizens. Government is a reflection of the people it serves. Failure of the many to participate in the political process leads to government for the few who do.

State Ethics Committees Many states have legislative ethics committees that hear complaints of ethics violations by legislators. They often investigate complaints and impose








penalties for ethics-related violations. Duties vary among the state committees. A state-by-state review can be found at -of-legislative-ethics-committees.aspx. “State legislatures pass ethics laws that impose restrictions on themselves and lobbyists. To ensure these laws are kept, legislatures establish oversight entities that include ethics committees, ethics commissions or a combination of both. Internal ethics committees are an important way for legislatures to solidify their credibility with the public.”61





Nothing is politically right which is morally wrong.

—Daniel O’Connell (1755–1847)

Political malpractice is negligent conduct by an elected or appointed political official. Ronald Brownstein wrote in a news column in the St. Petersburg Times, “Practical steps are possible to help millions of low income families live healthier lives and receive more effective care when they need it. Ignoring that opportunity, while waiting for consensus on coverage, would be a form of political malpractice.” The likelihood of a successful negligence case against a member of Congress is doubtful. If such a case ever got through a courtroom door, the following four elements of negligence would have to be proven:

1. The first element necessary to prove political malpractice requires that the plaintiff(s) be able to establish there is a duty to care. Establishing this first element of negligence for a senator, for example, would be a difficult hurdle. The oath of office for a senator is so amorphous that it would be difficult to establish a duty to care, as illustrated in the following quotes.

Oath of Office

I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.

Looking beyond the oath of office:

For nearly three-quarters of a century, that oath served nicely, although to the modern ear it sounds woefully incomplete. Missing are the soaring references to bearing “true faith and allegiance;” to taking “this obligation freely, without any mental reservation or purpose of evasion”; and to “well and faithfully” discharging the duties of the office.

Should a plaintiff be able to overcome this first element of negligence, thus proving a duty to care, the remaining elements could be just as difficult to establish.

2. The second element of political malpractice requires the plaintiff prove that the duty to care was breached. Arguably, politicians, for example, who agree to veto any program the President supports while he is in







office, are contrary to the spirit of the law. The dilemma here requires the plaintiff(s) to prove what specific duty to care was breached.

3. The third element of political malpractice requires proof of harm. 4. The fourth element requires proof of a causal connection between the

politician’s breach of duty and the harm suffered. In other words, the plaintiff(s) must prove that the breach of duty was the proximate cause of the plaintiff’s injury.

Senator Bob Dole, when speaking of Veterans Affairs Secretary Eric Shinseki regarding allegations of mismanagement, falsified records, and long waits for veterans in receiving health care, said, “If the facts reveal that he neglected his duties, then he should go.” By May 30, 2014, Secretary Shinseki, a retired general, resigned his office following the allegations with increasing pressure from Congress for him to resign. Like medical malpractice, political malpractice involves a failure to offer adequate healthcare services to help prevent the bureaucratic quagmire of regulations that hinders the provision of health care to those in need, as illustrated in the reality check The Coal Miner.

Flint, Michigan is not the only city concerned with questions that involve both political malpractice and criminal conduct facing government employees and officials regarding the health safety of drinking water. Residents of St. Joseph, Louisiana, for example, are concerned with drinking and bathing in murky brown water. The Louisiana health department claims tests show that there are no dangerous amounts of chemicals in St. Joseph’s water supply. However, this does not ease the fears of those living there. It is an ethical dilemma involving trust. Government officials are not willing to drink the water, why should the public. While conducting a survey in Louisiana and 10 years before St. Joseph became the focus of public and media scrutiny, a hospital surveyor described his water pollution concerns, as described in the reality check Hospital Water Questioned.

The New Jersey Health Department’s website references public concern over the safety of tap water in the Dover Township/Toms River area of Ocean County as far back as 1995 [ /health/eohs/dovertwp.shtml], where the occurrence of childhood cancer has been a concern for many years and linked to the drinking water. This website illustrates the difficulty in bringing closure to the people’s concerns for the health and welfare of their children.

Community outrage continues because of the slow pace in addressing public concerns about contaminated water. Government officials elected as the guardians of the communities they serve continue down the slippery slope of distrust.






It was December 1989 when Larry, the hospital administrator, was making his morning visits to various departments, as he often did each day with both staff and patients. While visiting a medical unit he visited with Jimmy, one of the patients. Larry asked Jimmy, “Are we taking good care of you?” He said, “Yes.” He then turned to a man who was on the opposite side of his bed and said, “This is my brother Bill.” Bill, looking at Larry, choked up and asked, “Can you help my brother? He has given up the will to live. Please help my brother want to live.” I looked at Jimmy lying there in his bed, fragile and struggling to breathe between each word, as he said, “I can no longer carry on this way. I am ready to move on. I’m a tired old man. I have fought so long. I’ve needed benefits for so many years for my family and myself. I have had many promises over of the years of people promising to help me. But up until this moment in time, no one was able to help me. I have black lung disease. I struggle to breathe.” He then turned, looking over to Bill, and said, “My brother also has black lung disease. We worked together in the coalmines for many years. This is our reward.” I looked at Jimmy and slowly back to Bill and said, “I will have my staff help facilitate you in getting the help you need.” As we said our goodbyes, I thought to myself, as I left the room, Jimmy has fought so long. He has asked for so little, a man forgotten by incompetent and corrupt bureaucratic leadership.

Michigan Governor Rick Snyder has admitted that the government failed the people. The following news article and reality check illustrate how the nation’s government, on the highest levels, continues to fail the people throughout the nation, from as far north as Michigan to as far south as Louisiana.


Michigan Gov. Rick Snyder gave a State of the State address Tuesday night, following remarks he made a day earlier on how he’s made mistakes in handling the Flint, Michigan water crisis.

“I’m sorry and I will fix it,” Snyder said near the opening of his speech, directly addressing the residents of Flint. “Government failed you at the federal, state and local level.”

—Jessica Durando, USA Today, January 20, 2016

Ethicists in Public Service




Although not all cities may need to hire an ethicist in order to set priorities, it may be helpful in certain types of decisions. An independent, unbiased, professionally trained decision maker from who is an “outsider” may be more acceptable to councils, mayors, citizens, employees, or the press than one derived from inside the political arena. The city of Alexandria, Virginia, in 2008, “hired an ethics consultant for $9,000 per year. Cities must make decisions to set priorities when allocating scarce resources. City council members, mayors, and city managers have available the advice of the city attorney and/or their professional organizations when faced with ethical dilemmas.” This is particularly helpful in the decision-making process when decisions involve a reduction or elimination of services to the public, especially services to the elderly, disabled, or less fortunate.


Joe was in Shreveport, Louisiana. It was Sunday evening about 11:00 PM. Joe opened his computer to review his itinerary on his company’s website when he noticed that the survey starting date for a small community hospital in south central Louisiana had been changed from Tuesday to Monday. The rush began. He packed his clothes, loaded his rental car, and checked out of the hotel, accidentally leaving his suits behind.

Joe arrived at the new hotel at about 2:00 AM. He checked in and unpacked. Joe turned on the water and found it was a mucky brown color. He called the front desk to question the water that flowed into the sink, tub, and toilet. After a bit of a chuckle, the desk associate said, “It’s OK. It’s always brown.” Joe thought to himself, “Well, at least the hospital will have clear, clean water.”

The following day, Carol, the survey coordinator, greeted Joe and his survey team in the hospital lobby. Carol escorted the survey team to a conference room, which was assigned to the team as a home base during the survey. The first thing Joe noticed was bottled water, apple juice, and orange juice packed in ice on the boardroom table. He thought, “Oh happy day.” He then went to the small sink in the anteroom of the boardroom to wash his hands. Joe observed that the water was a brown in color, just a bit lighter than the water at the hotel. Before leaving the room, Carol said, “If you need anything, I’ll be just across the hall.” Joe quickly replied, “There is something I have some concern with—the quality of the water here in central Louisiana.” Carol replied, “Oh no, it’s OK. It’s been tested by the health department.” Joe replied, “Could you please show me any documentation you have on file that I can review.” Carol replied, “OK, I’ll see what we have on file.” By the end of the survey, there was no health department paperwork available in the hospital for Joe to review. He suggested that an






attempt be made to seek clarification from the health department, in writing, regarding the safe use of the hospital’s water source.




▸ CHAPTER REVIEW 1. A law is a general rule of conduct that is enforced by the government.

When a law is violated, the government imposes a penalty.

Public laws deal with the relationships between individuals and the government. Private laws deal with relationships among individuals.

2. Common law is derived from judicial decisions. During the colonial period, the United States based its law on English common law, but states had the authority to modify their legal systems. As a result, there is no uniform system of common law among the states.

Precedent—a judicial decision that may be used as a standard in subsequent similar cases. A precedent is set when a court decision is rendered that serves as a rule for future guidance when deciding similar cases. Res judicata—“the thing is decided”—refers to that which has been previously acted on or decided by the courts—a final judgment rendered by a court of competent jurisdiction on the merits is conclusive as to the rights of the parties and their privies, and, as to them, constitutes an absolute bar to subsequent action involving the same claim, demand, or cause of action. Stare decisis—common law principle (“let the decision stand”) provides that when a decision is rendered in a lawsuit involving a particular set of facts, another lawsuit involving an identical or substantially similar situation is to be resolved in the same manner as the first lawsuit. Original jurisdiction—authority of a court to first conduct a trial. Appellate jurisdiction—authority of a court to hear appeals from trial court decisions.

3. Statutory law is written law that emanates from legislative bodies.

A statute can abolish any rule of common law. The Constitution is the highest level of enacted law; it takes precedence over the constitutions and laws of specific states and local jurisdictions. Statutory law can be amended, repealed, or expanded by the legislature. States and local jurisdictions can only enact and enforce laws that do not conflict with federal laws.

4. Administrative law is public law issued by administrative agencies to administer the enacted laws of the federal and state governments.

Administrative agencies implement and administer the administrative law.




The rules and regulations established by an agency must be administered within the scope of the authority delegated to the agency by Congress. Agency regulations and decisions can be subject to judicial review. Each state has its own system of administrative law.

5. Separation of powers provides that no one branch of the government— legislative, executive, or judicial—will be clearly dominant over the other two.

Legislative branch enacts, amends, and/or repeals existing laws. Executive branch administers and enforces the law. Judicial branch resolves disputes in accordance with the law.

6. The Department of Health and Human Services (DHHS) develops and implements administrative regulations for carrying out national health and human services policy objectives through various agencies within DHHS.

7. Ethics and the law are not mutually exclusive—they are intertwined. Government ethics committees include:

Executive branch: Office of Government Ethics U.S. House of Representatives: Committee on Ethics Senate: Select Committee on Ethics Judicial branch: U.S. Judicial Code of Conduct Office of Congressional Ethics

8. Political malpractice is negligent conduct by an elected or appointed political official.




▸ REVIEW QUESTIONS 1. Define the term law and describe the sources from which law is

derived. 2. Define the legal terms precedent, res judicata, stare decisis, original

jurisdiction, and appellate jurisdiction. 3. Describe the function of the three branches of government. 4. What is the meaning of separation of powers? 5. What is the function of an administrative agency? 6. Describe why the Department of Health and Human Services was






1. Bernard Schwartz, The Law in America (New York: McGraw-Hill, 1974), 1.

2. 5 U.S. (Cranch) 137, 163 (1803).

3. The Law Dictionary, “What is Public Law?” law/

4. Pierce v. Ortho Pharmaceutical Corp., 417 A.2d 505, 512 (N.J. 1980).

5. Cruzan v. Director, Missouri Department of Health, 496 U.S. 261, 110 S.Ct. 2841 (1990).

6. A.K.R. Kiralfy, Potter’s Historical Introduction to English Law (London, UK: Sweet & Maxwell, 1962), 9.

7. John Reeves, History of the English Law (London, UK: Reed and Hunter, 1814), 2.

8. Id.

9. George W. Keeton, English Law (Newton Abbot, UK: David & Charles, 1974), 70.

10. Id.

11. Id.

12. Kiralfy, supra note 6, at 9–10.

13. Schwartz, supra note 1, at 29.

14. Lawrence Friedman, A History of American Law (New York, NY: Touchstone Books, 1985), 92.

15. Lebron v. Gottlieb Memorial Hospital, Docket Nos. 105741, 105745 cons., (Ill. February 4, 2010).

16. Cal. Civ. Code §3333.2(b) (West 2009).

17. Fla. Stat. §766.118 (2009).

18. People v. Caballes, 221 Ill. 2d 282, 313 (2006).

19. Black’s Law Dictionary, 6th ed. (Eagan, MN: 1990), 1305.

20. 2 Root 90, 92 (Conn. 1794).

21. U.S. Department of Health and Human Services, Task Force on Medical Liability and Malpractice (Washington, DC: Author, 1987), 3.

22. Id.

23. Zinman, “Study Finds Hospitals ‘Harm’ Some,” Newsday, March 1, 1990, 17.

24. The Robert Wood Johnson Foundation, “The Tort System for Medical Malpractice: How Well Does It Work, What Are the Alternatives?” Abridge, Spring 1991, 2.




25. The Robert Wood Johnson Foundation, “Negligent Medical Care: What Is It, Where Is It, and How Widespread Is It?” Abridge, Spring 1991, 6.

26. D. Sharp, “Errors Renew the Call for Doctor Review,” USA Today, March 27, 1995, 2.

27. K. Painter, “Breast Cancer Top Cause of Malpractice Complaints,” USA Today, June 15, 1996, 1.

28. Sandra B. Goodman, “As Hands-on Doctoring Fades Away, Patients Lose,” The Washington Post, May 20, 2014, E1.

29. Becker’s Hospital Review, “Legal & Regulatory Issues: 29 Statistics on Medical Malpractice Payouts and Lawsuits,” statistics-on-medical-malpractice-payouts-and-lawsuits.html

30. U.S. Constitution, art. 6, § 1, cl. 2.

31. 5 U.S.C.S. §§ 500–576 (Law. Co-op. 1989).

32. An “agency means each authority of the Government of the United States, … but does not include (A) the Congress; the Courts of the United States; …” 5 U.S.C.S. § 551(1) (Law. Co-op. 1989).

33. 5 U.S.C.S. § 702 (Law. Co-op. 1989).

34. 5 U.S.C.S. § 706 (Law. Co-op. 1989). title5-partI-chap7-sec706.htm.

35. 401 A.2d 872 (Pa. Commw. Ct. 1979).

36. Id. at 873

37. Department of Human Serv. v. Berry, 764 S.W.2d 437 (Ark. 1989).

38. Id. at 439

39. 88 F.R.D. 583 (E.D. Mich. 1980).

40. Yahoo!, “U.S. Government Departments and Agencies,”

41. Donald Levitan and Elwyn E. Mariner, Your Massachusetts Government, 10th ed. (Newton Center, MA: Government Research Publications, 1984), 14.

42. Heritage of Yankton, Inc. v. South Dakota Dep’t. of Health, 432 N.W.2d 68, 77 (S.D. 1988).

43. Marbury v. Madison, 5 U.S. (Cranch) 137, 180 (1803).

44. Government Publishing Office, “The United States Government Manual: Executive Branch: Departments,” 2015-07-01/xml/GOVMAN-2015-07-01-117.xml

45. National Institutes of Health, “What We Do: Mission and Goals,”




46. U.S. Food and Drug Administration, “FDA Fundamentals,”

47. Indian Health Service, “Indian Health Care Improvement Act,”

48. U.S. Office of Government Ethics,

49. U.S. Office of Government Ethics, “Financial Conflicts of Interest,”

50. Committee on Ethics, “Committee Rules,”

51. Committee on Ethics, “Jurisdiction,”

52. United States Senate Select Committee on Ethics, “Jurisdiction,”

53. U.S. Senate Select Committee on Ethics, “Rules of Procedure,” File_id=551b39fc-30ed-4b14-b0d3-1706608a6fcb

54. Franking Commission, “What is the Frank?” commission/what-frank.

55. U.S. Senate Select Committee on Ethics, “Jurisdiction,”

56. Id.

57. U.S. Courts, “Code of Conduct,”

58., “Code of Conduct for United States Judges,” judges#f.

59. Office of Congressional Ethics, “Frequently Asked Questions,”

60. Id.

61. National Conference of State Legislatures, “State Ethics Committees,” committees.aspx

62. Ronald Brownstein, “Health Care Safety Net Stretched Thin,” St. Petersburg Times, June 4, 2004, Section A, 13a.

63. U.S. Senate, “Oath of Office,”

64. Id.

65. Susan Page, “Veterans Affairs A ‘Disaster’,” The Washington Post, May, 23, 2014, 1A.




66. Ethics in Public Service, “Alexandria Hires Ethics Consultant,” April 9, 2009, ethics-consultant/

67. Laura Olson, “URPA 5358 Group 2,” January 2, 2009,




© photogl/Shutterstock





Tort Law—Negligence


THE COURT WAS APPALLED The plaintiff, while in the custody of the defendant penal institution, alleged that because the defendant’s employees failed to timely diagnose her breast cancer, her right breast had to be removed. The defendant contended that even if its employees were negligent, the plaintiff’s cancer was so far developed when discovered that it would nevertheless have required removal of her breast.

Pursuant to the defendant’s policy of medically evaluating all new inmates, on May 26, Dr. Evans gave the plaintiff a medical examination. He testified that his physical evaluation included an examination of the plaintiff’s breasts. However, he stated that his examination was very cursory.

The day following her examination, the plaintiff examined her own breasts. At that time, she discovered a lump in her right breast, which she characterized as being about the size of a pea. The plaintiff then sought an additional medical evaluation at the defendant’s medical clinic. Testimony indicated that fewer than half of the inmates who sign the clinic list are actually seen by medical personnel the next day after signing their name. Also, those not examined on the day for which the list is signed are given no preference in being examined on the following day. Their names are simply deleted from the daily list, and their only recourse is to continually sign the list until they are examined. The evidence indicated that after May 27, the plaintiff constantly signed the clinic list and provided the reason she was requesting medical care.

A nurse finally examined the plaintiff on June 21. The nurse noted in her nursing notes that the plaintiff had a “moderate large mass in right breast.” The nurse recognized that the proper procedure was to measure such a mass, but she testified that this was impossible because no measuring device was available. The missing measuring device to which she alluded was a simple ruler. The nurse concluded that Evans should again examine the plaintiff.

On June 28, Evans again examined the plaintiff. He recorded in the progress notes that the plaintiff had “a mass on her right wrist. Will send her


2 122



to hospital and give her Benadryl for allergy she has.” Evans meant to write “breast” not “wrist.”

He failed to measure the size of the mass on the plaintiff’s breast. The plaintiff was eventually transferred to the Franklin Pre-Release Center (FPRC) on September 28. On September 30, when a nurse at FPRC examined the plaintiff; the nurse recorded that the plaintiff had a “golf ball”- sized lump in her right breast. The plaintiff was transported to the hospital on October 27, where Dr. Walker treated her. The plaintiff received a mammogram examination, which indicated that the tumor was probably malignant. This diagnosis was confirmed by a biopsy performed on November 9. The plaintiff was released from confinement on November 13.

On November 16, Dr. Lidsky, a surgeon, examined the plaintiff. Lidsky noted the existence of the lump in the plaintiff’s breast and determined that the size of the mass was approximately 4 to 5 centimeters and somewhat fixed. He performed a modified radical mastectomy upon the plaintiff’s right breast, by which nearly the plaintiff’s entire right breast was removed. A suit was filed.


Every instance of a man’s suffering the penalty of the law is an instance of the failure of that penalty in effecting its purpose, which is

to deter from transgression.

—Richard Whately






The reader, upon completion of this chapter, will be able to:

Describe what a tort is and the objectives of tort law. Define negligence and explain the distinction between negligence and malpractice. Explain how the commission and omission of an act differ. Explain the elements necessary to prove a negligence case. Describe the importance of foreseeability in a negligence case.

This chapter introduces the reader to the study of tort law with an emphasis on negligence in healthcare settings. A tort is a civil wrong, other than a breach of contract, committed against a person (e.g., reputation, privacy), property (real or personal) for which a court provides a remedy in the form of compensation for damages suffered. Tort actions are a concern to caregivers both personally and professionally. Caregivers should be armed with the knowledge necessary to improve their understanding of their rights and responsibilities in the healthcare setting.




▸ OBJECTIVES OF TORT LAW The basic objectives of tort law are: (1) preservation of peace between individuals by providing a substitute for retaliation; (2) culpability (to find fault for wrongdoing); (3) deterrence (to discourage the wrongdoer [tortfeasor] from committing future wrongful acts, as well as, deter others from committing wrongdoing); and (4) compensation (to indemnify the injured party to a lawsuit).

Compensation for adverse medical outcomes typically takes the form of financial damages. When finding fault, the court must determine who should bear the cost of an unfavorable outcome—the patient-plaintiff or the provider- defendant. The plaintiff must prove negligence by the defendant. Conversely, the defendant argues a case to avoid fault determination. Underlying this adversarial proceeding is the assumption that when a defendant bears the cost of a negligent act, there will be a decline in similar acts. Although professional liability insurance helps to insulate a provider from financial loss, the fear is ever present that the monetary award may exceed the provider’s coverage limits.

The three basic categories of tort law are (1) negligent torts; (2) intentional torts (e.g., assault, battery, false imprisonment, invasion of privacy, infliction of mental distress); and (3) strict liability, which is applied when the activity, regardless of fault, intentions, or negligence, is so dangerous to others that public policy demands absolute responsibility on the part of the wrongdoer (e.g., products liability). Negligence is reviewed in the next section.




▸ NEGLIGENCE Negligence is a tort, a civil or personal wrong. It is the unintentional commission or omission of an act that a reasonably prudent person would or would not do under given circumstances.

Commission of an act would include, for example:

Administering the wrong medication Administering the wrong dosage of a medication Administering medication to the wrong patient Performing a surgical procedure without the patient’s consent Performing a surgical procedure on the wrong patient or body part Performing the wrong surgical procedure Omission of an act would include, for example: Failure to conduct a thorough history and physical examination Failure to assess and reassess a patient’s nutritional needs Failure to administer medications as prescribed Failure to order diagnostic tests Failure to follow up on abnormal or critical test results Failure to conduct a “time out” to insure that the correct surgical procedure is being performed on the correct patient at the correct site

Negligence is a form of conduct caused by heedlessness or carelessness that constitutes a departure from the standard of care generally imposed on reasonable members of society. It can occur when, after considering the consequences of an act, a person does not exercise the best possible judgment; when one fails to guard against a risk that should be appreciated; or when one engages in behavior expected to involve unreasonable danger to others. Negligence or carelessness of a professional person (e.g., nurse practitioner, pharmacist, physician, physician assistant) is referred to as malpractice, whereas criminal negligence is the reckless disregard for the safety of another (e.g., willful indifference to an injury that could follow an act).

Thousands of deaths occur each year as a result of medical errors. Although medical errors often involve misdiagnosis, delayed diagnosis, failure to diagnose, surgical errors, and prescription errors, not all medical errors are necessarily malpractice. Most medical or surgical interventions involve some degree of risk. It is the responsibility of the treating professional to inform his or her patient as to the inherent risks, benefits, and alternatives of a proposed treatment or procedure.







▸ FORMS OF NEGLIGENCE The three basic forms of negligence in FIGURE 3-1 are as follows:

1. Malfeasance: Performance of an unlawful or improper act (e.g., performing an abortion in the third trimester when prohibited by state law)

2. Misfeasance: Improper performance of an act, resulting in injury to another (e.g., administering the wrong dose of a medication, wrong site surgery (e.g., removal of a healthy kidney instead of the diseased kidney , removal of the healthy breast instead of the diseased breast , removal of the wrong leg during surgery )

3. Nonfeasance: Failure to act when there is a duty to act as a reasonably prudent person would in similar circumstances (e.g., failure to administer medications, failure to order diagnostic tests or prescribe necessary medications)

FIGURE 3-1 Forms of negligence.

3 4








▸ DEGREES OF NEGLIGENCE The use of the terminology, “degrees of negligence,” more aptly describes three generally accepted “degrees of care” that can affect the amount of damages in a negligence case.

1. Slight: Minor deviation of what is expected under the circumstances. 2. Ordinary: Failure to do what a reasonably prudent person would or

would not do under the circumstances. 3. Gross: The intentional or wanton omission of required care or

performance of an improper act.




▸ ELEMENTS OF NEGLIGENCE The following four elements of negligence (FIGURE 3-2) must be proven in order for a plaintiff to recover damages for negligence. When the four elements of negligence have been proven, the plaintiff is said to have presented a prima facie case of negligence, thus enabling the plaintiff to prevail in a lawsuit. The foundation of the columns in Figure 3-2 illustrates examples of negligent acts. The pillars represent each element of negligence that must be proven in order to establish that a negligent act has occurred. Any unproven element of negligence will defeat a lawsuit based on negligence.

FIGURE 3-2 The four elements of an act of negligence.

1. Duty to care Obligation to conform to a recognized standard of care.

2. Breach of duty Deviation from the recognized standard of care. Failure to adhere to an obligation.

3. Injury Actual damages must be established. If there are no injuries, monetary damages cannot be awarded the plaintiff(s).

4. Causation Departure from the standard of care must be the cause of the plaintiff’s injury. The injury must be foreseeable.

Duty to Care




Duty to care is defined as a legal obligation of care, performance, or observance imposed on one to safeguard the rights of others. Duty can arise from a special relationship such as that between a physician, nurse, or pharmacist and a patient. The existence of this relationship implies that a caregiver–patient relationship was in effect at the time an alleged injury occurred. In the case of a physician, duty to care can arise from a simple telephone conversation or out of a caregiver’s voluntary act of assuming the care of a patient. Duty also can be established by statute or contract between the plaintiff and the defendant.

Duty to care is depicted in FIGURE 3-3, where the pharmacy manager of General Hospital’s pharmacy, prior to leaving work for the day, assigns responsibility to the pharmacist behind the counter, telling her, “You’re in charge of the pharmacy, which includes the IV admixture room. Your duties and responsibilities are those as described in the pharmacy department policy and procedure manual. I will be leaving in an hour, so you should review them before I leave. If you have any questions after I leave, you can reach me on my cell phone.” This assignment established a duty on the part of the pharmacist to adhere to the policies and procedures in the department manual.

FIGURE 3-3 Duty to save. © Tyler Olsen/Shutterstock, Inc.

Breach of duty, injury, and causation are further illustrated next under the relevant headings.

Hastings Case: Duty to Stabilize the Patient 6




The surviving parents in Hastings v. Baton Rouge Hospital brought a medical malpractice action for the wrongful death of their 19-year-old son. The action was brought against the hospital; Dr. Gerdes, the emergency department (ED) physician; and the thoracic surgeon on call, Dr. McCool. The patient was brought to the ED at 11:56 PM because of two stab wounds and weak vital signs. Gerdes decided that a thoracotomy (an incision into the pleural space of the chest) had to be performed. He was not qualified to perform the surgery and called Dr. McCool, who was on call that evening for thoracic surgery. Gerdes described the patient’s condition, indicating that the patient had been stabbed in a major blood vessel. At trial, McCool claimed that he did not recall Gerdes saying that a major blood vessel could be involved. McCool asked Gerdes to transfer the patient to the Earl K. Long Hospital. Gerdes said, “I can’t transfer this patient.” McCool replied, “No. Transfer him.” Kelly, an ED nurse on duty, was not comfortable with the decision to transfer the patient and offered to accompany him in the ambulance. Gerdes reexamined the patient, who exhibited marginal vital signs, was restless, and was draining blood from his chest. The ambulance service was called at 1:03 AM, and by 1:30 AM, the patient had been placed in the ambulance for transfer. The patient began to fight wildly, the chest tube came out, and the bleeding increased. An attempt to revive him from a cardiac arrest was futile, and the patient died after having been moved back into the ED. The patient virtually bled to death in the ED.

The duty to care in this case cannot be reasonably disputed. Louisiana, by statute, imposes a duty on hospitals licensed in Louisiana to make emergency services available to all persons residing in the state regardless of insurance coverage or economic status. The hospital’s own bylaws provide that patient transfer should never occur without due consideration for the patient’s condition. The 19th Judicial District Court directed a verdict for the defendants, and the plaintiffs appealed. The court of appeals affirmed the district court’s decision. On further appeal, the Louisiana Supreme Court held that the evidence presented to the jury could indicate the defendants were negligent in their treatment of the victim. The findings of the lower courts were reversed, and the case was remanded for trial.

Hospitals are required to stabilize the patient prior to transfer. In this case, there was a surgeon on call who was available to treat this patient. McCool decided to practice telephone medicine and made the unfortunate decision to transfer the patient, which resulted in risking the life of an unstable patient, leading to his death.

Duty to Treat Emergency Patients In O’Neill v. Montefiore Hospital, the duty owed to the patient was clear. Mr. O’Neill had been experiencing pain in his chest and arms. He had walked with his wife to the hospital at 5:00 AM for care. After arriving at the hospital, O’Neill explained his pain. Upon learning that O’Neill was a member of the






Hospital Insurance Plan (HIP), the ED nurse stated that the hospital had no connection with HIP. The nurse contacted Dr. Graig, an HIP physician, and explained O’Neill’s symptoms. He allegedly suggested O’Neill be treated by an HIP physician later in the morning, at 8:00 AM. The nurse then handed the phone to O’Neill, who said to Dr. Graig, “Well, I could be dead by 8 o’clock.” Following his phone conversation with Dr. Graig, O’Neill spoke to the nurse, indicating that he had been told to go home and come back when HIP was open. Mrs. O’Neill, concerned about her husband, asked that a physician see her husband immediately. The nurse again requested that they return at 8:00 AM. Mrs. O’Neill said he could be dead by 8:00 AM. No help was offered, and the O’Neills left the ED to return home. O’Neill paused occasionally on his way home to catch his breath. Shortly after arriving home, he fell to the floor and expired. The plaintiff sought recovery against the hospital for failure to render necessary emergency treatment and against the physician for his failure and refusal to treat O’Neill. Dr. Graig claimed that he had offered to come to the ED but that O’Neill said he would wait and see a HIP physician that morning.

The New York Supreme Court for Bronx County entered a judgment dismissing the plaintiff’s complaint, and the plaintiff appealed the court’s ruling. The New York Supreme Court, Appellate Division, reversed the lower court’s decision and held that a physician who abandons a patient after undertaking examination or treatment can be held liable for malpractice. The proof of the record in this case indicated that the physician undertook to diagnose the ailments of the deceased by telephone, thus establishing at least the first element of negligence—duty to use due care. The finding of the trial court was reversed, and a new trial was ordered.

Duty to Hire Competent Employees Texas courts recognize that an employer has a duty to hire competent employees, especially if they are engaged in an occupation that could be hazardous to life and limb and requires skilled or experienced persons. For example, the appellant in Deerings West Nursing Center v. Scott was found to have negligently hired an employee that the appellant knew or should have known was incompetent, thereby causing unreasonable risk of harm to others. In this case, an 80-year-old visitor had gone to Deerings to visit her infirm older brother. During one visit, Nurse Hopper, a 6-foot-4-inch male employee of Deerings, confronted the visitor to prevent her from visiting. The visitor recalled that he was angry and just stared. She stated that upon his approach, she had thrown up her hands to protect her face, but he hit her on the chin, slapped her down on the concrete floor, and got on top of her, pinning her to the floor.

Hopper testified that he was hired sight unseen over the telephone by Deerings’s director of nursing. Even though the following day, Hopper completed an application at the nursing facility, he still maintained that he was hired over the phone. In his application, he falsely stated that he was a Texas





licensed vocational nurse (LVN). Additionally, he claimed that he had never been convicted of a crime. In reality, he had been previously employed by a bar, was not an LVN, had committed more than 56 criminal offenses of theft, and was on probation at the time of his testimony.

The trial court awarded the plaintiff a judgment of $35,000 for actual damages and $200,000 in punitive damages. The court of appeals held that there was sufficient evidence to support the findings that the employee’s failure to obtain a nursing license was the proximate cause of the visitor’s damages and that the hiring was negligent and also showed a heedless and reckless disregard of the rights of others.

It is common knowledge that the bleakness and rigors of old age, drugs, and the diseases of senility can cause people to become confused . . . and cantankerous. It is predictable that elderly patients will be visited by elderly friends and family. It is reasonable to anticipate that a man of proven moral baseness would be more likely to commit a morally base act on an 80- year-old woman. Fifty-six convictions for theft is some evidence of mental aberration. Hopper was employed not only to administer medicine but also to contend with the sometimes erratic behavior of the decrepit. The investigative process necessary to the procurement of a Texas nursing license would have precluded the licensing of Hopper. In the hiring of an unlicensed and potentially mentally and morally unfit nurse, it is reasonable to anticipate that an injury would result as a natural and probable consequence of that negligent hiring.

Deerings West Nursing Center showed a clear duty of care. The appellant violated the very purpose of Texas licensing statutes by failing to verify whether Hopper held a current LVN license. The appellant then placed him in a position of authority, allowed him to dispense drugs, and made him a shift supervisor. This negligence eventually resulted in the inexcusable assault on an elderly woman.

Duty to Nursing Facility Patient A concise statement of the duty a nursing facility owes to its residents is found in Lagrone v. Helman where an action was brought against the operator of the nursing facility for injuries sustained by the resident in a fall. The trial court, which rendered judgment for the defendant, stated in its instructions to the jury, “It was the duty of the defendants to use reasonable care for the safety of the appellant, consistent with her age and physical condition.” The plaintiff/appellant appealed the trial court’s decision and the Supreme Court of Mississippi affirmed the trial court’s decision. The resident was an ambulatory resident in the defendant nursing facility who suffered from cerebral arteriosclerosis, which subjected her to occasional dizzy spells. She had requested medication from a nurse employed by the facility and had followed her to the medicine cabinet. There were two conflicting statements as to what






occurred next. The plaintiff claimed that, after obtaining the medicine, the nurse suddenly, carelessly, and negligently whirled around and struck her, knocking her down and causing her to suffer a fracture of her left hip. The facility claimed that the nurse handed the pill to the plaintiff, who dropped it, and in bending over to pick it up, became dizzy and fell to the floor. Although judgment was entered for the nursing facility, had the jury accepted the plaintiff ‘s description of the facts, the result might have been liability for the nursing facility on the basis of respondeat superior.

Standard of Care The standard of care describes what conduct is expected of an individual in a given situation. The general standard of acceptable care is based on what a reasonably prudent person would do or not do acting under the same or similar circumstances. The reasonably prudent person doctrine describes a hypothetical person who is put forward as the community ideal of what would be considered reasonable behavior. One’s age, sex, physical condition, education, training, profession, knowledge, mental capacity, and requirements imposed by law determine the reasonableness of conduct. Deviation from the standard of care constitutes negligence if it can be shown that the resulting damages are caused by the breach of one’s duty to care.

The courts often rely on the testimony of an expert witness when determining the standard of care required of a health professional in the same or similar communities. Expert testimony is necessary when the jury is not qualified to determine what a reasonably prudent professional’s standard of care should be in a given situation. Most states hold those with special skills (e.g., physicians, nurse practitioners, physician assistants) to a higher standard of care, which is reasonable in light of their education and training. A registered nurse, for example, has the duty to exercise that degree of skill, care, and knowledge ordinarily possessed and exercised by other nurses. If a patient’s injury is the result of a physician’s negligent act, the standard of care required would be that degree of skill, care, and knowledge ordinarily possessed and exercised in the specialty the physician is practicing. In addition, an organization’s policies and procedures, regulatory requirements, and accreditation standards (e.g., The Joint Commission) can be used to help establish the standard of care required.

Duty Set by Statute Various state statutes can be used in establishing the duty to care. California Code of Regulations, Title 22, section 70217 reads in part:

(a) . . . only registered nurses shall be assigned to Intensive Care Newborn Nursery Service Units, which specifically require one registered nurse to two or fewer infants. In the Emergency Department, only registered nurses shall be assigned to triage patients and only registered nurses shall be assigned to critical trauma patients.




• • •

(1) The licensed nurse-to-patient ratio in a critical care unit shall be 1:2 or fewer at all times. “Critical care unit” means a nursing unit of a general acute care hospital which provides one of the following services: an intensive care service, a burn center, a coronary care service, an acute respiratory service, or an intensive care newborn nursery service. In the intensive care newborn nursery service, the ratio shall be 1 registered nurse: 2 or fewer patients at all times.

(2) The surgical service operating room shall have at least one registered nurse assigned to the duties of the circulating nurse and a minimum of one additional person serving as scrub assistant for each patient-occupied operating room. The scrub assistant may be a licensed nurse, an operating room technician, or other person who has demonstrated current competence to the hospital as a scrub assistant, but shall not be a physician or other licensed health professional who is assisting in the performance of surgery.

(3) The licensed nurse-to-patient ratio in a labor and delivery suite of the perinatal service shall be 1:2 or fewer active labor patients at all times. When a licensed nurse is caring for antepartum patients who are not in active labor, the licensed nurse-to-patient ratio shall be 1:4 or fewer at all times.

(4) The licensed nurse-to-patient ratio in a postpartum area of the perinatal service shall be 1:4 mother-baby couplets or fewer at all times. In the event of multiple births, the total number of mothers plus infants assigned to a single licensed nurse shall never exceed eight. For postpartum areas in which the licensed nurse’s assignment consists of mothers only, the licensed nurse-to-patient ratio shall be 1:6 or fewer at all times.

(5) The licensed nurse-to-patient ratio in a combined Labor/Delivery/Postpartum area of the perinatal service shall be 1:3 or fewer at all times the licensed nurse is caring for a patient combination of one woman in active labor and a postpartum mother and infant. The licensed nurse-to-patient ratio for nurses caring for women in active labor only, antepartum patients who are not in active labor only, postpartum women only, or mother-baby couplets only, shall be the same ratios as stated in subsections (3) and (4) above for those categories of patients.

(6) The licensed nurse-to-patient ratio in a pediatric service unit shall be 1:4 or fewer at all times.

(7) The licensed nurse-to-patient ratio in a postanesthesia recovery unit of the anesthesia service shall be 1:2 or fewer at all times, regardless of the type of anesthesia the patient received.

(8) In a hospital providing basic emergency medical services or comprehensive emergency medical services, the licensed nurse-to-patient ratio in an ED shall be 1:4 or fewer at all times that patients are receiving




treatment. There shall be no fewer than two licensed nurses physically present in the ED when a patient is present.

As in Hastings v. Baton Rouge Hospital, some duties are created by statute. As noted earlier, a Louisiana statute imposes a duty on licensed hospitals to make emergency services available to all persons residing in the state regardless of insurance coverage or economic status. Many such standards are created by administrative agencies under the provisions of a statute. To establish liability based on a defendant’s failure to follow the standard of care required by statute, the following elements must be present:

1. The defendant must have been within the specified class of persons outlined in the statute.

2. The plaintiff must have been injured in a way that the statute was designed to prevent.

3. The plaintiff must show that the injury would not have occurred if the statute had not been violated.

Duty Set by Policies and Procedures The standard of care that employees and agents of a healthcare entity must follow can be established through the healthcare organization’s internal policies, procedures, rules, and regulations. The courts generally hold that such internal operational standards are indicative of, for example, a hospital’s expectations of the proper procedures to be followed in rendering patient care and, hence, create a duty to adhere to those standards. Thus, if an employee fails to adhere to a hospital’s written standards of care and a patient is injured, the employee who violates those standards can be considered negligent if the patient is injured as a result of that violation.

Ethics and the Standard of Care The standard of care required by a caregiver can in part be influenced by the principles of ethics that apply to the caregiver’s profession. For example, a decision concerning termination of resuscitation efforts is an area where the standard of care includes an ethical component. Under these circumstances, it occasionally may be appropriate for a medical expert to testify about the ethical aspects underlying the professional standard of care.

Community Versus National Standard of Care The courts have been moving away from reliance on a community standard and applying an industry or national standard. This trend has developed as a result of the more reasonable belief that the standard of care should not vary with the locale where an individual receives care. It is unreasonable for any one healthcare facility and/or healthcare professional to set the standard simply because there is no local basis for comparison. Geographic proximity rules have increasingly given way to a national standard, with the standard in the professional’s general locality becoming a factor in determining whether




the professional has exercised that degree of care expected of the average practitioner in the class to which he or she belongs.

The ever-evolving advances in medicine and mass communications, the availability of medical specialists, the development of continuing education programs, and the broadening scope of government regulations continue to raise the standard of care required of healthcare professionals and organizations. As a result, many courts have adopted the view that the practice of medicine should be national in scope. In Dickinson v. Mailliard, the court stated:

Hospitals must now be licensed and accredited. They are subject to statutory regulation. In order to obtain approval they must meet certain standard requirements. . . . It is no longer justifiable, if indeed it ever was, to limit a hospital’s liability to that degree of care which is customarily practiced in its own community. . . . [M]any communities have only one hospital. Adherence to such a rule, then, means the hospital whose conduct is assailed, is to be measured only by standards which it has set for itself.

The Court of Appeals of Maryland, in Shilkret v. Annapolis Emergency Hospital Association, stated:

[A] hospital is required to use that degree of care and skill which is expected of a reasonably competent hospital in the same or similar circumstances. As in cases brought against physicians, advances in the profession, availability of special facilities and specialists, together with all other relevant considerations, are to be taken into account.

Evidence of the standard of care applicable to professional activities may be found in a variety of documents, such as regulations of government agencies (e.g., state licensure laws) and standards established by private organizations, such as The Joint Commission. Although the courts tend to prefer a broader standard of care, the community standard can be extremely important in any given situation.

Assume for a moment that the question is whether a doctor in a remote area of Alaska has placed patients at an unnecessarily high risk by receiving telephone inquiries from nurses in Eskimo villages at even more remote areas and attempting to prescribe by phone. Clearly, such conduct would violate the standard of care in San Francisco and, in San Francisco, would place his patients in an “unnecessarily” high-risk situation. For the doctor in Alaska, on the other hand, this method of consultation may be the only possible one, and thus not at all unnecessary or a gross and flagrant violation.







Hospital Must Meet Nationwide Standard The parents in Wickliffe v. Sunrise Hospital sued the hospital for the wrongful death of their teenage daughter, who suffered respiratory arrest while recovering from surgery. The Nevada Supreme Court held that the level of care to which the hospital must conform is a nationwide standard. The hospital’s level of care is no longer subject to narrow geographic limitations under the so-called locality rule; rather, the hospital must meet a nationwide standard.

Furthermore, the Georgia Court of Appeals in Hodges v. Effingham held that application of the locality rule was erroneous in an action against the hospital. The alleged failure of nurses to take an accurate medical history of the patient’s serious condition and convey the information to the physician drew into question the professional judgment of the nurses. The jury should have been instructed as to the general standard of nursing required.

There are no degrees of care in fixing responsibility for negligence, but the standard is always that care which a reasonably prudent person should use under like circumstances. The duty to exercise reasonable care is a standard designed to protect a society’s members from unreasonable exposure to potentially injurious hazards; negligence is conduct that falls short of the reasonable care standard. Perfection of conduct is humanly impossible; however, and the law does not exact an unreasonable amount of care from anyone.

Professionals Held to a Higher Standard Most states hold those with special skills to a standard of care that is reasonable in light of their special abilities and knowledge. The plaintiff, for example in Kowal v. Deer Park Fire District submitted affidavits from two doctors who stated that, to a reasonable degree of medical certainty, the death of the plaintiff’s decedent “was caused by severe and extensive cerebral anoxia caused by . . . incorrect intubation,” that the incorrect intubation of the decedent constituted medical malpractice. The failure to recognize that the patient’s condition constituted a gross departure from good and accepted practice of what is a commonplace medical technique. Assuming that the deposition testimony of the defendants established prima facie evidence that they were not grossly negligent, the sworn opinion of the plaintiff’s experts established that there were issues of fact that precluded the granting of summary judgment.

Specialists, in particular, are held to a higher standard of care than nonspecialists. Generally, the reliance of the public on the skills of a specialist and the wealth and sources of his or her knowledge is not limited to the geographic area in which he or she practices. Rather, his or her knowledge is a specialty; a person specializes to keep abreast. Any other standard for a








specialist would negate the fundamental expectations and purpose of a specialty.

Expert Testimony to Establish Required Standard Traditionally, in determining how a reasonably prudent person should perform in a given situation, the courts rely on the testimony of an expert witness as to the standard of care required in the same or similar communities.

Locality Cannot Be Limited to County Lines The plaintiff’s expert witness in Stogsdill v. Manor Convalescent Home, Inc., and Hiatt, MD, who practiced about 12 miles from the convalescent home where the defendant physician treated the plaintiff, was found competent to testify. The defendant objected, stating the expert never practiced in the county where the malpractice occurred. The court overruled this objection on the grounds that locality cannot be construed so narrowly as to be determined by county lines. Expert testimony like that in Stogsdil is necessary when a jury is not trained or qualified to determine what the reasonably prudent professional’s standard of care would be under similar circumstances.

Breach of Duty Once a duty to care has been established, the plaintiff must demonstrate that the defendant breached that duty by failing to comply with the accepted standard of care. Breach of duty is the failure to conform to or the departure from a required duty of care owed to a person. The obligation to perform according to a standard of care can encompass either performing or failing to perform a particular act.

Breach of duty is illustrated in FIGURE 3-4, where the IV admixture room pharmacist checking the work of a pharmacy technician failed to follow up on his concern as to whether or not the medication in the intravenous (IV) bag had been diluted in the correct dosage. Hospital policies and procedures often provide that when there are questions regarding an order, the pharmacy assistant must seek verification from the pharmacist when a medication order raises concern as to the medication ordered, dosage, and/or route to be administered (e.g., injection, IV). In this instance, failure to follow up established a breach of duty.





FIGURE 3-4 Breach of duty. © Minerva Studio/Shutterstock, Inc.

Hastings Case: Breach of Duty The court in Hastings v. Baton Rouge Hospital, which was discussed earlier, found there was a breach of duty when the patient did not receive adequate care. Hospital regulations provided that when a physician cannot be reached or refuses a call, the chief of service must be notified so that another physician can be obtained. This was not done. A plaintiff need not prove that the patient would have survived if proper treatment had been administered, only that the patient would have had a chance of survival. As a result of Dr. Gerdes’s failure to make arrangements for another physician and Dr. McCool’s failure to perform the necessary surgery, the patient had no chance of survival. The duty to provide for appropriate care under the circumstances was breached.

Failure to Provide a Safe Environment In Dunahoo v. Brooks, the nursing facility was found to have breached its duty when a patient tripped over an obviously ill-placed light cord. The court stated that because the defendant nursing facility operator had been aware of the 94-year-old plaintiff’s infirmities and had agreed to provide her nursing care, the nursing facility assumed an obligation to exercise care commensurate with her physical condition. While the plaintiff was getting out of bed, she tripped and fell over a light cord that was loose on the floor in an area that the defendant knew the plaintiff frequently used. The cord was plugged into a socket on the floor 5 inches from the baseboard. The court was impressed with the ease with which the situation could have been corrected, noting that the cord could have been fastened down with a few nails and the outlet placed on the baseboard instead of nearly in the middle of the floor.






Responsibility to Protect Patient The nursing facility was found negligent in Booty v. Kentwood Manor Nursing Home, Inc., when a 90-year-old resident wandered outside the facility, fell, and suffered a hip fracture. The resident’s physical condition deteriorated, and he eventually died. The staff was aware of the resident’s confusion and tendency to stray. The court found that the facility was responsible for taking reasonable steps to prevent injury to a mentally confused and physically fragile resident. The facility’s alarm system might have alerted the staff of unauthorized resident departures, but it had been deactivated, and the doors were propped open for the convenience of the staff. The record demonstrated that inadequate supervision was the cause of resident’s departure and that he most likely would not have suffered injury but for the nursing facility’s breach of duty owed to the resident.

Injury Injury includes physical harm, pain, suffering, and loss of income or reputation. A defendant may be negligent and still not incur liability if no injury or actual damages result to the plaintiff. Without harm or injury, there is no liability. The mere occurrence of an injury “does not establish negligence for which the law imposes liability, because the injury may be the result of an unavoidable accident, or an act of God, or some cause so remote to the person sought to be held liable for negligence that he cannot be charged with responsibility for the injury.”

FIGURE 3-5 portrays the administration of an incorrect dose of an IV medication that had been improperly diluted in the hospital’s pharmacy, which led to the injury and ultimate death of an infant in General Hospital’s nursery.






FIGURE 3-5 Injury. © Paul Hakimata Photography/Shutterstock

Hastings Case: Injury Hastings went into cardiac arrest. An attempt to revive him was futile and the patient died after having been moved back to the ED. The patient virtually bled to death, thus establishing the third element required to establish proof that a negligent act had been committed.

Failure to Render Care Injury was obvious in Lucas v. HCMF Corp., where the patient had been transferred to a nursing facility following hospitalization for several ailments, including early decubitus ulcers. The resident was returned to the hospital days later. “At that time the ulcer on her hip had become three large ulcers that reached to the bone and tunneled through the skin to meet one another. The ulcer on her buttocks had grown from one inch in diameter to eight inches in diameter and extended to the bone. Additional ulcers had developed on each of her ribs, on her left arm and wrist, and on the left side of her face.” The standard of care in preventing and treating decubitus ulcers required that the resident be mobilized and turned every 2 hours to prevent deterioration of tissue. The treatment records reflected that the resident was not turned at all from September 22 through October 1, nor was she turned on October 4, 7, or 12. Failure to periodically turn the resident and move her to a chair had caused the deterioration in her condition.

Multiple Punctures in Starting Central Line In the medical malpractice case of Goodwin v. Kufoy, the internist failed to successfully start a central line in order for the patient to receive her prescribed medication intravenously. During the attempts to start the central line, the internist made an indeterminate number of puncture wounds at four different sites on the patient’s body. The patient alleged that she experienced physical pain and suffering as a result of the multiple puncture wounds. Her pain, however, was managed successfully with medication, and no further treatment was sought.

The patient filed a lawsuit against the internist, and a medical review panel was formed. The medical review panel’s opinion found that the patient failed to show that the treating internist had breached the standard of care.

The patient then brought her case to trial in district court. The trial court found that the patient failed to establish the applicable standard of care, failed to prove that the internist had breached any standard of care, and failed to prove that she suffered any damages as a result of the unsuccessful procedure.








The patient appealed, contending that the trial court erred in finding she failed to establish the standard of care. The plaintiff claimed the internist failed to obtain a consult from a specialist, after multiple puncture wounds to start a central line. The State of Louisiana Court of Appeal, 3rd Circuit, agreed that the patient had established the standard of care. However, the plaintiff did not prove that she suffered any damages as a result of the defendant’s failed attempts to start a central line.

Causation The element of causation requires that there be a reasonable, close, and causal connection or relationship between the defendant’s negligent conduct and the resulting damages. In other words, the defendant’s negligence must be a substantial factor causing the plaintiff’s injury. Proximate cause is a term that refers to the relationship between a breach of duty and the resulting injury. The breach of duty must be the proximate/direct cause of the resulting injury. The mere departure from a proper and recognized procedure is not sufficient to enable a patient to recover damages unless the plaintiff can show that the departure was unreasonable and the proximate cause of the patient’s injuries.

The courts generally apply the but-for rule to determine if the injury is directly the result of a defendant’s act or omission of an act. A finding that an injury would not have occurred but for a defendant’s act establishes that the particular act or omission is the proximate cause of the harm. If an injury would have occurred regardless of a defendant’s negligent act, liability cannot be assigned to the defendant. “Thus, in a death case, if a defendant physician, by action or inaction, has destroyed any substantial possibility of the patient’s survival, such conduct becomes a proximate cause of the patient’s death. The law does not require the plaintiff to prove to a certainty that the patient would have lived had he received more prompt diagnosis and treatment for the condition causing the death.”

FIGURE 3-6 portrays a defense attorney successfully arguing that the cause of death of an infant in General Hospital’s nursery was due to the failure of the pharmacist to properly verify that the IV medication had been properly diluted and labeled by the pharmacy technician in the hospital’s pharmacy. The IV solution, containing the medication, was delivered to the nursery, where the nurse checked the label, unaware that the medication left the pharmacy mislabeled and improperly diluted, she administered it to the infant, who subsequently died. Those actions combined to establish the proximate cause of the injury, the fourth element of negligence—causation.





FIGURE 3-6 Causation determined. © Junial Enterprises/Shutterstock

Hastings Case: Causation Causation in the Hastings v. Baton Rouge Hospital, discussed earlier, was well established. In the ordinary course of events, Hastings would not have bled to death in a hospital ED over a 2-hour period without some surgical intervention to save his life. “As a result of Dr. Gerdes’s failure to obtain another surgeon and Dr. McCool’s failure to operate, Cedric had no chance of living. Requiring his survivors to prove that surgery would have saved him would be an unreasonable burden.”

Failure to Alert Patient of Misread Computed Tomography Scan On November 2, 1995, the plaintiff, in St. Dic v. Brooklyn Hospital Center, was admitted to the hospital complaining of a severe headache, an inability to open her eyes, and the absence of feeling in her legs. A computed tomography (CT) scan was administered, which the defendant conceded was misread by the staff physician as normal. After discharging the plaintiff from its care, the defendant’s radiologist reviewed the CT and concluded it was, in fact, not normal. The defendant did not contact the plaintiff to alert the defendant about the revised finding. The hospital conceded that its employee misread the CT. Failure to alert the plaintiff and the misreading were departures from accepted medical practice, the jury properly found that those conceded departures were the proximate causes of the plaintiff’s injury. “The principal issue presented on this appeal is whether those conceded departures







were the proximate causes of the plaintiff’s injury. Contrary to the defendant’s contention, the evidence adduced at trial was legally sufficient to support the jury’s verdict on causation.”

Failure to Refer In Robinson v. Group Health Association, Inc., the District of Columbia Court of Appeals held that there was a genuine issue of material fact as to whether the failure of a group health provider to treat a patient’s diabetes aggressively resulted in the amputation of his leg below the knee. The testimony of the plaintiff’s expert, as it related to the issue of proximate cause, was sufficient to allow the case to go to the jury. According to the expert witness, the failure of the provider to refer the patient for vascular evaluation resulted in his below- the-knee amputation. The expert testified to a reasonable degree of medical certainty, which he equated to a greater than 50% chance, that if there had been an early vascular consult, followed by an angioplasty and perhaps a partial foot amputation, a below-the-knee amputation could have been avoided. Although the provider presented contrary testimony, the plaintiff’s expert testimony was found sufficient to permit a reasonable juror to find that there was a direct and substantial causal relationship between the provider’s breach of the standard of care and the patient’s injuries.

The primary wrong upon which a cause of action for negligence is based consists of the breach of a duty on the part of one person to protect another against injury, the proximate result of which is an injury to the person to whom the duty is owed. These elements of duty, breach, and injury are essentials of actionable negligence, and in fact, most judicial definitions of the term “negligence” or “actionable negligence” are couched in those terms. In the absence of any one of them, no cause of action for negligence will lie.

Causation Not Established: Case Dismissed Mrs. Stewart was admitted to the hospital with inflammation of the gallbladder, and the surgeon began antibiotics. Stewart, however, died early the next morning. The county medical examiner stated that the cause of death was a result of a blood-borne infection. The plaintiff’s nurse provided expert testimony in a deposition that a registered nurse at the hospital failed to meet the nursing standard of care in treating the patient. A chart was produced identifying 11 instances in which the hospital nurse allegedly failed to meet the nursing standard of care, including failure to assess the need for oxygen therapy, failure to note abnormal breath sounds and severity or location of pain, failure to assess urinary retention, and failure to assess vital signs and nausea. The plaintiff, Stewart’s husband, contended that the evidence established that the defendants violated the nursing standard of care and that their failures were the proximate cause of his wife’s death. The defendants moved for dismissal and the superior court granted the motion. The Court of Appeals of Washington, Division Three, in Stewart v. Newbold, found that the plaintiff—Stewart’s husband—failed to establish any genuine issue on the








question of proximate causation. The trial court properly dismissed the claims against the nurse and hospital.

Eliminating Causes Another way to establish the causal relationship between the particular conduct of a defendant and a plaintiff’s injury is through the process of eliminating causes other than the defendant’s conduct. As an example, in Shegog v. Zabrecky, Mr. Pereyra sought treatment for back pain from Dr. Zabrecky, a chiropractor at the Life Extension Center, in January 1987. Zabrecky ordered X-rays. The X-rays revealed that Pereyra was suffering from a fractured vertebra caused by a malignant tumor. Pereyra was referred to a surgeon, who performed two surgical procedures to remove the tumor. Pereyra underwent a series of radiation treatments, which were supervised by Dr. Usas. A CT scan revealed that the cancer had spread to his lungs. Dr. Usas and other consulting physicians recommended that chemotherapy be considered following the course of radiation treatments. Pereyra was advised that his chance of survival following chemotherapy was 50% or better. During the summer of 1987, Pereyra consulted with a number of physicians as to the best course of treatment. Pereyra continued to see Zabrecky throughout the summer and fall of 1987. Zabrecky recommended that Pereyra reject the chemotherapy treatments and undergo a course of treatment with neytumorin and neythymin (two compounds manufactured in Germany). The Food and Drug Administration had not approved either drug. Pereyra agreed to undergo the treatment. Zabrecky performed an initial enzyme study prior to treatment, but did not perform further tests after the course of treatment began. During the course of treatment, the cancer continued to spread. Additional radiation treatments were given. Pereyra’s condition worsened, and he was admitted to the hospital. The physicians at the hospital had not been aware that Pereyra was injecting himself with drugs given to him by Zabrecky. Upon urging from his wife, Pereyra revealed this information to the physicians at the hospital. Pereyra died on December 17, 1987, approximately 6 weeks after he had begun treatment with neytumorin and neythymin. An autopsy revealed that Pereyra had died from necrosis of the liver caused by a toxic reaction to a foreign substance. Pereyra was taking only the drugs neytumorin and neythymin between July 1987 and his death. No cancer was found in the liver.


Citation: Caruso v. Pine Manor Nursing Ctr., 538 N.E.2d 722 (Ill. App. Ct. 1989)


In Illinois, a nursing facility by statute has a duty to provide its residents with proper nutrition. Under the Nursing Home Care Reform Act, the owner and licensee of a nursing home are liable to a resident for any intentional or





negligent act or omission of their agents or employees that injures a resident. The act defines neglect as a failure of a facility to provide adequate medical or personal care or maintenance, when failure results in physical or mental injury to a resident or in the deterioration of the resident’s condition. Personal care and maintenance include providing food, water, and assistance with meals necessary to sustain a healthy life. The nursing facility in this case maintained no records of the resident’s fluid intake or output. A nurse testified that such a record is a required nursing facility procedure that should have been followed for a person in the resident’s condition, but was not.

The resident’s condition deteriorated after staying 6.5 days at the facility. Upon leaving the facility and entering a hospital ED, the resident was diagnosed by the treating physician as suffering from severe dehydration caused by an inadequate intake of fluids. The nursing facility offered no alternative explanation for the resident’s dehydrated condition.

The trial court found that the record supported a finding that the resident had suffered from dehydration as a result of the nursing facility’s negligence. The defendant appealed the jury verdict.


Did the resident suffer harm as a result of Pine Manor Nursing Center’s negligence?


The Illinois Appellate Court upheld the trial court’s finding that the resident suffered dehydration due to the nursing facility’s negligence.


The evidence demonstrated that the proximate cause of the resident’s dehydration was the nursing facility’s failure to administer proper nourishment; therefore, the jury reasonably concluded that the nursing facility’s negligence caused the dehydration.

A lawsuit was filed against the defendants, seeking damages for negligent treatment. The alleged negligent acts included:

Administering drugs statutorily prohibited for use Withholding information from treating physicians Failing to follow patient’s blood work Advising the patient to use drugs that had expired




Engaging in the unlicensed practice of medicine Inducing the patient to forgo appropriate therapy

The jury delivered a verdict for the plaintiff. The defendants appealed, claiming that the evidence introduced at trial did not support the jury’s finding as to causation. The appellate court held that Zabrecky’s grossly negligent actions and the circumstantial evidence introduced supported the jury’s finding of causation. Zabrecky violated a recognized standard of care by prescribing statutorily prohibited drugs. No evidence was presented that would have supported another cause of the patient’s liver failure. Reports from treating physicians indicate that the plaintiff died of liver failure and not from cancer. The defendant’s expert testified that necrosis of the liver can be caused by the injection of foreign substances. He also testified that the normal reaction time of the human liver to a foreign protein is, on average, 6 weeks.

One of the ways to establish the causal relationship between particular conduct of a defendant and a plaintiff’s injury is the expert’s deduction, by the process of eliminating causes other than the conduct, that the conduct was the cause of injury. . . . The submitted reports indicate that each physician deduced that the German drugs were the most probable cause of Pereyra’s liver failure, even without analysis of the drugs.

Foreseeability Foreseeability is the reasonable anticipation that harm or injury is likely to result from a commission or omission of an act. The test for foreseeability is whether one of ordinary prudence and intelligence should have anticipated the danger to others caused by his or her negligent act. The test for foreseeability is not what the wrongdoer believed would occur; instead, it is whether the wrongdoer ought to have reasonably foreseen that the event in question, or some similar event, would occur. The broad test of negligence is what a reasonably prudent person would or should normally foresee and would do in light of this foresight under the circumstances.

Foreseeability involves guarding against that which is probable and likely to happen, not against that which is only remotely possible. There is no expectation that a person can guard against events that cannot reasonably be foreseen or that are so unlikely to occur that they would be disregarded.

When a defendant’s action or actions breach the standard of care and injury is the result of the breach, the jury must make two determinations. First, was it foreseeable that harm would occur from the failure to meet the standard of care? Second, was the carelessness or negligence the proximate or immediate cause of the harm or injury to the plaintiff?

In Hastings v. Baton Rouge Hospital, it was highly probable that the patient would die if the bleeding was not stopped. The broad test of negligence is







what a reasonably prudent person would foresee and would do in the light of this foresight under the circumstances.

In Haynes v. Hoffman, the plaintiff brought a medical malpractice action against the defendant physician for his alleged negligence in prescribing a medication from which the plaintiff suffered an allergic reaction. The trial court returned a verdict in favor of the defendant, and the plaintiff appealed. The evidence at trial revealed that the plaintiff had not disclosed her history of allergies to the physician. The physician testified that, at the time of the physical examination, the plaintiff denied having any allergies. The plaintiff was found to have contributed to her injuries by failing to provide her physician information regarding her known allergies.

The question of foreseeability was an issue in Ferguson v. Dr. McCarthy’s Rest Home. In this case, the plaintiff, a resident in the defendant’s nursing facility, suffered from paralysis of the left side of the body but was able to roll toward the left side in bed. The defendant had knowledge of this ability. A radiator, which was approximately the same height as the bed, was next to the plaintiff’s bed. During the night, the plaintiff’s left foot came in contact with the radiator, and she suffered third-degree burns. The court held that this kind of accident was foreseeable with respect to a person in the plaintiff’s condition, particularly because the defendant had knowledge of the plaintiff’s condition. The defendant should have shielded the radiator or not placed the plaintiff next to it.

Generally, the issue of foreseeability is for the trial court to decide. A duty to prevent a wrongful act by a third party will be imposed only where those wrongful acts can be reasonably anticipated.






▸ SUMMARY CASE All the elements necessary to establish negligence were well established in Niles v. City of San Rafael. On June 26, 1973, at approximately 3:30 PM, Kelly Niles, a young boy, got into an argument with another boy on a ball field, and he was hit on the right side of his head. He rode home on his bicycle and waited for his father, who was to pick him up for the weekend. At approximately 5:00 PM, his father arrived to pick him up. By the time they arrived in San Francisco, Kelly appeared to be in a great deal of pain. His father then decided to take him to Mount Zion Hospital, which was a short distance away. He arrived at the hospital ED at approximately 5:45 PM. On admission to the ED, Kelly was taken to a treatment room by a registered nurse. The nurse obtained a history of the injury and took Kelly’s pulse and blood pressure. During his stay in the ED, he was irritable, vomited several times, and complained that his head hurt. An intern who had seen Kelly wrote, “pale, diaphoretic, and groggy,” on the patient’s chart. Skull X-rays were ordered and found to be negative except for soft tissue swelling that was not noted until later. The intern then decided to admit the patient. A second-year resident was called, and he agreed with the intern’s decision. An admitting clerk called the intern and indicated that the patient had to be admitted by an attending physician. The resident went as far as to write “admit” on the chart and later crossed it out. A pediatrician who was in the ED at the time was asked to look at Kelly. The pediatrician was also the paid director of the Mount Zion Pediatric Outpatient Clinic.

Haskins talked to Kelly in the emergency room, but he did not examine Kelly or look at his chart. Then Haskins talked to Kelly’s father, concluded he was a responsible person, and told him Kelly could go home. Haskins advised Niles to watch for dilation of the pupils in Kelly’s eyes, and to be sure that Kelly could be aroused from sleep. The pediatrician asked Kelly a few questions and then decided to send him home.

The physician could not recall what instructions he gave the patient’s father, but he did give the father his business card. The pediatrician could not recall giving the father a copy of the ED’s head injury instructions, an information sheet that had been prepared for distribution to patients with head injuries. The head injury pamphlet described under what circumstances the patient should be returned to the ED should any of the following signs appear:

1. A large, soft lump on the head 2. Unusual drowsiness (cannot be awakened) 3. Forceful or repeated vomiting 4. A fit or convulsion (jerking or spells) 5. Clumsy walking 6. Bad headache






7. One pupil larger than the other

Although Kelly exhibited several of these signs while he was in the ED, he was discharged. Kelly was taken back to his father’s apartment at about 7:00 PM. A psychiatrist, a friend of Kelly’s father, had stopped by later that evening. He examined Kelly and noted that one pupil was larger than the other. Because the pediatrician could not be reached, Kelly was taken back to the ED. A physician on duty noted an epidural hematoma during his examination and ordered that a neurosurgeon be called.

Today, Kelly can move only his eyes and neck. A lawsuit against Mount Zion and the pediatrician for $5 million was instituted. The city of San Rafael and the public school district also were included in the lawsuit as defendants. Expert testimony by two neurosurgeons during the trial indicated that the patient’s chances of recovery would have been very good if he had been admitted promptly. This testimony placed the proximate cause of the injury with the hospital. The final judgment was $4 million against the defendants, $2.5 million for compensatory damages, and another $1.5 million for pain and suffering.

Case Lessons Each case presented in this textbook illustrates actual experiences of plaintiffs and defendants, enabling the reader to apply the lessons learned to real-life situations. The many lessons in Niles v. City of San Rafael include the following:

An organization can improve the quality of patient care rendered in the facility by establishing and adhering to policies, procedures, and protocols that facilitate the delivery of quality care across all disciplines. The provision of quality health care requires collaboration across disciplines. A physician must conduct a thorough and responsible examination and order the appropriate tests for each patient, evaluating the results of those tests and providing appropriate treatment prior to discharging the patient. A patient’s vital signs must be monitored closely and documented in the medical record. Corrective measures must be taken when a patient’s medical condition signals a medical problem. A complete review of a patient’s medical record must be accomplished before discharging a patient. Review of the record must include review of test results, nurses’ notes, residents’ and interns’ notes, and the notes of any other physician or consultant who may have attended the patient.




An erroneous diagnosis leading to the premature dismissal of a case can result in liability for both the organization and physician.

Collaboration in Tort Reform Physicians and, increasingly, advanced practice practitioners (e.g., physician assistants and nurse practitioners) are on the front lines of medicine but often have been excluded from the decision-making processes that threaten their autonomy and financial security. A concerted effort must be made to include them in the process of tort reform. The present system of punishment for all because of the inadequacies of the few has proven to be costly and far from effective.

The medical malpractice insurance crisis continues to be a major dilemma for the healthcare industry. Although there have been many approaches to resolving the crisis, there appears to be no one magic formula. The solution most likely will require a variety of efforts, including tort reforms, some of which have been reviewed earlier here.


The Ohio Court of Appeals held that the delay in providing the plaintiff treatment fell below the medically acceptable standard of care. The court was appalled that the physician had characterized his evaluation as a medical examination or had implied that what he described as a “cursory breast examination” should be considered a medically sufficient breast examination. It seemed incredible to the court that a physician would deliberately choose not to take the additional few minutes or seconds to thoroughly palpitate the sides of the breasts, which is a standard, minimally intrusive cancer detection technique. His admission that he merely “pressed” on the plaintiff’s breasts, coupled with the additional admission that such acts would not necessarily disclose lumps in the breasts, constituted poor medical care.

It was probable that an earlier procedure would have safely and reliably conserved a large part of the plaintiff’s right breast. Through inexcusable delays, the plaintiff lost this option and, instead, was medically required to have the entire breast removed. The court concluded that the defendant’s negligence was the sole and proximate cause of the plaintiff’s losses.42







▸ CHAPTER REVIEW 1. A tort is a civil wrong that is committed against a person or property for

which a court provides a remedy in the form of an action for damages. 2. Negligence is a tort—a civil or personal wrong that is the unintentional

commission or omission of an act that a reasonably prudent person would or would not do under the same or similar circumstances.

3. Forms of negligence Malfeasance: the execution of an unlawful or improper act. Misfeasance: the improper performance of an act that results in injury to another. Nonfeasance: a failure to act when there is a duty to do so.

4. Degrees of negligence Ordinary negligence: the failure to do what a reasonably prudent person would do or doing what a reasonably prudent person would not do under the circumstances of the act or omission in question. Gross negligence: the intentional or wanton omission of care that should be provided or the performance of an improper act.

5. Elements of negligence Duty to care: the legal obligation or obligatory conduct owed by one person to another. The standard of care is the conduct expected of an individual in a given situation. Breach of duty: the failure to meet a prevailing standard of care. Injury: without proof of harm or injury, a defendant cannot be found liable for negligence. Causation: the defendant’s negligence must be a substantial factor in having caused injury.

Foreseeability: the reasonable anticipation that harm or injury will result from an act or a failure to act. Test for foreseeability: whether one should have reasonably anticipated that the event in question or a similar event would occur.




▸ REVIEW QUESTIONS 1. Describe the objectives of tort law. 2. Explain the difference between negligence and malpractice. 3. Describe the elements of a negligence that the plaintiff must establish

in a negligence suit. 4. Describe the importance of causation in establishing liability in a

negligence suit.





1. Tomcik v. Ohio Dep’t of Rehabilitation & Correction, 62 Ohio Misc.2d 324, 598 N.E.2d 900 (Ohio Ct. App. 1991).

2. Id. at 904.

3. Clare Kitchen, “You’re Taking Out Wrong Kidney, Surgeon Was Told,” kidney-surgeon-told.html#ixzz4sTYYdGM2

4., “Wrong Breast and Wrong Kidney Removed as a Result of Two Inexcusable Surgical Errors,” removed-as-a-result-of-two-inexcusable-surgical-errors

5., “Doctor Who Cut Off Wrong Leg Is Defended by Colleagues,” The New York Times, September 17, 1995. defended-by-colleagues.html

6. 498 So. 2d 713 (La. Ct. App. 1986).

7. 11 A.2d 132 (N.Y. App. Div. 1960).

8. 787 S.W.2d 494 (Tex. Ct. App. 1990).

9. Id. at 496.

10. 233 Miss. 654, 103 So. 2d 365 (1958).

11. 175 N.W.2d 588, 596 (Iowa 1970).

12. 349 A.2d 245 (Md. 1975).

13. Greene v. Bowen, 639 F. Supp. 544, 561 (E.D. Cal. 1986).

14. 706 P.2d 1383 (Nev. 1985).

15. 355 S.E.2d 104 (Ga. Ct. App. 1987).

16. 57A AM. JUR. 2D Torts § 26 (1989).

17. No. 2004-00863 (N.Y. App. Div. 2004).

18. 343 N.E.3d 589 (Ill. 1976).

19. 498 So. 2d 713 (La. Ct. App. 1986).

20. 128 So. 2d 485 (Ala. 1961).

21. 483 So. 2d 634 (La. Ct. App. 1985).

22. 57A AM. JUR. 2D Torts § 78 (1989).

23. 384 S.E.2d 92 (Va. 1989).

24. Id.

25. 974 So. 2d 815 (La. App. 2008).




26. Brown v. Koulizakis, 229 Va. 524, 331 SE.2d 440 at 446 (1985).

27. 498 So. 2d 713 (La. Ct. App. 1986).

28. Id at 71.

29. St. Dic v. Brooklyn Hospital Center, 12 A.D. 3rd 661 (2004).

30. Id. at 662.

31. 691 A.2d 1147 (D.C. App. 1997).

32. 57A AM. JUR. 2D Torts § 80 (1989).

33. 112 Wash. App. 1027 (2002).

34. 654 A.2d 771 (Conn. App. 1995).

35. Id. at 777.

36. Clark v. Wagoner, 452 S.W.2d 437, 440 (Tex. 1970).

37. 57A AM. JUR. 2D Torts § 134 (1989).

38. 296 S.E.2d 216 (Ga. Ct. App. 1982).

39. 142 N.E.2d 337 (Mass. 1957).

40. 116 Cal. Rptr. 733 (Cal. Ct. App. 1974).

41. Id.

42. Supra, Tomcik v. Ohio Dep’t of Rehabilitation & Correction.




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Intentional Torts


FALSE ARREST In Desai v. SSM Healthcare, Dr. Desai was walking across a hospital parking lot, a shortcut to the St. Louis University Medical School’s Institute of Molecular Virology, where he worked as part of his graduate studies. Two security guards, Mr. Mealey and Mr. Windam, stopped Desai and asked him for identification. Desai said that he was a doctor and that he did not have his identification with him. Following an argument, the two security guards grabbed Desai’s arms and Windam slammed Desai’s head against the trunk of a car. After handcuffing him, the security guards escorted Desai back to the security office where they were joined by the security guards’ supervisor. The handcuffs were eventually removed after the security guards received verification that Desai was affiliated with the institute and confirmation from a nurse supervisor that he was a physician. Shortly thereafter, the university campus police arrived. One of the officers asked Desai to apologize to Mealey. Desai refused and said that he wanted the St. Louis city police called, because he wanted to file an official complaint of assault. At the request of the security guards, Desai was handcuffed again and arrested by the St. Louis police for trespassing. The security guards later admitted that they had Desai arrested to avoid trouble for themselves. Desai was not released from jail until noon the following day. While in jail, he suffered headaches and seizures. Desai brought suit against the hospital and security guards for false imprisonment, battery, and malicious prosecution.

The defendants moved to have the malicious prosecution count dismissed, and the motion was granted. The jury had returned a verdict totaling $75,000 in damages for the false imprisonment claim and found in favor of the defendants on the battery claim. The trial court sustained the defendants’ motions for judgment notwithstanding the verdict, and the plaintiff appealed. Did the plaintiff meet his burden of establishing his case by substantial evidence?










The reader, upon completion of this chapter, will be able to:

Define intentional torts and describe the differences between intentional torts and negligence. Identify various intentional torts and their application in the healthcare setting. Explain the theories a plaintiff can use in pursuing a products liability case against a manufacturer. Describe various theories a manufacturer may use when defending itself against a products liability case.

An intentional tort is one that is committed deliberately. Proof of intent is based on the premise that the defendant intended the harmful consequences of his or her behavior. An individual’s reason to cause harm is irrelevant and does not protect him or her from responsibility for the damages suffered as the result of an intentional act.

There are two main differences between intentional torts and negligence. The first is intent is present in intentional but not in negligent wrongs. For a tort to be considered intentional, the act must be committed intentionally, and the wrongdoer must realize to a substantial certainty that harm would result. The second difference is less obvious. Although a negligent wrong may simply be the failure to act when there is a legal duty to act, an intentional wrong always involves a willful act that violates another’s interests. Intentional wrongs include assault and battery, false imprisonment, defamation of character, fraud, invasion of privacy, and infliction of emotional distress (FIGURE 4-1).

FIGURE 4-1 Intentional torts.







▸ ASSAULT AND BATTERY It has long been recognized by law that a person possesses a right to be free from aggression and the threat of actual aggression against one’s person. The right to expect others to respect the integrity of one’s body has roots in both common and statutory law. The distinguishing feature between assault and battery is that assault effectuates an infringement on the mental security or tranquility of another, whereas battery constitutes a violation of another’s physical integrity.

Caregivers must be aware of the potential for assault and battery complaints that can arise when caring for patients. In addition, they have to be alert to potential problems that can occur between patients (e.g., problems caused by smoking; cultural, racial or religious bias; emotional conflicts). A healthcare facility has a particular duty to closely supervise those patients whose mental conditions make it probable that they will injure themselves or others.

The defendant in United States v. Moore, an inmate at the Federal Medical Center in Rochester, had tested positive for the HIV antibody. He was convicted later by a jury for assault and battery for assaulting two federal correctional officers with his mouth and teeth. The defendant motioned the U.S. District Court for a judgment of acquittal and for a new trial. Evidence at trial showed that AIDS could be transmitted through body fluids such as blood and semen. The defendant had been informed that he had both the AIDS virus and the hepatitis antibody and that he potentially could transmit the diseases to other persons. He bit one officer on the leg twice, leaving a 4-inch saliva stain. He bit the second officer, leaving a mark that was visible 5 months later at trial. Expert testimony at trial indicated that any human bite can cause a serious infection and that blood is sometimes present in the mouth, particularly if an individual has ill-fitting teeth or gum problems. In the defendant’s motion for a new trial, he claimed that the court erred in denying his requested Jury Instruction 12, which would have prohibited the officers’ testimony as to medical instructions they were given to avoid infecting their families from being entered into evidence. The evidence was considered probative of the dangerousness of the bites inflicted by the defendant, and the probative value outweighed any prejudicial effect. The defendant’s motions for a judgment of acquittal and a new trial were denied.

Assault An assault is a deliberate threat coupled with the apparent present ability to do physical harm to another. No actual contact or damage is necessary. It is the deliberate threat or attempt to injure another or the attempt by one to make bodily contact with another without his or her consent. To commit the tort of assault, two conditions must exist. First, the person attempting to touch another unlawfully must possess the apparent present ability to commit the





battery. Second, the person threatened must be aware of or have actual knowledge of an immediate threat of a battery and must fear it.

Battery A battery is the intentional touching of another’s person in a socially impermissible manner, without that person’s consent. It is intentional conduct that violates the physical security of another. An act that otherwise would be considered to be a battery may be permissible if proper consent has been given or if it is in defense of oneself or of a third party. The receiver of the battery does not have to be aware that a battery has been committed (e.g., a patient who is unconscious and has surgery performed on him or her without consent, either expressed or implied, is the object of a battery). The unwanted touching may give rise to a cause of action for any injuries brought about by the touching. No actual damages need be shown to impose liability.

The law provides a remedy if consent to a touching has not been obtained or if the act goes beyond the consent given. In the healthcare context, the principle of law concerning battery and the requirement of consent to medical and surgical procedures are critically important. Liability of organizations and healthcare professionals for acts of battery is most common in situations involving lack of patient consent to medical and surgical procedures.

It is of no legal importance that a procedure constituting a battery has improved a patient’s health. If the patient did not consent to the touching, the patient may be entitled to such damages as can be proved to have resulted from commission of the battery.

Unauthorized Surgery In Perna v. Pirozzi, the New Jersey Supreme Court held that a patient who consents to surgery by one surgeon and is actually operated on by another has an action for medical malpractice or battery. Proof of unauthorized invasion of the plaintiff’s person, even if harmless, entitles one to nominal damages. Patients, when signing informed consents, should be informed verbally and in the body of the written consent of the possibility of another physician participating in or conducting the surgical procedure.

Nurse Muffles Patient with Pillow The registered nurse in Wyatt v. Iowa Dep’t of Human Services sought to muffle a patient’s screams with a pillow in order to protect another patient, who suffered from a neurologic condition that rendered the patient highly susceptible to stimuli such as noise. The nurse was found not to have committed assault under Iowa’s dependent adult abuse registry because the nurse did not have the intent necessary to commit abuse. She did not intend to harm the patient. She only intended to muffle the noise for protection of her other patient.






Physician Strikes Nurse In Peete v. Blackwell, punitive damages in the amount of $10,000 were awarded to a nurse in her action against a physician for assault and battery. Evidence showed that the physician struck the assisting nurse on the arm and cursed at her when he ordered her to turn on the suction. Dr. Peete appealed the trial court’s decision asserting the evidence presented was insufficient to show the requisite “insult or other aggravating circumstances” required for an award of $10,000 in punitive damages. He contended that, even if sufficient evidence of aggravating circumstances were presented, the actual assessment of punitive damages was against the weight and preponderance of the evidence submitted. On appeal, the Supreme Court of Alabama upheld the judgment of the trial court.





▸ FALSE IMPRISONMENT False imprisonment is the unlawful restraint of an individual’s personal liberty or the unlawful restraint or confinement of an individual. The personal right to move freely and without hindrance is basic to the legal system. Any intentional infringement on this right may constitute false imprisonment. Actual physical force is not necessary to constitute false imprisonment; false imprisonment may occur when an individual who is physically confined to a given area reasonably fears detainment or intimidation without legal justification. Both intimidation and forced detainment may be implied by words, threats, or gestures. Excessive force used to restrain a patient may produce liability for both false imprisonment and battery.

To recover for damages for false imprisonment, a plaintiff must (1) be aware of the confinement and (2) have no reasonable means of escape. Availability of a reasonable means of escape may bar recovery. To lock a door when another is reasonably available to pass through is not imprisonment. However, if the only other door provides a way of escape that is dangerous, the law may consider it an unreasonable way of escape, and therefore, false imprisonment may be a cause of action. Whether false imprisonment has taken place will be a matter for the courts to decide. No actual damage needs to be shown for liability to be imposed.

Some occasions and circumstances allow for a person’s confinement, such as when a person presents a danger to self or to others. Criminals are incarcerated, as are sometimes the mentally ill who may present a danger to themselves or others. Long-term care residents are sometimes restrained to prevent falls. Children are retained after school for disciplinary reasons. In these examples, the right to move about freely has been violated, but the infringement occurs for reasons that are justifiable under the law. Where legal justification is absent and an arrest or imprisonment is false, a person denied free movement is permitted to seek a remedy at law for any resulting injury.

Physically Violent Persons In Celestine v. United States, the right to move about freely had been violated; however, the infringement was permissible for reasons justifiable under the law. In this case, the plaintiff had brought an action alleging battery and false imprisonment because security guards had placed him in restraints. The plaintiff-appellant sought psychiatric care at a Veterans Administration (VA) hospital. He became physically violent while waiting to be seen by a physician. The VA security guards placed him in restraints until a psychiatrist could examine him. The U.S. Court of Appeals for the Eighth Circuit held that the record supported a finding that the hospital was justified in placing the patient under restraint. Under Missouri law, no false imprisonment or battery occurred in view of the common law principle that a person believed to be





mentally ill could be restrained lawfully if such was considered necessary to prevent immediate injury to that person or others.

Contagious Diseases Detaining patients without statutory protection can constitute false imprisonment. State health codes generally provide guidelines describing under what circumstances a patient may be detained. For example, patients with certain contagious diseases may be detained. Healthcare organizations should establish protocols for handling patients who have contracted a contagious disease. Also, statutes in most states allow persons with mental illness and intoxicated individuals to be detained if they are found to be dangerous to themselves or others. Those persons with mental illness, however, can be restrained only to the degree necessary to prevent them from harming themselves or others.

Intoxicated Persons The patient in Davis v. Charter by the Sea was found not entitled to a directed verdict on a false imprisonment claim. The claim arose from her overnight, involuntary detention at a hospital. Evidence that the patient was highly intoxicated, confused, incoherent, and experiencing a low diastolic blood pressure raised a jury question as to the existence of a medical emergency authorizing her detention.

Restraints Restraints generally are used to control behavior when patients are disoriented or may cause harm to themselves (e.g., suicide, falling, contaminating wounds, pulling out intravenous lines) or to others. The use of restraints raises many questions of a patient’s rights in the areas of autonomy, freedom of movement, and the accompanying health problems that can result from continued immobility. In general, a patient has a right to be free from any physical restraints imposed or psychoactive drugs administered for purposes of discipline or convenience and that are not required to treat a patient’s medical symptoms.

Although the motivations for using restraints appear sound, there has been a tendency toward overuse. The fear of litigation over injuries sustained because of the failure to apply restraints further compounds the problem of overuse. As a result, regulations governing the use of restraints under the Omnibus Budget Reconciliation Act of 1987 make it clear that restraints are to be applied as a last resort rather than as a first option in the control of a patient’s behavior. Because prescription drugs are sometimes used to restrain behavior, the regulations represent the first time that prescription drugs must, by law, “be justified by indications documented in the medical chart.”

To avoid legal problems, healthcare organizations should implement policies aimed at eliminating or reducing the use of restraints. Programs for the






effective use of restraints should include the following:

Policies that conform to federal and state guidelines, as well as those required by accrediting agencies Policies prescribing that the least restrictive device be used to maintain the safety of the patient, requiring the periodic review of patients under restraint, and requiring physician orders for restraints Procedures for implementing organizational policies (e.g., alternatives to be followed before resorting to restraints include family counseling to encourage increased visitations, environmental change, activity therapies, and patient counseling) Periodic review of policies and procedures, with revision as necessary Education and orientation programs for staff Educational programs for patients and their families Sound assessment of each patient’s needs Informed consent from the patient or legal guardian Periodic patient monitoring to determine the need to continue the use of restraints Review of safe practices to prevent patient injury A mechanism for handling complaints of patients in restraint Documentation that includes the need for restraints, time-limited orders (“as needed” [PRN] orders are not acceptable), consents for the application of restraints, patient monitoring, and reappraisal of the continuing need for restraints

In Big Town Nursing Home, Inc. v. Newman, the court held that there was sufficient evidence to support a finding that a 67-year-old male resident had been falsely imprisoned in a facility against his will. He had attempted to leave the facility 3 days after he arrived, but was caught by the facility’s employees and forcibly returned. He was placed in a patient care unit with persons who were addicted to drugs and alcohol and those who were mentally disturbed. He asked during the ensuing weeks that he be permitted to leave and attempted to leave five or six times. Eventually, he was confined to a restraint chair, his clothes were taken, and he was not permitted to use the telephone. The actions of the staff were described as being in utter disregard of the resident’s legal rights. There was no court order for his commitment, and the agreement for his admission stated that he was not to be kept against his will. The court stated that the staff acted recklessly, willfully, and maliciously by unlawfully detaining him.





▸ DEFAMATION OF CHARACTER Defamation of character is a communication to someone about another person that tends to hold that person’s reputation up to scorn and ridicule. To be an actionable wrong, defamation must be communicated to a third person; defamatory statements communicated only to the injured party do not constitute grounds for an action. Slander is the verbal form of defamation and tends to form prejudices against a person in the eyes of third persons. Libel is the written form of defamation and can be presented in such forms as signs, photographs, letters, and cartoons.

Slander Slanderous lawsuits are rare because of the difficulty in proving defamation, the small awards, and high legal fees. With slander, the person who brings suit generally must prove special damages; however, when any allegedly defamatory words refer to a person in a professional capacity, the professional need not show that the words caused damage, since it is presumed that any slanderous reference to someone’s professional capacity is damaging.

Professionals who are called incompetent in front of others have a right to sue to defend their reputation. However, it is difficult to prove that an individual comment was injurious. If the person making an injurious comment cannot prove that the comment is true, then that person can be held liable for damages.

Libel Libelous words must be communicated to a third person in order to be an actionable wrong. Defamatory statements communicated only to the injured party will not support an action. Truth of a statement is a complete defense.

In a libel or slander per se (on its face) action, a court will presume that certain words and accusations cause injury to a person’s reputation without proof of damages. Words or accusations that require no proof of actual harm to one’s reputation are (1) accusing someone of a crime, (2) accusing someone of having a loathsome disease, (3) using words that affect a person’s profession or business, and (4) calling a woman unchaste. Healthcare professionals are, however, legally protected against libel when complying with a law that requires the reporting of patient information, such as malaria and smallpox. Damages typically consist of economic losses, such as loss of business or employment.

Performance Appraisals Not for General Publication A statement in a hospital newsletter regarding the discharge of a nursing supervisor constituted libel per se in Kraus v. Brandsletter. The newsletter indicated that the hospital’s medical board had discharged the nursing





supervisor after a unanimous vote of no confidence. Couching the board’s determination in terms of a vote gave the impression that the board’s determination had been based on facts that justified the board’s opinion. The statement tended to injure the nurse’s reputation as a professional because it did not refer to specifics of her performance, but rather to her abilities as a professional in general. The reasonable interpretation of the statement in the newsletter was that the supervisor was incompetent in her professional capacity, thus giving rise to a cause of action for libel per se.

On the flip side in the same case, an alleged statement that a physician said, “You nurses will receive your Christmas bonus early, your boss is going to get fired,” was not slander per se in that it did not injure the nurse in her professional capacity. In addition, the statement that she was going to be fired was true.

Performance Appraisal Statements Not Libelous In Schauer v. Memorial Care System, the plaintiff applied for and was given a supervisory position at Memorial Hospital’s new catheterization laboratory. In March 1989, she received an employment appraisal for the period of June 1988 through December 1988. At that time, Schauer’s supervisor rated her performance as “commendable” in two categories and “fair” in eight categories, with an overall rating of “fair.” Although Schauer did not lose her job as a result of the appraisal, she brought an action against the hospital and her former supervisor for libel and emotional distress as a result of the appraisal. The hospital moved for summary judgment on the grounds that the employment appraisal was not defamatory as a matter of law, the hospital had qualified privilege to write the performance appraisal, and the claim for emotional distress did not reach the level of severity required for a claim for intentional infliction of emotional distress. The trial court granted the hospital’s motion for summary judgment, and Schauer appealed.

The Texas Court of Appeals held that the statements contained in the performance appraisal were not libelous and that the appraisal was subject to qualified privilege. Moreover, the hospital’s conduct and the statements contained in the appraisal did not support the claim for intentional infliction of emotional distress.

To sustain her claim of defamation, Schauer had to show that the hospital published her appraisal in a defamatory manner that injured her reputation in some way. A statement can be unpleasant and objectionable to the plaintiff without being defamatory. The hospital argued that the statements contained in the appraisal were truthful, permissible expressions of opinion and not capable of a defamatory meaning. Schauer’s supervisor prepared the appraisal as part of her supervisory duties. The appraisal was not published outside the hospital and was prepared in compliance with the hospital policy for all employees. Schauer disputed her overall rating of “fair” as being






libelous. “Clearly, this is a statement of her supervisor’s opinion and is not defamatory as a matter of law.”

In her performance appraisal, Schauer objected to the statement, “Ms. Schauer was not sensitive to employee relations.” Schauer conceded in her deposition that there were a number of interpersonal problems in the catheterization laboratory and that she did not get along with everyone. The court found that given these admissions, the statement was not defamatory.

As to the plaintiff’s claim of emotional distress, the plaintiff failed to show that the hospital acted intentionally and recklessly. The Restatement of Torts, Second, § 46 (1977) provides:

Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community. . . . The liability clearly does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities. Complete emotional tranquility is seldom attainable in this world, and some degree of transient and trivial emotional distress is part of the price of living among people. The law intervenes only where the distress is so severe that no reasonable man could be expected to endure it.

Newspaper Articles A libel suit was brought against the Miami Herald Publishing Company more than 2 years after its publication of an editorial cartoon depicting a nursing facility in a distasteful manner. The cartoon was described in the following manner:

On October 29, 1980, The Herald published an editorial cartoon which depicted three men in a dilapidated room. On the back wall was written “Krest View Nursing Home,” and on the side wall there was a board which read “Closed by Order of the State of Florida.” The room itself was in a state of total disrepair. There were holes in the floor and ceiling, leaking water pipes, and exposed wiring. The men in the room were dressed in outfits resembling those commonly appearing in caricatures of gangsters. Each man carried a sack with a dollar sign on it. One of the men was larger than the other two and was more in the forefront of the picture. One of the others addressed him. The caption read: “Don’t Worry, Boss, We Can Always Reopen It As a Haunted House for the Kiddies.”

The court held that the newspaper’s editorial cartoon depicting persons resembling gangsters in a dilapidated building, identified as a particular nursing facility that had been closed by state order, was an expression of pure opinion and was protected by the First Amendment against the libel suit alleging that the cartoon defamed the owner of the facility.








In another newspaper libel case, the court in Wisconsin Association of Nursing Homes v. Journal Co. would not compel the newspapers to accept and print an advertisement in the exact form submitted by the Wisconsin Association of Nursing Homes and various individual homes.

Plaintiffs allege in their complaint that the defendants published a series of “investigative reports” in the Milwaukee Journal which dealt with the quality of care and services in several nursing homes. Plaintiffs further characterized the conclusions of the article as being false and erroneous. As a result, the plaintiffs prepared a full-page advertisement which purported to respond to and refute the allegations set out in the above mentioned “reports.” The defendant newspaper refused to publish the advertisement in the form presented, and referred the question of possibly libelous matter to the attention of plaintiffs’ attorneys.

The court held that it was within the newspaper’s journalistic discretion to reject the advertisement on the ground that it contained possibly libelous material. “[T]he clear weight of authority has not sanctioned any enforceable right of access to the press. In sum, a court can no more dictate what a privately owned newspaper can print than what it cannot print.”

Unlike broadcasting, the publication of a newspaper is not a government- conferred privilege. As we have said, the press and the government have had a history of disassociation. We can find nothing in the United States Constitution, any federal statute, or any controlling precedent that allows us to compel a private newspaper to publish advertisements without editorial control merely because such advertisements are not legally obscene or unlawful.

In a very different suit, the appellee in Stevens v. Morris Communications Corp. alleged that a newspaper article, which identified her as a representative of a convalescent center at a city council meeting, had defamed her. She claimed that the article implied that she had responsibility for the convalescent center’s problems of maintenance and disrepair. The court held that the newspaper article did not defame the appellee. Using the reasonable person test, the court found that it was highly unlikely that a reasonable person could have read the newspaper article as being defamatory.

The Georgia case of Barry v. Baugh, however, presented a unique situation. The case involved a nurse who brought a defamation action, charging that a physician slandered her in the course of a consultation concerning the commitment of her husband to a mental institution. The nurse requested damages for mental pain, shock, fright, humiliation, and embarrassment. The nurse alleged that if the physician’s statement were made known to the public, her job and reputation would be adversely affected. The court held that the physician’s statement concerning the nurse did not constitute slander because







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the physician was not referring to the nurse in a professional capacity; therefore, the plaintiff had to demonstrate damages in order to recover. The plaintiff was unable to show damages.

Defenses to a Defamation Action Essentially, the two defenses to a defamation action are (1) truth and (2) privilege. When a person has said something that is damaging to another person’s reputation, the person making the statement will not be liable for defamation if it can be shown that the statement is true. A privileged communication differs from a defamatory statement in that the person making the communication has a responsibility to do so. For example, many states have statutes providing immunity to physicians and healthcare institutions in connection with peer review proceedings. The person making the communication must do so in good faith, on the proper occasion, in the proper manner, and to persons who have a legitimate reason to receive the information.

An administrator’s statements made to a physician’s supervisor regarding the physician’s alleged professional misconduct are not grounds for a defamation action as long as the statements are made in good faith. An administrator has a duty to report complaints about alleged professional misconduct of physicians working in the hospital. The administrator has qualified privilege to report such complaints to the physician’s supervisor and other hospital officials as necessary.

Two types of privilege may provide a defense to an action for defamation: absolute privilege and qualified privilege. Absolute privilege attaches to statements made during judicial and legislative proceedings as well as to confidential communications between spouses. Qualified privilege attaches to statements such as those made as a result of a legal or moral duty to speak in the interests of third persons and may provide a successful defense only when such statements are made in the absence of malice. If it can be shown that a speaker made a statement out of monetary gain, hatred, or ill will, the law will not permit the speaker to hide behind the shield of privilege to avoid liability for defamation.

Nurse Manager and Privileged Information The defense of privilege is illustrated in the case of Judge v. Rockford Memorial Hospital, whereby a nurse brought an action for libel. The action was based on a letter written to a nurses’ professional registry by the director of nurses of the hospital to which the nurse had been assigned by the registry. In the letter, the director of nurses stated that the hospital did not wish to have the nurse’s services available to them because of certain losses of narcotics during times when this particular nurse was on duty. The court refused the nurse recovery. Because the director of nurses had a legal duty to make the communication in the interests of society, the director’s letter constituted a







privileged communication. Therefore, the court held that the letter did not constitute libel because it was privileged.

Public Figures It is important to note that public figures have more difficulty in pursuing defamation litigation than the average individual. A person who occupies a position of considerable public responsibility is considered a public figure for the purposes of the law of defamation and is generally more vulnerable to public scrutiny. Legal action against a public figure often will be denied in the absence of any showing of actual malice in connection with alleged defamatory references to a plaintiff. Actual malice applies only in cases involving public figures and encompasses knowledge of falsity or recklessness as to truth.

Television Station Sued by Board Chairman The chairman of a publicly owned and operated county hospital in Drew v. KATV Television brought a suit against a television station for defamation. The station reported during a news broadcast that the board chairman had been charged with a felony when he had been charged with two misdemeanor counts of solicitation to tamper with evidence (both of which were dismissed at trial). The second news report implied that the plaintiff was involved in a drug investigation being conducted at the hospital where he served as chairman of the board. The plaintiff occupied a position of considerable public responsibility, and he was considered a public figure for the purposes of the law of defamation. The circuit court dismissed the case on the defendant’s motion for summary judgment, and the plaintiff appealed. The Arkansas Supreme Court held that the trial court properly ordered summary dismissal of the plaintiff’s action against the television station in the absence of any showing of malice in connection with the allegedly defamatory references to the plaintiff during the news broadcasts.


Citation: Chowdhry v. North Las Vegas Hospital, Inc., 851 P.2d 459 (Nev. 1993)

Facts On October 2, a young woman entered the emergency department of a hospital complaining of chest pain and shortness of breath. Dr. Lapica, the emergency physician on duty, saw her. Dr. Lapica diagnosed the patient as suffering from a possible pneumohemothorax, which required the placement of a chest tube to drain accumulated fluids. Lapica contacted Dr. Chowdhry, a physician who had recently performed surgery on the young woman and who was also the on-call thoracic surgeon at the hospital, and informed Chowdhry that his services were required at the hospital. The record





revealed that Chowdhry refused to return to the hospital to treat the patient because he had recently left there and would treat her only if she were transferred to University Medical Center (UMC). Chowdhry testified that he could not return to the hospital because of a conflicting emergency at UMC.

Lapica then contacted the hospital’s chief of staff, Dr. Wilchins, and told him that Chowdhry refused to come to the hospital and attend to the patient. Both physicians concluded that if the patient could be safely transported to UMC, the transfer should be affected so that Chowdhry could treat her.

The patient was ultimately transported to UMC where Lapica and Ms. Crow, the supervising nurse at the hospital, prepared incident reports detailing the events and submitted them to the administrator, Mr. Moore.

On October 3, Mr. Moore informed Dr. Silver, UMC’s Chief of Surgery, that Chowdhry had refused to come to the hospital emergency department to treat the patient. The matter was directed to the hospital’s surgery committee, which recommended summary suspension of Chowdhry’s staff privileges.

On November 1, in response to Chowdhry’s request, a hearing was held before the medical executive committee. As a result of the hearing, Chowdhry’s staff privileges were reinstated, but a reprimand was placed in his file for jeopardizing himself, the patient, and the hospital. The hospital denied Chowdhry’s subsequent request to have the reprimand expunged from his record, thus prompting Chowdhry to file an action against the hospital, Silver, Moore, Wilchins, and Lapica.

Chowdhry’s complaint alleged theories of liability based upon negligence, breach of contract, conspiracy, defamation, and negligent and intentional infliction of emotional distress. The district court concluded that Chowdhry had no reasonable basis for bringing the action and awarded attorneys’ fees and costs to the defendants, and Chowdhry appealed.

Issue Did the district court err in dismissing the claims of defamation and infliction of emotional distress?

Holding The Nevada Supreme Court held that the district court did not err in dismissing the claims of defamation and infliction of emotional distress.

Reason Chowdhry’s emotional distress claims are premised upon respondents’ accusations of patient abandonment. Chowdhry testified that, as a result,




“he was very upset” and could not sleep. Insomnia and general physical or emotional discomfort were found to be insufficient to satisfy the physical impact requirement for emotional distress. Thus, Chowdhry failed, as a matter of law, to present sufficient evidence to sustain verdicts for negligent or intentional infliction of emotional distress.

To establish a prima facie case of defamation, a plaintiff must prove (1) a false and defamatory statement by defendant concerning the plaintiff, (2) an unprivileged publication to a third person, (3) fault amounting to at least negligence, and (4) actual or presumed damages. The actual statements made by the various respondents were not that Chowdhry “abandoned” his patient, but that he “failed to respond” or “would not come” to the hospital to treat his patient. The record reflected that the respondents made the statements to hospital personnel and other interested parties (e.g., the patient’s mother) in the context of reporting what was reasonably perceived to be Chowdhry’s refusal to treat the patient at the hospital. The statements attributable to the respondents, taken in context, are not reasonably capable of a defamatory construction.




▸ FRAUD Fraud is a willful and intentional misrepresentation that could cause harm or loss to a person or property. It includes any cunning, deception, or artifice used in violation of legal or equitable duty to circumvent, cheat, or deceive another. The forms it may take and the means by which it may be practiced are as multifarious as human ingenuity can devise, and the courts consider it unwise or impossible to formulate an exact, definite, and all-inclusive definition of the action.

To prove fraud, the following facts must be shown:

1. An untrue statement known to be untrue by the party making it and made with the intent to deceive

2. Justifiable reliance by the victim on the truth of the statement 3. Damages as a result of that reliance

Concealment of Information The plaintiff in Robinson v. Shah was a patient of the defendant, Dr. Shah, from 1975 to 1986. During that period, Dr. Shah treated Robinson for various gynecologic disorders. On November 9, 1983, Dr. Shah performed a total abdominal hysterectomy and bilateral salpingo-oophorectomy on Robinson. Approximately 1 week following surgery, Robinson was discharged from the hospital and was assured that there were no complications or potential problems that might arise as a result of the surgery. She began to experience abdominal distress the day after she was discharged. She consulted Dr. Shah about her symptoms, and he ordered X-rays to be taken of Robinson’s kidneys, ureter, and bladder in an effort to explain her discomfort.

The X-rays were taken at St. Joseph Memorial Hospital and were read and interpreted by Dr. Cavanaugh. After reading the X-rays, Dr. Cavanaugh called Dr. Shah, reporting the X-rays showed the presence of surgical sponges in Robinson’s abdomen. Dr. Cavanaugh also sent Dr. Shah a copy of a written report reflecting his findings.

Dr. Shah decided to conceal from Robinson the findings of the X-rays. He intentionally lied, telling her that the X-rays were negative and that there were no apparent or unusual complications from the surgery. He at no time revealed that surgical sponges were left in Robinson’s abdomen. Over the next several years, Robinson continued to see Dr. Shah for gynecologic checkups. Although Robinson continued to experience abdominal pain and discomfort, Dr. Shah failed to reveal the existence of the surgical sponges in her abdomen. Robinson eventually ceased seeing Dr. Shah as her physician in 1986.





Because of her ongoing concerns about the pain and discomfort in her abdomen, as well as intestinal, urologic, and gynecologic problems, she consulted other physicians. Although Robinson brought her complaints to the attention of other physicians, no one was able to diagnose the source of her problems. Finally, in 1993, one of the physicians attending to Robinson’s problems diagnosed a pelvic mass, which he felt could be causing her discomfort. Robinson underwent pelvic sonograms and X-rays, which revealed the existence of surgical sponges in Robinson’s abdomen.

Robinson filed a lawsuit contending that since November 18, 1983, Dr. Shah had knowledge of the presence of the surgical sponges in her abdomen and knew that future complications could arise from this condition. Despite this knowledge, the plaintiff contended, the defendant continued to conceal the existence of the surgical sponges in her abdomen.

The trial court found that the plaintiff was unable to discover the fact that the defendant negligently left surgical sponges in her abdomen and that this fact was fraudulently concealed from the plaintiff. The plaintiff appealed the trial court’s decision.

The appeals court held that although the action in this case was filed more than 10 years after the fraud was perpetrated, the statute of limitations was not tolled because of the defendant’s fraudulent concealment of information from the patient. The court decided that allowing such misrepresentation would only serve to encourage such behavior.




▸ INVASION OF PRIVACY Invasion of privacy is a wrong that invades the right of a person to personal privacy. Absolute privacy has to be tempered with reality in the care of any patient, and the courts recognize this fact. Disregard for a patient’s right to privacy is legally actionable, particularly when patients are unable to protect themselves adequately because of unconsciousness or immobility.

The right to privacy is implied in the Constitution. It is recognized as a right to be left alone—the right to be free from unwarranted publicity and exposure to public view, as well as the right to live one’s life without having one’s name, picture, or private affairs made public against one’s will. Healthcare organizations and professionals may become liable for invasion of privacy if, for example, they divulge information from a patient’s medical record to improper sources or if they commit unwarranted intrusions into a patient’s personal affairs.

The information in a patient’s medical record is confidential and should not be disclosed without the patient’s permission, with the exception of occasions when there is a legal obligation or duty to disclose the information (i.e., reporting of communicable diseases, gunshot wounds, and child abuse). Those who come into possession of the most intimate personal information about patients have both a legal and an ethical duty not to reveal confidential communications.

Employee/Patient Confidentiality Breached Unfortunately, familiarity with an organization’s healthcare environment tends to diminish the conscious concern employees should have for the protection of patient privacy. The plaintiff in Vernuil v. Poirie, a former hospital employee, was awarded $15,000 in a legal action against her supervisor and hospital for invasion of privacy. The plaintiff claimed that while she was a patient and in the postoperative recovery room, her supervisor lifted her sheet in an attempt to view her abdominal incision. The court of appeals held that evidence sustained a finding of invasion of privacy. Because the supervisor’s conduct occurred during the time and place of his employment, the hospital was jointly liable for damages. “Ensuring a patient’s well-being from all others, including staff, while the patient is helpless under the effects of anesthesia is part of its normal business.”






▸ INFLICTION OF MENTAL DISTRESS The intentional or reckless infliction of mental distress is characterized by conduct that is so outrageous that it goes beyond the bounds tolerated by a decent society. It is a civil wrong for which a tortfeasor can be held liable for damages. Mental distress includes mental suffering resulting from painful emotions such as grief, public humiliation, despair, shame, and wounded pride. Liability for the wrongful infliction of mental distress may be based on either intentional or negligent misconduct. A plaintiff may recover damages if he or she can show that the defendant intended to inflict mental distress and knew or should have known that his or her actions would give rise to it. Recovery generally is permitted even in the absence of physical harm.

To prove the infliction of emotional distress, the plaintiff must establish the following:

1. The defendant’s conduct was intentional or reckless. 2. The conduct was extreme and outrageous. 3. The conduct caused emotional distress to the plaintiff. 4. The emotional distress was severe.

All of these elements were present in Lucchesi v. Stimmell, where the plaintiff brought a legal action against a physician for intentional infliction of emotional distress, claiming that the physician failed to be present during unsuccessful attempts to deliver her premature fetus and that he thereafter failed to disclose to her that the fetus was decapitated during attempts to achieve delivery by pulling on the hip area to free the head. The judge instructed the jury that it could conclude that the physician had been guilty of extreme and outrageous conduct for staying at home and leaving the delivery in the hands of a first-year intern and a third-year resident, neither of whom was experienced in breech deliveries.

Mother Shown Her Premature Infant The mother of a premature infant who died shortly after birth went to her physician for a 6-week checkup. She noticed a report in her medical chart that stated that the child was past the fifth month in development and that hospital rules and state law prohibited disposal of the infant as a surgical specimen. The mother questioned her physician regarding the infant. The physician requested that his nurse take the mother to the hospital. An employee at the hospital took the mother to a freezer. The freezer was opened and the mother was handed a jar containing her premature infant. The circuit court found that the hospital, through its employees, committed intentional infliction of emotional distress. On appeal, the court of appeals in Johnson v. Woman’s Hospital held that the jury could find that the hospital’s conduct in displaying the infant was outrageous conduct.






As to the outrageous conduct theory we hold that there is evidence from which a jury could find that the conduct of the defendant hospital in displaying the infant in the manner and under circumstances described was outrageous conduct as defined by our Supreme Court in the Medlin case, supra, and that such conduct recklessly caused severe emotional distress to plaintiff Mrs. Johnson. We are of the opinion that a recitation of the foregoing facts could be considered to cause the exclamation of “outrage!” from the general community.

Verbal Abuse of a Patient In another case, an action was brought in Greer v. Medders by a patient and his wife against the physician for mental distress. In this case, the defendant physician had been providing on-call coverage for the attending physician, who was on vacation. When the patient, who had been admitted to the hospital, had not seen the covering physician for several days, he called the physician’s office to complain. The physician later entered the patient’s room in an agitated manner and became verbally abusive in the presence of the patient’s wife and nurse. He said to the patient, “Let me tell you one damn thing, don’t nobody call over to my office raising hell with my secretary. . . . I don’t have to be here every damn day checking on you because I check with physical therapy. . . . I don’t have to be your damn doctor.” When the physician left the room, the plaintiff’s wife began to cry, and the plaintiff experienced episodes of uncontrollable shaking for which he received psychiatric treatment. The superior court entered summary judgment for the physician, and the plaintiff appealed. The Georgia Court of Appeals held that the physician’s abusive language willfully caused emotional upset and precluded summary judgment for the defendant.







▸ PRODUCTS LIABILITY Products liability is the accountability of a manufacturer, seller, or supplier of chattels to a buyer or other third party for injuries sustained because of a defect in a product. An injured party may proceed with a lawsuit against a seller, manufacturer, or supplier on three legal theories: (1) negligence, (2) breach of warranty (express or implied), and (3) strict liability. Many states have enacted comprehensive products liability statutes. These statutory provisions can be very diverse such that the U.S. Department of Commerce has promulgated a Model Uniform Products Liability Act (MUPLA) for voluntary use by the states. Three types of product defects that incur liability are design defects, manufacturing defects, and defects in marketing (e.g., providing improper instructions or making exaggerated claims about a product’s use).

A $200 million settlement was reached over the deadly meningitis outbreak that was linked to a Massachusetts pharmacy. The funds were set aside for the victims of the outbreak and their families. The defendants in the New England Compounding Center (NECC) are facing criminal charges.

Negligence Negligence, as applied to products liability, requires the plaintiff to establish duty, breach, injury, and causation. The manufacturer of a product is not liable for injuries suffered by a patient if they are the result of negligent use by the user. Product users must conform to the safety standards provided by the manufacturers of supplies and medical devices. Failure to follow proper safety instructions can prevent recovery in a negligence suit if injury results from improper use.

Because manufacturers are liable for injuries that result from unsafe product design, they generally provide detailed safety instructions to the users of their products. Failure to provide such instructions could be considered negligence on the part of the manufacturer.


BOSTON—A federal judge has set an April 10, 2017 trial date for the remaining 10 defendants in the criminal cases stemming from the deadly fungal meningitis outbreak in 2012.

In an order issued Tuesday, U.S. District Judge Richard G. Stearns set the spring date for the 10 who are facing charges ranging from mail and wire fraud to racketeering.




—Walter F. Roche, Jr., MetroWest Daily News, August 23, 2016

Selling Equipment with a Known Hazardous Design An action in Airco v. Simmons National Bank, Guardian, et al. was brought against a physician partnership that provided anesthesia services to the hospital and Airco, Inc., the manufacturer of an artificial breathing machine used in the administration of anesthesia. It was alleged that the patient suffered irreversible brain damage because of the negligent use of the equipment and its unsafe design. The machine had been marketed despite prior reports of a foreseeable danger of human error brought about by the presence of several identical black hoses and the necessity of connecting them correctly to three ports of identical size placed closely together. The machine lacked adequate labels and warnings, according to the reports. The jury awarded over $1 million in compensatory damages against the physician partnership and Airco, Inc. Punitive damages in the amount of $3 million were awarded against Airco, Inc. On appeal of the punitive damages award, the Arkansas Supreme Court held that the evidence for punitive damages was sufficient for the jury. The manufacturer acted in a persistent reckless disregard of the foreseeable dangers in use of the machine by continuing to sell it with the known hazardous design.

Tainted Tylenol Capsules Negligence, as well as breach of warranty and strict liability, was not established in the well-publicized case of the 1980s involving a woman who died after ingesting Tylenol capsules tainted with potassium cyanide. The decedent’s estate in Elsroth v. Johnson & Johnson sued the manufacturer and the retail grocery store that sold the over-the-counter drug. The defendants moved for a summary judgment. The U.S. district court held that the retailer did not have a duty to protect the decedent from acts of tampering by an unknown third party. The manufacturer was not liable under an inadequate warning theory. Manufacturers are under a duty to warn of the dangers that may be associated with the normal and lawful use of their products, but they need not warn that their products may be susceptible to criminal misuse.

Negligent Use of a Bovie Plate Negligent use of a product may lead to liability, as was the case in Monk v. Doctors Hospital. In this case, the patient was admitted to the hospital for abdominal surgery. Prior to surgery, the patient asked the surgeon also to remove three moles from the right arm and one from the right leg. The surgeon instructed a hospital nurse to prepare a Bovie machine but was not present while the machine was set up. The nurse placed the contact plate of the Bovie machine under the patient’s right calf in a negligent manner, and the patient suffered burns. Manufacturer instruction manuals, supplied to the







hospital, supported the claim that the plate was placed improperly under the patient. The trial court directed a verdict in favor of the hospital and the physician. The appellate court found that there was sufficient evidence from which the jury could conclude that the Bovie plate was applied in a negligent manner. There also was sufficient evidence, including the manufacturer’s manual and expert testimony, from which the jury could find that the physician was independently negligent.

This case demonstrates the necessity for an organization to require conformity to the safety standards provided by the manufacturers of supplies and medical devices. As evidenced in the previous case, such failure can cause an organization and its staff to be held liable for negligence. This case should alert manufacturers of the necessity to provide appropriate safety instructions to the users of their products. It can be assumed that failure to provide such instructions could be considered negligence on the part of the supplier.

Defective Packaging Cotita, a registered nurse, stuck himself with a syringe manufactured by the defendant-appellee, PharmaPlast. The syringe, although still in its sterile packaging, was missing the protective cap that normally covers the tip of the needle. Improper packaging allowed the needle to pierce its sterile plastic covering and penetrate the protective gloves Cotita was wearing. Because of the presence of the patient’s blood on his gloves at the time of the needlestick, Cotita feared that he had been exposed to the human immunodeficiency virus (HIV). Subsequent tests revealed that Cotita was not HIV positive; nevertheless, he sued PharmaPlast, seeking damages for mental anguish stemming from his fear of contracting HIV.

PharmaPlast admitted defective packaging, and the district court granted summary judgment for the plaintiff on the issue of the defective state of the syringe. PharmaPlast asserted Cotita was negligent in his use of the syringe. Cotita objected to the introduction of evidence concerning his negligence.

The damage issue was tried before a jury that returned a verdict for $150,000 in Cotita’s favor. This amount was reduced by 30%, a figure that the jury found reflected his negligence. Cotita maintained that the issue of his negligence should not have been considered by the jury or used to reduce the amount of his award.

On appeal, the U.S. Court of Appeals found no error in the district court’s application of comparative fault. PharmaPlast presented evidence that the procedures used by the nurse were in violation of universal safety precautions and procedures that are standard in the healthcare industry. The district court here was entitled to determine that the application of comparative fault would ultimately encourage workers in the healthcare field to follow the established procedures for handling syringes.






Failure to Warn Merck pulled its painkiller, Vioxx, a drug it manufactured for the treatment of arthritis, off pharmacy shelves after participants in a study experienced adverse cardiovascular events compared to those taking a placebo. Merck officials had argued that Vioxx was not the cause of users’ heart attacks and the company had properly warned doctors and consumers about its risks. Following a 3-year battle, Merck announced in November 2007 that it would pay $4.85 billion to settle plaintiff claims over injuries linked to Vioxx. The company paid the money into a fund, and people who claimed Vioxx injured them could petition for monetary relief.

Breach of Warranty A warranty is a particular type of guarantee (a pledge or assurance of something) concerning goods or services provided by a seller to a buyer. Nearly everything purchased is covered by a warranty. To recover under a cause of action based on a breach of warranty theory, the plaintiff must establish whether there was an express or implied warranty.

Express Warranty An express warranty includes specific promises or affirmations made by the seller to the buyer, such as “X” drug is not subject to addiction. If the product fails to perform as advertised, it is a breach of express warranty. For example, in Crocker v. Winthrop Laboratories, the patient, Mr. Crocker, was admitted to the hospital for a hernia operation. His physician prescribed both Demerol and Talwin for pain. After discharge from the hospital, Crocker developed an addiction to Talwin and was able to obtain prescriptions from several physicians to support a habit he developed. He was eventually admitted to the hospital for detoxification. After 6 days, Crocker walked out of the hospital and went home. He became agitated and abusive, threatening his wife, and she eventually called a physician at his request. The physician arrived and gave Crocker an injection of Demerol. Crocker then retired to bed and subsequently died. Action was brought against the drug company for the suffering and subsequent wrongful death that occurred as the proximate result of the decedent’s addiction to Talwin.

The district court rendered a judgment for the plaintiff and the court of appeals reversed. On further appeal, the Texas Supreme Court held that when a drug company positively and specifically represents its product to be free and safe from all dangers of addiction and when the treating physician relies on such representation, the drug company is liable when the representation proves to be false and injury results.

Implied Warranty An implied warranty is a guarantee of a product’s quality that is not expressed in a purchase contract. An implied warranty assumes that the item sold can perform the function for which it is designed. Implied warranties are in effect





when the law implies that one exists by operation of law as a matter of public policy for the protection of the public. For example, Jacob E. Decker & Sons v. Capps is a case involving the question of the liability of a manufacturer for selling tainted food products to the consumer for damages sustained by ingestion of contaminated sausage. One member of a family died and others became seriously ill as a result of eating contaminated food. The jury found that the sausage had been contaminated before being packaged by the defendant and that it was unfit for human consumption. The Texas Supreme Court decided that the defendant was liable for the injuries sustained by the consumers of the contaminated food under an implied warranty. Liability in such a case is based neither on negligence nor on a breach of the usual implied contractual warranty; instead, it is based on the broad principle of public policy to protect human health and life.

There was no implied warranty for contaminated blood where the patient in Perlmutter v. Beth David Hospital contracted serum hepatitis from a blood transfusion. The plaintiff relied on an implied sales warranty as the basis of her suit. The court denied recovery, pointing out that even though a separate charge of $60 was made for the blood, the charge was incidental to the primary contract with the hospital for services. Because there was no claim of negligence, the court determined that blood provided by the hospital was a service, rather than a sale, and therefore, barred recovery by the patient. The rationale in this case did not extend to relieve commercial blood banks from liability on the basis of strict liability warranty theories. Action could have been instituted against the hospital if it had been shown that the hospital was negligent in handling the blood.

Strict Liability Strict liability is a legal doctrine that causes some persons or entities to be responsible for the damages their actions or products cause, regardless of “fault” on their part. Strict liability often applies when people engage in inherently hazardous activities, such as blasting in a city. If the blasting injures a person, no matter how careful the blasting company is, it could be liable for the injuries suffered.

Strict liability also applies in cases involving the manufacturers of products such as drugs and medical equipment. Responsibility without fault makes possible an award of damages without proof of a manufacturer’s negligence. The plaintiff only needs to show that he or she suffered injury while using the manufacturer’s product in the prescribed way. The following elements must be established in order for a plaintiff to proceed with a case on the basis of strict liability:

1. The product must have been manufactured by the defendant. 2. The product must have been defective at the time it left the hands of

the manufacturer or seller. The defect in the product normally consists






of a manufacturing defect, a design defect in the product, or an absence or inadequacy of warnings for the use of the product.

3. The plaintiff must have been injured by the specific product. 4. The defective product must have been the proximate cause of injury to

the plaintiff.

The number of drug-related lawsuits increased significantly between 2000 and 2006, as noted in the following news article.


Between 2000 and 2006, “more than 65,000 product liability lawsuits have been filed against prescription drug makers, the most of any industry,” says researcher Thomson West.

The pace isn’t likely to slow, given the number of drugs on the market, the millions of consumers taking them, and the skill of plaintiffs’ lawyers . . .”

—Julie Schmit, USA Today, August 23, 2006

Products liability–related lawsuits are a worrisome concern for pharmaceutical manufacturers as lawyers continue to use TV advertisements to seek clients who believe they have been harmed by medications. At the same time, drug manufacturers, in an attempt to slow the surge of lawsuits, are including frightening disclaimers in their drug-related advertisements.

Manufacturer Responsible for Defective Latex Gloves In Green v. Smith & Nephew AHP, Inc., Green began her employment at St. Joseph’s Hospital in Milwaukee, where she worked as a radiology technologist. Hospital rules required Green to wear protective gloves while attending patients. To comply with these rules, Green wore powdered latex gloves manufactured by Smith & Nephew AHP (S&N). Initially, Green used one or two pairs of gloves per shift. However, upon her promotion to the computed tomography (CT) department, her use of gloves increased. Green’s job required her to use approximately 40 pairs of gloves per shift. Green began suffering various health problems. Her hands became red, cracked, and sore, and began peeling. Green was eventually diagnosed with a latex allergy. Her symptoms grew increasingly severe, eventually culminating in an acute shortness of breath, coughing, tightening of the throat, and hospitalization on more than one occasion.

Green claimed that S&N should be held strictly liable for her injuries. She argued that although S&N could have significantly reduced the protein levels in and discontinued powdering its gloves by adjusting its production process,





S&N nonetheless used a production process that maintained these defects in the gloves. These defects, Green alleged, created the unreasonable danger that S&N’s gloves would cause consumers to develop an allergy to latex and suffer allergy-related conditions. The primary cause of an allergy to latex is latex gloves, and for this reason, an allergy to latex disproportionately affects members of the healthcare profession. According to Green’s medical experts, the vast majority of people with an allergy to latex (up to 90%) are healthcare workers. In addition, although an allergy to latex is not common among the general population, Green’s medical experts testified that it affects between 5 and 17% of all healthcare workers in the United States.

Although a manufacturer is not under a duty to manufacture a product that is absolutely free from all possible harm to every individual, it is the duty of the manufacturer not to place upon the market a defective product that is unreasonably dangerous to the ordinary consumer.

The jury returned a verdict in favor of Green, finding that S&N’s gloves were defective and unreasonably dangerous, and that they caused Green’s injuries. The jury awarded Green $1 million in damages. The court of appeals affirmed the circuit court judgment. S&N then petitioned the Wisconsin Supreme Court to review the court of appeals decision.

The Wisconsin Supreme Court affirmed the decision of the court of appeals. Strict products liability imposes liability without regard to negligence and its attendant factors of duty of care and foreseeability. Regardless of whether a manufacturer could foresee the potential risks of harm inherent in its defective and unreasonably dangerous product, strict products liability holds the manufacturer responsible for injuries caused by that product. When a manufacturer places a defective and unreasonably dangerous product into the stream of commerce, the manufacturer, not the injured consumer, should bear the costs of the risks posed by the product.

Negligent Handling of Blood A blood bank was found strictly liable in Weber v. Charity Hospital of Louisiana at New Orleans when a hospital patient developed hepatitis from a transfusion of defective blood during surgery. Evidence established that the blood bank collected, processed, and sold the blood to the hospital. Although the hospital administered the blood, absent any negligence in its handling or administration, it was not liable for the patient’s injury. Many states have enacted statutes to exempt blood from the product category and thus remove blood products from the theory of strict liability.

Res Ipsa Loquitur Liability also may be based on the concept of res ipsa loquitur (the thing speaks for itself) by establishing the following:





1. The product did not perform in the way intended. 2. The product was not tampered with by the buyer or third party. 3. The defect existed at the time it left the defendant manufacturer.

Mislabeled Pain Patches A manufacturer mislabeled a box of Duragesic patches, a strong prescription medication for moderate to severe chronic pain, marking the box as containing 25-mg patches. In actuality, the box contained 100-mg patches. The patient placed a patch on her back to provide relief of severe back pain. Instead of receiving the 25-mg dosage recommended by her physician, she received 100 mg, four times the recommended dosage. The patient went into a coma and eventually died.

Products Liability Defenses Defenses against recovery in a products liability case include:

1. Assumption of a risk (e.g., voluntary exposure to such risks as radiation treatments and chemotherapy treatments)

2. Intervening cause (e.g., an intravenous solution contaminated by the negligence of the product user, rather than that of the manufacturer)

3. Contributory negligence (e.g., use of a product in a way for which it was not intended)

4. Comparative fault (e.g., injury as a result of the concurrent negligence of both the manufacturer and plaintiff)

5. Disclaimers (e.g., manufacturers’ inserts and warnings regarding usage and contraindications of their products)

Courts often invalidate disclaimers and waivers of liability for products as being against public policy. Warranties are limited so that manufacturers and retailers are held responsible for personal injuries caused by the use of a product.


The Missouri Court of Appeals held that the evidence supported a finding that the security guards falsely imprisoned the physician and that the physician was entitled to punitive damages on the false imprisonment claim. The defendants’ testimony provided the jury with sufficient evidence to establish that the plaintiff was held without justifiable cause. The testimony supported a finding that the arrest was self-serving and resulted in the false imprisonment.







▸ CHAPTER REVIEW 1. Intentional wrongdoing involves a willful act that violates another

person’s interests. Not only must the action be intentional, but the perpetrator must realize that the action will result in harm. Intentional torts include:

Assault and battery: Assault is the infringement on the mental security or tranquility of another person. Battery is the violation of another person’s physical integrity. No actual physical harm needs to have occurred for an individual to be guilty of assault. False imprisonment is the unlawful restraint of an individual’s personal liberty or the unlawful restraint or confinement of an individual. For a false imprisonment charge to warrant recovery, the plaintiff must be aware of the confinement and have no reasonable means of escape. Defamation of character is a false oral or written communication to someone other than the individual defamed that subjects that individual’s reputation to scorn and ridicule in the eyes of a substantial number of respectable people in the community. Two aspects of defamation of character are:

Libel: written defamation. Slander: spoken (verbal) form of defamation.

Fraud is a willful and intentional misrepresentation that could cause harm or loss to an individual or property. To prove fraud, the following elements must be established: (1) an untrue statement known to be untrue by the party making it and made with the intent to deceive; (2) a justifiable reliance by the victim on the truth of that statement; and, (3) damages as a result of that reliance. Invasion of privacy is a wrong that interferes with the right of an individual to personal privacy. Infliction of mental distress is conduct so outrageous that it goes beyond the bounds tolerated by a decent society. Mental distress can include mental suffering from painful emotions such as grief, public humiliation, despair, shame, and wounded pride. Products liability is the liability of a manufacturer, seller, or supplier of chattels to a buyer or other third party for injuries sustained because of a defect in a product.

2. Theories for a products liability lawsuit include:

Negligence Failure to warn Breach of warranty




Express warranty Implied warranty

Strict liability: liability without fault that makes possible an award of damages without any proof of manufacturer negligence. The plaintiff needs only to show that he or she suffered injury while using the manufacturer’s product in the prescribed way.

3. Products liability defenses include:

Assumption of a risk Intervening cause Contributory negligence Comparative fault Disclaimers




▸ REVIEW QUESTIONS 1. Describe the various categories of intentional torts.

Describe the difference between assault and battery. What is defamation of character? What two forms can it take? Under what circumstances can a patient be held in a hospital against his or her will? What is fraud? What three elements must be present to establish fraud? Describe how a patient’s privacy can be invaded. What is the infliction of mental distress? Give an example.

2. What are the legal theories an injured party can pursue when filing a lawsuit against a seller, manufacturer, or supplier of goods?

3. Describe the defenses often used in a products liability case.





1. 865 S.W.2d 833 (Mo. Ct. App. 1993).

2. No. Crim. 4-87-44 (D. Minn. Sept. 3, 1987) (unpublished).

3. 457 A.2d 431 (N.J. 1983).

4. 744 N.W.2d 89 (Ia. 2008).

5. 504 So.2d 22 (Ala. 1986).

6. 841 F.2d 851 (8th Cir. 1988).

7. 358 S.E.2d 865 (Ga. Ct. App. 1987).

8. Judith Garrard et al., “Evaluation of Neuroleptic Drug Use by Nursing Home Elderly Under Proposed Medicare and Medicaid Regulations,” Journal of the American Medical Association 265 (1991): 463.

9. 461 S.W.2d 195 (Tex. Ct. App. 1970).

10. 562 N.Y.2d 127 (N.Y. App. Div. 1990).

11. Id. at 129.

12. 856 S.W.2d 437 (Tex. Ct. App. 1993).

13. Id. at 447.

14. Id.

15. Keller v. Miami Herald Publishing Company, 778 F.2d 711 (11th Cir. 1985).

16. Id. at 713.

17. 285 N.W.2d 891 (Wis. Ct. App. 1979).

18. Id. at 893.

19. Id. at 894.

20. Associates and Aldrich Co. v. Times Mirror Co., 440 F.2d 133, 136 (9th Cir. 1971).

21. 317 S.E.2d 652 (Ga. Ct. App. 1984).

22. 143 S.E. 489 (Ga. Ct. App. 1965).

23. Id.

24. Miller-Douglas v. Keller, 579 So. 2d 491 (La. Ct. App. 1991).

25. 150 N.E.2d 202 (Ill. App. Ct. 1958).

26. 739 S.W.2d 680 (Ark. 1987).

27. 936 P.2d 784 (Kans. App. 1997).

28. 589 So. 2d 1202 (La. Ct. App. 1991).

29. Id. at 1204.

30. 716 P.2d 1013 (Ariz. 1986).




31. 527 S.W.2d 133 (Tenn. Ct. App. 1975).

32. Id. at 140.

33. 336 S.E.2d 329 (Ga. App. 1985).

34. Id.

35. 638 S.W.2d 660 (Ark. 1982).

36. 700 F. Supp. 151 (S.D.N.Y. 1988).

37. 403 F.2d 580 (D.C. Cir. 1968).

38. Id.

39. 974 F.2d 598 (5th Cir. 1992).

40. 514 S.W.2d 429 (Tex. 1974).

41. 164 S.W.2d 828 (Tex. 1942).

42. 123 N.E.2d 793 (N.Y. 1955).

43. 629 N.W.2d 727 (2001).

44. 487 So. 2d 148 (La. Ct. App. 1986).




© alejandro dans neergaard/Shutterstock





Tort Reform and Risk Reduction





The reader, upon completion of this chapter, will be able to:

Discuss the ways in which a provider can practice defensive medicine. Describe various tort reform programs designed to lower the cost of malpractice insurance. Describe various programs that can help reduce the number of malpractice claims.

The tort system has proven to be inadequate in the prevention of medical malpractice. Damage awards as deterrents to malpractice have failed to reduce the number of claims. Exorbitant jury awards and malpractice insurance premiums continue to cost the healthcare industry billions of dollars annually. Given the difficulties in the present tort system, we often become victims of the failures of medicine as opposed to beneficiaries of its many successes. Dr. Gregg Roslund writes in Emergency Physician’s Monthly: “Do you think our medical liability system has been broken for a while? If so, you’re not alone. And now, with the recent enactment of the Affordable Care Act, our resources are more limited, our decisions more scrutinized, and we’re going to have to do more with less.” With changes in the political arena, it is unclear how changes in the Affordable Care Act will affect malpractice premiums and physician income.

Physicians have altered, limited, or closed their practices after having spent the most productive years of their lives training to practice medicine. Many obstetricians/gynecologists, for example, have dropped the high-risk obstetrics portion of their practices to reduce their malpractice premiums. As a result, it has become more difficult for patients to find a physician to get the care they need. Frivolous and unscrupulous malpractice actions have caused physicians to place limitations on their scope of practice.

Physicians who wish to practice their chosen specialty and remain financially independent often resort to the practice of defensive medicine. Defensive medicine involves overprescribing diagnostic tests and avoiding more risky, lawsuit-prone procedures, thus reducing the likelihood of litigation and the associated risks of higher insurance premiums. While defensive medicine provides the practitioner with a valuable legal defense in the event of a lawsuit, it is believed to be one of the most harmful effects produced by the threat of malpractice litigation. “The message the tort system is sending to doctors is not so much deterrence, in terms of practicing good medicine, but more just ‘drive defensively,’ because any patient you may see may be a litigant.”

The states have legislated a variety of tort reforms designed to help lower the economic impact of malpractice awards on the healthcare system. Out-of-






court settlements make it difficult to evaluate the impact of these reforms on a state-by-state basis. A wide variety of legislative enactments designed to help lower malpractice insurance premiums by limiting malpractice awards are reviewed here. The Medical Malpractice Center provides helpful information on malpractice laws by state at its website (


Over the last decade or more, mediation has become an integral part of our civil justice system. While undoubtedly some cases are not (and should not be) resolved by mediation, but rather by trial, attorneys and litigants seem to have embraced mediation as a natural part of the litigation process and a highly satisfactory way to resolve disputes.

—Susan K. Gauvey and Heather R. Pruger, Maryland Bar Journal, July 2010




▸ MEDIATION AND ARBITRATION Among the many factors contributing to the malpractice crisis is the high cost of litigation. Trial by jury is lengthy and expensive. If case disputes can be handled out of court, the process and expense of a lawsuit can be significantly reduced. Mediation and arbitration are basically mechanisms for simplifying and expediting the settlement of claims. Mediation is the process whereby a third party, the mediator, attempts to bring about a settlement between the parties of a complaint. The mediator, however, cannot force a settlement. The U.S. District Court for the Southern District of New York describes mediation as follows:

Mediation is a form of alternative dispute resolution. In mediation, parties and counsel meet, sometimes collectively and sometimes individually, with a neutral third party (the mediator) who has been trained to facilitate confidential settlement discussions. The parties articulate their respective positions and interests and generate options for a mutually agreeable resolution to the dispute. The mediator assists the parties in reaching their own negotiated settlement by defining the issues, probing and assessing the strengths and weaknesses of each party’s legal positions, and identifying areas of agreement and disagreement. The main benefits of mediation are that it can result in an expeditious and less costly resolution of the litigation, and can produce creative solutions to complex disputes often unavailable in traditional litigation.

Arbitration is the process by which parties to a dispute voluntarily agree to submit their differences to the judgment of an impartial mediation panel for resolution. It is used as a means to evaluate, screen, and resolve medical malpractice disputes before they reach the courts. Arbitration can be accomplished by mutual consent of the parties or statutory provisions. A decision made at arbitration may or may not be binding, depending on prior agreement between the parties or statutory requirements.





▸ STATUTE OF LIMITATIONS All states have precise deadlines for the filing of medical malpractice lawsuits. These deadlines are described as the statute of limitations, which sets a limit on the amount of time a plaintiff has to file a malpractice complaint. Time limits vary from state to state as noted at the following website: limitations.html.

Malpractice actions must be filed in a timely manner. The action filed in Russell v. Williford was not filed in a timely manner under the statute of limitations. Reasonable diligence should have led the plaintiff to seek a second opinion or additional treatment much sooner when the abnormal condition in his left leg persisted. This simple action, if taken within 1 to 2 years after surgery instead of 27 years later, might have made the true problem with the plaintiff’s leg known much sooner. Therefore, the plaintiff may not bring this action now, over a quarter of a century after the alleged act or omission. To allow the plaintiff to proceed under this set of facts on such an ancient claim would set a dangerous precedent.





▸ STRUCTURED AWARDS Structured awards are set up for the periodic partial payment of judgments rather than paying the injured party a lump-sum payment. The purpose of a structured award is to provide compensation during a plaintiff’s lifetime. It eliminates the potential for an unwarranted windfall to the plaintiff’s beneficiaries in the event of early death. Some states have sought to deal with award limitations by mandating structured recoveries when awards exceed a certain dollar amount.

Structured awards provide that money awarded to the plaintiff be placed in a trust fund and invested appropriately so that the funds will be available to the plaintiff over an extended period of time. The rationale behind such legislation is that an immediate award of a large sum of money often is not necessary for a plaintiff to be well taken care of after suffering injuries. Instead, the prudent investment of a smaller amount of money can produce a recovery commensurate with the needs and the rights of the plaintiff. This, in turn, requires a smaller cash outlay by the defendant or the defendant’s insurance company, thereby holding down the costs of malpractice insurance and the ultimate cost of medical care to the consumer.




▸ MEDICAL MALPRACTICE SCREENING PANELS Medical malpractice screening panels are designed to evaluate the merits of medical injury claims and encourage the settlement of claims outside the courtroom. “Panels render an opinion on provider liability and, in some cases, on damages. In most states, the panel’s decision on the merit of the claim is admissible in court.” Unlike binding arbitration, the decision of a screening panel is not binding and is imposed as a condition precedent to trial, whereas arbitration is conducted in lieu of a trial. Mandatory screenings of alleged negligence cases are useful in discouraging frivolous lawsuits from proceeding to trial.

The Alaska Supreme Court, in Keyes v. Humana Hospital Alaska, held that a statute creating mandatory pretrial review of medical malpractice claims by an expert advisory panel did not impermissibly infringe on the plaintiff’s constitutional right to a trial by jury. The statute was a reasonable legislative response to the medical malpractice insurance crisis.

The constitutionality of a Virginia statute, in Speet v. Bacaj, provided that admission of a medical review panel’s opinion into evidence did not infringe on the plaintiff’s right to a trial by jury or impact on a jury’s function in resolving the disputed facts in the case. The trial court jury instructions were correctly permitted in this case, where the lower court stated, “The opinion of the Medical Review Panel is not binding upon you. You should consider it along with the other evidence.”








▸ COLLATERAL SOURCE RULE The collateral source rule is a common law principle that prohibits a court or jury from taking into account, when setting an award, that part of the plaintiff’s damages covered by other sources of payment (e.g., health insurance for medical bills, disability). Several states have modified the collateral source rule so that evidence regarding other sources of payment to the plaintiff may be introduced for purposes of reducing the amount of the ultimate award to the plaintiff. The jury then would be permitted to assign the evidence such weight as it chooses. The award could be reduced to the extent that the plaintiff has received compensation from other sources.

Imposition of the collateral source rule can result in recoveries to plaintiffs far in excess of their economic loss. Such excessive payments contribute significantly to the high cost of malpractice insurance and the high cost of health care to the public. When evidence regarding collateral sources of payment is allowed to mitigate the damages payable to a plaintiff, excessive recoveries are discouraged.




▸ CONTINGENCY FEE LIMITATIONS A contingency fee is payment for services rendered by an attorney predicated on the favorable outcome of a case. Payment is based on a preestablished percentage of the total award. Some states set this percentage by statute. California, in Section 6146 of the California Business and Professional Code, “caps contingency fees at a rate of forty percent of the first $50,000 recovered, thirty-three and one-third percent of the next $50,000 recovered, twenty-five percent of the next $500,000, and fifteen percent on anything over $600,000.” These are maximums, and the attorney and client are free to negotiate lower rates. Under a contingency agreement, if there is no award to the plaintiff, the attorney receives no payment for services rendered.

Physicians argue that the contingency fee arrangement serves to encourage an unreasonable number of lawsuits. Attorneys reason that if they or their clients must bear the initial cost of a lawsuit, only those lawsuits with obvious merit will be filed. The contingency fee structure allows those unable to bear the cost of litigation to initiate a suit for damages. Limiting contingency fees on a sliding scale basis, with the percentage decreasing as the award to the plaintiff increases, and/or providing for a lesser fee if a claim is settled prior to trial, appears to have merit.





▸ COUNTERSUITS: FRIVOLOUS CLAIMS Healthcare providers, in some instances, have filed countersuits after being named in what they believe to be frivolous medical malpractice suits. The threat of countersuits, however, has not been helpful in reducing the number of malpractice claims. Remedies for such actions vary from one jurisdiction to the next. For a physician to prevail in a suit against a plaintiff or plaintiff’s attorney, the physician must show the following:

1. The suit was frivolous. 2. The motivation of the plaintiff was not to recover for a legitimate injury. 3. The physician has suffered damages as a result of the suit.

It has been argued that defendants should be allowed to recover court costs and damage awards from both the plaintiff(s) and their attorneys for frivolous claims and counterclaims. Frivolous litigation is the practice of filing a lawsuit that lacks legal merit and has little chance of being successful. It consists of a claim made by the defendant(s) that there is insufficient evidence for the plaintiff(s) to proceed with a case.

A claim or defense may be frivolous because it has no underlying justification, either in fact or law. United States Rule 11 of the Federal Rules of Civil Procedure and similar state rules require an attorney to perform a due diligence investigation concerning the factual basis for a claim or defense. Congress enacted section 1912 of Title 28 of the U.S.C., which provides that in the U.S. Supreme Court and in the U.S. Courts of Appeals, where litigation by the losing party has caused damage to the prevailing party, the court may impose a requirement that the losing party must pay the prevailing party for those damages. The costs associated with filing a lawsuit include time spent in preparing and litigating a case, obtaining and analyzing medical records, obtaining expert witnesses, conducting depositions, and a variety of other costs associated with litigating a lawsuit.

In Berlin v. Nathan, a radiologist, a surgeon, and a hospital were sued for alleged malpractice by a patient who sought $250,000 because the defendants did not diagnose a fracture of her little finger. The radiologist missed the break, but he claimed that it was not evident on the X-ray taken at the hospital and that there was no error on his part. Furthermore, the finger was placed in a splint just as if it had been broken, so the treatment was correct regardless of the diagnosis. The radiologist countersued, so the malpractice suit and countersuit were tried together. When the jury was selected, the patient withdrew the malpractice suit, but the radiologist persisted with his case. The jury awarded the radiologist $2,000 as compensation and $6,000 in punitive damages, presumably convinced that the patient and her attorneys acted improperly in bringing the lawsuit and that the





attorneys were negligent in their investigation of the patient’s case before filing suit.

When the case was taken to an appellate court, the decision of the lower court was reversed on the grounds that the physician failed to plead special damages and (because the countersuit had been filed prematurely) failed to plead a favorable result in the original suit. The appellate court went on to say that a showing of special damages is essential in a case of this type in order that the public’s right to free access of the court system not be impeded by the threat of counter-litigation. The court reasoned that people who believe they have legitimate claims should not be dissuaded from using the court system solely because of the fear of liability in the event their claim is unsuccessful. However, a study conducted by researchers at the Harvard School of Public Health found that “most malpractice claims are meritorious, with 97% of claims involving medical injury. The press release from Harvard headlined: “Study casts doubt on claims that the medical malpractice system is plagued by frivolous lawsuits.”

The appellate court holding in the Berlin case represents the majority judicial view across the country regarding countersuits. Courts generally do not find in favor of the countersuing party because they fear that persons who otherwise would bring valid malpractice suits will be discouraged simply because of a concern over the possibility of a countersuit.

The courts, thus far, have not looked favorably on countersuits for frivolous negligence actions. Some state legislatures have taken limited action in this area. An Arkansas statute, for example, provides that in any civil action in which the court finds that there was a complete absence of a judicial issue of either law or fact raised by the losing party or his or her attorney, the court shall award, with certain stipulations, an attorney fee in an amount not to exceed $5,000 or 10% of the amount in controversy, whichever is less, to the prevailing party.






▸ JOINT AND SEVERAL LIABILITY The doctrine of joint and several liability provides that a person causing an injury concurrently with another person can be held equally liable for the entire judgment awarded by a court. This has been referred to as pure joint and several liability.

Some states have taken action to modify the doctrine by adopting a modified joint and several liability requirement, in which the defendant “is responsible for the entire verdict only if they are found to be at or above a specified percentage of fault. Twenty-eight (28) states practice Modified Joint and Several Liability (California, Colorado, Hawaii, Idaho, Illinois, Iowa, Louisiana, Maine, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Texas, Washington, West Virginia, and Wisconsin).”

Some states require that each defendant in a multidefendant action should be limited to payment for the percentage of fault ascribed to him or her. This has been referred to as pure several liability. Presently, “Fourteen (14) states practice Pure Several Liability (Alaska, Arizona, Arkansas, Connecticut, Florida, Georgia, Indiana, Kansas, Kentucky, Michigan, Tennessee, Utah, Vermont, and Wyoming).” A Wyoming statute, for example, provides that each defendant to a lawsuit is liable only for that proportion of the total dollar amount of damages according to the percentage of the amount of fault attributed to him or her. A Minnesota statute provides that a defendant whose fault is 15% or less may be jointly liable for a percentage of the whole award not greater than four times his or her percentage of fault.

Fair Share Act Governor Tom Corbett of Pennsylvania signed the Fair Share Act (42 Pa. Cons. Stat. § 7102) in 2011, which provides for a proportionate share of liability among joint tortfeasors and eliminates the common law doctrine of joint and several liability. Under the law, with few exceptions, each defendant is liable for “that proportion of the total dollar amount awarded as damages in the ratio of the amount of that defendant’s liability to the amount of liability attributed to all defendants and other persons to whom liability is apportioned under subsection (a.2)” [42 Pa. Cons. Stat. § 7102(a.1)(1)].








▸ MALPRACTICE CAPS Many states have attempted to stem the tide of rising malpractice awards by enacting laws that limit the total dollar damages allowable in malpractice actions. Some states have placed limitations on the amount of awards in order to discourage frivolous lawsuits. The impetus for malpractice caps is due, in part, because jury awards often vary substantially from jurisdiction to jurisdiction within and between states. As a result, negligence attorneys often attempt to try personal injury cases in those jurisdictions in which a jury is more likely to grant a higher award. Although there have been challenges to statutes limiting awards, it would appear that limitations on malpractice recoveries are mixed as to the constitutionally of such caps. Pennsylvania for example does not impose caps on damages in personal injury cases unless the case is brought against a Commonwealth agency. In fact, damages caps are otherwise unconstitutional under the Constitution of the Commonwealth of Pennsylvania.

The battle continues regarding the effectiveness of malpractice liability caps. States that have such statutes in place are finding that the caps do not resolve the issue of high malpractice insurance premiums for physicians. Although there have been challenges to statutes limiting awards, it would appear that limitations on malpractice recoveries are considered constitutional in some states and unconstitutional in others, as illustrated in the following cases.

Florida. Florida caps on medical malpractice damages were determined to be unconstitutional. The Florida Supreme Court ruled on June 8, 2017, that the Florida caps on medical malpractice damages were unconstitutional. Susan Kalitan had filed a lawsuit in 2008 against the North Broward Hospital District and other defendants after undergoing carpal-tunnel syndrome surgery and suffering a perforated esophagus during anesthesia. A jury awarded $4 million in noneconomic damages. The amount was reduced by about $2 million because of the caps in the 2003 law. On appeal, the 4th District Court of Appeal ruled that the damage caps were unconstitutional. The Florida Supreme Court upheld the 4th District Court of Appeal’s decision, which found that the state’s malpractice caps on noneconomic damages violated the Equal Protection Clause of the Florida Constitution.

We conclude that the caps on noneconomic damages in sections 766.118(2) and (3) arbitrarily reduce damage awards for plaintiffs who suffer the most drastic injuries. We further conclude that because there is no evidence of a continuing medical malpractice insurance crisis justifying the arbitrary and invidious discrimination between medical malpractice victims, there is no rational relationship between the personal injury noneconomic damage caps in section 766.118 and alleviating this purported crisis. Therefore, we hold that the caps on personal injury





noneconomic damages provided in section 766.118 violate the Equal Protection Clause of the Florida Constitution.

Section 766.118 sets noneconomic damages caps of $500,000 per claimant in personal injury or wrongful death actions arising from medical negligence. The noneconomic damages suffered by the injured patient in this case were severe. Such an award in this case could not be constitutionally limited by Section 766.188(2) and (3).

Idaho. The Idaho Supreme Court, in Jones v. State Board of Medicine, held that the state’s limitation on malpractice recoveries of $150,000 is not necessarily unconstitutional. The court also held that there was no inherent right to an unlimited amount of damages and that the state had a legitimate interest in controlling excessive medical costs caused by large malpractice recoveries and, thus, the statute could be held constitutional. Idaho has raised the limitation on noneconomic damages, such as pain and suffering, to $250,000 under Idaho Code § 6-1603. This limitation does not apply to economic damages such as medical expenses, and adjusts with inflation yearly based on adjustments made by the Idaho Industrial Commission.

California. The California Supreme Court, in Fein v. Permanente Medical Group, found that provisions in the Medical Injury Compensation Reform Act of 1975, Section 3333.2 of the Civil Code, that limit noneconomic damages for pain and suffering in medical malpractice cases to $250,000 are not unconstitutional. The legislature did not place limits on a plaintiff’s right to recover for economic damages, such as medical expenses and lost earnings resulting from an injury. Unlike other states, California’s limitation does not adjust with inflation, and the limitation will remain at the 1975 rates until the law is amended. At the ballot box in 2014, California citizens voted to maintain the $250,000 cap on noneconomic damages.

Virginia. A Virginia statute that places a cap of $750,000 on damages recoverable in a malpractice action was found not to violate the Seventh Amendment separation of powers principles or the Fourteenth Amendment due process or equal protection clauses. Under Virginia Code § 8.01-581.15, Virginia’s malpractice cap has been increasing incrementally over the years and is as of 2015 set at $2.15 million. The malpractice cap is scheduled to rise to $3 million by 2031. Further increases are scheduled after that date.

Illinois. In November 2006, the plaintiffs in Lebron v. Gottlieb Memorial Hospital, Abigaile Lebron (Abigaile), a minor, and her mother, Frances Lebron (Lebron), filed a medical malpractice and declaratory judgment action against the defendants—the hospital, physician, and nurse. According to the complaint, Lebron was under the care of the physician during her pregnancy. On October 31, 2005, Lebron was admitted to the hospital, where the physician delivered Abigaile by cesarean section. The nurse assisted in the









delivery and provided the principal nursing care from the time of Lebron’s admission. The plaintiffs alleged that as the direct and proximate result of certain acts and omissions by the defendants, Abigaile sustained numerous permanent injuries, including severe brain injury, cerebral palsy, cognitive mental impairment, inability to be fed normally such that she must be fed by a gastrostomy tube, and inability to develop normal neurologic function.

The plaintiffs sought a judicial determination of their rights with respect to Public Act 94-677 and a declaration that certain provisions of the act, applicable to the plaintiffs’ cause of action, violate the Illinois Constitution. The plaintiffs challenged the caps on noneconomic damages contained in the act. The plaintiffs alleged that Abigaile sustained disability, disfigurement, and pain and suffering to the extent that damages for those injuries will greatly exceed the applicable limitations on noneconomic damages under the Act.

The Supreme Court of Illinois agreed with the plaintiffs that the $500,000 limit on noneconomic damages was arbitrary. Although agreeing with the defendants that noneconomic injuries are difficult to assess, imposing an arbitrary damages limitation in all cases, without regard to the facts, did not alleviate such difficulty.

The defendants referred the court’s attention to statutes limiting noneconomic damages in medical malpractice cases that have been adopted in other states. The defendants contended that the limits on damages contained in the act are well within the range of reasonable limits adopted by these states. The court reviewed the statutes cited by the defendants and observed that the limitations on noneconomic damages adopted in other states vary widely, not only in the amount of the cap, but also regarding other specifics. “On what basis defendants have determined that such disparate provisions are all reasonable is not known, and it is not for the Supreme Court of Illinois to judge the reasonableness of other states’ legislation. The ‘everybody is doing it’ mentality is hardly a litmus test for the constitutionality of the statute.”

A summary of medical malpractice damages caps, which vary from state to state, can be found at medical-malpractice-damages-caps.html. The state supreme courts of Florida, Missouri, Georgia, Illinois, Alabama, Oregon, Washington, and New Hampshire have overturned limits on noneconomic damages. The Florida Supreme Court, in a 5-2 decision, held that the way the caps reduced damages is “arbitrary and unrelated to a true state interest,” and it “offends the fundamental notion of equal justice under the law.” The court continued: “The statutory cap on wrongful death noneconomic damages fails because it imposes unfair and illogical burdens on injured parties when an act of medical negligence gives rise to multiple claimants.”


24 25 26 27 28 29

30 31








▸ NO-FAULT SYSTEM A no-fault system compensates injured parties for economic losses regardless of fault. It is intended to compensate more claimants with smaller awards. A no-fault system compensates victims of medical injury whether or not they can prove medical negligence. Proponents of the no-fault approach cite its advantages as providing a swifter and less expensive resolution of claims and a more equitable compensation for patients. “While several other countries have established a no-fault system for medical malpractice, no state has established an across-the-board no-fault medical malpractice system. But Florida and Virginia have established a voluntary no-fault system for children born severely impaired because of neurologic injuries suffered during the birthing process.”

A no-fault system of compensation does have drawbacks. Opponents of the no-fault system are concerned about the loss of whatever deterrent effect the present tort system exerts on healthcare providers. The system’s lower administrative costs can be an incentive to file lawsuits and, therefore, may not produce the desired outcome of reducing the incidence of malpractice claims.





▸ REGULATION OF INSURANCE PRACTICES Many believe that the regulation of insurance practices is necessary to prevent windfall profits. Both the medical profession and the legal profession believe that insurance carriers have raised premiums disproportionately to their losses and that, despite their claims of substantial losses, they have reaped substantial profits. Additional information on insurance can be found at several websites including




▸ REDUCING THE RISKS OF MALPRACTICE A variety of programs have been implemented to improve the quality of patient care, reduce the incidence of medical errors, and lower malpractice insurance premiums.

Risk Management Risk management programs improve patient care and treatment practices, thus reducing the number of patient injuries and thereby minimizing the exposure of an organization to lawsuits. An effective risk management program includes a monitoring system that identifies potential risks to patients and staff. Liability insurers have been strong proponents of risk management and in many cases, insurers have reduced premiums for physicians and healthcare organizations that implement risk management programs that include: a grievance or complaint mechanism designed to process and resolve grievances by patients or their representatives; data collection with respect to negative healthcare outcomes; medical care evaluation mechanisms that include tissue review, blood utilization, and medical audit committees to periodically assess the quality of medical care being provided; and patient safety education programs to support staff.

Performance Improvement There are a variety of labels ascribed to the quality improvement process, such as continuous quality improvement (CQI) and performance improvement (PI). CQI is the term given to the philosophy of management introduced into the U.S. business world in 1980 by an American statistician, Dr. W. E. Deming. Initially working in Japan, Deming was rediscovered by his own country when an NBC news documentary entitled If Japan Can—Why Can’t We? was broadcast on June 24, 1980. A portion of the documentary highlighted Deming’s efforts in helping to make Japanese management and products what some would call the best in the world. His concepts on improving quality, however, failed to catch the immediate attention of the business world in the United States. Through his years of research, Deming formulated step-by-step procedures for improving quality and decreasing costs. Since that time, there have been numerous variations on the CQI process of improving quality. CQI comes in a diversity of packages that contain sound business practices that have been developed over many years. CQI involves improving performance at every functional level of an organization’s operation, using all available resources (human and capital). It combines fundamental management techniques, innovative improvement efforts, and specialized technical skills in a structure focused on continuously improving processes. CQI relies on people and involves everyone. CQI is concerned with providing a quality product, getting to market on time, providing the best service, reducing costs, broadening market share, and producing organizational growth.




Performance improvement is the terminology adopted by The Joint Commission, which describes “the systematic process of detecting and analyzing performance problems, designing and developing interventions to address the problems, implementing the interventions, evaluating the results, and sustaining improvement.” Successful PI programs require commitment by the organization’s leadership to PI activities, regular inter- and intra- departmental meetings between caregivers, and continuing educational opportunities for self-improvement within and outside of the organization. PI should be part of an organization’s culture and can be adopted by professional organizations and specialty societies when developing best-practice guidelines. “Many of the specialty societies either have drafted or are drafting practice guidelines for their medical area of expertise. For example, the American Society of Anesthesiologists developed guidelines for intra-operative monitoring in 1986. During the following year, no lawsuits were brought for hypoxic injuries; in previous years hypoxic injury suits averaged six per year.”

Peer Review Medical staff peer review is the evaluation of a physician’s work competence and quality by his or her peers. It is a form of self-regulation and can be accomplished internally by qualified members of an organization’s medical staff within their respective fields of expertise. In high-profile cases, an external group can conduct peer review activities in order to avoid giving the perception of bias and the appearance of wrongdoing and thus provide credibility to the process.






▸ COLLABORATION IN TORT REFORM Physicians and, increasingly, advanced practice practitioners (e.g., physician assistant and nurse practitioners) are on the front lines of medicine but often have been excluded from the decision-making processes that threaten their autonomy and financial security. A concerted effort must be made to include them in the process of tort reform. The present system of punishment for all because of the inadequacies of the few has proven to be costly and ineffective.

The medical malpractice insurance crisis continues to be a major dilemma for the healthcare industry. Although many approaches have been taken to resolve the crisis, there appears to be no one magic formula. The solution most likely will require a variety of efforts, including tort reforms, some of which have been reviewed here.




▸ CHAPTER REVIEW 1. Mediation is the process wherein a third party attempts to bring about a

settlement between parties. Arbitration is a process wherein parties agree to submit their differences to the judgment of an impartial mediation panel for resolution in lieu of trial.

2. Structured awards are those placed in a trust set up to provide compensation over a plaintiff’s lifetime.

3. Pretrial screening panels are used to encourage out-of-court settlements. The panels give an opinion on provider liability and, in some cases, damages.

4. The collateral source rule is a common law principle that prohibits a court or jury, when setting an award, from taking into account that part of the plaintiff’s damages that would be covered by other sources of payment.

5. A contingency fee is payment for an attorney’s services predicated on the favorable outcome of a case. Many believe that a limitation on such fees would limit the windfall profits of attorneys, thus reducing the economic drain on the healthcare system.

6. Some healthcare providers have filed countersuits after being named in what they believe to be frivolous claims. The threat of such suits, however, has not proven to be helpful in reducing the number of malpractice claims.

7. The concept of joint and several liability holds that a person who caused an injury concurrently with another person can be held equally liable for the full judgment awarded by a court. Some states require that each defendant in a multidefendant action should be limited to payment for the percentage of fault ascribed to him or her.

8. Some states are attempting to limit the rising costs of malpractice awards by setting malpractice caps.

9. Proponents of a no-fault approach to reducing the costs associated with exorbitant malpractice awards cite as its advantages swifter and less expensive resolution of claims and more equitable compensation for patients.

10. Statutes of limitations specify the timeframe within which a lawsuit must be commenced.

11. Reducing the risks of malpractice can be accomplished by implementation of best practices, risk management, performance improvement activities, and peer review.







▸ REVIEW QUESTIONS 1. Describe various tort reform programs designed to lower the cost of

malpractice insurance. Should there be limits placed on malpractice awards? Support your opinion.

2. Discuss what a structured award is and how it might reduce the costs associated with large-sum malpractice awards.

3. Discuss which of the schemes for tort reform discussed previously you consider most helpful in addressing the malpractice insurance crisis.

4. Describe how risk management, performance improvement, and peer review can be helpful in improving patient care and reducing the number of malpractice claims.





1. Gregg Roslund, MD, “The Medical Malpractice Rundown: A State-by-State Report,” Emergency Physicians Monthly, July 21, 2014.

2. The Robert Wood Johnson Foundation, “The Tort System for Medical Malpractice: How Well Does It Work, What Are the Alternatives?” Abridge, Spring 1991, 2.

3. United States District Court Southern District of New York, “What Is Mediation,”

4. No. 2003-CA-01573-COA (Miss. Ct. App. 2004).

5. The Robert Wood Johnson Foundation, “Legal Reform,” Abridge, Spring 1991, 3.

6. 750 P.2d 343 (Alaska 1988).

7. 377 S.E.2d 397 (Va. 1989).

8. Id. at 401.

9. Eugen C. Andres and Jim Moore, “Requirements for Client Retainer Agreements,” December 2013. 2013-Requirements-for-Client-Retainer-Agreements.aspx.

10. 381 N.E.2d 1367 (1978).

11. Jack Cannon, “Frivolous Malpractice Lawsuits Uncommon: Harvard Study,” News/Frivolous-Malpractice-Lawsuits-Uncommon-Harvard-Study.shtml.

12. Ark. Code Ann. § 16-22-309 (Michie 1987).

13. Matthiesen, Wickert & Lehrer, S.C., “Joint and Several Liability and Contribution Laws in All 50 States,” Updated September 15, 2017. actions-in-all-50-states.pdf.

14. Id.

15. Wyo. Stat. § 1-1-109 (1986).

16. Minn. Stat. § 604.02 (1988).

17. North Broward Hospital District, etc., et al., Appellants, vs. Susan Kalitan, 174 So. 3d 403 (2015).

18. North Howard Hospital v. Kalitan, No. SC15-1858 (June 8, 2017).

19. 555 P.2d 399 (Idaho 1976).

20. 695 P.2d 665 (Cal. 1985).

21. Ballotpedia, “California Proposition 46, Medical Malpractice Lawsuits Cap and Drug Testing of Doctors (2014),”


22. Boyd v. Bulala, 877 F.2d 1191 (4th Cir. 1989).

23. Lebron v. Gottlieb Memorial Hospital, Docket Nos. 105741, 105745 cons., (Ill. February 4, 2010).

24. John Chapman, “Florida medical malpractice wrongful death damage caps overturned in state Supreme Court ruling,” April 23, 2015. https://www.hop- overturned-state-supreme-court-ruling/.

25. Stephen R. Clark and Kristin Weinberg, “Missouri Supreme Court Overrules 20 Years of Precedent in Holding Noneconomic Damages Cap Unconstitutional,” January 4, 2013. supreme-court-overrules-20-years-of-precedent-in-holding- noneconomic-damages-cap-unconstitutional.

26. The Cochran Firm, “Georgia Supreme Court Overturns Medical Malpractice Damage Cap,” overturns-medical-malpractice-damage-cap/.

27. Kevin Sack, “Illinois Court Overturns Malpractice Statute,” February 4, 2010. The New York Times.

28., “Oregon Supreme Court Overturns $12M Medical Malpractice Verdict, Applies $3M Cap,” June 17, 2016. malpractice-2/oregon-supreme-court/.

29. Zachary Matzo, “Washington Medical Malpractice Laws & Statutory Rules,” washington.html.

30. Medical Malpractice Center, “New Hampshire Medical Malpractice Laws,”

31. Pamela Menaker, “Caps on Non-Economic Damages Held Unconstitutional,” June 2, 2014. American Bar Association, Litigation News. non-economic-damage-caps.html.

32. Id.

33. George Coppolo and Saul Spigel, “Medical Malpractice-No-Fault Systems,” December 8, 2003. OLR Research Report.

34. Glossary, The Joint Commission Hospital Accreditation Standards, 2017, GL– 29.

35. The Robert Wood Johnson Foundation, “Preventing Negligence,” Abridge, Spring 1991, at 8.







© Orguz Dikbakan/Shutterstock





Criminal Aspects of Health Care


WRONGFUL ADMINISTRATION OF CHEMOTHERAPY The physician in the United States v. Moon was convicted by a trial court for healthcare fraud and making false statements regarding the administration of partial doses of chemotherapy medications to patients. These actions resulted in placing patients at risk of death or serious bodily harm. The physician was billing Medicaid and other insurance programs for full doses of the medications. The defendant-physician appealed the trial court’s decision. At sentencing, the district court considered testimony from family members of deceased patients. The various families testified that their loved ones suffered emotional harm as a result of not knowing whether or not the medications administered were wrongfully administered. The defendant contended that the testimony of the patients’ relatives was not “relevant” because they were not “victims” of the offenses for which the defendant was convicted.


Laws are made to restrain and punish the wicked; the wise and good do not need them as a guide, but only as a shield against rapine and

oppression; they can live civilly and orderly, though there were no law in the world.

—John Milton (1608–1674)






The reader, upon completion of this chapter, will be able to:

Explain what criminal law is, its main objectives, and the classification of crimes. Describe the criminal procedure process from arrest through trial. Describe several of the more common crimes that occur in the healthcare setting.

Criminal law is society’s expression of the limits of acceptable human and institutional behavior. A crime is any social harm defined and made punishable by law. The objectives of criminal law are as follows:

Maintain public order and safety. Protect the individual. Use punishment as a deterrent to crime. Rehabilitate the criminal for return to society.

A crime is also defined as “any act which the sovereign has deemed contrary to the public good; a wrong which the government has determined is injurious to the public and, hence, prosecutable in a criminal proceeding.” Crimes are generally classified as misdemeanors or felonies. The difference between a misdemeanor and a felony is the severity of the crime. A misdemeanor is an offense punishable by less than 1 year in jail and/or a fine (e.g., petty larceny). A felony is a much more serious crime (e.g., rape, murder) and is generally punishable by imprisonment in a state or federal penitentiary for more than 1 year.

Criminal law has been seen as a system of regulating the behavior of individuals and groups in relation to societal norms, whereas civil law is aimed primarily at the relationships between private individuals and their rights and obligations under the law.

Particular to healthcare organizations is the fact that patients are often helpless and at the mercy of others. Healthcare facilities are far too often places where the morally weak and mentally deficient prey on the physically and sometimes mentally helpless. The very institutions designed to make the public well and feel safe can sometimes provide the setting for criminal conduct. As a result, the U.S. Department of Justice and state prosecutors vigorously pursue and prosecute healthcare organizations and individuals for criminal conduct. There is a zero-tolerance policy for healthcare fraud, patient abuse, and other such crimes. Healthcare professionals must be observant of the actions of others and report suspicious conduct. In an effort to provide the reader with a review of criminal law as it applies to the healthcare industry, this






chapter presents the procedural aspects of criminal law, as well as an overview of criminal cases that have occurred in healthcare facilities.




▸ CRIMINAL PROCEDURE Criminal procedure regulates the process for addressing violations of criminal law. The following sections provide an overview of criminal procedure and the process for the prosecution of misdemeanors and felonies.

Arrest Prosecution for a crime generally begins with the arrest of a person by a police officer or with the filing of a formal action in a court of law and the issuance of an arrest warrant or summons. On arrest, the suspect is taken to the appropriate law enforcement agency for processing and booking, which includes paperwork and fingerprinting. The police also prepare and file accusatory statements, such as a misdemeanor information and felony complaints, with the appropriate jurisdiction. When necessary, one or more detectives may be assigned to a case to gather evidence, interview both persons suspected of committing a crime and witnesses to a crime, and assist in preparing a case for possible trial. After processing has been completed, the person is either detained or released on bond. If the alleged offense is classified as a felony, the U.S. Constitution requires that the case be referred to a grand jury for an indictment. An indictment is the official charging instrument accusing the defendant of criminal conduct.

A prosecuting attorney represents the interests of the state, and a defense attorney represents the interests of the defendant. Although the specific process varies according to local law, in virtually every jurisdiction, unless a guilty plea has been accepted by the court, the process culminates with a trial. The defendant can appeal a lower court’s decision by appealing to a higher court.

Criminal statutes spell out the specific elements that must be proven to constitute a criminal act. Unless the prosecuting authority proves all the elements of a particular crime, the defendant is not guilty of the offense charged. In a criminal case, the three general elements that must be established are as follows:

1. The act itself is a criminal act, known as actus reus or the guilty act. 2. The intent to commit the criminal act provides the requisite mental

state, or the mens rea. 3. The attendant or surrounding circumstances of the crime demonstrate

that the crime was committed by the defendant.

Arraignment The arraignment is a formal reading of the accusatory instrument (a generic term that describes a variety of documents, each of which accuses the defendant of an offense) and includes the setting of bail. The accused should




appear with counsel or have counsel appointed by the court if he or she cannot afford an attorney. After the charges are read, the defendant pleads guilty or not guilty as charged. A not guilty plea is normally offered on a felony complaint. On a plea of not guilty, the defense attorney and prosecutor formulate arguments to the judge when setting bail. After arraignment of the defendant, the judge sets a date for the defendant to return to court. Between the time of arraignment and the next court date, the defense attorney and the prosecutor confer about the charges and the evidence in the possession of the prosecutor. The defense will at that time offer mitigating circumstances in an attempt to negotiate with the prosecutor to reduce or drop the charges.

Indictment A felony complaint or grand jury indictment commences a criminal proceeding. The accused can be tried for a felony after a grand jury indictment (EXHIBIT 6-1). The defendant can waive presentment to the grand jury and plead guilty by relinquishing his rights to a grand jury hearing and proceed to trial by jury. During a grand jury hearing, the prosecution presents evidence, which may lead to an indictment of the target if the grand jury finds reasonable cause to believe from the evidence presented that all the elements of a particular crime are present. The grand jury may request that witnesses be subpoenaed to testify. A defendant may choose to testify and offer information if he or she wishes. Actions of a grand jury are handed up to a judge, after which the defendant is notified to appear to be arraigned for any crimes charged in the indictment.




EXHIBIT 6-1 Report of the grand jury. Reproduced from Grand Jury Women’s Medical,

Conference If the defendant does not plead guilty, both felony and misdemeanor cases are taken to conference, and plea-bargaining commences with the goal of an agreed upon disposition. If a disposition cannot be reached, the case is




adjourned, motions are made, and further plea-bargaining takes place. After several adjournments, a case may be assigned to a trial court.

Criminal Trial Most of the processes of a criminal trial are similar to those of a civil trial. They include jury selection, opening statements, presentation of witnesses and other evidence, summations, instructions to the jury by the judge, jury deliberations, verdict, and opportunity for appeal to a higher court. In a criminal trial, the jury verdict must be unanimous, and the standard of proof is that guilt must be proven beyond a reasonable doubt, whereas in a civil trial, the plaintiff need only prove a claim by a preponderance of the evidence.

Criminal History and False Statements The record in Hoxie v. Ohio State Med. Bd. indicated that the physician had made false statements concerning his criminal history when he stated in a deposition that he had never been arrested. There was, however, sufficient evidence presented to support permanent revocation of his license to practice medicine. Certified records held by the state of California indicated that the physician had been arrested or detained by the Los Angeles Police Department multiple times in the 1970s and 1980s for possessing marijuana and phencyclidine piperidine (PCP), driving under the influence of alcohol and/or drugs, and driving with a suspended license. Although the physician asserted that documentation of his criminal past had been fabricated by police and was not credible, law enforcement investigation reports were generally admissible. The physician himself added to the reliability of the records by verifying all significant identifying information contained within the documents and records.

Prosecutor The role of the prosecutor in the criminal justice system is well defined in Berger v. United States:

The United States Attorney is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice will be done. As such, he is in a peculiar and very definite sense the servant of the law, the twofold aim of which is that guilt shall not escape or innocence suffer.

The potential of the prosecutor’s office is not always fully realized in many jurisdictions. In many cities, the combination of the prosecutor’s staggering caseload and small staff of assistants prevents sufficient attention from being given to each case.

Defense Attorney







The defense attorney generally sits in the proverbial hot seat, being perceived as the bad guy. Although everyone seems to understand the attorney’s function in protecting the rights of those represented, the defense attorney often is not the most popular person in the courtroom.

There is a substantial difference in the problem of representing the “run-of- the-mill” criminal defendant and one whose alleged crimes have aroused great public outcry. The difficulties in providing representation for the ordinary criminal defendant are simple compared with the difficulties of obtaining counsel for one who is charged with a crime, which by its nature or circumstances incites strong public condemnation.

Criminal trials involving healthcare professionals and organizations often involve healthcare fraud, kickbacks, tampering with drugs, illegal use and sale of drugs, falsification of records, patient abuse, criminal negligence, manslaughter, murder, rape and sexual assault, and theft. Each of these criminal offenses is reviewed in the following paragraphs.





▸ HEALTHCARE FRAUD Healthcare fraud involves an unlawful act, generally deception for personal gain. It encompasses an array of irregularities and illegal acts characterized by intentional deception. Healthcare fraud continues to be a major financial drain on the healthcare system. The primary agency for exposing and investigating healthcare fraud is the Federal Bureau of Investigation (FBI), with jurisdiction over both federal and private insurance programs.

The Bureau seeks to identify and pursue investigations against the most egregious offenders involved in health care fraud through investigative partnerships with other federal agencies, such as Health and Human Services-Office of Inspector General (HHS-OIG), Food and Drug Administration (FDA), Drug Enforcement Administration (DEA), Defense Criminal Investigative Service (DCIS), Office of Personnel Management- Office of Inspector General (OPM-OIG), and Internal Revenue Service- Criminal Investigation (IRS-CI), along with various state Medicaid Fraud Control Units and other state and local agencies.

Moreover, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) provides for criminal and civil enforcement tools and funding dedicated to the fight against healthcare fraud. The Act requires the U.S. Attorney General and the U.S. Secretary of the Department of Health and Human Services (DHHS), acting through the Office of Inspector General (OIG), to establish a coordinated national healthcare fraud and abuse control program. The program provides a national framework for federal, state, and local law enforcement agencies; the private sector; and the public to fight healthcare fraud. Since its establishment in 1976, “OIG has been at the forefront of the Nation’s efforts to fight waste, fraud and abuse in Medicare, Medicaid and more than 100 other HHS programs. HHS-OIG is the largest inspector general’s office in the Federal Government, with approximately 1,600 dedicated to combating fraud, waste and abuse and to improving the efficiency of HHS programs.”


National Health Care Fraud Takedown Results in Charges Against over 412 Individuals Responsible for $1.3 Billion in Fraud Losses

Largest Health Care Fraud Enforcement Action in Department of Justice History Attorney General Jeff Sessions and Department of Health and Human Services (HHS) Secretary Tom Price, MD, announced today the largest ever health care fraud enforcement action by the Medicare Fraud Strike Force,







involving 412 charged defendants across 41 federal districts, including 115 doctors, nurses, and other licensed medical professionals, for their alleged participation in health care fraud schemes involving approximately $1.3 billion in false billings. Of those charged, over 120 defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. Thirty state Medicaid Fraud Control Units also participated in today’s arrests. In addition, HHS has initiated suspension actions against 295 providers, including doctors, nurses, and pharmacists.

— Department of Justice, Justice News, July 13, 2017

The DHHS and the Department of Justice (DOJ) in 2009 created the Health Care Fraud Prevention and Enforcement Action Team (HEAT). With its creation, the fight against Medicare fraud became a Cabinet-level priority. The HHS Secretary and the Attorney General direct HEAT’s work. By 2015, HEAT coordinated a national healthcare fraud takedown that uncovered $712 million in fraudulent billing.

The Department of Justice Health and Human Services Medicare Fraud Strike Force is a multiagency team of federal, state, and local investigators that is designed to combat Medicare fraud. Medicare fraud is estimated to cost the nation $80 billion annually. The success of cooperation of agencies on the federal and state levels was evident when the Medicare Fraud Strike Force in 2011 charged 111 defendants in 9 cities, including doctors, nurses, healthcare company owners and executives, and others, for their alleged participation in Medicare fraud schemes involving more than $225 million in false billing.

The Obama administration in July 2012 announced the formation of a public- private partnership to aid in the prevention of healthcare fraud among the federal government, state officials, several leading private health insurance organizations, and other healthcare antifraud groups. The partnership is designed to share information and best practices in order to improve detection and prevent payment of fraudulent healthcare billings.

Attorney General Loretta E. Lynch and HHS Secretary Sylvia Mathews Burwell announced in 2016 that a “nationwide sweep led by the Medicare Fraud Strike Force in 36 federal districts, resulting in criminal and civil charges against 301 individuals, including 61 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving approximately $900 million in false billings.” The message is clear that those involved in healthcare fraud are being vigorously pursued. The public has been encouraged to report suspected Medicare fraud by calling 1- 800-HHS-TIPS (1-800-447-8477) or TTY: 1-800-377-4950.









The federal government’s initiative to investigate and prosecute healthcare organizations for criminal wrongdoing has resulted in the establishment of corporate compliance programs for preventing, detecting, and reporting criminal conduct. An effective corporate compliance program should include:

1. Developing appropriate policies and procedures 2. Appointing a compliance officer to oversee the compliance program 3. Communicating the organization’s compliance program to employees 4. Providing for monitoring and auditing systems that are designed to

detect criminal conduct by employees and other agents 5. Publicizing a reporting system whereby employees and other agents

can report criminal conduct by others within the organization without fear of retribution

6. Taking appropriate steps to respond to criminal conduct and to prevent similar offenses

7. Periodically reviewing and updating the organization’s corporate compliance program

8. Working with state and federal law enforcement and regulatory agencies and insurance companies to detect, prevent, and prosecute healthcare fraud

As noted in the following remarks by former Attorney General Eric Holder, healthcare fraud continues to present significant risks to patient health and is a financial drain on the healthcare system, leading to higher costs for legitimate care.

We are here to announce that Johnson & Johnson and three of its subsidiaries have agreed to pay more than $2.2 billion to resolve criminal and civil claims that they marketed prescription drugs for uses that were never approved as safe and effective—and that they paid kickbacks to both physicians and pharmacies for prescribing and promoting these drugs.

• • •

Put simply, this alleged conduct is shameful and it is unacceptable. It displayed a reckless indifference to the safety of the American people. And it constituted a clear abuse of the public trust, showing a blatant disregard for systems and laws designed to protect public health.

• • •

This settlement demonstrates that the Departments of Justice and Health and Human Services—working alongside a variety of federal, state, and local partners—will not tolerate such activities. No company is above the law. And my colleagues and I are determined to keep moving forward— guided by the facts and the law, and using every tool, resource, and authority at our disposal—to hold these corporations accountable, to safeguard the American people, and to prevent this conduct from happening in the future.16




Schemes to Defraud A defendant is guilty of a scheme to defraud when he or she engages in a scheme constituting a systematic, ongoing course of conduct with intent to defraud more than one person or to obtain property from more than one person by false or fraudulent pretenses, representations, or promises, and so obtains property from one or more of such persons. To show intent in a scheme to defraud, one needs to establish the following three elements:

1. That on or about (date), in the county of (county), the defendant (defendant/s name) engaged in a scheme constituting a systematic ongoing course of conduct.

2. That the defendant did so with intent to defraud more than one person or to obtain property from more than one person by false or fraudulent pretenses, representations, or promises.

3. That the defendant so obtained property from one or more of such persons, at least one of whom has been identified.

Schemes to defraud come in many forms, such as when $12 million in Medicaid funds were fraudulently used in the names of the deceased, where “The Illinois Medicaid program paid an estimated 12 million for medical services for people listed as the deceased in other state records, according to the internal state government memo . . . Auditors identified overpayments for services to roughly 2,900 people after the date of their deaths.”

Healthcare fraud is committed when a dishonest provider or consumer intentionally submits or causes someone else to submit false or misleading information for use in determining the amount of healthcare benefits payable. Some examples of provider healthcare fraud include the following:

Billing for services not rendered Falsifying a patient’s diagnosis to justify tests, surgeries, or other procedures that are not medically necessary Misrepresenting procedures performed to obtain payment for noncovered services, such as cosmetic surgery Upcoding services (billing for a more costly service than the one actually performed) Upcoding medical supplies and equipment (billing for more expensive equipment than what was delivered to the patient) Unbundling (billing each stage of a procedure as if it were a separate procedure) Billing for unnecessary services (services that are not medically indicated) Accepting kickbacks for patient referrals Waiving patient co-pays or deductibles Overbilling the insurance carrier or benefit plan





There are many examples of healthcare fraud, and some of the most egregious are described next.

Fraud Results in 45-Year Prison Sentence The U.S. Supreme Court refused to hear the appeal of Dr. Farid Fata, who was convicted of running a scheme that involved billing the government for medically unnecessary cancer and blood treatments. As a result of his scheme to defraud the government, and harm patients in the process, he will spend the next 45 years in prison.

The defendant, Farid Fata, was a physician who intentionally misdiagnosed no fewer than 553 of his patients with cancer and other maladies they did not have, then administered debilitating treatments, noxious chemicals, and invasive tests—including chemotherapy, intravenous iron, and PET scans—they did not need. For this reprehensible conduct, Fata received no less than $17 million in ill-gotten payments from Medicare and other insurers. The district court accurately described Fata’s conduct as “a huge, horrific series of criminal acts.”

Healthy Dose of Fraud Patients were allegedly brought to California where they were paid to undergo surgeries that they did not need.

In the scam, agents say, recruiters bring “patients” from across the nation to surgery centers in California where they give phony or exaggerated symptoms and doctors perform unnecessary operations on them. Then the surgery centers send inflated claims for the unnecessary procedures to the patients’ insurance companies. When the insurers pay up, federal authorities say, the recruiters, the surgery centers and the patients split the proceeds.

Individuals and corporate entities are continuously bombarding the public with fraudulent activities. Fraud has become so rampant that it has led to a decline of trust in corporate leadership.

Medicare and Medicaid Fraud The jury in United States v. Raithatha convicted the defendant for making false statements and scheming to defraud. The defendant, sentenced to 27 months of imprisonment, appealed his conviction and sentence.

The indictment filed against the defendant included charges for instructing billing staff to raise the Current Procedural Terminology (CPT) code on invoices when the physician actually provided a lower cost service; submitting invoices to insurance companies for services performed by other physicians, as if the defendant had performed them; submitting claims with a diagnosis listing an illness, when the patient did not have an illness; and causing patients







to present themselves for medically unnecessary visits by refusing to authorize refills on prescriptions.

Charges also included making unannounced home visits to patients; approaching people on the street and ushering them into the clinic for unscheduled examinations; examining people who had come into the clinic for nonmedical reasons, such as to pay debts owed to the defendant; ordering medical tests not related to patients’ conditions; falsely representing that other physician employees had specialties so that patients would be examined an additional time by a specialist; and refusing to provide test results until a follow-up appointment was scheduled and kept.

The defendant also was charged with defrauding Medicare/Medicaid by submitting a cost report for 1997 that included personal expenses unrelated to patient care (e.g., money that was actually spent to furnish and complete the defendant’s home).

The defendant, on appeal, argued that there was insufficient evidence to sustain his conviction for defrauding or attempting to defraud. The defendant’s staff members testified that the defendant instructed them to bill office visits covered by private insurance under CPT codes 99213 or 99203, regardless of the CPT code entered by the attending physician on the encounter form. Staff members were aware of the “up-coding” scheme, which resulted in higher reimbursement for the physician.

In addition, staff members testified that the defendant routinely ordered tests unrelated to his patients’ conditions and supported the tests with false diagnoses. Zeren, a nurse practitioner working at the McKee Clinic, testified that after she performed sports physicals on children at local schools and found no indication of upper respiratory infections, the defendant, who had not been present at the examinations, falsely diagnosed them as having upper respiratory infections. A reasonable juror could have reasonably found the defendant physician guilty of defrauding or attempting to defraud Medicare/Medicaid. The conviction and sentence of the district court was affirmed.

False Medicaid Claims In United States v. Larm, a physician and his office manager were convicted on charges that they violated 42 U.S.C. § 139h(a)1 by submitting false Medicaid claims for medical services they never rendered to patients. Claims sometimes were submitted even when patients administered allergy injections themselves. In addition, more expensive serums were billed instead of the less expensive serums that were actually administered.

Home Care Fraud





Today, more Americans are living longer than ever before. As medicine has advanced, the average life expectancy has increased by 50%. There is an ever-increasing number of seniors receiving in-home care who are dependent on family and healthcare providers to attend to their physical, financial, emotional, and healthcare needs. Medicare home health benefits allow individuals with restricted mobility to remain at home, instead of in an institutional setting, by providing home care benefits. Home care services and supplies are generally provided by nurses, home nursing aides, speech therapists, and physical therapists under a physician-certified plan of care.

Home care is rapidly being recognized as a breeding ground for abuse. The numerous scams in home care fraud are caused by the difficulty in supervising services provided in the home, Medicare’s failure to monitor the number of visits per patient, beneficiaries paying no co-payments except for medical equipment, and the lack of accountability to the patient by failing to explain services provided.

Home care fraud generally is not easy to detect. It involves charging insurers for more services than patients received, billing for more hours of care than were provided, falsifying records, and charging higher nurses’ rates for care given by aides. The trend toward shorter hospital stays has created a multibillion-dollar market in home care services. This new market is providing opportunities for fraud.

Fraudulent Billing for Laboratory Tests The Court of Appeals of Georgia in Culver v. State found that a reasonable fact finder could conclude that the physician (Kell) maintained control over the laboratory and its Medicaid billings and received significant payments from the laboratory. The trier of fact (jury or judge as chosen by the defendant) also could find that although Medicaid paid the laboratory approximately $200 for each urine test conducted, the laboratory routinely charged self-pay patients $19.20 for what the laboratory employees described as the same test. Regulations prohibit providers from billing Medicaid for an amount greater than the lowest price routinely offered to the general public for the same service or item on the same date of service.

Physician Bills for Services Not Rendered A physician in State v. Cargille was found to have submitted false information for the purpose of obtaining greater compensation than was otherwise permitted under the Medicaid program. Sufficient evidence was presented to sustain a conviction of Medicaid fraud. The physician argued that he felt justified for multiple billings for single office visits because of the actual amount of time that he saw a patient. He believed that his method of reimbursement was more equitable than Medicaid. The court disagreed with the physician’s reasoning.






Pharmacist Submits False Drug Claims The pharmacist in State v. Heath submitted claims for reimbursement on brand-name medications rather than on the less expensive generic drugs that were actually dispensed. A licensed pharmacist and former employee of the defendant contacted the Medicaid Fraud Unit of the Louisiana Attorney General’s office and reported the defendant’s conduct in substituting generic drugs for brand-name drugs. As a result of the complaint, the Medicaid Fraud Unit conducted a call out, in which the unit sent letters to Medicaid recipients in the pharmacy’s surrounding area:

In a recipient call out, the Medicaid Fraud Unit sends letters to Medicaid recipients in the general area of the pharmacy involved and asks them to bring all their prescription drugs to the welfare office on a specific date. The call out revealed that some of the prescription vials issued by the aforesaid pharmacies contained generic drugs while the labels indicated that they should contain brand-name drugs.

The pharmacist eventually was convicted on three counts of Medicaid fraud.

Inaccurate Records and Controlled Drugs The operator of a pharmacy, in a disciplinary proceeding before the California Board of Pharmacy, was found negligent because of inaccurate record keeping. The pharmacist failed to keep accurate records of dangerous drugs, report thefts by employees, and report a burglary of pharmacy drugs. Such reporting is required by state statute.

Nursing Facility Stockholder Falsifies Records The principal stockholder of a nursing home corporation in Chapman v. United States, Department of Health and Human Services was convicted of making 19 false line-item cost entries in reports to the Kansas Medicaid agency. The record shows that Chapman acted deliberately to submit false data to the Kansas Medicaid agency so that nursing homes owned by him would be reimbursed for goods and services they did not provide. When an audit was scheduled that threatened to reveal the false claims, Chapman prepared false invoices and had checks issued, but not signed, in an effort to cover up the discrepancies that the state audit would reveal.

The U.S. Court of Appeals found that the DHHS did not act unreasonably when it imposed a $2,000 penalty for each of the false Medicaid claims and proposed an additional settlement of $118,136 even though the state already had recovered the $21,115 in excessive reimbursement by setoff. The court concluded, “The penalty reflects a fair amount of leniency on the part of the Inspector General and the Administrative Law Judge (ALJ).”

Inflating Insurance Claims










The North Carolina Court of Appeals held that a chiropractor’s license was properly suspended for 6 months in Farlow v. North Carolina State Board of Chiropractic Examiners for inflating the insurance claims of victims of an automobile accident. Dr. Farlow prescribed a course of treatment for several patients that was not justified by the injuries they received. Instead, the treatment was prescribed to inflate insurance claims.

Fraudulent Billing The physician in Richstone v. Novello was found to have willfully filed false reports, practiced with negligence on more than one occasion, practiced fraudulently, failed to maintain adequate records, and performed unnecessary medical tests and treatments. The physician was found to be morally unfit to practice medicine as well as unsuitable for retraining or probation. A hearing committee of the state decided to revoke the physician’s license. The physician challenged the committee’s actions.

Given evidence that the physician was found to have engaged in fraudulent billing, attempted to coerce a patient into dropping her complaint with the department of health, denied patients timely access to their records, performed substandard follow-up procedures, ordered excessive and medically unnecessary tests on patients, and falsified his application for reappointment to the hospital’s medical staff, the Supreme Court, Appellate Division declined to disturb the hearing committee’s decision to revoke the physician’s license.

Abuse in Prescribing Controlled Substances Evidence was sufficient in United States v. Merrill to support a doctor’s convictions for deaths resulting from healthcare fraud and the use of narcotics prescribed outside the course of professional practice in violation of the controlled substance act, where the record indicated that the doctor had written more than 33,000 prescriptions for controlled substances during the 3.5 years prior to his arrest. Furthermore, even if the patients who died had other substances in their systems, such as alcohol or illicit drugs, the medical examiner, who performed the autopsies on each of the patients, testified that the drugs of the same type as prescribed by the defendant were the cause of death.

Fraud and Ethics Behind every act of healthcare fraud lies a lapse in ethics. One particular type of fraud occurs when physicians refer their patients to hospitals and ancillary healthcare providers when the physician has a financial interest in the provider to which the patient has been referred. The ethical risks inherent in physician self-referral were first noted in a 1986 Institute of Medicine study and again in a 1989 HHS Inspector General study. The 1989 study concluded that physicians who owned or invested in independent clinical laboratories referred Medicare patients for 45% more laboratory services than did physicians







without financial interests. It was in 1989 that the Ethics and Patient Referrals Act was enacted, prohibiting unethical referrals, which were further defined in 1991 when the American Medical Association (AMA) Council on Ethical and Judicial Affairs concluded that physicians should not refer patients to a healthcare facility in which they have a financial interest and do not directly provide services. In the following year, the AMA House of Delegates voted to declare self-referral unethical in most instances.

The Omnibus Budget Reconciliation Act of 1989 (effective January 1, 1992) backed the AMA’s position on self-referral, barring the referral of Medicare patients to clinical laboratories by physicians who have, or whose family members have, a financial interest. The scope of the ban on self-referral was expanded with the enactment of the Omnibus Reconciliation Act of 1993 (effective January 1, 1995), which added 10 additional designated health services: physical therapy; occupational therapy; radiology services; radiation therapy services and supplies; durable medical equipment and supplies; parenteral and enteral nutrients, equipment, and supplies; orthotics, prosthetics, and prosthetic devices and supplies; home health services; outpatient prescription drugs; and inpatient and outpatient hospital services. The 1993 law also expanded and clarified exceptions and applied the referral limits to Medicaid.

Anti-kickback laws require proof of “knowing” and “willful” illegal remuneration (i.e., bribes or rebates) for patient referrals. Such conduct is illegal and can result in criminal sanctions. If an improper financial relationship exists, a loss of Medicare payment or a civil fine may serve as punishment. Because of the law’s preventive nature, it has been highly effective in protecting the Medicare and Medicaid programs’ integrity by motivating healthcare professionals to proactively comply with the law and to avoid financial arrangements that may unethically lead to substantial increases in use of service.

Unethical Pay to Referring Physicians In United States v. Greber, an osteopathic physician violated the Omnibus Budget Reconciliation Act when he unethically paid referring physicians after rendering services. The defendant, board certified in cardiology, was president of Cardio-Med, Inc., an organization that he founded. The company provided physicians with diagnostic services, one of which was Holter monitoring, a method of recording a patient’s cardiac activity on tape, generally for a period of 24 hours. Cardio-Med billed Medicare for the monitoring service and, when payment was received, forwarded a portion to the referring physician. The government charged that the referral fee exceeded that permitted by Medicare and that there was evidence the physician received interpretation fees even though the defendant actually evaluated the monitoring data. After a trial by jury, the physician was convicted on 20 of 23 counts in an indictment charging mail fraud, Medicare fraud, and false statements. On appeal, the physician contended that the evidence was insufficient to support the guilty verdict. The





court of appeals held that to the extent that payments made to the physician were made to induce referrals by that physician of Medicare patients to use payer laboratory services, Medicare fraud was established.

Physicians Victims of Fraud Physicians are not immune from being the victims of fraud. The detection, investigation, and prosecution of financial crimes against physicians are not uncommon occurrences. They involve such areas as computer billing crime, bookkeeper/office manager theft, insurance fraud, cash larceny, checkbook scams, and patient record tampering.

Physicians should be aware of how to analyze larcenous transactions, identify embezzled funds, and recognize the criminal employee. Physicians should be wary of bookkeepers who make themselves appear indispensable because of their perceived ability to operate the office computer system. To avoid being victimized by employee fraud, physicians should do the following:

Familiarize themselves with patient billing and recordkeeping practices. Avoid having one individual in charge of billing and collection procedures. Arrange for an annual audit of office procedures and records by an outside auditor.




▸ KICKBACKS The Medicare and Medicaid Patient Protection Act of 1987, as amended (42 U.S.C. §1320a-7b; the “Anti-Kickback Statute”), provides for criminal penalties for certain acts impacting Medicare and state healthcare (e.g., Medicaid) reimbursable services. The Anti-Kickback Statute, as amended, prohibits certain solicitations or receipt of remuneration. The statute penalizes anyone who knowingly and willfully solicits, receives, offers, or pays anything of value as an inducement for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service payable under the Medicare or Medicaid programs; and purchasing, leasing, or ordering or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item payable under the Medicare or Medicaid programs.

The OIG investigates violations of the Medicare and Medicaid Anti-Kickback Statute. Violators are subject to criminal penalties or exclusion from participation in the Medicare and Medicaid programs. The OIG specifically targets four billing practices: claims for services not provided, claims for beneficiaries not homebound, claims for visits not made, and claims for visits not authorized by a physician.

Laboratory Kickback In the case of United States v. Kats, the owner of Tech Diagnostic Medical Lab (Tech-Lab) agreed to kick back 50% of the Medicare payments received by Tech-Lab as a consequence of referrals from Total Health Care, a medical service company. Under the scheme, Total Health Care collected blood and urine samples from medical offices and clinics in southern California and sent them to Tech-Lab for testing. Tech-Lab billed Total Health Care, which in turn billed the private insurance carrier or the government-funded insurance programs Medi-Cal and Medicare for reimbursement. Tech-Lab then kicked back half of its receipts to Total Health Care. The owners of Tech-Lab and Total Health Care arranged an identical scheme with a community medical clinic; Kats, the appellant, subsequently purchased a 25% interest in the clinic and began collecting payments under the scheme. Kats was convicted of conspiracy to commit Medicare fraud and of receipt of kickbacks in exchange for referral of Medicare patients. He appealed the decision. The court of appeals, however, affirmed the charges against him.

Architectural Contract Kickback In United States v. Thompson, a jury convicted three members of a county council, which served as the governing body of a county hospital, for soliciting and receiving $6,000 in kickbacks from architects. The architects testified that the appellants and others sought a 1% kickback on a hospital project, financed by federal funds, in return for being awarded the architectural contract. Mr. Galloway, of the architectural firm of Galloway and Guthrey, delivered $6,000






to appellant Campbell at the Knoxville airport. The architects had informed the FBI, and an investigation was conducted. After the investigation, indictments, and trial by jury, the defendants were each sentenced to 1 year in prison. On appeal, the U.S. Court of Appeals for the Sixth Circuit held that the receipt of a kickback constituted an overt act in furtherance of a conspiracy to obstruct lawful government function and was a violation of the general conspiracy statute and a crime against the United States. It had been previously observed that “[t]o conspire to defraud the United States means primarily to cheat the government out of property or money, but it also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest.” Proof that part of the architects’ fee was reimbursed with federal funds was not necessary for a conviction. The criminal convictions were affirmed.

Ambulance Service Kickback In United States v. Bay State Ambulance and Hospital Rental Services, a city official was convicted in a federal district court for conspiring to commit Medicare fraud along with other defendants who were also convicted of making illegal payments. Bay State Ambulance and Hospital Rental Services, a privately owned ambulance company, gave cash and two automobiles to an official of a city-owned hospital. The gifts were given as an inducement to the city official for his recommendation that Bay State be awarded the Quincy City Hospital ambulance service contract, for which Bay State received some Medicare funds as reimbursement. The defendants appealed, and the U.S. Court of Appeals for the First Circuit held that the evidence was sufficient to sustain a conviction.






▸ TAMPERING WITH DRUGS In United States v. Milstein, the government established at trial that the defendant and others purchased Eldepryl, a medication used to treat Parkinson’s disease, and the fertility drugs Pergonal and Metrodin, which were produced for distribution outside the United States; stripped them of their original factory packaging; and repackaged them with forged labels and packaging materials closely resembling those of drugs produced in accordance with Food and Drug Administration (FDA) requirements for the U.S. market. They then fraudulently sold the drugs in the United States to doctors, pharmacists, and pharmaceutical wholesalers. The conviction for distributing the misbranded drugs in interstate commerce with fraudulent intent was appropriate.


. . . Robert Courtney would, by law enforcement estimates, dilute 98,000 prescriptions for 4,200 patients. The sheer voraciousness of his dilutions suggests the compulsion of a pathological shoplifter. At times, Courtney diluted conservatively; at others, he reduced medications to trace amounts, seemingly taunting their recipients: Feel anything now? Though Courtney’s highest profits came from diluting expensive chemotherapy medication—a plaintiff’s lawyer says he pocketed as much as $50,000 in the treatments for a single cancer patient—Courtney adulterated a total of 72 different drugs, including fertility drugs, antibiotics, drugs to prevent nausea, and others to improve blood clotting.

—Robert Draper, “The Toxic Pharmacist,” The New York Times, June 8, 2003

In another case, the chief medical officer of the Nebraska Department of Health and Human Services Regulation and Licensure entered an order revoking Poor’s license to practice as a chiropractor in the state of Nebraska. Poor engaged in a conspiracy to manufacture and distribute a misbranded substance, and he introduced into interstate commerce misbranded and adulterated drugs with the intent to defraud and mislead. He was arrested for driving under the influence and was convicted of that offense. In addition, Poor knowingly possessed cocaine. He conceded that these factual determinations were understood as beyond dispute.

Both the district and appellate courts found that Poor’s conduct was clearly immoral. The appellate court stated that Poor’s denial now, after taking







advantage of a plea bargain, that he committed any of the acts he admitted to in the U.S. District Court is disturbing and is not consistent with the integrity expected by persons engaged in a professional occupation.

The Supreme Court of Nebraska, as a result of the seriousness of Poor’s felony conviction and its underlying conduct, his subsequent lack of candor with respect to that conduct, and his lack of sound judgment demonstrated by his driving under the influence conviction, concluded that revocation of Poor’s license was an appropriate sanction.




▸ INTERNET PHARMACY AND SALE OF DRUGS The use of Internet pharmacies has been on the rise due to the high cost of drugs. Not only are patients purchasing bogus medications, but they also are obtaining questionable prescriptions from physicians through the Internet, as noted in United States v. Nelson, where Fuchs operated an Internet pharmacy called Customers would obtain prescription and nonprescription drugs from the Internet pharmacy. In accord with federal law, all requests for prescription drugs must be reviewed by a physician. Dr. Nelson, the defendant in this case, agreed to review the prescriptions, approving 90 to 95% of prescription requests without examining his purported patients. Customers who used Fuchs’s Internet pharmacy would have their orders routed through a brick-and-mortar pharmacy called Main Street Pharmacy. Dr. Nelson would physically visit Main Street Pharmacy to sign the prescription requests, and customers would receive prescriptions by mail and pay Fuchs directly.

Dr. Nelson was charged and convicted of both conspiracy to distribute controlled prescription drugs outside the usual course of professional practice, in violation of 21 U.S.C. § 846, and conspiracy to launder money, in violation of 18 U.S.C. § 1956(h). Dr. Nelson appealed his conviction, arguing that there was insufficient evidence to support a conviction because there was no evidence of a conspiracy. On appeal, the court determined that a reasonable jury could infer the existence of an agreement constituting a conspiracy to distribute prescription drugs outside the usual course of professional practice and to launder the proceeds of that distribution.

Federal law 21 U.S.C. § 841(a) makes it illegal for any person knowingly or intentionally:

1. to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance; or

2. to create, distribute, or dispense, or possess with intent to distribute or dispense, a counterfeit substance.


The FDA is warning consumers that almost all Internet pharmacies are fraudulent and probably are selling counterfeit drugs that could harm them.

• • • Instead, they’re getting fake drugs that are contaminated, are past their expiration date or contain no active ingredient, the wrong amount of active ingredient or even toxic substances. These drugs could sicken people,





cause them to develop a resistance to their real medicine, cause no side effects or trigger harmful interactions with other medications.

—Associated Press, The Washington Post, October 2, 2012


Several state attorneys general are pressing Google to make it harder for its users to find counterfeit prescription medicine and illegal drugs online, marking the second time in the past 3 years that the firm has drawn government scrutiny for its policies on rogue Internet pharmacies.

• • • Google, which failed to persuade a California judge to dismiss the suits, entered settlement talks last month after attorneys for the shareholders obtained e-mails showing that top executives warned then-chief executive Eric Schmidt and co-founder Larry Page more than a decade ago about the risks of accepting such ads.

—Matea Golf and Tom Hamburger, The Washington Post, April 16, 2014

Dr. Richard Ruth, a 78-year-old physician, was sentenced to 15 to 30 years in prison, and his son Michael was sentenced 7 to 22 years in prison, for running what has been termed a “pill mill” involving the illegal distribution of tens of thousands of prescription drugs to, for example, drug addicts. The County Court Judge in this case “expressed bafflement at the Ruths’ lack of remorse or acceptance of responsibility.” “Your claims of victimization defy common sense,” the judge said to Michael Ruth, 46.

The illegal sale of drugs on the Internet continues to grow as unsuspecting patients search for cheaper drugs. Internet pharmacy is a risky business, as noted in the following news report and the case that follows.

Although Google reached a settlement to pay $500 million to avoid prosecution for aiding illegal online pharmaceutical ads, some state prosecutors want to see more from Google in preventing ads from unlicensed pharmacies. “Google acknowledged in the settlement that it had improperly and knowingly assisted online pharmacy advertisers allegedly based in Canada to run advertisements for illicit pharmacy sales targeting U.S. customers.”






Where greed is involved and money the reward, criminals believe the risks taken are worth the monetary reward gained, as is noted by how common Internet crimes have become. The various schemes to sell both tainted and illegal drugs on the Internet are becoming more creative.

Healthcare providers convicted of illegally selling prescription drugs face not only criminal penalties but the loss of their licenses to practice medicine, as was the case in Brown v. Idaho State Board of Pharmacy, where the Idaho State Board of Health suspended the license of a pharmacist who admitted to using marijuana approximately twice a week. During a hearing by the Board, the hearing officer admitted into evidence a copy of a judgment of a conviction on Brown’s plea of guilty to a criminal charge of possession of drug paraphernalia. The Idaho State Board of Pharmacy suspended Brown’s license. On appeal, the Idaho Court of Appeals held that revocation of his license was supported by evidence that he engaged in the illegal use of marijuana and that he also had participated in the sale and delivery of a misbranded drug.

It is important to note that not only is the physician at risk for writing illegal prescriptions, but the pharmacist is at risk as well if he or she knowingly fills such prescriptions.





▸ FALSIFICATION OF RECORDS As with healthcare fraud, falsification of medical and business records is grounds for criminal prosecution. Anyone who suffers damage as a result of falsification of records may claim civil liability, which could result in the provider’s loss of Medicare and Medicaid funding.

False Entries in Operative Report When a surgeon omitted a true entry in his operative report by not indicating that a nonphysician assisted in a patient’s surgery, the surgeon was indicted for falsification of records. Two of the defendants, orthopedic surgeons Dr. Lipton and Dr. Massoff, in People v. Smithtown General Hospital, on the morning of July 3, 1975, performed an orthopedic procedure on a patient. The prosthesis used during surgery was supplied by a general sales manager, Mr. MacKay, who was present in the operating room during most of the operation, which began at 8:00 AM and ended at 11:30 AM. After completion of the operation, an X-ray of the patient revealed that the “head of the femur popped out of the acetabulum.” At the request of Lipton, the salesman was located at a golf course and asked to return to the hospital. On arriving back in the operating room, he found Massoff reopening the surgical site. Massoff attempted to remove the prosthesis. MacKay offered his assistance and successfully removed the prosthesis. Massoff then returned to his office. With the consent of Lipton, MacKay removed the cement from the bone shaft and reinserted the prosthesis. An indictment charged Lipton with the intent to defraud and to conceal the crimes of unauthorized practice of medicine and assault. A similar indictment was returned against a supervising nurse and the hospital for failure to make a true entry in the operating room register.


A VA investigation of one of its outpatient clinics in Colorado reveals how ingrained delays in medical care may be for an agency struggling to rapidly treat nearly 9 million veterans a year amid allegations that dozens have died because of delays.

Clerks at the Department of Veterans Affairs clinic in Fort Collins were instructed last year how to falsify appointment records so it appeared the small staff of doctors was seeing patients within the agency’s goal of 14 days, according to the investigation.

—Gregg Zoroya, USA Today, May 4, 2014







A motion to dismiss the indictments against the physicians and nurse charged with falsifying business records in the first degree was denied. A motion to dismiss the indictments for assault in the second degree was granted.




▸ PATIENT ABUSE Patient abuse is the mistreatment or neglect of individuals who are under the care of a healthcare organization. Abuse is not limited to an institutional setting and may occur in an individual’s home. Abuse can take many forms: physical, psychological, medical, and financial. To compound the issue, abuse is not always easy to identify because injuries often can be attributed to other causes, especially in elderly patients with their advanced age and failing health. In the hospital setting, patients are not generally as dependent on the facility operator in the same manner as a resident in a nursing facility. Patients are usually hospitalized only for brief time periods, whereas nursing facility residents may be dependent on the facility operator for years. Thus the potential for long-term abuse and neglect is far greater for nursing facility residents than hospital patients.

Unfortunately, the abuse of the elderly is not a localized or isolated problem; it permeates society. Behind Closed Doors, a landmark book on family violence, stated that the first national study of violence in American homes estimated that one in two homes is the scene of family violence at least once a year.


Gale . . . wasn’t prepared for the rough treatment and cruel taunts she says her ailing mother suffered at the nursing home. She cried as a nurse’s aide upbraided her mother for failing to straighten her arthritis-stricken legs. And she watched in disbelief as an assistant jerked her mother off her rubber bed pad and pushed her into the bed’s metal rails.

All of these images were caught . . . by a “granny cam”—a camera hidden in her mother’s room.

—Deborah Sharp, “On the Watch in Nursing Homes: Coalition Wants Granny Cams to Protect Elderly from Neglect,” USA Today, September 14,


We have always known that America is a violent society. . . . What is new and surprising is that the American family and the American home are perhaps as much or more violent than any other single institution or setting (with the exception of the military, and only then in the time of war). Americans run the greatest risk of assault, physical injury and even murder in their own homes by members of their own families.






It is difficult to determine the extent of elder abuse because the abused elderly are reluctant to admit that their children or loved ones have assaulted them. According to a 2005 fact sheet by the National Center on Elder Abuse, “between 1 and 2 million Americans age 65 years or older have been injured, exploited, or otherwise mistreated by someone on whom they depended for care and protection.”

The plaintiffs in In re Estate of Smith v. O’Halloran instituted a lawsuit in an effort to improve deplorable conditions at many nursing homes. The court concluded that:

The evidentiary record . . . supports a general finding that all is not well in the nation’s nursing homes and that the enormous expenditures of public funds and the earnest efforts of public officials and public employees have not produced an equivalent return in benefits. That failure of expectations has produced frustration and anger among those who are aware of the realities of life in some nursing homes, which provide so little service that they could be characterized as orphanages for the aged.

Abuse of nursing facility residents gave impetus to the strengthening of resident rights under the Omnibus Budget Reconciliation Act of 1989. The Act provides that a “resident has the right to be free from verbal, sexual, physical, or mental abuse, corporal punishment, and involuntary seclusion.” Although resident rights have been significantly strengthened, resident abuse is often in the headlines. For example, the headline, “Nurse’s Aide Jailed for Punching Patient,” topped a story about a nurse’s aide who was jailed for punching a 91- year-old senile man in the nose. The aide had been previously convicted of resident abuse.

Questions to ask in order to determine whether patients are being abused:

Are physician time-limited orders for restraints documented in each patient’s medical record? Are there an unusual number of patients who are physically restrained? Which restraints are commonly being used (e.g., physical, medication)? Are physical restraints applied correctly? What is the apparent physical and mental condition of restrained patients? Are physical restraints periodically released as required by law? Are patients able to move about and exercise, with assistance as necessary? Do staff members respond to requests for water and assist patients to the bathroom on a timely basis? How often are observations of restrained patients documented?









Do patients show signs of overmedication? Are there signs of mental and physical abuse? Are there signs of harassment, humiliation, or threats from staff or patients? Are patients comfortable with staff? Do patients show skin breakdown due to bruises or other causes (e.g., failure to turn patients in bed)? Is there evidence of patient neglect (e.g., patients left in urine or feces without cleaning)?

Abusive Search A nurse in People v. Coe was charged with a willful violation of the public health law in connection with an allegedly abusive search of an 86-year-old resident at a geriatric center and with the falsification of business records in the first degree. The resident, Mr. Gersh, had heart disease and difficulty in expressing himself verbally. Another resident claimed that two $5 bills were missing. Nurse Coe assumed that Gersh had taken them because he had been known to take things in the past. The nurse proceeded to search Gersh, who resisted. A security guard was summoned, and another search was undertaken. When Gersh again resisted, the security guard slammed a chair down in front of him and pinned his arms while the defendant nurse searched his pockets, failing to retrieve the two $5 bills. Five minutes later, Gersh collapsed in a chair, gasping for air. Coe administered cardiopulmonary resuscitation but was unsuccessful, and Gersh died.

Coe was charged with violation of Section 175.10 of the New York Penal Law for falsifying records, because of the defendant’s “omission” of the facts relating to the search of Gersh. These facts were considered relevant and should have been included in the nurse’s notes regarding this incident. “The first sentence states, ‘Observed resident was extremely confused and talks incoherently. Suddenly became unresponsive. . . .’ This statement is simply false. It could only be true if some reference to the search and the loud noise was included.” A motion was made to dismiss the indictment at the end of the trial.

The court held that the search became an act of physical abuse and mistreatment, the evidence was sufficient to warrant a finding of guilt on both charges, and the fact that searches took place frequently did not excuse an otherwise illegal procedure.

It may well be that this incident reached the attention of the criminal justice system only because, in the end, a man had died. In those instances that are equally volatile of residents’ rights and equally contrary to standards of common decency but which do not result in visible harm to a patient, the acts are nevertheless illegal and subject to prosecution. A criminal act is not legitimized by the fact that others have, with impunity, engaged in that act.







Repeated Instances of Physical Abuse The revocation of a personal care home license was found to be proper in Miller Home, Inc. v. Commonwealth, Department of Public Welfare because of repeated medication violations and resident abuse. Evidence was presented that the son of the personal care home’s manager was hired as a staff member after having acted as a substitute, even though he had physical altercations with residents of the home. On one occasion, the manager’s son punched a female resident, resulting in her hospitalization for broken bones around the eye, and on two prior occasions, he had been involved in less physical altercations that required police intervention.

A nursing facility orderly challenged a determination by the commissioner of the State Department of Health finding him guilty of resident abuse in Reid v. Axelrod. The orderly maintained that the resident struck him with his cane and that he merely pushed the cane away to avoid being struck a second time. A co-employee testified that the orderly struck the resident in the chest after being hit with the cane. The court held that the determination was supported by substantial evidence and that the 3-year delay in conducting the hearing did not warrant dismissal of the petition charging the orderly with resident abuse. Public policy requires that residents must be protected from abusive healthcare workers.

The nursing facility resident in Stiffelman v. Abrams died as a result of the following abuse:

“. . . blows, kicks, kneeings, or bodily throwings intentionally, viciously, and murderously dealt him from among the facility’s staff over a period of approximately two to three weeks prior to his death”; that the “beatings were repeated and were received by the decedent at ninety years of age and in a frail, defenseless, and dependent condition”; that the beatings so administered to the decedent were “physically and mentally tortuous”; that he was caused by them to live out his final days in agony and terror; and that his physical injuries included thirteen fractures to his ribs, subpleural hemorrhaging, and marked lesions to his chest, flanks, abdomen, legs, arms, and hands; that during and following the period of the beatings the decedent lay at the facility for days unattended and unaided as to the deterioration and grave suffering he was undergoing.

The executors of the estate had brought suit against the operator and individual and corporate owners of the facility for damages for personal injuries resulting in the death of the resident. The executors were requesting, under Count I, $1.5 million in survival damages because of the physical and mental pain and suffering of the decedent, as well as $3 million for punitive damages, and under Count II, $1,504,084 in contractual breaches of the resident’s admission contract with the facility. The executors claimed that certain standards of care and personal rights contained in the contract were violated.








The trial court sustained the nursing facility’s motion for dismissal of the case on the grounds that the plaintiffs failed to state a claim on which relief could be granted. On appeal, the judgment of the trial court was reversed with respect to Count I, and the dismissal of Count II was sustained. The case was remanded, requiring the executors to proceed under appropriate statutory authority and not under contract.

Forcible Administration of Medications The medical employee in In re Axelrod sought review of a determination by the commissioner of health that she was guilty of resident abuse. Evidence showed that the employee, after a resident refused medication, “held the patient’s chin and poured the medication down her throat.” There was no indication or convincing evidence that an emergency existed that would have required the forced administration of the medication. The court held that substantial evidence supported the commissioner’s finding that the employee had been guilty of resident abuse.

Upon our review of the record, we conclude that the Commissioner’s determination that the petitioner had been guilty of patient abuse was supported by substantial evidence. The record supports the respondent’s findings that the petitioner forcibly administered medication to the patient; that there was no order directing the petitioner to administer the medication forcibly; and that there was no convincing evidence that the patient’s refusal to take the medication constituted a medical emergency justifying the forcible administration of medication.


Citation: State v. Houle, 642 A.2d 1178 (Vt. 1994)

Facts The defendant, a licensed practical nurse (LPN), had criminal charges brought against her stemming from her treatment of a stroke patient. It was alleged that she had slapped the patient’s legs repeatedly and shackled him to his bed at the wrists and ankles. By the time of trial, the patient had died of causes unrelated to the charged conduct. During the trial, the state presented testimony of eyewitnesses, including the patient’s wife, hospital employees, and an investigator from the office of the attorney general. The defendant did not deny that she had restrained the patient, but claimed that her actions were necessary for the patient’s protection, as well as her own, and that her actions were neither assaultive nor cruel. The defendant claimed that the trial court improperly admitted evidence that the patient submitted.








Was the evidence that the patient submitted admissible in prosecution of the defendant?

Holding The Vermont Supreme Court held that the evidence that the patient gave was relevant and admissible.

Reason The patient’s awareness of what happened to him was relevant to the state’s case because the trial court, in its instruction to the jury, defined cruelty as “intentional and malicious infliction of physical or emotional pain or suffering upon a person.” By showing that the patient was aware of what had happened to him, the state allowed the jury to infer that he had suffered physical or emotional pain. The state presented a witness who was present when the incident occurred and who was able to describe the acts of abuse in detail. The credibility of this eyewitness testimony, and not what the patient’s testimony would have been, was the focus of the trial.

Abuse and Revocation of License The operator of a nursing facility appealed an order by the department of public welfare revoking his license because of resident abuse in Nepa v. Commonwealth Department of Public Welfare. Substantial evidence supported the department’s finding. Three former employees testified that the nursing facility operator had abused residents in the following incidents: he unbuckled the belt of one of the residents, causing his pants to drop, and then grabbed a second resident, forcing the two to kiss (petitioner’s excuse for this behavior was to shame the resident because of his masturbating in public); on two occasions, he forced a resident to remove toilet paper from a commode after she had urinated and defecated in it (denying that there was fecal matter in the commode, petitioner’s excuse was that this was his way of trying to stop the resident from filling the commode with toilet paper); and he verbally abused a resident who was experiencing difficulty in breathing and accused him of being a fake as he attempted to feed him liquids.

The nursing facility operator claimed that the findings of fact were not based on substantial evidence and that, even if they were, the incidents did not amount to abuse under the code. The defendant attempted to discredit the witnesses with allegations from a resident and another employee that one of his former employees got into bed with a resident and that another had taken a picture of a male resident while in the shower and had placed a baby bottle and a humiliating sign around the neck of another resident. The court was not impressed. Although these incidents, if true, were reprehensible, they were collateral matters that had no bearing on the witnesses’ reputation for truthfulness and therefore could not be used for impeachment purposes. The






court held that there was substantial evidence supporting the department’s decision and that the activities committed by the operator were sufficient to support revocation of his license.

We believe Petitioner’s treatment of these residents as found by the hearing examiner to be truly disturbing. These residents were elderly and/or mentally incapacitated and wholly dependent on Petitioner while residing in his home. As residents, they are entitled to maintain their dignity and be cared for with respect, concern, and compassion.

Petitioner testified that he did not have adequate training to deal with the patients he received who suffered from mental problems. Petitioner’s lack of training in this area is absolutely no excuse for the reprehensible manner in which he treated various residents. Accordingly, DPW’s order revoking Petitioner’s license to operate a personal care home is affirmed.67




▸ CRIMINAL NEGLIGENCE Criminal negligence is the reckless disregard for the safety of others and the willful indifference to an injury that could follow an act. The neglect of elderly residents was noted in the State v. Cunningham, where the defendant was the owner and administrator of a residential care facility that housed 30 to 37 mentally ill, mentally retarded, and elderly residents. The Iowa Department of Inspections and Appeals conducted routine inspections of the defendant’s facility between October 1989 and May 1990. All of the surveys except for one resulted in a $50 daily fine assessed against the defendant for violations of the regulations. On August 16, 1990, a grand jury filed an indictment charging the defendant with several counts of wanton neglect of a resident in violation of Iowa Code section 726.7 (1989), which provides: “A person commits wanton neglect of a resident of a health care facility when the person knowingly acts in a manner likely to be injurious to the physical, mental, or moral welfare of a resident of a health care facility. . . . Wanton neglect of a resident of a health care facility is a serious misdemeanor.”

The district court held that the defendant had knowledge of the dangerous conditions that existed in the healthcare facility but willfully and consciously refused to provide or exercise adequate supervision to remedy or attempt to remedy the dangerous conditions. The residents were exposed to physical dangers and unhealthy and unsanitary physical conditions and were grossly deprived of much needed medical care and personal attention.

The district court sentenced the defendant to 1 year in jail for each of the five counts, to run concurrently. The district court suspended all but 2 days of the defendant’s sentence and ordered him to pay $200 for each count, plus a surcharge and costs, and to perform community service. A motion for a new trial was denied, and the defendant appealed.

The Iowa Court of Appeals held that there was substantial evidence to support a finding that the defendant was responsible for not properly maintaining the nursing facility, which led to prosecution for wanton neglect of the facility’s residents. Substantial evidence means evidence that would convince a rational fact finder that the defendant was guilty beyond a reasonable doubt. The defendant was found guilty of knowingly acting in a manner likely to be injurious to the physical or mental welfare of the facility’s residents by creating, directing, or maintaining the following five hazardous conditions and unsafe practices:

1. There were fire hazards and circumstances that impeded safety from fire. For example, cigarette stubs were found in a cardboard box, and burn holes were found in patient clothing, on furniture, and in





nonsmoking areas. Also, exposed electrical wiring was found, along with a bent and rusted fire door that could not close or latch.

2. The facility was not properly maintained and demonstrated many health and safety violations, including broken glass in patients’ rooms; excessively hot water in faucets; dried feces on public bathroom walls and grab bars; no soap in the kitchen; insufficient towels and linens; dead and live cockroaches and worms in the food preparation area; and debris, bugs, and grease throughout the facility.

3. Dietary facilities were unsanitary and inadequate to meet the dietary needs of the residents. In one particular case, an ordered “no concentrated sweets” diet for a diabetic patient was not followed, subjecting the patient to life-threatening blood sugar levels.

4. There were inadequate staffing patterns and supervision in the facility. No funds were spent on employee training, and the defendant did not spend the minimum amount of time at the facility, as required by administrative standards.

5. Improper dosages of medications were administered to the residents. For example, physicians distributed an ongoing overdose of heart medication to one resident while failing to administer medication to another (which resulted in a seizure).

The defendant argued that he did not create the unsafe conditions at the facility. The court of appeals disagreed. The statute does not require that the defendant create the conditions at the facility to sustain a conviction. The defendant was the administrator of the facility and responsible for the conditions that existed.

Cruelty to the Infirm Cruelty to the infirm is the intentional neglect by any person, including a caregiver, causing unjustifiable pain or suffering to an infirm, aged patient. The defendants in State v. Brenner were charged with cruelty to the infirm. The defendants brought a challenge stating that the criminal statutes under which they were charged were constitutionally vague. According to the court, Section 14.12 of Louisiana Revised Statutes defines criminal negligence as follows:

Criminal negligence exists when, although neither specific nor general criminal intent is present, there is such disregard of the interest of others that the offender’s conduct amounts to a gross deviation below the standard of care expected to be maintained by a reasonably careful man under like circumstances.

Criminal negligence requires:

. . . a gross deviation below the standard of care expected to be maintained by a reasonably careful man under like circumstances. It calls for substantially more than the ordinary lack of care, which may be the basis of







tort liability, and furnishes a more explicit statement of that lack of care, which has been variously characterized in criminal statutes as “gross negligence” and “recklessness.”

The state alleged that the administrator of the nursing facility neglected and mistreated residents by failing to ensure that the facility was maintained in a sanitary manner, necessary health services were performed, staff were properly trained, there were adequate medical supplies and sufficient staff, records were maintained properly, and the residents were adequately fed and cared for.

In addition to allegations of neglect and mistreatment of residents, other allegations charged the director of nursing with failing to properly train the staff at the facility in correct nursing procedures. The controller was alleged to have failed to purchase adequate medical supplies for proper treatment. The admissions director allegedly failed to exercise proper judgment regarding admission procedures, and the physical therapist allegedly failed to provide adequate physical therapy services. The defendants asserted that the term neglect was unconstitutionally vague. The Louisiana Supreme Court, on appeal by the defendants from two lower courts, held that the phrases “intentional or criminally negligent mistreatment or neglect” and “unjustifiable pain and suffering” were not vague and that they were sufficiently clear in meaning to afford a person of ordinary understanding fair notice of the conduct that was prohibited.

This case clearly illustrates how various employees can be included in a legal action involving criminal negligence. It serves as a reminder about the responsibility of all employees to serve as advocates for all patients.






▸ HOMICIDE Murder of Newborn Babies In a highly publicized case, Dr. Kermit Gosnell was convicted of murdering newborn babies by snipping their spinal cords shortly after delivery. The jury, following a 2-month trial and 10 days of deliberation, convicted Gosnell of murder. Although it was expected that prosecutors would seek the death penalty, Gosnell made a deal with prosecutors promising not to appeal the jury’s decision in exchange for life in prison without parole.


In an instant, Dr. Henry Bello triggered a Code Silver at Bronx Lebanon Hospital, sending his one-time colleagues diving for cover on the hospital’s top two floors while he repeatedly pulled his trigger, killing a doctor who had the misfortune of covering someone else’s shift as a favor and injuring six others, including a patient.

—Coleen Long and Julie Watson, The Washington Times, July 3, 2017

All too often, places of healing become homicide scenes, as was the case at Bronx Lebanon Hospital in New York. Homicide includes all killings of humans and ranges from manslaughter to murder with varying degrees of each representing the severity of the crime. First-degree murder involves the deliberate and premeditated killing of another with malice aforethought. Second-degree murder is not deliberate and is not premeditated; however, it is the killing of another with malice aforethought. The tragedy of murder in institutions that are dedicated to the healing of the sick has been an all-too- frequent occurrence, as noted in the following examples.


Armed with a 3-year grudge and more guns than he could hold, a former substitute schoolteacher stormed a hospital looking to punish the nurse he blamed for his mother’s death. The nurse, another employee and a bystander are dead . . .

—Daniel Yee, The Capital, March 29, 2008





“Dr. Davidson was a wonderful and inspiring cardiac surgeon who devoted his career to saving lives and improving the quality of life of every patient he cared for,” said a statement issued by the hospital, which is affiliated with Harvard Medical School. “It is truly devastating that his own life was taken in this horrible manner.”

—HuffPost/AP, The Huffington Post, January 20, 2015

Nurse Sentenced for Diabolical Acts From 1993 to 1995, Majors worked as a licensed practical nurse (LPN) in the intensive care unit (ICU) of a county hospital. He may have been a competent nurse, but he had one problem: An incredibly high number of elderly patients died under his watch. By 1995, after rumors started to circulate that he was euthanizing patients, the hospital suspended him, and the state board of nursing suspended his license.

In 1994, 100 of the 351 people admitted to the hospital’s four-bed ICU died. A large percentage of those who died were elderly. In comparison, during the previous 4 years, an average of only 27 patients per year died, out of an average of 354 admitted to the ICU each year.

Spurred on by her suspicions (and those of other nurses), Nurse Stirek conducted an analysis showing that Majors was present for more deaths than any other nurse, almost twice as many as the nearest contender. After Stirek showed her analysis to Ling, the hospital’s president and chief executive officer, Ling suspended Majors from work, with pay. Later, Ling asked the police to investigate, and Majors was subsequently prosecuted.

Majors was sentenced to spend life in prison for murdering six elderly patients, a crime the judge referred to as a paragon of evil at its most wicked. Majors had been entrusted with their care; in response, he committed diabolical acts that extinguished the frail lives of six people.

Fatal Injection of Pavulon In a case involving Angelo, a registered nurse on the cardiac/intensive care unit at a Long Island hospital, the defendant was found guilty of second- degree murder for injecting two patients with the drug Pavulon. He was found guilty of the lesser charges of manslaughter and criminally negligent homicide in the deaths of two other patients. Angelo committed the murders in a bizarre scheme to revive the patients and be thought of as a hero.







Fatal Injection of Lidocaine In another case, Hargrave v. Landon, the defendant, a nurse’s aide, was convicted of murder in the first degree when he was found to have injected an elderly patient with a fatal dose of the drug lidocaine. He was sentenced to life imprisonment by the circuit court. The defendant appealed the judgment of the circuit court, alleging that his due process rights were violated during the trial when the trial court failed to grant his motion for change of venue. Because of what was termed the carnival atmosphere surrounding the trial, he argued the trial court should have sequestered the jury. In addition, the defendant claimed the trial court improperly admitted evidence of other crimes. Finally, he asserted the evidence was insufficient as a matter of law to sustain the conviction.

The U.S. district court held that the nurse’s aide failed to establish that he was denied an impartial jury because of adverse pretrial publicity, especially because the tenor of newspaper articles before his trial was primarily informative and factual and the articles treated the story objectively. The evidence was determined to have been sufficient to support the petitioner’s conviction for murder.

Lethal Dose of Anesthesia A licensed dentist and an oral surgeon in People v. Protopappas were convicted in the superior court of second-degree murder for the deaths of three patients who died after receiving general anesthesia. The record revealed that the three patients received massive doses of drugs, which resulted in their deaths. The dosages had not been tailored to the patients’ individual conditions. The dentist had also improperly instructed surrogate dentists, who were neither licensed nor qualified to administer general anesthesia, to administer preset dosages for an extended time with little or no personal supervision. In addition, the dentist had been habitually slow in reacting to resulting overdoses. In one case, the patient’s general physician informed the defendant that the 24-year-old, 88-pound patient suffered from lupus, total kidney failure, high blood pressure, anemia, heart murmur, and chronic seizure disorder, and should not be placed under anesthesia even for a short time. The defendant consciously elected to ignore that medical opinion. On appeal, the court of appeals found that there was sufficient evidence of implied malice to support the jury’s findings that the dentist and the oral surgeon were guilty of second-degree murder.

This is more than gross negligence. These are the acts of a person who knows that his conduct endangers the life of another and who acts with conscious disregard for life. . . . Many murders are committed to satisfy a feeling of a hatred or grudge, it is true, but this crime may be perpetrated without the slightest trace of personal ill-will.








Not every charge of suspected murder ends in a conviction; however, there is a heavy price to be paid due to the mental anguish suffered by those charged with the crime.

Lethal Dose of Codeine Evidence supported a finding that a nurse killed the plaintiff’s decedent in Havrum v. United States. After a bench trial in an action brought under the Federal Tort Claims Act, the trial court concluded that Williams, a nurse at a Veterans Affairs (VA) hospital, killed veteran Elzie Havrum. On appeal, the government challenged the sufficiency of the evidence.

Ms. Havrum was required to show that the VA hospital had a duty to protect Mr. Havrum from injury and that its failure to perform that duty caused his death. The government did not challenge the trial court’s conclusion that the hospital breached its duty to protect Havrum from the nurse, who presented a danger to patients. The government contends, however, that Havrum failed to establish causation because the evidence did not support the court’s finding that the nurse killed Havrum.

The trial court found that Williams gave Havrum a lethal dose of codeine, and that even disregarding the evidence of codeine poisoning, the circumstantial evidence indicated that Williams killed Havrum. The trial court relied, in part, on a study by the hospital’s epidemiologist, Dr. Christensen, who investigated a suspected link between Williams and an increase in deaths on the ward where Williams customarily worked. The study concluded that patients who were under Williams’s care were nearly 10 times more likely to die than patients not under his care. In addition, Williams was associated with many unexpected deaths that occurred in private rooms. Christensen also testified that he had never seen anything so unusual as the number of patients who died on the relevant ward from May through July 1992, between 1:00 AM and 3:00 AM (a period when fewer deaths generally occur). Williams was present for 11 of the 13 deaths in that interim, although he worked on only one third of the shifts.

Christensen concluded that there was only one chance in a million that the pattern of deaths on the ward was random and that there was a compelling correlation between the deaths and Williams for which Christensen could find no benign explanation. Although the court agreed with the government, the statistical evidence alone does not establish that Williams caused Havrum’s death; that evidence is nevertheless probative. It was, moreover, only one aspect of the circumstantial evidence upon which the trial court relied in finding causation.

With regard to Havrum specifically, the court noted that his death was among those that Christensen found highly unusual. Havrum died on the ward in question at 1:15 AM in a private room with Williams present. Havrum was not





expected to die, and the government offered no evidence that he faced death as part of some short-term natural progression. Although Havrum suffered from a serious illness, the admitting physician did not place him in intensive care and did not believe that his death was imminent. Havrum actually reported feeling better while he was in the hospital, but 16 hours after his admission, he was pronounced dead.

The trial court also referred to suspicious inconsistencies and alterations in the medical records. The court remarked that Williams first wrote a medical note indicating that he found Havrum in severe respiratory distress at about 1:15 AM, the same time that the physician pronounced him dead. The time in the note was then changed to 1:10 AM, a line was drawn through the note, and the note was marked “error R.W.” Williams then wrote another medical note; this time he stated that he found Havrum in severe respiratory distress at about 1:10 AM and that the physician arrived at about 1:15 AM, just as Havrum stopped breathing. Although the government suggests possible innocent explanations for the changed entries and omissions, the trial court, which noted that Williams had been fired by another hospital for inserting a false entry into a patient’s chart, was free to draw its own, less-innocent inferences from Havrum’s hospital records. In addition, one permissible inference is that Williams’s evident uncertainty about what to say and to note in the records indicates that there was, in fact, nothing particularly wrong with Havrum, and that Williams took his life. The appellate court concluded that, more likely than not, Williams did kill Havrum.

Removal of Life Support Equipment There is generally a duty to provide life-sustaining equipment in the immediate aftermath of cardiopulmonary arrest; however, there is no duty to continue its use once it has become futile and ineffective to do so in the opinion of qualified medical personnel. Two physicians in Barber v. Superior Court were facing murder charges for failing to continue treatment. The charges were based on their acceding to requests of the patient’s family to discontinue life support equipment and intravenous tubes. The patient suffered a cardiopulmonary arrest in the recovery room after surgery. A team of physicians and nurses revived the patient and placed him on life support equipment. The patient suffered severe brain damage, which placed him in a comatose and vegetative state from which, according to tests and examinations by other specialists, he was unlikely to recover. On the written request of the family, the patient was taken off life support equipment. The family, his wife and eight children, made the decision together after consultation with the physicians. Evidence had been presented that the patient, before his incapacitation, had expressed to his wife that he would not want to be kept alive by a machine. There was no evidence indicating that the family was motivated in their decision by anything other than love and concern for the dignity of their loved one. The patient continued to breathe on his own. Showing no signs of improvement, the physicians again discussed the





patient’s poor prognosis with the family. The intravenous lines were removed, and the patient died sometime thereafter.

A complaint was filed against the two physicians. The magistrate who heard the evidence determined that the physicians did not kill the deceased, because their conduct was not the proximate cause of the patient’s death. On motion of the prosecution, the superior court determined as a matter of law that the evidence required the magistrate to hold the physicians to answer and ordered the complaint reinstated. The court of appeals held that the physicians’ omission to continue treatment, although intentional and with knowledge that the patient would die, was not an unlawful failure to perform a legal duty. The evidence amply supported the magistrate’s decision.


Citation: People v. Diaz, 834 P.2d 1171 (Cal. 1992)

Facts The defendant, a registered nurse, was working on the night shift at a community hospital. During a 3½-week period, 13 patients on the night shift had seizures, cardiac arrest, and respiratory arrest; nine died. The unit closed, and the defendant went to work at another hospital. Within 3 days, a patient died after exhibiting the same symptoms as those of the patients in the previous hospital while the defendant was on duty. The defendant was arrested and tried for 12 counts of murder.

The testimony revealed that the defendant injected the patients with massive doses of lidocaine (a rhythm-controlling drug). Evidence showed that the defendant assisted the patients before they exhibited seizures, providing opportunity for the nurse to administer the drug. She was observed acting strangely on the nights of the deaths, and high concentrations of lidocaine were found in the patients’ syringes. Moreover, syringes containing the drug and lidocaine vials were discovered in the defendant’s home.

Pretrial investigation revealed that 26 other patients had died at the defendant’s first hospital while under the nurse’s care. All had the same symptoms. The defendant, who waived her right to trial by jury, was found guilty of the 12 counts of murder. The nurse appealed the judgment.

Issue Did the expert testimony support the finding that an overdose of lidocaine caused the patients’ deaths? Did the evidence prove that the defendant had the opportunity to give patients overdoses of lidocaine?




Holding The California Supreme Court upheld the convictions.

Reason The expert testimony about the levels of lidocaine in the patients’ tissue, coupled with the nurse’s testimony concerning the symptoms prior to the deaths, confirmed that the patients died from overdoses given to them by the defendant. Testimony showed that the defendant was the only nurse on duty the night each patient was poisoned, other nurses were there only on some of the nights, and only the defendant had the opportunity to administer the fatal doses.




▸ MANSLAUGHTER Manslaughter is the commission of an unintentional act that results in the death of another person. It can be either voluntary or involuntary. Voluntary manslaughter is the intentional killing of another person without premeditation or malice aforethought, in what is commonly referred to as the “heat of passion,” which is caused by the provocation of the victim (e.g., found having an affair with the defendant’s spouse). Involuntary manslaughter is the result of a negligent act that occurs when the defendant did not intend to kill the victim but acted in a criminally negligent or reckless manner, such as performing a risky surgical procedure when the defendant was aware that he or she was not sufficiently competent to perform it. There are an endless number of cases where physicians have been charged with manslaughter, as follows.

A physician was charged in patient’s death from substandard tummy tuck. A medical board found, after reviewing the case, that the physician practiced internal medicine and was not a surgeon. He did not have adequate backup, including support staff, equipment to monitor vitals, or a crash cart, which would have had resuscitative drugs, oxygen, and a defibrillator to be used in the event the patient suffered distress during the procedure.” A cosmetic surgeon was “charged with involuntary manslaughter after allegedly giving a deadly cocktail of drugs during a liposuction procedure, authorities said.” A surgeon was convicted of manslaughter for delaying an operation and was “sentenced to 2½ years in prison, of which he must serve at least half, for delaying surgery for a man with a perforated intestine.” In Manhattan Beach, a plastic surgeon was charged with manslaughter after a liposuction patient died on the operating table. He was charged with recklessly performing liposuction on a patient he knew previously had had a heart transplant, causing her death during the operation. A surgeon was charged with manslaughter over a kidney error in the death of a war veteran whose healthy kidney was accidentally removed instead of the diseased one.


The operation went smoothly but while recovering from surgery he developed abdominal pain and was transferred to Sellu’s care. Sellu suspected there had been a rupture in the patient’s bowel—a potentially life- threatening condition that requires surgery—but the surgeon ignored the urgency that the case demanded and the patient later died.






83 272



—Owen Bowcott, The Guardian, November 5, 2014

Reviewing the various case studies and news clippings, there are a variety of manslaughter charges against both family members and healthcare workers. Dr. Conrad Murray, for example, was convicted of involuntary manslaughter in the death of Michael Jackson for providing him with the powerful operating room anesthetic propofol on a nightly basis to help him sleep. He had been sentenced to a 4-year prison term. After serving 2 years of his 4-year sentence, he was released from prison following a U.S. Supreme Court decision on state prison conditions that diverted him to the overcrowded Los Angeles County lockup. In another case, the Boston Globe reported a healthcare worker was ordered held on $20,000 bail on a manslaughter charge for allegedly ignoring a mentally ill client who was choking to death on a piece of steak. In another reported case, a physician was facing manslaughter charges for the alleged overdose of one of his patients who died of a methadone overdose.

A study published in the Journal of the Royal Society of Medicine identified 85 reported cases of manslaughter from 1995 to December 2005 by searching newspaper databases, Medline, Embase, and the Wellcome library catalogue. The study concluded:

The number of doctors prosecuted for manslaughter has risen steeply since 1990, but the proportion of doctors convicted remains low. Prosecution for deliberately violating rules is understandable, but accounts for only a minority of these cases. Unconscious errors—mistakes and slips (or lapses)—are an inescapable consequence of human actions and prosecution of individuals is unlikely to improve patient safety. That requires improvement to the complex systems of health care.


The family of a 65-year-old woman has been charged with manslaughter after authorities say the woman’s body was found covered in infected bedsores that left her ribs exposed, the Tampa Bay Times reports. The Hillsborough County Sheriff’s Office says Mary Winston, a former nurse, had rheumatoid arthritis that was so severe she couldn’t move. Her husband told authorities they should have sought professional medical care, but they were scared to let authorities see how badly her condition had deteriorated.

—Health News Florida Staff, Health News Florida, June 27, 2013








Although charges are often reduced, the lessons are clear—healthcare professionals must be aware of the potential for criminal charges as they practice in healthcare settings.




▸ RAPE AND SEXUAL ASSAULT Rape occurs when one person is forced, without giving consent, to have sexual intercourse with another. Statutory rape occurs when a person under the age of legal consent has sexual intercourse with another. An action was filed against a nursing home in Dupree v. Plantation Pointe, L.P. after the plaintiff’s mother was sexually assaulted at the nursing home by a dementia patient. A registered nurse testified that on the night of the incident, the nursing home was properly staffed and that no member of the nursing home staff did anything improper in the treatment of the assaulted resident. She stated measures were taken to protect residents from the dementia resident. Furthermore, she testified that only a doctor had the power to order restraints or transfer the patient and that the doctors did not do so. In addition, there was testimony that there was no penetration, that the resident suffered no physical injury, and that she was not even aware of the assault. The trial court did not err in finding that the nursing home had not breached its duty of care.

Dr. Earl Brian Bradley, a pediatrician, was indicted in 2010 for molesting, raping, and exploiting his pediatric patients. After trial he was sentenced on June 26, 2011 to 14 consecutive life terms in prison. The hospital where he had worked had previously cleared Dr. Bradley after conducting an internal investigation following an accusation of inappropriate conduct with young patients. “Hence, administrators reportedly never informed the state’s medical disciplinary board or law enforcement authorities of the allegations.” Whatever the circumstances of the investigation were, conducting a thorough investigation is mandatory for the safety of both staff and patients.

Although statistics are not reliable, rape cases in healthcare facilities are not infrequent occurrences. The hospital’s responsibilities in an alleged rape involve the following:

Notification of the parents if the patient is a minor Timely notification of law enforcement Following recognized procedures for examination of the patient Collecting and protecting physical evidence (e.g., body fluids) Thorough documentation (e.g., photographs and victim statements) Treatment of patient injuries Maintaining patient privacy and dignity Providing emotional support Referral for follow-up counseling Pregnancy counseling as appropriate

The American Congress of Obstetricians and Gynecologists recommends the following in evaluation and the treatment of victims of sexual assault:







Medical Issues

Obtain informed consent. Assess and treat physical injuries. Obtain past gynecologic history. Perform physical examination, including pelvic examination, with appropriate chaperone. Obtain appropriate specimens and serologic tests for sexually transmitted infection testing. Provide appropriate infectious disease prophylaxis as indicated. If the assailant’s HIV status is unknown, evaluate the risks and benefits of nonoccupational postexposure prophylaxis. Provide or arrange for provision of emergency contraception as indicated. Provide counseling regarding findings, recommendations, and prognosis. Arrange follow-up medical care and referrals for psychosocial needs.

Legal Issues

Provide accurate recording of events. Document injuries. Collect samples as indicated by local protocol or regulation. Identify the presence or absence of sperm in the vaginal fluids and make appropriate slides. Report to authorities as required. Ensure security of chain of evidence.

An article titled “Patient education: Care after sexual assault (beyond the basics)” contains more helpful information; it can be found at

A hospital technologist in Copithorne v. Framingham Union Hospital alleged that a staff physician raped her during the course of a house call. The technologist’s claim against the hospital was summarily dismissed for lack of proximate causation. On appeal, the dismissal was found to be improper when the record indicated that the hospital had received notice of allegations that the physician assaulted patients on and off the hospital’s premises. The hospital had instructed the physician to have another individual present when visiting female patients and had instructed nurses to keep an eye on him. The physician’s sexual assault was foreseeable. There was evidentiary support for the proposition that failure to withdraw the physician’s privileges caused the rape when the technologist asserted that it was the physician’s good reputation in the hospital that led her to seek his services.











Mann sees an empty spot where a treasured object once sat, and her eyes fill with tears. The mantelpiece in her living room, which used to display crystal vases and porcelain figurines. Her light-filled atrium, where small marble animals peeked out from among the orchids.

—Tara Bahrampour, The Washington Post, May 12, 2016

Theft is the illegal taking of another person’s or organization’s property. Patients at home and in healthcare facilities must be cautious of the potential for unscrupulous persons to take their personal belongings. Healthcare facilities, including home care agencies, must be alert to the potential threat of theft by dishonest persons, such as caregivers, visitors, and trespassers. The theft of patient valuables (e.g., cash, credit cards, jewelry, in-home valuables), supplies, drugs, and medical equipment is substantial, and it costs healthcare organizations millions of dollars each year.

The lengths to which thieves will go are listed here.

A report published in the Mayo Clinic Proceedings says hospital workers have stolen drugs by siphoning medication from IV bags, taking leftover pills meant for the trash, and tampering with their patient’s syringes, which has led to six infectious disease outbreaks in U.S. hospitals since 2004. A Pennsylvania man is facing charges that he stole human skin worth about $350,000 from a Philadelphia hospital over a period of nearly 2 years, police said. Police received a report that two wallets and an iPad had been stolen from a new mother’s room in the maternity ward of Langley Memorial on March 30. Foster said the thieves broke into at least one staff locker. They also stole cash, clothing, cellphones, office supplies, and staff identification badges, swipe cards, and personal alarms. After learning of the thefts, the hospital deactivated those security items.

Medical Identity Theft Medical identity theft is the unauthorized use or disclosure of patient information. “Medical identity theft occurs when someone uses another person’s name or insurance information to get medical treatment, prescription








drugs, or surgery. It also happens when dishonest people working in a medical setting use another person’s information to submit false bills to insurance companies.” Thieves often use patient mail (e.g., credit card information, bank statements, patient bills, checking account information) to obtain information about the consumer, which they use to steal his or her identity for financial gain.

To improve the efficiency and effectiveness of the healthcare system, HIPAA included administrative simplification provisions that required DHHS to adopt national standards for electronic healthcare transactions and code sets, unique health identifiers, and security. At the same time, Congress recognized that advances in electronic technology could erode the privacy of health information. Consequently, Congress incorporated into HIPAA provisions that mandated the adoption of federal privacy protections for individually identifiable health information.


Federal authorities have launched dozens of new criminal investigations into possible opioid and drug theft by employees at Department of Veterans Affairs hospitals, a new sign the problem is not going away despite new prevention efforts.

—Hope Yen, The Washington Times, May 31, 2017


It all started in the operating room’s locker room. At first it was $2 from someone’s wallet and $5 from another. It was sporadic at first, then the frequency of the thefts increased. Employees began to look at one another with suspicion. Finally, management was able to make a difficult decision. A theft detection powder that cannot be easily washed off was dusted on some of the money, and it was placed in a purse in an open locker. Greed finally took over as the person’s thefts became more frequent and brazen. She eventually took the money that was marked with the powder. Unaware that the money had been dusted, the employee, an OR transporter responsible for wheeling patients into and out of the OR on a stretcher, eventually went to the hospital’s coffee shop to spend some of the money. When the cashier noticed the greenish color on the thief’s hands, he realized that this was the culprit who had been taking money from her coworkers, and he notified administration. The transporter admitted to taking the money, not only from the OR staff and her coworkers, but when she transported patients to and






from their rooms, she would take money and other items from the patient’s bedside cabinet. She admitted that patients were groggy when recently anesthetized, and this made it easy for her to steal from them. The employee was discharged without charges being pressed against her.

The legal and ethical issues swirling around this incident became a hot topic for discussion among the OR staff. The potential impact on public relations concerns mitigated the willpower of management to press charges.

More than 11 million records were reported breached in June 2016. “The bulk of these record breaches were attributable to a single hacking incident that included a large insurer database (10.3 million records).”

The HIPAA Breach Notification Rule, 45 CFR §§ 164.400-414, requires HIPAA covered entities and their business associates to provide notification following a breach of unsecured protected health information. Similar breach notification provisions implemented and enforced by the Federal Trade Commission (FTC), apply to vendors of personal health records and their third party service providers, pursuant to section 13407 of the HITECH Act.”

As required by section 13402(e)(4) of the Health Information Technology for Economic and Clinical Health (HITECH) Act, the Secretary must post a list of breaches of unsecured protected health information affecting 500 or more individuals. These breaches are now posted in a new, more accessible format that allows users to search and sort the posted breaches. Additionally, this new format includes brief summaries of the breach cases that Office of Civil Rights (OCR) has investigated and closed, as well as the names of private practice providers who have reported breaches of unsecured protected health information to the Secretary.

Regarding notification, the DHHS requires: (1) Individual Notice to individuals whose data has been compromised in written form by first-class mail or email if the affected individual has agreed to receive such notices electronically; (2) Media Notice when a breach affects more than 500 residents of a state or jurisdiction; and, (3) Notice to the Secretary of DHHS in addition to notifying affected individuals and the media regarding breaches of unsecured protected health information.

The Federal Trade Commission offers a brochure titled “Medical Identity Theft,” at its website ( that can help the consumer detect identity theft, correct mistakes in medical records, protect medical information, and check for other identity theft concerns. Contact information for credit reporting companies is also available at the site.








Theft of Drugs Perhaps one of the most tempting and accessible crimes for a healthcare professional involves the misuse or theft of drugs. Drugs can offer significant financial gain when they fall into the hands of the wrong people. As noted in Chia v. Ohio Board of Nursing, where the appellant licensed nurse took a patient’s Percodan tablets for her own use, the appellant pled no contest and was found guilty of theft of drugs and a felony of the fourth degree. The licensing board mailed to the appellant a notice of immediate suspension and opportunity for hearing. In that notice, the board informed the appellant that her license was immediately suspended as a result of her felony drug abuse conviction. The notice also informed the appellant that the board proposed further sanctions to her license and that she was entitled to a hearing regarding those sanctions if she requested one within 30 days. The appellant did not respond to the notice.

Without having heard from the appellant, the board mailed her a letter informing her that it would consider sanctions to her license at its regularly scheduled meeting in May. At that meeting, the board permanently revoked the appellant’s nursing license. The appellant appealed the board’s decision to the court of common pleas. That court affirmed the board’s decision, finding that it was supported by reliable, probative, and substantial evidence and was in accordance with law. The board’s notice clearly informed the appellant that her license was immediately suspended as a result of her felony drug conviction.

Theft of Resident’s Money The evidence presented in People v. Lancaster was found to have provided a probable cause foundation for information charging felony theft of nursing home residents’ money by the office manager. Evidence showed that on repeated occasions, the residents’ income checks were cashed, or cash was otherwise received on behalf of residents; that the defendant, by virtue of her office, had sole responsibility for maintaining the residents’ ledger accounts; and that frequently cash receipts were not posted to the residents’ accounts.

In another case, there was sufficient evidence in Miller v. Dunn to hold that a nurse assistant had misappropriated $15,000 from an 83-year-old nursing home resident. The record indicated that the funds were taken during those times the resident made visits to the hospital for respiratory problems. The patient had been diagnosed with dementia, and the resident’s confusion was increasing. The nursing assistant actively procured the check in question, filling in the date, amount, and her name as payee. As a result, the nursing assistant was placed on the employee disqualification list for misappropriating funds.

Commingling Resident’s Personal Funds







Criminal charges of theft were imposed because of misapplication of property in State v. Pleasant Hill Health Facility. The facility commingled the residents’ personal funds (Social Security checks and personal allowances) in a corporate account. There were times that the residents’ funds remained in the corporate account for 3 to 6 months before being transferred to the residents’ accounts, during which time the combined funds were used to pay corporate expenses. The facility described its relationship with the residents as debtor–creditor and not a trust relationship. The facility claimed that the funds were always available to residents, and they were never denied a request for their funds. The Maine Supreme Judicial Court held that the facility’s handling of the residents’ funds was not a debtor–creditor relationship but a trust relationship. Pleasant Hill’s commingling of patients’ personal need funds with corporate funds and use of the combined funds to pay corporate expenses constituted dealing with the money as its own and was a violation of the corporation’s trust agreement. The facility argued that it ultimately transferred all of the residents’ personal funds from a transfer account to the residents’ accounts. The court concluded that a violation had occurred at the moment the residents’ personal funds were deposited without segregating them from the corporation’s own funds.


The U.S. Court of Appeals for the Sixth Circuit determined that the physician was found to have been properly convicted of healthcare fraud and making false statements, arising from administration of partial doses of chemotherapy medication while billing Medicaid and other insurance programs for full doses. The appeals court also disagreed with the defendant’s contention that the district court considered an inappropriate factor when it heard testimony from family members.





▸ CHAPTER REVIEW 1. The objectives of criminal law are to:

Maintain public order and safety Protect individuals Use punishment as a deterrent to crime Rehabilitate criminals for return to society

2. A crime—a social harm defined and made punishable by law—is generally either a misdemeanor or a felony.

A misdemeanor is an offense generally punishable by less than 1 year in jail and/or a fine. A felony, however, is punishable by imprisonment in a state or federal prison for a period of more than 1 year.

3. Criminal procedure involves

Arrest Arraignment Indictment Conference Criminal trial

4. Criminal trials involving healthcare professionals and organizations include: healthcare fraud, kickbacks, false claims, tampering with drugs, Internet pharmacy, falsification of records, patient abuse, criminal negligence, manslaughter, murder, rape, sexual abuse, and theft.




▸ REVIEW QUESTIONS 1. Discuss the objectives and classification of criminal offenses. 2. Discuss the criminal trial process. 3. Describe some of the more common criminal offenses that occur in

healthcare settings.





1. 513 F.3d 527 (C.A. 6. Tenn. 2008).

2. Stephen H. Gifis, Law Dictionary, at 118–119 (1975).

3. “Model Penal Code: Selected Provisions,”

4. No. 05AP-681 (Ohio App. 2006).

5. 295 U.S. 78, 88 (1935).

6. John Kaplan, Criminal Justice Introductory Cases and Materials (Eagan, MN: Foundation Press, 1973), 228.

7. Id. at 259.

8. U.S. Department of Justice, “National Health Care Fraud Takedown Results in Charges Against Over 412 Individuals Responsible for $1.3 Billion in Fraud Losses,” takedown-results-charges-against-over-412-individuals-responsible.

9. Federal Bureau of Investigation, “What We Investigate: Health Care Fraud,”

10. Id.

11. Office of the Inspector General, “About Us,” oig/about-us/index.asp.

12. U.S. Department of Health and Human Services, “Stop Medicare Fraud,”

13. Id. note 8.

14. U.S. Department of Health and Human Services, News Release, February 17, 2011.

15. U.S. Department of Justice, “National Health Care Fraud Takedown Results in Charges against 301 Individuals for Approximately $900 Million in False Billing,” June 22, 2016. care-fraud-takedown-results-charges-against-301-individuals- approximately-900.

16. Attorney General Eric Holder, “Attorney General Eric Holder Delivers Remarks at the Johnson and Johnson Press Conference,” The United States Department of Justice, November 4, 2013.

17. Carla K. Johnson and Sara Burnett, “$12 Million in Medicaid Funds Went to Deceased in Illinois,” The Washington Post, April 20, 2014.

18. USA v. Farid Fata, No. 15-1935 (6th Cir. 2016).




19. ABC News, “A Healthy Dose of Fraud,”

20. 385 F.3d 1013 (C.A. 6, Ky. 2004).

21. 824 F.2d 780 (9th Cir. 1987).

22. 254 Ga. App. 297, 562 S.E.2d 201 (Ga. App. 2002).

23. 507 So. 2d 1254 (La. Ct. App. 1987).

24. 513 So. 2d 493 (La. Ct. App. 1987).

25. Id. at 495.

26. Banks v. Board of Pharmacy, 207 Cal. Rptr. 835 (Cal. Ct. App. 1984).

27. 821 F.2d 523 (10th Cir. 1987).

28. Id. at 529.

29. Id. at 530.

30. 322 S.E.2d 696 (N.C. Ct. App. 1985).

31. 726 N.Y.S.2d 188 (2001).

32. 513 F.3d 1293 (C.A. 11, Fla. 2008).

33. 760 F.2d 68 (3d Cir. 1985).

34. 871 F.2d 105 (9th Cir. 1989).

35. 366 F.2d 167 (6th Cir. 1966).

36. 265 U.S. 182, 188 (1924).

37. 874 F.2d 20 (1st Cir. 1989).

38. Robert Draper, “The Toxic Pharmacist,” The New York Times, June 8, 2003. mcubz=0.

39. 401 F.3d 53 (C.A. 2, N.Y. 2005).

40. Poor v. State, No. S-02-472, 266 Neb. 183 (Neb. 2003).

41. No. 02-6183 (C.A. 10, Okla. 2004).

42. Carolyn Davis, “Souderton Doctor Jailed with Son in ‘Pill Mill’ Case,” The Philadelphia Inquirer, June 7, 2014. 07/news/50390458_1_father-and-son-sentencing-motions.

43. Thomas Catan, “Con Artist Starred in Sting That Cost Google Millions,” The Wall Street Journal, January 25, 2012.

44. 746 P.2d 1006 (Idaho Ct. App. 1987).

45. Gregg Zoroya, “VA Treatment Records Falsified, Probe Finds,” USA Today, May 4, 2014. healthcare-delays-treatment-phoenix-cheyenne-deaths/8602117/.

46. 402 N.Y.S.2d 318 (N.Y. Sup. Ct. 1978).




47. Id. at 320.

48. Richard J.Gelles, Murray A. Strauss, and Suzabbe K. Steinmetz, Behind Closed Doors: Violence in the American Family (New York, NY: Anchor Books, 1981).

49. Id.

50. National Center on Elder Abuse, “Fact Sheet: Elder Abuse Prevalence and Incidence,”

51. 557 F. Supp. 289 (D. Colo. 1983).

52. Id. at 293.

53. 42 C.F.R. § 483.13 (1989).

54. “Nurse’s Aide Jailed for Punching Patient,” The Baltimore Sun, June 29, 1990, §D, at 2.

55. 501 N.Y.S.2d 997 (N.Y. Sup. Ct. 1986).

56. Id. at 1001.

57. Id.

58. 556 A.2d 1 (Pa. Commw. Ct. 1989).

59. 559 N.Y.S.2d 417 (N.Y. App. Div. 1990).

60. 655 S.W.2d 522 (Mo. 1983).

61. Id.

62. 166 A.D. 913 (1990).

63. Id.

64. Id. at 573–574.

65. 121 Commonwealth Court 532 (1988).

66. Id. at 535.

67. Id. at 540.

68. State v. Cunningham, 493 N.W.2d 884 (Iowa Ct. App. 1992).

69. Id. at 887–888.

70. 486 So. 2d 101 (La. 1986).

71. Id. at 103.

72. Id.

73. Id. at 101, 104.

74. HuffPost/AP, Doctor at Boston’s Brigham and Women’s Hospital Dies after Shooting, Suspect Dead,” January 20, 2015. shooting_n_6508430.html.

75. Majors v. Engelbrecht, 149 F.3d 709 (1998).




76. Carolyn Collwell, “The Verdict of Angelo: Murder Found in 2 Deaths,” Newsday, December 15, 1989. killer/the-verdict-on-angelo-murder-found-in-2-deaths-1.1875478.

77. 584 F. Supp. 302 (E.D. Va. 1984).

78. Id. at 305.

79. 246 Cal. Rptr. 915 (Cal. Ct. App. 1988).

80. Id. at 927.

81. 204 F.3d 815 (8th Cir. 2000).

82. 195 Cal. Rptr. 484 (Cal. Ct. App. 1983).

83. Owen Bowcott, “Surgeon convicted of patient manslaughter through negligence,” The Guardian, November 5, 2013. manslaughter-negligence-patient.

84. Alyssa Newcomb, “Oregon Doctor Charged in Patient’s Death From Botched Tummy Tuck,” ABC News, August 29, 2012. cosmetic-surgery/story?id=17104454.

85. Brandon Lowry, “Former Encino Cosmetic Surgeon Charged in Patient’s Death,” ABC News, August 20, 2013. Surgeon-Charged-in-Patients-Death-220456371.html.

86. Skeptical Scalpel, “Surgeon Convicted of Manslaughter for Delaying Operation,” Physicians Weekly, November 18, 2013. delaying-operation/.

87. Ned Berke, “Manhattan Beach Plastic Surgeon Charged With Manslaughter After Liposuction Patient Dies On Table,” April 1, 2013. surgeon-charged-with-manslaughter-after-liposuction-patient-dies-on- table/.

88. Clare Dyer, “Surgeon charged with manslaughter over kidney error,” BMJ, September 15, 2001.

89. “Family Neglected Woman to Death: Authorities,” Health News Florida, June 27, 2013. authorities.

90. “Doctor Charged in Pain Med Death,” Health News Florida, July 10, 2013.

91. R. E. Ferner and Sarah E. McDowell, “Doctors Charged with Manslaughter in the Course of Medical Practice, 1795–2005: A Literature Review,” Journal of the Royal Society of Medicine, 99(6); (2006): 309–314.

92. No. 2002-CT-00556-SCT (Miss. 2004).




93. “Earl Bradley,”

94. Martha Neil, ABA Law Journal, April 19, 2010.

95. American Congress of Obstetricians and Gynecologists, “Committee Opinion: Sexual Assault,” Publications/Committee-Opinions/Committee-on-Health-Care-for- Underserved-Women/Sexual-Assault.

96. 520 N.E.2d 139 (Mass. 1988).

97. Cathy Puleo, “6 infectious disease outbreaks linked to hospital drug thefts: Patients at high risk,” Healthcare Business and Technology, June 11, 2014.

98. Jonathan Allen, “Pennsylvania Man Accused in Theft of Human Skin from Hospital,” Reuters, May 30, 2014. man-accused-theft-human-skin-hospital-190051628.html.

99. “Thief Targets Mother in Langley Hospital Maternity Ward,” CBC News, April, 17, 2013, mother-in-langley-hospital-maternity-ward-1.1323284.

100. Trevor Wilheim, “Police Make Arrest in Windsor Regional Hospital Thefts,” The Windsor Star, January 29, 2014. targeted-again-by-thieves/.

101. Federal Trade Commission, “Medical Identity Theft: FAQs for Health Care Providers and Health Plans,” center/guidance/medical-identity-theft-faqs-health-care-providers-health- plans.

102., “HIPAA for Professionals,” Reviewed June 16, 2017.

103. Kira Caban, “Monthly Breach Barometer: Staggering 11 Million Patient Records Breached,” July 5, 2016. barometer-june.

104., “Breach Notification Rule,” Reviewed July 26, 2013. notification/index.html.

105. U.S. Department of Health and Human Services, Office for Civil Rights, “Breach Portal: Notice to the Secretary of HHS Breach of Unsecured Protected Health Information,”

106. Id. note 104.

107. No. 04AP-143 (Ohio App. 2004).

108. 683 P.2d 1202 (Colo. 1984).

109. 184 S.W.3d 122 (Mo. App. 2006).




110. 496 A.2d 306 (Me. 1985).




© Jerry Silwowski/Shutterstock





Contracts and Antitrust


BREACH OF CONTRACT: BLOOD TRANSFUSION Harvey was diagnosed with blockage in his carotid artery. Dr. Strickland recommended a surgical procedure. In anticipation of surgery, Harvey signed written forms entitled, “Refusal of Treatment, Release from Liability” and “Consent to Operation.” The documents indicated that Harvey refused to have blood or blood products given to him and that he fully understood the attendant risks. The documents stated: “In all probability, my refusal for such treatment, medical intervention, and/or procedure (may)(will) seriously imperil my health or life.” Hospital forms list Harvey’s mother, Julia, as his emergency contact. The day before his surgery, Harvey signed another consent form indicating that he would not give permission to the doctor to use blood or blood products, even if it became necessary to administer blood.

Surgery was performed and appeared to have gone well. Harvey, however, later developed a blood clot and had a stroke while in the recovery room. Because Harvey was unconscious, hospital personnel located his mother in the waiting room and obtained her permission to perform a computed tomography (CT) scan and arteriogram. A second surgery was performed, and more blood clots were removed along the side of the carotid artery. Harvey was moved to the intensive care unit (ICU). He was intubated that evening by the on-call emergency room physician after the ICU nurse discovered Harvey was having trouble breathing. The next day, Harvey began bleeding from the surgical site and had lost approximately 30% of his blood volume. His heart rate was extremely high, and Dr. Strickland was concerned that if they could not get the heart rate down, Harvey would have a heart attack and die. When his hemoglobin level reached 8, Dr. Strickland recommended a blood transfusion to Harvey’s mother, Julia, who initially declined because of her son’s faith as a Jehovah’s Witness. Ultimately, Julia consented to giving Harvey two units of blood. Harvey recovered fully from the procedures and later sued. Harvey filed a lawsuit against Dr. Strickland after receiving the unwanted blood. The lawsuit claimed breach of contract, lack of informed consent, medical malpractice, and medical battery. The trial




court directed a verdict for Dr. Strickland. Harvey appealed the court’s decision.







The reader, upon completion of this chapter, will be able to:

Explain what a contract is. Describe the elements of a contract. Describe how a hospital can be liable for the acts of a physician under contract. Explain the possible defenses and remedies for nonperformance of a contract. Describe under what circumstances an employee handbook could be considered a contract and how to avoid that assumption.

This chapter provides the reader with a general understanding of the purpose, types, elements, and importance of contracts as they pertain to healthcare organizations and caregivers. Attention also is given to the defenses and legal remedies for nonperformance of a contract.




▸ WHAT IS A CONTRACT? A contract is a special kind of voluntary agreement, either written or oral, that involves legally binding obligations between two or more parties. A contract serves to provide one or more of the parties with a legal remedy if another of the parties does not perform his or her obligations pursuant to the terms of the contract. The major purpose of a contract is to specify, limit, and define the agreements that are legally enforceable. A contract forces the participants to be specific in their understandings and expectations of each other. Contracts, particularly those in writing, serve to minimize misunderstandings and offer a means for the parties to a contract to resolve any disputes that may arise.




▸ TYPES OF CONTRACTS The following is a general description of the various types of contracts and a brief definition of each. Healthcare professionals should be knowledgeable about each type of contract because they are used commonly in the healthcare setting.

Express Contracts An express contract is one in which the parties have an oral or written agreement. Both written and oral contracts are generally recognized and are equally legal and binding.

Oral Contract. A court will not consider oral negotiations and agreements made before or at the same time a written contract is signed if the parties intended the document to be their complete and final agreement. Both written and oral contracts are generally recognized and are equally legal and binding.

Written Contract. It is preferable to reduce important and complex contracts to writing. In certain instances, the courts will enforce only written contracts.

Implied Contract An implied contract is one that is inferred by law. It is based on the conduct of the parties, such as a handshake or similar conduct. Much of the litigation concerning excesses of corporate authority involves questions of whether a corporation has the implied authority—incidental to its express authority—to perform a questioned act. In Hungerford Hosp. v. Mulvey, for example, even though its certificate of incorporation did not authorize the hospital to construct a medical office building, the hospital was permitted to construct the building on land that had been donated for maintaining and operating the hospital. The court, in recognizing a trend to encourage charitable hospitals to provide private offices for rental to staff members, held that such an act was within the implied powers of the hospital and that such offices aid in the work of a general hospital even though it went beyond the hospital corporation’s express powers.

Voidable Contract A voidable contract is one in which one party, but not the other, has the right to escape from its legal obligations under the contract. It is considered to be a voidable contract at the option of that party. For example, a minor, not having the capacity to enter into a contract, can void the contract. However, the competent party to the contract may not void the contract. Contracts involving fraud or where one party to the contract is incapacitated, not legally of sound mind, or under undue influence or duress are voidable contracts.





Executed Contract An executed contract is one in which all the terms and obligations of the parties to the contract have been fully performed.

Enforceable Contract An enforceable contract is one that is a valid, legally binding agreement. If one party breaches it, the other will have an appropriate legal remedy.

Unenforceable Contract An unenforceable contract is one in which, because of some defect, no legal remedy is available if breached by one of the parties to the contract.

Contracts for Realty, Goods, or Services There are also contracts for realty (a contract for the purchase and sale, exchange, or other conveyance of real estate), goods (movable objects, with the exception of money and securities), and services (human energy).




▸ ELEMENTS OF A CONTRACT Whether contracts are executed in writing or agreed to orally, they must contain the following elements to be enforceable: (1) offer/communication, (2) consideration, and (3) acceptance.

The law will enforce contracts only when they are executed between persons who are competent—that is, those with the legal and mental capacity to contract. Certain classes of persons, such as minors, people with mental illness, and prisoners, traditionally have been considered unable to understand the consequences of their actions and have been deemed incompetent, or lacking in legal capacity, to make a binding contract.

Offer/Communication An offer is a promise by one party to do (or not to do) something if the other party agrees to do (or not do) something. Preliminary negotiations are not offers. An offer must be communicated to the other party so that it can be accepted or rejected.

Consideration Consideration requires that each party to a contract give up something of value in exchange for something of value. No side can have a free way out or the ability to obtain something of value without providing something in exchange. Only when legal consideration has been given will a court treat the agreement as a contract. The adequacy or inadequacy of consideration, or the price paid, normally will not affect the formation of a contract.

Acceptance Upon proper acceptance of an offer, a contract is formed. A valid acceptance requires the following:

1. Meeting of the Minds. Acceptance requires a meeting of the minds (mutual assent); in other words, the parties must understand and agree on the terms of the contract. This means that each side must be clear as to the details, rights, and obligations of the contract.

2. Definite and Complete. Acceptance requires that mutual assent be found between the parties. The terms must be so complete that both parties understand and agree to what has been proposed.

3. Duration. Generally, the offeror (the one who makes the offer) may revoke an offer at any time prior to a valid acceptance. When the offeror does revoke the proposal, the revocation is not effective until the offeree (the person to whom the offer is made) receives it. Once the offeree has accepted the offer, any attempt to revoke the agreement is invalid.




4. Complete and Conforming. The acceptance must be a mirror image of the offer. In other words, the acceptance must comply with all the terms of the offer and not change or add any terms, unless agreed upon by both parties.




▸ BREACH OF CONTRACT A breach of contract occurs when there is a violation of one or more of the terms of the contract. The basic elements that a plaintiff must establish in order to be successful in a breach of contract lawsuit are: (1) a valid contract was executed; (2) the plaintiff performed as specified in the contract; (3) the defendant failed to perform as specified in the contract; and, (4) the plaintiff suffered an economic loss as a result of the defendant’s breach of contract.




▸ CORPORATE CONTRACTS The ability of a corporation to enter into a contract is limited by its powers as contained in or inferred from its articles of incorporation (sometimes called a charter) or conferred upon it by general corporation law. Whenever a contract of any consequence is made with a corporation, appropriate corporate approval and authorization must be obtained. In the event that a contract is entered into with a corporation without the appropriate authority, the contract nevertheless may be ratified and made binding on the corporation by subsequent conduct or statements made on its behalf by its representatives.

When the chief executive officer (CEO) exceeds his limits of authority to execute a contract on behalf of the organization, the question arises as to who will be responsible for the costs of the contract. If the actions of the governing body give rise to a third party’s reasonable belief that the CEO acts with the authority of the organization, and such belief causes the third party to enter into an agreement with the CEO, expecting that the organization will be obligated under the contract, the organization generally is responsible under the concept of apparent authority, which is the appearance of being the agent of another (employer or principal) with the power to act for the principal. However, if a third party deals with the CEO in the absence of indications of the CEO’s authority created by the governing body and thereby unreasonably assumes that the CEO possesses the authority to bind the organization to a contract, then such third party deals with the CEO in an individual capacity and not as an agent of the organization.

Although there can be times when a CEO makes a decision that exceeds his or her authority, the governing body may subsequently approve such actions through ratification by accepting any resulting responsibility as though it had been authorized previously. Conversely, if the governing body, for example, has set a limitation on the amount of funds a CEO is authorized to expend on a capital budget item and the CEO exceeds that authorization, he could be held liable to the supplier for that purchase, if so made without prior approval of the governing body.

Physician Contracts Hospitals have traditionally contracted with physician groups to provide specialty coverage in the emergency department, radiology, and anesthesia services, and hospital-operated out-patient clinics. It has been estimated that there are as many as 31,000 hospital-employed physician hospitalists caring for inpatients. Statistics show that “One-in-four medical practices is now owned by a hospital or health system, and hospitals employed 38% of all U.S. physicians in 2015. ‘That’s a 50% increase between 2012 and 2015, growing from 95,000 employed physicians in 2012 to more than 140,000 employed physicians in 2015.’ ” Physicians continue to lose medical independence and






more costly hospital care. Physicians are increasingly seeking hospital employment to improve their lifestyle by having more control over working hours and to lessen their financial worries of maintaining a practice (e.g., malpractice insurance, government regulations, and the high costs associated with the day-to-day functioning of an office).




▸ PARTNERSHIP A partnership comprises two or more persons who agree to carry on a business for profit and to share profits and losses in some proportion. According to Black’s Law Dictionary, a partnership is “A voluntary contract between two or more competent persons to place their money, effects, labor, and skill, or some or all of them, in lawful commerce or business, with the understanding that there shall be a proportional sharing of the profits and losses between them.” A partnership, unlike a corporation, can be created by the parties’ actions without a written or oral agreement.

The Uniform Partnership Act, which has been adopted by most states, describe a partnership and partnership agreement as follows:

(6) “Partnership” means an association of two or more persons to carry on as co-owners a business for profit formed under Section 202, predecessor law, or comparable law of another jurisdiction.

(7) “Partnership agreement” means the agreement, whether written, oral, or implied, among the partners concerning the partnership, including amendments to the partnership agreement.

There are a variety of partnerships in the healthcare industry, such as those between physicians when forming a physician general practice or specialty group. Hospital–physician partnerships can take the form of a joint venture, such as a freestanding ambulatory surgery center.






▸ AGENT An agent is one who has the power to contract for and bind another person, the principal, to a contract. Corporations can act only through agents (e.g., their officers). An apparent or ostensible agent is one who a third person believes is acting on behalf of the principal. If a hospital undertakes to provide physician services to a community and the community reasonably believes that a physician is employed by the hospital to deliver services, then the hospital would generally be liable for the physician’s negligent acts. For example, in Jennison v. Providence St. Vincent Med. Ctr., Jennison, having severe abdominal pain, was taken to the hospital emergency department. Unsure of the cause of Jennison’s medical problems, Cook, Jennison’s assigned physician, recommended surgery. Prior to surgery Cook asked Nunez, a member of an independent anesthesiology group at the hospital, to place a central venous catheter in Jennison.

An X-ray had been taken to confirm the correct placement of the central line. The X-ray showed that the tip of the central line had gone into the pericardial sac of Jennison’s heart. A procedure had not been established to notify the treating physicians in a timely manner that the central line had been dangerously misplaced.

Upon the eventual discovery that the central line had been misplaced, it was pulled back to its proper position. Unfortunately, fluids had already infused through the central line and into the space between Jennison’s heart and pericardial sac. The pressure of the fluid against her heart kept it from filling adequately. Jennison’s blood pressure dropped, and she went into cardiac arrest. The doctors attempted to remove the excess fluid. During the procedure, Jennison suffered a second cardiac arrest. The doctors were again able to resuscitate her. However, due to the lack of oxygen to her brain, Jennison suffered a severe brain injury.

The jury returned a verdict in favor of the plaintiffs, finding the hospital 100% negligent, and the hospital appealed. The Court of Appeals of Oregon affirmed the findings of the trial court. The hospital presented itself as providing radiology services to the public. The public, looking to the hospital to provide such care, is unaware of and unconcerned with the technical complexities and nuances surrounding the contractual and employment arrangements between the hospital and the various medical personnel operating therein. Public policy dictates that the public has every right to assume and expect that the hospital is the medical provider it purports to be.








▸ INDEPENDENT CONTRACTOR An independent contractor is an individual who agrees to undertake work without being under the direct control or direction of another. Independent contractors are personally liable for their own negligent acts. Whether a physician is an employee or an independent contractor is of primary importance in determining liability for damages. Generally, a healthcare organization is not liable for injuries resulting from negligent acts or omissions of independent physicians. There is no liability on the theory of respondeat superior, whereby a physician is an independent contractor as long as the physician is not an employee of the organization, is not compensated by the organization, maintains a private practice, and is chosen directly by his or her patients. The mere existence of an independent contractual relationship, however, is not sufficient to remove an organization from liability for the acts of certain of its professional personnel if the independent contractor status is not readily known to the injured party as noted in Mduba v. Benedictine Hospital next.

Hospital Liable for Physician’s Negligence A hospital can be liable for a physician’s negligence, even if the physician is under contract to provide services to the hospital. The appellate division of the New York State Supreme Court in Mduba v. Benedictine Hospital held that the hospital was liable for the emergency department physician’s negligence whether the physician was an independent contractor or, even if under contract, the physician was considered to be an independent contractor. The court held that the patient had no way of knowing of the existence of a contract and relied on the relationship between the hospital and the physician in seeking treatment in the emergency department.

Agency Not Liable for Negligent Hiring The employer, Patient Support Services, Inc. (PSS), in Maristany v. Patient Support Services, Inc., was found not liable for negligent hiring for injuries received by a patient under the care of one of its independent contractors. By contract dated January 29, 1994, the plaintiff retained the services of PSS to furnish an independent nurse, Terry, to care for her husband, Santiago, a postoperative brain surgery patient at defendant Presbyterian Hospital.

At approximately 10:00 PM, Terry assisted a hospital nurse in placing Santiago into a Posey-restraining vest. At approximately 3:30 AM, Terry returned from a break to find Santiago extremely agitated. Terry sought assistance and tried to restrain the patient physically, but the patient escaped from the vest, climbed over the rails, and fell to the floor, sustaining serious injury.






The plaintiffs did not contest that Terry’s status was that of an independent contractor rather than an employee. Although an employer is generally not liable for the torts or negligent acts of an independent contractor under the doctrine of respondeat superior, the employer had a right to rely on the supposed qualifications and good character of the contractor and is not bound to anticipate misconduct on the contractor’s part. The employer is not liable on the ground of its having employed an incompetent or otherwise unsuitable contractor unless it also appears that the employer either knew or, in the exercise of reasonable care, should have ascertained that the contractor was not properly qualified to undertake the work.

There was no competent proof that PSS had any reason to question Terry’s qualifications. At the time of the incident, Terry had had her qualifying certificate for more than 10 years. She had received training in the use of Posey restraints and had previously cared for patients whose condition required these restraints. Because Terry had previously worked for PSS and had not given any indication of incompetence, there was no viability to the claim that PSS was negligent in assigning her to the care of Santiago.




▸ CONDITIONS A condition to a contract is an act or event that must happen or be performed by one party before the other party has any responsibility to perform under the contract. An express condition is formally written into the contract in specific terms. An implied condition is one in which, although the parties may not have specifically mentioned the condition, it can reasonably be assumed that the parties intended the condition to be enforced.




▸ PERFORMANCE Performance is the act of doing what is required by a contract. Each party to a contract is bound to perform the promises according to the stipulated terms contained in the contract. The effect of successful performance by each party to a contract is to discharge the parties bound to the contract from any future contractual liability.




▸ NONPERFORMANCE DEFENSES Under some circumstances, the law gives a person a right not to perform under a contract. Defenses permitting nonperformance of a contract include fraud, mistakes, duress, illegal contract, impossibility, and statute of limitations.

Fraud A victim of fraud is not generally required to perform the agreed upon terms of a contract. Contract fraud occurs when at least one party in a contract knowingly misrepresents a material fact contained in the contract and intends that the other party rely on that misrepresentation. The second party must rely on the misrepresentation and suffer some damage before being excused from performing under the terms of the contract.

Mistakes of Fact and Law A party to a contract is permitted to claim a mistake in fact or law in a contract as a defense under certain instances. There are two types of mistakes: mistake of fact and mistake of law. A mistake of fact is a mistaken belief that certain facts are true. Both parties must have made the mistake. If only one is in error (and it is not known to the other), mistake of fact is not generally a defense. Mistake of law, on the other hand, is an incorrect judgment of the legal consequences of the known facts. If the parties to a suit make a mistake as to the law involved, they must accept their plight without any remedy.

Duress Duress is the use of unlawful threats or pressure to force an individual to act against his or her will. An act performed under duress is not legally binding.

Illegal Contract An illegal contract is a contract whose formation, object, or performance is against the law or contrary to public policy that no court will uphold or enforce. No individual can recover damages when a contract is formed for illegal purposes. A contract must not violate the law. To be a valid contract, the purpose or object (purpose or design) of the contract must not violate state or federal policy and must not violate any statute, rule, or regulation. If the subject or purpose of a contract becomes illegal by some statute, rule, or regulation before actual formation of the contract, the contract is invalid. For example, the transference of property with the object of defrauding another is an unenforceable contract.

Impossibility to Perform Contracts can become impossible to perform because (1) certain facts might have existed at the time the contract was executed or (2) they might have arisen subsequent to the formation of the contract. Contracts that are




impossible to perform do not have to be carried out by the parties to a contract. A promise to perform a contract becomes impossible when, for example, the work to be performed is impossible to complete the terms of the contract because of a natural disaster or the law has changed, thus making performance of the work agreed upon illegal.

Statute of Limitations A party who does not, within a timely period set by statute (statute of limitations), take action to enforce contract rights by suing for damages caused by a breach of contract can be barred from doing so.




▸ REMEDIES What can a party do when another has breached the contract and refuses to or cannot perform? The general rule is that legal redress will attempt to make the injured party whole again.

Specified Performance When an aggrieved party has subsequently complied with his or her obligations pursuant to the agreed upon terms of a contract, that party might seek specific performance as a remedy from the other party to the contract rather than monetary remuneration. The most satisfactory remedy available to an injured party may be to require specific performance by the other party to the contract.

Monetary Damages Monetary damages, sometimes called compensatory damages, are awarded in an attempt to restore to the aggrieved party the money that it would have had if the other party had not breached the contract. This can include the cost of making a substitute contract with another party and the expense of delays caused by the breach.

General and Consequential Damages General damages are those that can be expected to arise from a breach of a contract. The damages incurred must be foreseeable and common in the circumstances. Consequential damages are those that occur because of some unexpected, unusual, or strange development involved in the particular contract in dispute. The distinction between the two types is one of foreseeability. If it is found that the party who breached the contract could have foreseen the damages that followed, that person could be liable for consequential as well as general damages.

Duty to Mitigate Damages When a party to a contract has breached the terms of a contract, the other party cannot stand idly by and let damages build indefinitely. Every injured party has a duty to mitigate (lessen) damages caused by the breach of another person or entity. Failure to do so will prevent the aggrieved party’s recovery of damages that could have been mitigated.

Arbitration Under the modern view of contract law, agreements in contracts to arbitrate subsequent disputes are valid.







▸ EMPLOYMENT CONTRACTS An employment contract is a written document that sets forth the terms of the employment relationship. Such contracts are binding on both the employer and employee so long as the contract has been executed in a legal manner. The conditions of employment, including wages, hours, and type of work, are generally described in an employment contract. Depending on the level of employment and the responsibility of the new employee, the conditions of employment should include the terms of employment, the duties and responsibilities of the employee, compensation, confidentiality requirements (e.g., trade secrets and proprietary information), a noncompete clause, and provisions for termination of the agreement (e.g., an inability to perform one’s duties and responsibilities).

A contract can be express or implied. Most employees work under employment contracts. For example, if an employee signs a document promising to abide by company policy and procedures, it likely constitutes an employment contract. Certain categories of employees (e.g., radiologists) often have the ability to negotiate their employment contracts. An employer’s right to terminate an employee can be limited by express agreement with the employee or through a collective bargaining agreement to which the employee is a beneficiary.

The rights of employees have been expanding through judicial decisions in different states. Court decisions have been based on verbal promises, historical practices of the employer, and documents, such as employee handbooks, job descriptions, and administrative policy and procedure manuals that describe employee rights.

A job description is not intended to be an employment contract, nor does it dissolve the at-will employment relationship. It is a record of the basic purpose, typical level of authority, typical source of action, and representative function or duties of the job. It is designed to provide management and others with a clear understanding of the level of the job and its working relationships, skills, and requirements in relation to other jobs.

Employee Breaches Contract: Repayment of Tuition Required The registered nurse in Sweetwater Hosp. Ass’n v. Carpenter was found to have breached her contract with the hospital under which the hospital agreed to pay for her schooling as a nurse anesthetist in exchange for her agreeing to work for the hospital for 5 years following completion of her studies. The nurse agreed that if she failed to work at the hospital following completion of her studies, she would be responsible for cash advances by the hospital plus interest. Upon completion of her studies, the nurse sought employment





elsewhere because it appeared to her that there were no nurse anesthetist positions available at the hospital.

As consideration for the loan, the contract provided that the defendant agreed to become or remain an employee of the hospital. The contract did not state in what capacity the defendant would become or remain an employee. There was nothing in the language of the contract stating that the hospital had an obligation to offer the defendant a nurse anesthetist position.

In this case, there was no proof by the defendant that the hospital breached the contract. The defendant breached her own contract by taking a job elsewhere without specifically getting proof that she was not going to be offered a job by the hospital. The defendant did not present herself for employment at the hospital after graduation. She accepted a position elsewhere. Because she did not accept employment at the hospital, she was not entitled to rely upon the forgiveness provisions contained in the contract. She was, therefore, obligated to repay the hospital.

Geographic Limitations on Practice Reasonable The provisions of a covenant prohibiting the plaintiff in Thompson v. Nason Hosp., a pediatrician, from practicing pediatric medicine for a period of 2 years within a 10-mile radius of the defendant’s office, and prohibiting her for a period of 1 year from soliciting patients of the defendant, were found to be reasonable as to both duration and geographic area. When the plaintiff entered into the employment contract, she agreed to be bound by the restrictive covenants in the event that her employment should end. The defendant had the right to terminate the plaintiff’s employment for any reason whatsoever or for no reason upon 60 days’ written notice to the plaintiff.

No Express Agreement: Right to Terminate No express agreement was found to exist in O’Connor v. Eastman Kodak Co., in which the court held that an employer had a right to terminate an employee at will at any time and for any reason or no reason. The plaintiff did not rely on any specific representation made to him during the course of his employment interviews nor did he rely on any documentation in the employee handbook, which would have limited the defendant’s common law right to discharge at will. The employee had relied on a popular perception of Kodak as a “womb-to-tomb” employer.

Restrictive Covenant Enforceable The plaintiff-hospital, in Sarah Bush Lincoln Health Ctr. v. Perket, sued its former director of physical medicine and rehabilitation to enforce a restrictive covenant in the employment contract precluding the director from accepting similar employment in the same county within 1 year of termination of employment. The parties to the complaint entered into a contract whereby the defendant was employed as the plaintiff’s director of physical medicine. The







contract provided that during the director’s employment and for a period of 1 year thereafter, the director would not, directly or indirectly, invest in, own, manage, operate, control, be employed by, participate in, or be connected in any manner with the ownership, management, operation, or control of any person, firm, or corporation engaged in competition with the hospital in providing health services or facilities within Coles County, including the provision of services in a private office, without prior written consent of the hospital. Following the termination, the defendant engaged in the business of providing physical medicine and rehabilitation services in Coles County. The plaintiff argued that unless the defendant was enjoined, the hospital would suffer irreparable injury. The circuit court granted the hospital’s motion for preliminary injunction.

On appeal, the Illinois Appellate Court held that the grant of the preliminary injunction was proper and that the defendant was engaging in the business of providing physical medicine and rehabilitation services in Coles County. By hiring the defendant, the hospital was thereby bringing him in contact with a clientele that the hospital had established over a period of years. The hospital was naturally interested in protecting its clients from being taken over by the defendant as a result of these contacts.

Restrictive Covenant Not Enforceable Not every restrictive covenant is enforceable; for example, a restrictive covenant in an employment contract between a hospital and neurosurgeon was found to be geographically too restrictive, whereby the neurosurgeon was not to practice within a 30-mile radius of the hospital. This restriction was determined to be excessive. Such a restriction was considered to be detrimental to public interest in that the restricted area was plagued with a shortage of neurosurgeons.

A restrictive covenant in an employment contract between a hospital and a physician is not per se unreasonable and unenforceable. Under the circumstances of this case, however, the geographic restrictive area is excessive and must be reduced to avoid being detrimental to the public interest. In addition, because the two-year period for the restrictive covenant in this case has expired, the request for injunctive relief is moot.

The reader should understand that employment contracts that contain a restrictive covenant between a physician and a hospital, although not favored, are not per se unreasonable and unenforceable. The trial court must determine whether the restrictive covenant protects the legitimate interests of the employer, imposes no undue hardship on the employee, and is not adverse to the public interest.

In another case, the restrictive covenant in Comprehensive Psychology System P.C. v. Prince, limiting the ability of a psychologist from practicing








his profession within 10 miles of his former employer’s facility and from soliciting any of his patients, was determined not to be enforceable. The nature of the practice of psychology and the uniquely personal patient– psychologist relationship forbid restrictions that might interfere with an ongoing course of treatment. A psychologist who changes his office location, voluntarily or involuntarily, has a duty to inform patients of the change and the new location and phone number. To do otherwise may be akin to abandonment. Before unilaterally withdrawing from treating a patient, a doctor must provide reasonable notice of withdrawal to enable the patient to obtain substitute care. The limitations the plaintiff seeks to enforce against the defendant interfere with a critical patient–psychologist relationship and with the right of the patient to continued treatment from that psychologist.

Employee Handbook: A Contract In order for an employee handbook to constitute a contract, thereby giving enforceable rights to the employee, the following elements must be present:

1. A policy statement that clearly sets forth a promise that the employee can construe to be an offer.

2. The policy statement must be distributed to the employee, making him or her aware of the offer.

3. After learning about the offer and policy statement, the employee must “begin” or “continue” to work.

The plaintiff-employee in Weiner v. McGraw-Hill brought suit against his employer for wrongful termination. The plaintiff allegedly was discharged without just and sufficient cause or the rehabilitative efforts specified in the defendant’s handbook and allegedly promised at the time the plaintiff accepted employment. Furthermore, on several occasions when the plaintiff recommended that certain of his subordinates be dismissed, he allegedly was instructed to proceed in strict compliance with the handbook and policy manuals. The court held that although the defendant did not engage the plaintiff for a fixed term of employment, the plaintiff pleaded a good cause of action for breach of contract. Even the employment application that the plaintiff signed at the time of employment stated that he would be subject to the provisions of McGraw-Hill’s Handbook on Personnel Policies and Procedures.


Citation: Dutta v. St. Francis Reg’l Med. Ctr., 850 P.2d 928 (Kan. Ct. App. 1993)

Facts On July 1, 1987, Dr. Dutta, a radiologist, began working in the radiology department of the hospital as an employee of Dr. Krause, the medical





director of the hospital’s radiology department. On August 5, 1988, the hospital terminated Krause’s employment as medical director. On August 8, 1988, Dutta and the hospital entered into a written employment contract with a primary term of 90 days. The contract provided that if a new medical director had not been hired by the hospital within the 90-day period, the agreement was to be automatically extended for a second 90-day period.

Following a period of recruitment and interviews, the hospital offered Dr. Tan the position. Tan and the hospital executed a contract making him the medical director of the radiology department. The contract granted Tan the right “to provide radiation oncology services on an exclusive basis subject to the exception of allowing Dutta to continue her practice of radiation oncology at the hospital.” On April 24, 1989, the hospital notified Dutta that the 90-day contract had expired and that Tan was appointed as the new medical director. The letter provided in part:

It is our intent at this time to establish an exclusive contract with Dr. Donald Tan for medical direction and radiation therapy at SFRMC. Your medical staff privileges to practice radiation therapy at SFRMC will not be affected by this action. You will be allowed to maintain your current office space for radiation oncology activities; however, you should make alternative arrangements for your billing and collection activities. [Id. at 931]

Dutta and Tan then practiced independently of each other in the same facility. On October 13, 1989, Tan became unhappy with this arrangement and requested exclusive privileges, stating he could not continue as medical director without exclusivity. On February 2, 1990, an exclusive contract was authorized by the hospital. Dutta was notified that she would no longer be permitted to provide radiation therapy services at the hospital after May 1, 1990. By letter, Dutta twice requested a hearing on the hospital’s decision to revoke her right to use hospital facilities. Both requests were denied.

Dutta sued the hospital for breach of employment contract after the hospital entered into an exclusive agreement with Tan, thereby denying Dutta the use of the hospital’s radiology department and equipment. Dutta presented evidence about the purpose of the requirement in her contract with the hospital that provided that the new medical director be mutually acceptable to both parties. A hospital administrator testified that the hospital and Dutta included the phrase “mutually acceptable” in the contract because “[w]e both agreed that we wanted the person being recruited to be compatible with Dutta” [Id. at 932].




Issue Was the language, “mutually acceptable,” ambiguous in the employment contract between the hospital and Dutta?

Holding The Kansas Court of Appeals held that substantial evidence supported the jury’s verdict that the hospital breached its written employment contract with Dutta by hiring a medical director who was not mutually acceptable to both the hospital and Dutta.

Reason The language in the contract is ambiguous if the words in the contract are subject to two or more possible meanings. The determination of whether a contract is ambiguous is a question of law. Paragraphs 4 and 5 of the hospital’s employment agreement with Dutta, dated August 8, 1988, read as follows:

4. During the term of this Agreement the Medical Center shall be actively recruiting for a full-time Medical Director for the Radiation Therapy department. . . . Dr. Dutta shall be involved in the interviewing process. The person selected for [the] above positions shall be mutually acceptable to the Medical Center and Dr. Dutta. Dr. Dutta may discuss potential business arrangements with each individual interviewed.

5. Once the full-time Medical Director or part-time radiation therapist is selected, Dr. Dutta will, in good faith, attempt to reach a satisfactory business arrangement with the selected individual. [Id. at 936]

The testimony of Dutta, the hospital administrator, and the attorney who represented Dutta in contract negotiations provides a factual basis for the jury to find that the phrase, “mutually acceptable,” in the contract was intended by Dutta to ensure that the hospital would select a medical director who indicated a willingness to form a partnership or otherwise acceptable business relationship.

In Watson v. Idaho Falls Consolidated Hospitals, Inc., a nurse’s aide was awarded $20,000 for damages when the hospital, as employer, violated the provisions of its employee handbook in the manner in which it terminated the plaintiff’s employment. Although the nurse’s aide had no formal written contract, the employee handbook and the hospital policies and procedures manual constituted a contract in view of evidence to the effect that these documents had been intended to be enforced and complied with by both employees and management. Employees read and relied on the handbook as





creating terms of an employment contract. They were required to sign for the handbook to establish receipt of a revised handbook that explained hospital policy, discipline, counseling, and termination. A policy and procedure manual placed on each floor of the hospital also outlined termination procedures.

Employee Handbook: Not a Contract An employee handbook is not always considered a contract, as noted in Churchill v. Waters where it was not a contract because of a disclaimer in the handbook. A nurse brought a civil rights action against the hospital and hospital officials after her discharge. The federal district court held for the defendants, finding that the hospital employee handbook did not give the nurse a protected property interest in continued employment: “Absent proof that the handbook contained clear promises which indicated the intent to bind the parties, no contract was created.” The “handbook contained a disclaimer” expressly disavowing any attempt to be bound by it and stated that its contents were not to be considered conditions of employment. The handbook was presented as a matter of information only, and the language contained therein was not intended to constitute a contract between McDonough District Hospital and the employee. Although an employee handbook may delineate specific disciplinary procedures, that fact does not, in and of itself, constitute an enforceable contract.

In Trieger v. Montefiore Med. Ctr. a memorandum was circulated by Trieger to department chairs at the hospital strongly criticizing management and urging his co-chairs “to set things right and reclaim their prerogatives and responsibilities.” The memorandum read in part as follows:

. . . the role of Chairman has eroded over the past decade, largely through autocratic, unilateral decision-making and administrative micro- management. Chairmen no longer recruit faculty to their staff. Senior administration writes a contract which details in legalistic terminology what the boundaries will be, often without any provision for academic pursuits or even a phrase of welcome and encouragement. The Administration insists that all revenues belong to Montefiore including honoraria paid for continuing medical education teaching. Monies received for Graduate Medical Education from federal and state sources, which are meant to pay for teaching support for house staff education are usually absent from teaching budgets. The crisis of failure to replace essential capital equipment has managed to impair our efficiency of operation and have us drift further down the spiral of deficit. We seem to have entered onto the stage of a non-reversible Greek tragedy. We have to deal with hiring freezes which further compromise our productivity. To my knowledge chairmen and attending staff have not received a cost of living increase in salary in nine years! How can you retain good faculty?









The appellate court found that the trial court correctly determined that the memorandum was insubordinate and that it gave just cause for termination of the physician’s employment contract. In addition, the physician’s age discrimination claim was dismissed for lack of evidence sufficient to raise an issue of fact as to whether the hospital’s reason for the doctor’s dismissal, circulation of the insubordinate memorandum, was a pretext for discrimination. The doctor was terminated immediately after circulating the insubordinate memorandum, and there was no other evidence in the record to support the claim that the hospital’s actions were false or contrived.




▸ MEDICAL STAFF BYLAWS: A CONTRACT Medical staff bylaws can be considered a contract. The plaintiff, Dr. Bass, in Bass v. Ambrosius, alleged that the hospital’s termination of his staff privileges violated its own bylaws. The hospital contended that its bylaws did not constitute a contract between itself and Bass, and therefore, any violation of those bylaws would not support a breach of contract claim. The general rule that hospital bylaws can constitute a contract between the hospital and its staff is consistent with Wisconsin law that an employee handbook written and disseminated by the employer, and whose terms the employee has accepted, constitutes a contract between the employer and the employee. For instance, in Ferraro v. Koelsch, an employee handbook was management’s statement of what the company offered its employees and what it expected from its employees in return. It thus contained the essential elements of a binding contract: the promise of employment on stated terms and conditions by the employer and the promise by the employee to continue employment under those conditions. The court noted that a promise for a promise, or the exchange of promises, constitutes consideration to support any contract of this bilateral nature.

The bylaws at issue in Bass v. Ambrosius, required by Wis. Admin. Code § HSS 124.12(5) and approved by the hospital’s board of directors, have the same contractual elements as did the handbook in Ferraro. First, the bylaws state that they provide the rules that govern the physicians and dentists practicing at the hospital. Second, members of the hospital’s medical–dental staff must continuously meet the qualifications, standards, and requirements set forth in the bylaws. Third, an appointment to the medical–dental staff confers only those privileges provided by the letter of appointment and the bylaws. Fourth, all applicants for appointment to the medical–dental staff must submit a signed application acknowledging the requirement to familiarize themselves with the bylaws. Thus, Bass’s application to the medical–dental staff acknowledged by his signature that he would conduct his professional activities according to the bylaws and rules and regulations of both the hospital and the medical–dental staff of the hospital. In a separate letter, as part of the application process, Bass agreed to conduct his activities according to the bylaws of the hospital, as well as the bylaws and rules and regulations of the hospital’s medical–dental staff. For its part, the hospital promised that the medical–dental staff would be guided and governed by rules and regulations consistent with the bylaws, and it promised that any adverse action against a member of the medical–dental staff would comply with various procedural safeguards. The bylaws constituted a contract between Bass and the hospital. Accordingly, Bass was entitled to an order holding that the hospital had to comply with its bylaws before it could terminate his staff privileges.



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In Sadler v. Dimensions Health Corporation, Sadler, an obstetrician and gynecologist (OB/GYN), applied for medical staff privileges in the hospital’s OB/GYN department. She was granted temporary privileges pending receipt of further information on her application. While practicing at the hospital, three incident reports concerning Sadler were filed. They involved her failure to respond to calls and initiate timely treatment, a broken humerus and permanent nerve injury following a birth, and a retained surgical sponge. The patient care committee (PCC) of the OB/GYN department reviewed the reports and concluded that continued observation of Sadler was warranted. The PCC met with Sadler to review five cases. Three involved nonindicated or precipitous cesarean sections, and two involved delayed responses to calls from the hospital staff. Following review, the PCC recommended that Sadler consult with more senior practitioners for second opinions before performing cesarean sections.

Two physician consultants were eventually retained by the OB/GYN department of the hospital to review charts of a variety of Sadler’s cases. Random charts of other members of the OB/GYN department of the hospital were also reviewed. Following review, the consultants recommended in their report that Sadler be subjected to case-by-case pre-monitoring for surgical indications. The hospital’s medical executive committee (MEC) reviewed the documentation regarding Sadler’s performance. Based on that review, the MEC voted not to extend provisional privileges and to impose monitoring of Sadler until her provisional privileges expired. Sadler was notified by letter of the MEC decision not to extend her provisional privileges. She was advised that she had a right to request a hearing pursuant to the provisions of the bylaws. Sadler exercised that right, and an ad hoc committee (a hearing committee) was formed pursuant to the bylaws. The committee concluded that there was compelling evidence that the physician consistently disregarded hospital policies, was unprofessional in her dealings with staff, and deviated from acceptable standards in her hospital record keeping and clinical practice. In addition, she ignored efforts by the hospital to bring her into compliance.

The parties agreed that the bylaws of the medical staff of the hospital to which Sadler subscribed when she applied for privileges at the hospital constituted an enforceable contract between her and the hospital. Those bylaws provided a process by which Sadler could challenge her termination of clinical privileges. Sadler fully pursued the prescribed process.

Represented by counsel, she appeared before a panel of members of the medical staff who had no involvement with her case. She cross-examined witnesses under oath, called her own witnesses, offered evidence, and presented oral argument and posthearing written memoranda to the hearing committee. When the hearing committee agreed with the recommendation of the MEC that her privileges at the hospital should be terminated, she





exercised her right under the bylaws to have that decision reviewed by the appellate review committee of the board of directors.

The court of appeals held that there was substantial evidence to support the conclusions of the hearing committee and the board of directors that the imposition of proctoring and monitoring upon Sadler and the termination of her hospital privileges were reasonable and proper.

Right to Hearing A physician whose privileges are either suspended or terminated must exhaust all remedies provided in a facility’s bylaws, rules, and regulations before commencing a court action. The U.S. Court of Appeals in Northeast Georgia Radiological Associates v. Tidwell held that a contract with the hospital’s radiologists, which incorporated the medical staff bylaws, sustained the plaintiffs’ claim to a protected property interest entitling them to a hearing before the medical staff and the hospital authority.





▸ EXCLUSIVE CONTRACTS An organization often enters into an exclusive contract with physicians or medical groups for the purpose of providing a specific service(s) to the organization. Such contracts generally grant the contracting party the exclusive right to perform the services contracted for by the organization. Exclusive contracts typically occur within the organization’s ancillary service departments (e.g., anesthesiology, emergency services, pathology, radiology). Physicians who seek to practice at organizations in these ancillary areas but who are not part of the exclusive group have attempted to invoke the federal antitrust laws to challenge these exclusive contracts. These challenges generally have been unsuccessful.

In Jefferson Parish Hospital v. Hyde, the defendant hospital had a contract with a firm of anesthesiologists that required all anesthesia services for the hospital’s patients be performed by that firm. Because of this contract, the plaintiff anesthesiologist’s application for admission to the hospital’s medical staff was denied. Dr. Hyde commenced an action in the federal district court, claiming the exclusive contract violated Section 1 of the Sherman Antitrust Act. The district court rejected the plaintiff’s complaint, but the U.S. Court of Appeals for the Fifth Circuit reversed the decision, finding the contract illegal per se. The Supreme Court reversed the Fifth Circuit, holding that the exclusive contract in question does not violate Section 1 of the Sherman Antitrust Act. The Supreme Court’s holding was based on the fact that the defendant hospital did not possess “market power,” and, therefore, patients were free to enter a competing hospital and to use another anesthesiologist instead of the firm. Thus, the court concluded that the evidence was insufficient to provide a basis for finding that the contract, as it actually operates in the market, had unreasonably restrained competition.

Similarly, the anesthesiologists in Belmar v. Cipolla brought an action challenging a hospital’s exclusive contract with a different group of anesthesiologists. The New Jersey Supreme Court held that under state law, the hospital’s exclusive contract was reasonable and did not violate public policy.

Although the experts at trial differed about the relative advantages and disadvantages of the exclusive contract between Community and defendant doctors, all agreed that an exclusive contract was a recognized method of providing anesthesiology services. At trial, plaintiffs relied on an amendment to the statement of policy of the American Society of Anesthesiologists that disapproves exclusive contracts between hospitals and anesthesiologists. The statement, apparently adopted in response to the use of nurse anesthetists by some hospitals, is advisory only and does not subject contracting anesthesiologists to ethical sanctions.








Citation: Dominy v. National Emergency Servs., 451 S.E.2d 472 (Ga. App. 1994)

Facts The appellee, National Emergency Services (NES), assigned appellant, Dr. Dominy, to the emergency department at Memorial Hospital and Manor (MHM) in Bainbridge, Georgia, where he was working in 1987 when that hospital terminated its contract with NES and contracted with another provider, Coastal Emergency Services, for emergency department physicians. Dominy continued to perform emergency medical services at MHM under contract with Coastal until 1989.

The contract provided: “The period of this Agreement shall be for one (1) year from the date hereof, automatically renewable for a like period upon each expiration thereof. . . .” The only reasonable construction of this provision was that the parties intended to contract for Dominy’s employment for automatically renewable 1-year terms upon the mutual assent of the parties. The fact that the agreement did not set out the mechanics by which mutual assent may be communicated did not invalidate the contract.

Dominy challenged the contract’s noncompetition clause as overly restrictive. The covenant in this case provides, in pertinent part: “for a period of two (2) years after the termination of this agreement . . . Physician shall not directly or indirectly solicit a contract to perform nor have any ownership or financial interest in any corporation, partnership, or other entity soliciting or contracting to perform emergency medical service for any medical institution at which Physician has performed the same or similar services under this Agreement or any prior Agreement between Physician and Corporation” [Id. at 474].

Issue Was the contract’s noncompetition clause overly restrictive?

Holding The court of appeals held that the noncompetition clause was not overly restrictive.

Reason The record reveals no attempt by either party to terminate the contract, and it is undisputed that Dominy received payment for his services at MHM and other benefits from NES consistent with the agreement until the hospital terminated its contract with NES. By their conduct, the parties assented to




each of the contract’s yearly renewals. Accordingly, the trial court properly granted summary judgment to NES.

As to the contract’s noncompetition clause, this restriction prohibits Dominy from performing emergency medical services in only MHM in Bainbridge, Georgia, where he worked pursuant to a contract with NES, and from having an ownership or financial interest in an entity contracting to provide emergency medical services to that one hospital. He is not precluded from all practice of medicine, with staff privileges at MHM, nor is he prohibited from providing emergency medical services, directly or under contract to a provider of such services, to other hospitals in the immediate vicinity. The court found that such a restriction is reasonably limited in duration and territorial effect while it protects NES’s interest in preventing Dominy from becoming its competitor immediately after termination of its contract with MHM.

Nurse Practitioner: Noncompetitive Clause The respondent-hospital in Washington County Memorial Hospital v. Sidebottom employed the appellant-nurse practitioner from October 1993 through April 1998. Prior to beginning her employment, the nurse entered into an employment agreement with the hospital. The agreement included a noncompetition clause providing, in part, that the nurse, during the term of the agreement and for a period of 1 year after the termination of her employment, would not within a 50-mile radius directly or indirectly engage in the practice of nursing without the express direction or consent of the hospital. In February 1994, the nurse requested the hospital’s permission to work for the Washington County Health Department doing prenatal nursing care. Because the hospital was not then involved in providing prenatal care, the hospital gave her permission to accept that employment but reserved the ability to withdraw the permission if the services the nurse was providing later came to be provided by the hospital. In January 1996, the nurse and the hospital entered into a second employment agreement that continued the parties’ employment relationship through January 9, 1998. This agreement included a noncompetition clause identical to the 1993 employment agreement. It also provided for automatic renewal for an additional 2 years unless either party gave written termination notice no less than 90 days prior to the expiration of the agreement. On March 11, 1998, the nurse gave the hospital written notice of her resignation effective April 15. On April 16, the nurse began working as a nurse practitioner with Dr. Mullen, whose office is located within 50 miles of the hospital.

The Circuit Court prohibited the nurse from practicing nursing within a 50-mile radius of the hospital for a period of 1 year from April 15. The noncompetition clause in the nurse’s employment agreement was found to be clear and





unambiguous. The nurse had been notified by the hospital that the noncompetition clause in her contract would be enforced. On appeal, the judgment of the circuit court was affirmed.




▸ RESTRAINT OF TRADE The increasing number of alternative delivery systems and resultant competition has created the potential for illegal activities to restrain trade. The emphasis on free enterprise and a competitive marketplace has resulted in careful scrutiny by the Federal Trade Commission (FTC), the federal agency responsible for monitoring the marketplace and enforcing federal antitrust laws.

The Antitrust Division of the U.S. Department of Justice has primary responsibility for enforcing federal antitrust laws, which includes investigation of possible violations of both the criminal and the civil provisions of the Sherman, Clayton, and Robinson–Patman Acts.

Federal Trade Commission The FTC is authorized to enforce Section 5 of the FTC Act, which prohibits unfair methods of competition and unfair or deceptive acts or practices. Together with the Department of Justice, the FTC also enforces the Clayton Act sections that prohibit discrimination (e.g., in price), exclusive dealings and similar arrangements, certain corporate acquisitions of stock or assets, and interlocking directorates.

Sherman Antitrust Act The Sherman Antitrust Act, named for its author Senator John Sherman of Ohio, proscribes that every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states is declared to be illegal. Those who attempt to monopolize or combine or conspire with any other person or persons to monopolize any part of the trade or commerce can be deemed guilty of a felony. Areas of concern for healthcare organizations include reduced market competition, price fixing, actions that bar or limit new entrants to the field, preferred provider arrangements, and exclusive contracts.

A healthcare organization must be cognizant of the potential problems that may exist when limiting the number of physicians that it will admit to its medical staff. Because closed staff determinations can effectively limit competition from other physicians, the governing body must ensure that the decision-making process in granting privileges is based on legislative, objective criteria and is not dominated by those who have the most to gain competitively by denying privileges. Physicians have attempted to use state and federal antitrust laws to challenge determinations denying or limiting medical staff privileges. Generally, these actions claim that the organization conspired with other physicians to ensure that the complaining physician would not obtain privileges so that competition among physicians would be reduced.





Conspiracy to Terminate Physician’s Privileges In Patrick v. Burget, the U.S. Supreme Court upheld a $2 million jury verdict in favor of a surgeon practicing in Oregon who claimed that other physicians conspired to terminate his staff privileges at the only hospital in town and thus drove him out of practice. The defendant physicians argued that their conduct should be immune from liability under the state action doctrine because Oregon, like many states, has state agencies that regulate the procedures that hospitals may use to grant or deny staff privileges. The Supreme Court rejected this state action defense in the light of the egregious facts of the case (the defendant physicians were also participants in the state processes) and the fact that Oregon’s statutory scheme did not actively supervise medical staff determinations.

Claim of Boycott Denied On February 29, 1984, the defendant hospital in Cogan v. Harford Memorial Hospital, owned by Upper Chesapeake Health Systems, Inc. (UCHS), contracted with Dr. Cogan to act as the chief of radiology for 5 years. In 1988, the hospital and Cogan renegotiated the contract. Cogan’s compensation was increased, and the contract was extended until May 25, 1993, subject to termination by either party, providing a 120-day written notice. During the renegotiation, Cogan sought compensation on a fee-for-service basis, but the hospital was uncomfortable with such an arrangement.

In December 1990, Cogan began discussing with NMR of America, Inc. the possibility of opening a radiology clinic to provide testing with magnetic resonance imaging (MRI) separate from the hospital. The hospital expressed opposition to such an arrangement. In response, Cogan tied discussions of a new MRI clinic to renegotiation of his contract on a fee-for-service arrangement. The hospital agreed to discuss a fee-for-service contract. Under the proposed contract, Cogan’s radiology group would not maintain any financial or professional interest with any competing medical facility within 20 miles of a hospital owned by UCHS. The parties failed to reach an agreement.

On March 1, 1991, the hospital informed Cogan of its intention to terminate his employment contract as of June 28, 1991. In October 1991, Cogan formed Cogan & Smith, a partnership with Dr. Smith, his former associate at the hospital.

In November 1991, Cogan & Smith signed a contract in which it agreed to act as the managing director of a radiology clinic. The clinic had a lower volume of business than anticipated, and Cogan filed suit against UCHS. He contended that the hospital’s policy against sending patients to facilities not accredited by The Joint Commission impeded the clinic’s business. The hospital claimed that the policy affected no more than seven patients. Cogan contended it affected 15,000 patients. He characterized this policy as a group boycott against the







clinic. Under the Sherman Antitrust Act, group boycotts may be considered anticompetitive.

Cogan contended that the defendants violated the Sherman Act, breached the contract between himself and UCHS, interfered with his contractual relations, wrongfully discharged him, and deprived him of his constitutional rights in violation of 42 U.S.C. § 1983, as amended, 15 U.S.C.A. §§ 1, 2.

The U.S. District Court held that the harm suffered by Cogan because he was unable to continue working at the hospital was not compensable under the Sherman Act. The court found no evidence showing that competition in any relevant market had been harmed, reduced, or impacted by the termination of Cogan’s contract or the alleged group boycott of the MRI clinic by the implementation of the hospital’s policy. The only harm asserted was Cogan’s inability to continue working at the hospital. The injury he incurred as a competitor of the hospital was not the “type the antitrust laws were intended to prevent.”

Agreement for Professional Services Too Restrictive In Emergicare Systems Corporation v. Bourdon, Emergicare Systems Corporation (ESC) contracted to provide emergency department physicians to the Longview Regional Hospital for several years; Dr. Bourdon was one of those physicians. On October 23, 1991, ESC sent a letter to Bourdon confirming that its contract with Longview Regional Hospital would terminate on November 8, 1991, and that pursuant to his agreement for professional services with ESC, his agreement with ESC would also terminate. Bourdon talked to the hospital administrator and to Metroplex Emergency Physicians, PA. Arrangements were made for him to continue his work at the emergency department as an employee of Metroplex.

ESC sued Bourdon and Metroplex. ESC alleged that Bourdon breached a covenant not to compete and that Metroplex interfered with its contractual agreement with Bourdon. Following a nonjury trial, judgment was rendered on February 15, 1996, that ESC take nothing from the defendants. ESC appealed. The covenant purports to restrict the physician from working within 5 miles of any clinic operated by ESC, whether the physician ever worked in that clinic or not. Also, the covenant purports to restrict the physician from working in any emergency department where ESC provides emergency department physicians for 1 year following termination of such contract. This could be at some indefinite future date, more than 1 year following the physician’s termination of employment by ESC.

The trial court was correct in rendering the take-nothing judgment on the appellant’s claims against Metroplex. The appeals court held that covenants not to compete that are unreasonable restraints of trade and that are






unenforceable on grounds of public policy cannot form the basis of an action for tortious interference.




▸ HOSPITAL STAFF PRIVILEGES Staff privileges are both professionally and economically important to healthcare professionals in the practice of their chosen professions. Healthcare organizations must be selective in the granting of staff privileges to maintain quality standards, but every effort must be made to prevent anticompetitive abuses. As competition increases between podiatrists and orthopedic surgeons, psychologists and psychiatrists, nurse midwives and obstetricians, nurse anesthetists and anesthesiologists, and so on, it must be understood that there is a clear difference in denying staff privileges to an individual on a quality basis and denying such privileges to an entire group of professionals; the latter will serve only to raise a red flag and increase the chances of scrutiny by the courts. Competition for patients increases the potential for denial of privileges to prevent competitors from effectively entering the marketplace and practicing their respective professions.


Citation: Oltz v. St. Peter’s Community Hosp., 19 F.3d 1312 (9th Cir. 1994)

Facts Oltz, a nurse anesthetist, brought an antitrust action against physician anesthesiologists and St. Peter’s Community Hospital after he was terminated. Oltz had a billing agreement with the hospital, which provided 84% of the surgical services in the rural community that it served. The anesthesiologists did not like competing with the nurse anesthetist’s lower fees and, as a result, entered into an exclusive contract with the hospital on April 29, 1980, in order to squeeze the nurse anesthetist out of the market. This resulted in cancellation of the nurse anesthetist’s contract with the hospital. Oltz filed a suit against the anesthesiologists and hospital for violation of the Sherman Antitrust Act, 15 U.S.C. § 1. The anesthesiologists settled for $462,500 before trial.

The case against the hospital proceeded to trial. The jury found that the hospital conspired with the anesthesiologists and awarded the plaintiff $212,182 in lost income and $209,649 in future damages. The trial judge considered the damage award to be excessive and ordered a new trial.

The hospital motioned the court to exclude all damages after June 26, 1982, which was the date that the hospital renegotiated its exclusive contract with the anesthesiology group. The court decided that Oltz failed to prove that the renegotiated contract also violated antitrust laws, thus ruling that Oltz was not entitled to damages after June 26, 1982. Because Oltz conceded




that he could not prove damages greater than those offset by his settlement with the physicians, his claim for damages against the hospital was disposed of by summary judgment.

The judge who presided over Oltz’s request for attorneys’ fees restricted the amount that he could claim. Because Oltz had been denied damages from the hospital, the judge refused to award attorneys’ fees or costs for work performed after the 1986 liability trial.

Issue Was Oltz entitled to seek recovery for all damages resulting from destruction of his business after June 26, 1982?

Holding The U.S. Court of Appeals for the Ninth Circuit held that Oltz was entitled to seek recovery for all damages.

Reason Oltz introduced evidence that the initial exclusive contract violated antitrust laws and that such violation destroyed his practice. “Because the initial conspiracy destroyed his practice, Oltz is entitled to seek recovery for all damages resulting from the destruction of his business. . . . The legality of any subsequent agreements between the conspirators is irrelevant, because the April 29, 1980, contract severed the lifeline to Oltz’s thriving practice . . .” [Id. at 1314].

Restricting Medical Staff Privileges Moratoriums and closed medical staffs, as used in the healthcare field, describe an organization’s policy of prohibiting further appointments to its medical staff. Generally, a moratorium is for a specified period. It is lifted at such time as the purpose for which it was instituted no longer exists. A closed staff is of a more permanent nature and relates to the mission of the institution, such as a commitment to teaching and research. Such institutions are very selective in their medical staff appointments. Generally, physicians who are appointed have both prominent academic interests and abilities as well as national recognition for expertise in their specialties.

Organizations have adopted a moratorium policy in certain instances because of a high inpatient census and the difficulties that would be encountered in accommodating new physicians. If left unchecked, the closing of an organization’s medical staff eventually could have the effect of discouraging a competitive environment in the physician marketplace and delivery of health care. The governing body should methodically and rationally review any request to close any department or specialty to new applicants for medical




staff privileges. When considering exclusive contracts the organization also must consider its financial effect on both the physician as well as the organization. Closing the staff to competent community-based physicians does not necessarily equate to quality patient care. Governing bodies that adopt a policy limiting the number of physicians by specialty or department must do so on a rational basis and take the following into consideration before closing or limiting medical staff privileges to new applicants:

Effect on the organization’s census Organization and community needs for additional physicians in medical and surgical specialties and subspecialties that have a few or dwindling number physicians on staff, which in turn, limits patient choice in selecting a physician Strain that additional staff will place on the organization’s supporting departments (e.g., radiology and laboratory services) Effect of denying medical staff privileges to applicants who presently are located within the geographic area of the organization and serving community residents Effect on any contracts the organization may have with other healthcare delivery systems, such as health maintenance organizations Effect a moratorium will have on physician groups that may desire to add a partner The positive effect additional staff may have on the quality of care rendered in the organization Whether closing the staff will confine control of the organization’s beds to the existing medical staff, allowing them to enhance their economic interests at the expense of their patients and other qualified physicians Effect of a limited moratorium by specialty as opposed to a comprehensive one involving all specialties (indiscriminately closing a staff in all departments and sections without a review could be considered an action in restraint of trade) Existence of a mechanism for periodic review of the need to continue a moratorium Effect that medical staff resignations during the moratorium may have on the organization’s census Adopting a mechanism to encourage and recruit new physicians when a need is determined necessary to meet community needs Characteristics of the medical staff (is the staff aging and is there a need for highly trained physicians trained in new technology?) Potential for restraint of trade legal action under antitrust laws Effect on physicians without staff privileges whose patients are admitted to the hospital Formation of a committee composed of representatives from the governing body, medical staff, administration, and legal counsel to develop an appropriate moratorium policy




Selection of a consultant to study the demographic marketplace, physician referral patterns, literature, and organization use; conduct a medical staff opinion poll; develop patient–physician population ratios; determine population shifts; develop a formula to determine optimal staffing levels by department and section; and provide this information to the governing body for use in determining the appropriateness of closing the staff in selected medical departments and/or sections Consideration of the support of the governing body, medical staff, and administration prior to taking any action that limits the acceptance of new physicians to the organization’s professional staff Addressing of community concerns in order to assure diversity and the right and the ability of patients to choose a physician from the community with which they have a trust relationship, a right that must not be hindered by healthcare facilities that decide to limit applications from qualified medical staff applicants

The continuing pressures of new technology, third-party payers, a growing body of regulations, malpractice insurance rates, and a shortage of physicians in a variety of specialties emphasize the need for organizations to consider how they can effectively compete in the marketplace. The imposition of a moratorium could prove to be counterproductive to the long-term survival of an organization.

The governing body must ensure that any proposed action to close an organization’s medical staff is based on objective criteria. Unless an organization can show closing its medical staff is based on legitimate patient care concerns and/or relates to the objectives of the organization, physicians could successfully challenge an organization’s actions to impose a moratorium.




▸ TRANSFER AGREEMENTS Healthcare organizations should have a written transfer agreement in effect with other organizations to help ensure the smooth transfer of patients from one facility to another when such is determined appropriate. A transfer agreement is a written document that sets forth the terms and conditions under which a patient may be transferred from one facility to another that is able to provide the kind of care required by the patient. Transfer agreements help to seamlessly facilitate moving patients between facilities when medically necessary.

Transfer agreements should be written in compliance with and reflect the provisions of the federal and state laws, regulations, and standards affecting healthcare organizations. Agreements that will aid in bringing about the maximum use of the services of each organization and in ensuring the best possible care for patients should be established. The basic elements of a transfer agreement include the following:

1. Identification of each party to the agreement, including the name and location of each organization to the agreement.

2. Purpose of the agreement. 3. Policies and procedures for transfer of patients. (Language in this

section of the agreement should make it clear that the patient’s physician makes the determination as to the patient’s need for the facilities and services of the receiving organization. The receiving organization should agree that, subject to its admission requirements and availability of space, it will admit the patient from the transferring organization as promptly as possible.)

4. Organizational responsibilities for arranging and making the transfer. (Generally, the transferring organization is responsible for making transfer arrangements. The agreement should specify who would bear the costs involved in the transfer.)

5. Exchange of information. (The agreement must provide a mechanism for the interchange of medical and other information relevant to the patient.)

6. Retention of autonomy. (The agreement should make clear that each organization retains its autonomy and that the governing bodies of each facility will continue to exercise exclusive legal responsibility and control over the management, assets, and affairs of their respective facilities. It also should be stipulated that neither organization assumes any liability by virtue of the agreement for any debts or obligations of a financial or legal nature incurred by the other.)

7. Procedure for settling disputes. (The agreement should include a method of settling disputes that might arise over some aspect of the patient transfer relationship.)




8. Procedure for modification or termination of the agreement. (The agreement should provide that it could be modified or amended by mutual consent of the parties. It also should provide for termination by either organization on notice within a specified period.)

9. Sharing of services. (Depending on the situation, cooperative use of facilities and services on an outpatient basis [e.g., laboratory and X-ray testing] may be an important element of the relationship between organizations. The method of payment for services rendered should be carefully described in the agreement.)

10. Publicity. (The agreement should provide that neither organization will use the name of the other in any promotional or advertising material without prior approval of the other.)

11. Exclusive versus nonexclusive agreement. (It is advisable for organizations—when and where possible—to have transfer agreements with more than one organization. The agreement may include language to the effect that either party has the right to enter into transfer agreements with other organizations.)




▸ INSURANCE CONTRACT Insurance is a form of risk management used primarily to hedge against the risk of potential loss. In an insurance contract, the insurer has an obligation to indemnify the insured for losses caused by specified events. In return, the insured must pay a fixed premium during the policy period. As noted, the interpretation of an insurance contract can give rise to a legal action when the insurer refuses to indemnify the insured.

Coverage Denied The plaintiffs in Truett v. Community Mut. Ins. Co. brought an action against the insurer to recover medical expenses. In June 1991, Truett was treated for migraine headaches. As of August 1, 1991, Truett was covered under an employee benefit plan through a group health insurance contract with Community Mutual Insurance Co. On August 29, 1991, Truett was hospitalized for dizziness, vomiting, and weakness on his left side. After extensive testing, Dr. Moorthy diagnosed Truett as suffering from a complicated migraine. Truett sought reimbursement for medical expenses he incurred during the course of his illness.

Community Mutual concluded on January 20, 1992, that Truett’s medical expenses were not covered because the expenses were for the care of a preexisting condition. Under the insurance policy, conditions that existed prior to the effective date of the policy were not covered if health problems related to the conditions were manifested after the effective date. Truett challenged this assessment to a Community Mutual appeals board. Dr. Morrow was recruited by Community Mutual to provide an expert assessment of Truett’s case. The Community Mutual appeals board found that Truett’s condition was preexisting because he had been treated in June 1991 for migraine headaches. Therefore, Community Mutual denied his coverage for his expenses. On September 1, 1992, Truett filed a complaint against Community Mutual to recover Truett’s medical expenses. The court of common pleas entered summary judgment for Community Mutual, and Truett appealed.


The Supreme Court of South Carolina found that the trial court erred in granting a directed verdict to Strickland on Harvey’s breach of contract claim. Harvey relied on the documents he signed expressing his desire not to be administered blood.

I, Charles Harvey, refuse to have blood or any blood products given to me.





The risks attendant to my refusal have been fully explained to me and I fully understand that my chances for gaining normal health are seriously reduced, and that in all probability, my refusal for such treatment, medical intervention, and/or procedure (may) (will) seriously imperil my health or life.

With the understanding, I hereby release the attending physician, the Lexington Medical Center and its employees and their respective agents, heirs, executors, administrators and assigns from any and all claims of whatsoever kind of any nature.

“Dr. Strickland testified that although he knew Harvey was a Jehovah’s Witness, Harvey had told him he would consider a blood transfusion.” The court determined that it was for the jury to determine whether an undocumented express contract was created after the written consent form was signed refusing blood and blood by-products. The trial court’s grant of a directed verdict was reversed, and the matter was remanded for a new trial.

The Ohio Court of Appeals held that the insurer’s denial of coverage was not arbitrary or capricious. The appeals board had all of Truett’s medical records from before and after the incident in question. It obtained Morrow’s expert opinion that the complicated migraine was a continuation from Truett’s previous bouts with normal migraines. The appeals board and Morrow relied on medical evidence in making their decisions and neither overlooked nor ignored relevant information. Thus, the decision was not arbitrary or capricious.

Today, national health insurance provides that “All Marketplace plans must cover treatment for pre-existing medical conditions. No insurance plan can reject you, charge you more, or refuse to pay for essential health benefits for any condition you had before your coverage started. Once you’re enrolled, the plan can’t deny you coverage or raise your rates based only on your health.”







▸ CHAPTER REVIEW 1. A contract is a written or oral agreement that involves legally binding

obligations between two or more parties. The purpose of a contract is to provide legal recourse should one or more of the parties not perform its obligations as set forth under the contract.

2. Various types of contracts include:

Express contracts: Those in which the parties have an oral agreement or have reduced agreements to writing. Written contracts are always the most desirable form. Although oral contracts are generally recognized, the courts cannot always enforce them. Implied contracts: Those that are inferred by law and are based on parties’ conduct. Voidable contracts allow one party, but not the other, to escape from legal obligations under the contract. Executed contracts are those in which obligations have been performed fully. An enforceable contract is one that is a valid, legally binding agreement. If one party breaches it, the other will have an appropriate legal remedy. An unenforceable contract is one in which, because of some defect, no legal remedy is available if breached by one of the parties to the contract. Contracts for realty (real estate or interests in real estate), goods (movable objects, with the exception of money and securities), and services (human energy).

3. To be enforceable, contracts must contain:

An offer or communication Consideration Acceptance (If one or more of the parties who have entered into the contract are not considered competent, the contract will not be enforceable. Examples of those often found incompetent include minors, people with mental illness, and prisoners.)

4. In a contract lawsuit, the following elements must be established:

A valid executed contract Plaintiff performed as specified in the contract Defendant failed to perform as specified in the contract Plaintiff suffered an economic loss as a result of the defendant’s breach of contract

5. Independent contractors agree to perform work without being under the direct control or direction of another party.




An employer is liable for the torts or negligence of an independent contractor in certain circumstances; these include negligence of the employer in selecting, instructing, or supervising the contractor.

6. Defenses for not performing under a contract include:

Fraud Mistake of fact or law Duress Impossibility to perform the contract Expiration of the statute of limitations

7. Legal redress for breach of contract includes:

Specified performance of the duties set forth in the contract Monetary (or compensatory) damages General or consequential damages. General damages could be expected to result from the breach of the contract, whereas consequential damages are a result of unforeseen damages.

8. The right of an employer to terminate an employee can be limited through:

Employment contract Collective bargaining agreement

9. Employee handbooks and medical staff bylaws can be binding contracts between employer and employee, unless such documents provide legally acceptable disclaimers.

10. Exclusive contracts allow organizations to contract with physicians and medical groups to provide specific services to the organization.

11. The Federal Trade Commission is a federal agency that monitors the marketplace and enforces federal antitrust laws with the goal of maintaining free enterprise in a competitive marketplace.

12. Transfer agreement is a written document that sets forth terms and conditions under which a patient may be transferred to an alternate facility for care.

13. Insurance contract

Insurer has an obligation to indemnify the insured for losses caused by specified events. In return, the insured must pay a fixed premium during the policy period. Interpretation of an insurance contract can give rise to a legal action when the insurer refuses to indemnify the insured.







▸ REVIEW QUESTIONS 1. Explain the importance of a “written” contract. 2. Explain the elements of a contract. 3. Describe the differences between an express and an implied contract. 4. Describe various defenses and remedies available for nonperformance

of a contract. 5. Explain why and under what circumstances an employee handbook

can be considered a contract. 6. Explain why employers should place disclaimers in employee






1. Harvey v. Strickland, 350 S.C. 303, 566 S.E.2d 529 (2002).

2. 225 A.2d 495 (Conn. 1966).


4. Number of Hospital Employed Physicians by 50% Since 2012, HealthLeaders Media News, September 8, 2016. employed-physicians-50-2012?page=0%2C2#.

5. Henry Campbell Black, Black’s Law Dictionary, 4th ed., (Eagan, MN: West Publishing, 1968), 1277.

6. National Conference of Commissioners on Uniform State Laws, “Uniform Partnership Act (1997),” July 1996.

7. 25 P.3d 358 (2001).

8. 384 N.Y.S.2d 527 (N.Y. App. Div. 1976).

9. 693 N.Y.S.2d 143 (N.Y. App. Div. 1999).

10. No. E2004–00207-COA-R3-CV (Tenn. App. 2005).

11. P.C., 782 N.Y.S.2d 115 (N.Y. App. Div. 2004).

12. 492 N.Y.S.2d 9 (N.Y. 1985).

13. 605 N.E.2d 613 (Ill. App. Ct. 1992).

14. No. A75 September Term 2003 (N.J. 2005).

15. Community Hospital Group, Inc. v. Jay More, M.D., et al. (A-75/76-03).

16. 869 A.2d 901 (N.J. 2005).

17. 867 A.2d 1187 (N.J. App. 2005).

18. 457 N.Y.S.2d 193 (N.Y. 1982).

19. 720 P.2d 632 (Idaho 1986).

20. 731 F. Supp. 311 (D. Ill. 1990).

21. Id. at 321–322.

22. 570 N.E.2d 545 (Ill. App. Ct. 1991).

23. 789 N.Y.S.2d 42 (N.Y. App. Div. 2005).

24. Horty Springer, Trieger v. Montefiore Med. Ctr. March 9, 2004.

25. 520 N.W.2d 625 (Wis. App. 1994).

26. 368 N.W.2d 666, 668, 674 (1985).

27. 141 Md. App. 715 (2001).




28. 670 F.2d 507 (5th Cir. 1982).

29. 466 U.S. 2 (1984).

30. 475 A.2d 533 (N.J. 1984).

31. Id.

32. 7 S.W.3d 542 (Mo. App. 1999).

33. 15 U.S.C. § 1 (1982).

34. 108 S. CT. 1658 (1988).

35. 42 U.S.C.A. §§ 11101–11152 (1986).

36. 843 F. Supp. 1013 (D. Md. 1994).

37. Id. at 1018.

38. 942 S.W.2d 201 (Tex. App. 1997).

39. 633 N.E.2d 617 (Ohio Ct. App. 1993).

40. “Coverage for pre-existing conditions,”

41. Harvey v. Strickland, 566 S.E.2d 529, 311 (2002).

42. Id. at 307.




© corgarashu/Shutterstock





Civil Procedure and Trial Practice


CONFLICTING EVIDENCE Gwendolyn was in Mississippi when she felt light-headed and as though her heart was racing. Gwendolyn’s sister brought her to the BCH hospital. Dr. Dorrough diagnosed Gwendolyn as suffering from supraventricular tachycardia. As Gwendolyn was discharged, she was told to follow up with her physician and to return to the emergency room if she experienced any further problems. Gwendolyn returned to Georgia and was admitted to a medical center. She complained of dizziness, shortness of breath, and chest tightness and stayed at the medical center for over 5 hours. She was later transferred to St. Francis Hospital with a suspected diagnosis of acute pulmonary embolus. At St. Francis, Gwendolyn underwent emergency surgery. The surgery was unsuccessful, and Gwendolyn died of a pulmonary embolus.

The plaintiffs filed a complaint against Dorrough and BCH hospital. The complaint alleged that Dorrough and BCH breached their duty to provide proper care to Gwendolyn. The plaintiffs had two expert witnesses, Dr. Vance and Dr. Falk. Dorrough had one expert witness, Dr. Dupuis. The jury heard conflicting testimony from the expert witnesses concerning the events leading up to Gwendolyn’s death.

Vance testified that Dorrough did not meet the minimum standard of care based on the fact that there was a sustained rapid heart rate and abnormal laboratory findings. He stated that Gwendolyn suffered from sinus tachycardia and not supraventricular tachycardia. He defined sinus tachycardia as an increase in pulse rate in response to an underlying disease state. Falk stated that, in his opinion, if Gwendolyn had been properly diagnosed and given the drug heparin, she would not have embolized and would have survived.

Dupuis, the defendant’s expert, testified that Dorrough did not fall below the standard of care. He testified that Gwendolyn had a rare condition in that the clot that ultimately killed her was in the heart and did not come from the legs. Dupuis stated that Gwendolyn’s death was unavoidable despite the best of care.




The jury returned a verdict in favor of the plaintiffs and assessed damages in the amount of $1.5 million against Dorrough. He appealed, asserting that the verdict of the jury was not supported by credible or sufficient evidence.


Trials, especially jury trials, are vital to fostering the respect of the public in the civil justice system. Trials do not represent a failure of the

system. They are the cornerstone of the civil justice system. Unfortunately, because of expense and delay, both civil bench trials and civil jury trials are disappearing.







The reader, upon completion of this chapter, will be able to:

Discuss the pretrial discovery process. Describe the trial process. Describe the forms of evidence presented by the plaintiff. Describe defenses offered by the defendant. Explain the purpose of the judge’s charge to the jury. Describe the types of damages and how they are awarded.

For many students and healthcare practitioners, this book will be their only formal introduction to the legal aspects of health care. This chapter, in particular, is valuable to readers in understanding the law and its application in the courtroom. Although many of the procedures that are followed leading up to and during a trial are discussed in this chapter, civil procedure and trial practice are governed by each state’s statutory requirements. Cases on a federal level are governed by federal statutory requirements.




▸ PLEADINGS The pleadings of a case are the written statements of fact and law filed with a court by the parties to a lawsuit. The pleadings generally include such papers as the complaint, demurrer, counterclaims, answer, and bill of particulars. The parties to a controversy are the plaintiff and the defendant. The plaintiff is the person who initiates an action by filing a complaint. The defendant is the person against whom a lawsuit is brought. Many cases have multiple plaintiffs and defendants.

Summons and Complaint The complaint is the first pleading in a lawsuit. It sets forth the relevant allegations of fact that give rise to one or more legal causes of action, along with the damages requested. The complaint identifies the parties to a suit, states a cause of action, and includes a demand for damages. The essential elements of a complaint include the following:

1. A short, concise statement of the grounds on which the court’s jurisdiction depends (the court’s authority to hear the case)

2. A statement of the claim demonstrating that the pleader is entitled to relief

3. A demand for judgment for the relief to which the plaintiff deems him- or herself entitled

All of these elements apply to any counterclaim, cross claim, or third-party claims.

The summons is the legal document issued by a court and served on an individual announcing that a legal proceeding has been commenced. The summons provides the date and place where the defendant must appear to respond to and answer the complaint. In some jurisdictions, a complaint must accompany a summons (an announcement to the defendant that a legal action has been commenced).

A complaint can be served on a defendant either with the summons or within a prescribed time after the summons has been served. The formalities that must be followed when serving a summons so that appropriate jurisdiction over a defendant is obtained include the manner in which the summons is to be delivered, the time period within which the delivery must occur, and the geographic limitations within which service must be made. EXHIBIT 8-1 is an example of a summons.







EXHIBIT 8-1 Summons in a civil action. Reproduced from Summons in a Civil Action Accessed August 13, 2014.

Improper Service of a Summons Improper service of a complaint or summons is not effective if it is incorrectly served. Such failure does not prevent a complaint from being properly reserved as required by law in the state where the summons or complaint is served.

Improper service of a summons occurred on March 14, 1989, when a sheriff attempted to serve the writ on the defendant by leaving a copy with the receptionist at the hospital where he had worked. The defendant had terminated his relationship with the hospital on February 22, 1988. The




plaintiff’s attempted service of the writ of summons was therefore defective, because the defendant was not affiliated with the hospital where service of the summons was attempted. A copy of the complaint was left with a nurse at the intensive care unit of the hospital where the defendant was then a patient. The intensive care unit of a hospital, however, was not deemed the defendant- patient’s place of residence. “Where service of process is defective, the proper remedy is to set aside the service. In that event, the action remains open, but it cannot proceed against a defendant unless the plaintiff can thereafter effect service on such defendant which is sufficient to vest jurisdiction in the court.”

Demurrer A demurrer is a pleading in a lawsuit by the defendant challenging the legal adequacy of the plaintiff’s complaint. The pleading represents preliminary objections that are constructed so as to preempt “answering” the plaintiff’s complaint. A demurrer, for example, can be filed by one of the parties to a lawsuit claiming that the evidence presented by the other party is insufficient to sustain an issue or case.

Answer After service of a complaint, a response is required from the defendant in a document termed the answer. The answer to a complaint requires the defendant to respond to each of the allegations contained in the complaint by stating his or her defenses and by admitting to or denying each of the plaintiff’s allegations. If the defendant fails to answer the complaint within the prescribed time, the plaintiff can seek judgment by default against the defendant. However, in certain instances, a default judgment will be vacated if the defendant can demonstrate an acceptable excuse for failing to answer.

Personal appearance of the defendant to respond to a complaint is not necessary. To prevent default, the defendant’s attorney responds to the complaint with an answer. The defense attorney attempts to show, through evidence, that the defendant is not responsible for the negligent act claimed by the plaintiff to have occurred. The answer generally consists of a denial of the charges made and specifies a defense or argument justifying the position taken. The defense can show that the claim is unfounded, for example, because: (1) the period within which a suit must be instituted has expired; (2) there is contributory negligence on the part of the plaintiff; (3) any financial obligation has been remunerated; (4) a general release was provided to the defendant; or (5) a contract was illegal and therefore null and void. The original answer to the complaint is filed with the court having jurisdiction over the case, and a copy of the answer is provided to the plaintiff’s attorney.

Counterclaim A counterclaim is generally filed with the answer denying the plaintiff’s claims by alleging that it was the plaintiff and not the defendant who committed a wrongful act, and therefore, it is the defendant who is entitled to damages. For





example, the plaintiff could sue a hospital for personal injuries and property damage caused by the negligent operation of the hospital’s ambulance. The hospital could file a counterclaim on grounds that its driver was careful and that it was the plaintiff who was negligent and is liable to the hospital for damage to the ambulance.

Bill of Particulars A bill of particulars is a written request by the defendant for more detailed information from the plaintiff regarding the allegation(s) and claim(s) made than is provided in the initial complaint. If a counterclaim has been filed, the plaintiff’s attorney also can request a bill of particulars from the defendant. More specifically, a bill of particulars in a malpractice case may include a request that the plaintiff provide the defendant information that includes the following:

Date and time the alleged malpractice occurred Specific injuries alleged Where the alleged malpractice occurred The commissions and/or omissions constituting the malpractice alleged to have occurred, for example:

Misdiagnosis or failure to diagnose Failure to perform a test or diagnostic procedure Failure to medicate, treat, or operate A contraindicated test given or a contraindicated test or surgical procedure performed Administration of a medicine or treatment or performance of a test or surgical procedure in a manner contrary to accepted standards of medical practice Removal of the wrong body part

How the alleged malpractice occurred A listing of injuries claimed to have been caused by the defendant’s alleged malpractice A listing of any witnesses to the alleged malpractice A listing of damages claimed, for example:

Pain and suffering Length of time the plaintiff was confined to bed Required rehabilitation Permanent disabilities Economic damages (e.g., lost wages)

The name and address of the plaintiff’s employer

A death action rider may also be attached if the malpractice allegedly caused death. The rider may request such information as the length of time the decedent experienced pain; the date, time, and place of death; and a statement setting forth the cause of death.







▸ DISCOVERY Discovery is the process of investigating the facts of a case before trial. The discovery process is available to promote more just trials by preventing unfair surprise. “Discovery rules were promulgated to prevent trial by ambush. To deny a party the right to know absolutely at some meaningful time before trial the names and addresses of all witnesses the opposing side proposes to call in its case-in-chief is an insult to this principle.” The objectives of discovery are as follows:

1. Obtain evidence that might not be obtainable at the time of trial. 2. Isolate and narrow the issues for trial. 3. Gather knowledge of the existence of additional evidence that may be

admissible at trial. 4. Obtain leads to enable the discovering party to gather further evidence.

Discovery may be obtained on any matter that is not privileged and that is relevant to the subject matter involved in the pending action. The parties to a lawsuit have the right to discovery and to examine witnesses before trial.

Examination Before Trial Examination before trial (EBT) is one of several discovery techniques used to enable the parties of a lawsuit to learn more regarding the nature and substance of each other’s case. An EBT consists of oral testimony under oath and includes cross-examination. A deposition, taken at an EBT, is the testimony of a witness that has been recorded in a written format. Testimony given at a deposition becomes part of the permanent record of the case. Each question and answer is transcribed by a court stenographer and may be used at the subsequent trial. Truthfulness and consistency are important because answers from an EBT that differ from those given at trial can be used to attack the credibility of the witness.

Preparation of Witnesses The manner in which a witness handles questioning at a deposition or trial is often as important as the facts of the case. Each witness should be well prepared before testifying. Preparation should include a review of all pertinent records. Helpful guidelines for witnesses undergoing an EBT, a court hearing, or examination during trial include the following:

Review the records (e.g., medical records and other business records) on which you might be questioned. Do not be antagonistic in answering the questions. The jury may already be somewhat sympathetic toward a particular party to the lawsuit; antagonism may serve only to reinforce such an impression.





Be organized in your thinking and recollection of the facts regarding the incident. Answer only the questions asked. Explain your testimony in simple, succinct terminology. Do not overdramatize the facts you are relating. Do not allow yourself to become overpowered by the cross-examiner. Be polite, sincere, and courteous at all times. Dress appropriately and be neatly groomed. Pay close attention to any objections your attorney may have as to the line of questioning being conducted by the opposing counsel. Do not answer any question objected to by your legal counsel unless the judge overrules the objection and says to you, “You may answer the question.” Be sure to have reviewed any oral deposition in which you may have participated. Be straightforward with the examiner. Any answers designed to cover up or cloud an issue or fact will, if discovered, serve only to discredit any previous testimony that you may have given. Do not show any visible signs of displeasure regarding any testimony with which you are in disagreement. Be sure to have questions that you did not hear repeated and questions that you did not understand rephrased. If you are not sure of an answer, indicate that you are not sure or that you do not know the answer.

Attorney–Client Privilege Attorney–client privilege protects from discovery the communications between the parties to a lawsuit and their attorneys. In order for such information be protected from discovery, the following three elements must be established:

1. Both parties must agree that the attorney–client relationship does or will exist.

2. The client must seek advice from the attorney in his or her capacity as a legal advisor.

3. Communication between the attorney and client must be identified to be confidential.

Attorney–client privilege is intended to ensure that a client remains free from the apprehension that consultations with a legal advisor will be disclosed. Such privilege encourages a client to talk freely with his or her attorney so that he or she may receive meaningful legal advice. Likewise, with regard to the work-product doctrine, not even the most liberal of discovery theories can justify unwarranted inquiries into the files and the mental impressions of an attorney. Courts are required to protect the integrity and fairness of the fact- finding process by requiring full disclosure of all relevant facts connected with the impending litigation while promoting full and frank consultation between a




client and a legal advisor by removing the fear of compelled disclosure of information.

Incident and Investigative Reports Hospital incident and investigation reports are generally not protected from discovery. The burden rests with the hospital to demonstrate incident and investigation reports are protected from discovery under attorney–client privilege and the work-product doctrine. If in connection with an accident or an event, a business entity, in the ordinary course of business, conducts an investigation for its own purposes, the resulting investigative report is producible in civil pretrial discovery. The determination as to whether a defendant’s in-house report was prepared in the ordinary course of business or was a work product in anticipation of litigation is an important one. The fact that a defendant anticipates litigation resulting from an accident or event does not automatically qualify an in-house report as a work product. A document that is not privileged does not become privileged by the mere act of sending it to an attorney or by marking the documents as “privileged information.”

Statistical Data Not Necessarily Privileged The collection of statistical data is not necessarily protected from discovery during court proceedings. For example, the patient, Braverman, in Braverman v. Columbia Hospital, Inc., underwent surgery and was subsequently diagnosed with a nosocomial infection (hospital-acquired infection). She was hospitalized several times for treatment of the infection.

Braverman filed a lawsuit and sought a variety of documents from the hospital. The hospital objected on the grounds that some of the information sought by Braverman was a record of its review and evaluation procedures under Wis. Stat. § 146.38 and therefore was privileged. In its written decision, the trial court found that the infection control materials, including meeting minutes, infection rates, and the results of any investigations conducted by quality assurance/peer review committees, were privileged. Braverman appealed.

As mandated by Wis. Admin. Code § HFS 124.08, the hospital maintains an infection control committee (ICC). Its purpose is to influence and improve the quality of health care through the practice of infection control. The ICC recommends practices to reduce the risk of infection to patients, visitors, and healthcare workers. The hospital infection control practitioners compile infection statistics. The ICC conducts an investigation or study of any postoperative infection for purposes of quality assurance. The ICC coordinates its infection control processes in compliance with the bylaws and rules of the medical staff in order to reduce the risk of hospital-acquired infections.

Braverman argued that this kind of statistical data is not covered by Wis. Stat. § 146.38, which provides:





(3) Information acquired in connection with the review and evaluation of health care services shall be disclosed and records of such review and evaluation shall be released, with the identity of any patient whose treatment is reviewed being withheld unless the patient has granted permission to disclose identity, in the following circumstances:

. . . .

(d) In a report in statistical form. The report may identify any provider or facility to which the statistics relate.

The appeals court concluded that “We see this language as clear and unambiguous. And since Columbia’s statistical data qualifies under the paragraph, we conclude that Braverman is entitled to discover this data.” Such information is exempt from the privilege. Braverman was entitled to discover the statistical reports of infection data.






▸ MOTIONS The procedural steps that occur before trial are specifically classified as pretrial proceedings. After the pleadings have been completed, many states permit either party to move for a judgment on the pleadings. When this motion is made, the court will examine the entire case and decide whether to enter judgment according to the merits of the case as indicated in the pleadings. In some states, the moving party is permitted to introduce sworn statements showing that a claim or defense is false or a sham. This procedure cannot be used when there is substantial dispute concerning the facts presented by the affidavits.

Motion to Dismiss A defendant may make a motion to dismiss a case, alleging that the plaintiff’s complaint, even if believed, does not set forth a claim or cause of action recognized by law. A motion to dismiss can be made before, during, or after a trial. Motions made before a trial may be made on the basis that the court lacks jurisdiction, that the case is barred by the statute of limitations, that another case is pending involving the same issues, and other similar matters. A motion by the defendant during trial may be made after the plaintiff has presented his or her case, on the grounds that the court has heard the plaintiff’s case and the defendant is entitled to a favorable judgment as a matter of law. In the case of a motion made by the defendant at the close of the plaintiff’s case, the defendant normally will claim that the plaintiff has failed to present a prima facie case (i.e., that the plaintiff has failed to establish the minimum elements necessary to justify a verdict even if no contrary evidence is presented by the defendant). After a trial has been completed, either party may move for a directed verdict on the grounds that he or she is entitled to such verdict as a matter of law.

Dismissal Denied Procedural issues can result in a case being referred back to the trial court for further proceedings as noted in the following case, where Jean Pierrot, as personal representative of the deceased, filed a complaint alleging that Farrah, a 25-year-old pregnant woman, went to a hospital in the afternoon with complaints of abdominal pain. That evening, the hospital transferred Farrah involuntarily to Park Place, a behavioral health facility. The involuntary transfer of Farrah was allowed under the Florida Mental Health Act of 1971, commonly referred to as the Florida Baker Act, which allows for involuntary examination and commitment. Judges, law enforcement officials, physicians, or mental health professionals can initiate it. There must be evidence that the person possibly has a mental illness or may harm him- or herself or others. When Farrah arrived at Park Place she was in distress, complaining of severe abdominal pain and other symptoms. Over the next 2 days, Park Place employees committed various acts and omissions that resulted in her death.




The complaint alleged a wrongful death claim for violations of Farrah’s rights as a patient under the Baker Act. Park Place, in response, disagreed and moved to dismiss Pierrot’s wrongful death claim, arguing that the claim was one for medical malpractice and that Pierrot failed to comply with the pre-suit requirements of the Medical Malpractice Act.

The trial court dismissed Pierrot’s claim, deciding that the main point of the claim was that Park Place failed to properly respond to Farrah’s physical symptoms of severe abdominal pain, and therefore, the claim was one for medical negligence. Thus the court ruled Pierrot could not avoid the pre-suit requirements of the Medical Malpractice Act by pleading the claim under the Baker Act.

On appeal, Pierrot argued that a plaintiff claiming only violations of a mental health patient’s rights under the Baker Act is not required to comply with the medical malpractice pre-suit requirements. Additionally, Pierrot contended the pre-suit requirements do not apply to his claim because Park Place was not a healthcare provider. The Court of Appeal of Florida agreed with both arguments.

According to the complaint, Park Place was a licensed mental health facility and not a healthcare provider. The court found that Park Place failed to establish that it was a healthcare provider for purposes of the pre-suit requirements. The case was reversed and remanded back to the trial court for further proceedings.

This case illustrates the importance of preserving all causes of action and positions that the plaintiff’s attorney may wish to argue at trial. Cases referred back to the trial court are difficult to follow up because further deliberations often prove to be more damaging than helpful. Defendants may decide that a settlement is less costly than a lawsuit that could drag on for years and gain the attention of the news media. The “Newspaper Clippings” dispersed throughout the text, often high-profile cases, are often settled out of the courtroom due to the negative impact they can have on the reputation of the healthcare provider(s).

Motion for Summary Judgment A motion for summary judgment can be made when either party to a lawsuit believes that there are no triable issues of fact and that only issues of law need to be decided. This motion asks the court to rule that there are no facts in dispute and that the rights of the parties can be determined as a matter of law, on the basis of submitted documents, without the need for a trial. Summary judgment is generally granted when the evidence demonstrates that there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Although the courts are reluctant to look favorably on motions for summary judgment, they will grant them if the





circumstances of a particular case warrant it. The plaintiff, for example, in Thomas v. New York University Med. Ctr., while under general anesthesia, slid off the operating table during a surgical procedure. The plaintiff’s head was pulled out of a head-stabilizing device, causing his head to be lacerated by one of the pins. The plaintiff suffered trauma to his neck and required mechanical assistance to breathe for 6 days following the accident. The Supreme Court, Appellate Division, on motion by the plaintiff, determined that summary judgment on the issue of liability was warranted. It could easily be reasoned that anesthetized patients do not fall from operating tables in the absence of negligence. The defendants, who were in joint and exclusive control of the plaintiff, failed to explain their conduct in the operating room, and their failure to do so mandated summary judgment.





▸ PRETRIAL CONFERENCE In many states, a pretrial conference can be ordered at the judge’s initiative or on the request of one of the parties to the lawsuit. The pretrial conference is an informal discussion during which the judge and the attorneys eliminate matters not in dispute, agree on the issues, and settle procedural matters relating to the trial. Although it is not the purpose of the pretrial conference to compel the parties to settle the case, it often happens that cases are settled at this time.




▸ NOTICE OF TRIAL The examination before trial may reveal sufficient facts that would discourage the plaintiff from continuing the case, or it may encourage one or both parties to settle out of court. Once a decision to go forward is reached, the case is placed on the court calendar.

Postponement of a trial may be secured with the consent of both parties and consent of the court. A case may not be postponed indefinitely without being dismissed by the court. If one party is ready to proceed and another party seeks a postponement, a valid excuse must be shown. Should a defendant fail to appear at trial, the judge can pass judgment against the defendant by default. A case also can be dismissed if the plaintiff fails to appear at trial.




▸ MEMORANDUM OF LAW A memorandum of law (or trial brief) presents to the court the nature of the case, cites case decisions to substantiate arguments, and aids the court regarding points of law. Trial briefs are prepared by both the plaintiff’s and the defendant’s attorneys. A trial brief is not required, but it is a recommended strategy. It provides the court with a basic understanding of the position of the party submitting the trial brief before the commencement of the trial. It also focuses the court’s attention on specific legal points that may influence the court in ruling on objections and on the admissibility of evidence in the course of the trial.




▸ THE COURTROOM AND THE JUDGE A case is heard in the court that has jurisdiction over the subject in controversy. The judge presides over court proceedings, decides questions of law, and is responsible for ensuring that a trial is conducted properly, in an impartial manner, and that it is fair to both parties to a lawsuit. The judge determines what constitutes the general standard of conduct required of the defendant for the exercise of due care. The judge informs the jury of what the defendant’s conduct should have been, thereby making a determination of the existence of a legal duty.

The judge decides whether evidence is admissible, charges the jury (defines the jury’s responsibility in relation to existing law), and may take a case away from the jury (by directed verdict or make a judgment notwithstanding the verdict) when he or she believes that there are no issues for the jury to consider or that the jury has erred in its decision. This right of the judge with respect to the role of the jury narrows the jury’s responsibility with regard to the facts of the case. The judge maintains order throughout the suit, determines issues of procedure and law, and is generally responsible for the conduct of the trial. On the appeals level, a panel of judges review the arguments of the defendant’s and plaintiff’s attorneys in order to make a determination as to whether the trial court’s decision should be sustained, overruled, or sent back to the trial court with instructions for further proceedings.




▸ THE JURY The jury reviews the facts of a case offered by opposing counsels and makes an impartial decision as to the guilt of the defendant(s). Members of the jury are selected from a jury list. They are summoned to court by a paper known as the jury process. The number of jurors who sit at trial is 12 in common law. If there are fewer than 12, the number must be established by statute.

Jury Selection Process Counsel for both parties to a lawsuit question each prospective jury member for impartiality, bias, and prejudicial thinking. This process is referred to as the voir dire, the examination of jurors. Once members of the jury are selected, they are sworn in to try the case. The jury, when reviewing the facts of a case, determine what occurred, evaluate whether the plaintiff’s damages were caused by the defendant’s negligence, and decide whether the defendant exercised due care. The jury must pay close attention to the evidence presented by both sides of a suit in order to render a fair and impartial verdict. Jurors who fall asleep during the trial can be replaced with an alternate juror, as was the case in Richbow v. District of Columbia. The juror in this case “had been sleeping through the evidence and appellant’s counsel acknowledged that fact.”

Waiver of Trial by Jury The right to a trial by jury is a constitutional right, but an individual may waive the right to a jury trial. If this right is waived, the judge acts as judge and jury, becoming the trier of facts and deciding issues of law.

A Jury Decision A New York City jury awarded $26 million to a boy injured during surgery. What was it that so disturbed the jury that caused it to grant such a huge award? According to an article written by an alternate juror, who invited the jurors to his home 3 weeks after the trial:

The defense lawyers were on their feet objecting they didn’t want the jury to see Stephen. But that just raised a question for us: If his injuries were as slight as the defense had been insisting, why the resistance? The judge agreed that it was proper for Stephen to appear at his own trial, and the rear doors to the courtroom were opened.

Most of the jurors had begun to cry. But we were also angry. The defense lawyers it seemed, had been trying to put one over on us, claiming that Stephen was a normal teenage boy with a few minor handicaps.

For seven weeks, the jury had sat in that courtroom listening to the defense lawyers belittle Stephen’s problems. We saw the doctors refuse to acknowledge Stephen’s handicaps or to accept responsibility for them. To






the jury at least, it seemed that the doctors had made mistakes, refused to admit them, and then tried to cover them up.12




▸ SUBPOENAS A subpoena is a legal order requiring the appearance of a person and/or the presentation of documents to a court or administrative body. Attorneys, judges, and certain law enforcement and administrative officials, depending on the jurisdiction, may issue subpoenas. Subpoenas generally include: a reference number; names of the plaintiff(s) and defendant(s); the date, time, and place to appear; the name, address, and telephone number of the opposing attorney; and the documents requested if the subpoena is for records.

Some jurisdictions require the service of a subpoena at a specified time in advance of the requested appearance (e.g., 24 hours). In other jurisdictions, no such time limitation exists. A court clerk, sheriff, attorney, process server, or other person as provided by state statute can serve a subpoena.

A subpoena ad testificandum orders the appearance of a person at a trial or other investigative proceeding to give testimony. Witnesses have a duty to appear and may suffer a penalty for contempt of court should they fail to appear. They may not deny knowledge of a subpoena if they simply refused to accept it. The court may issue a bench warrant, ordering the appearance of a witness in court, if a witness fails to answer a subpoena. Failure to appear may be excused if extenuating circumstances exist.

A subpoena for records, known as a subpoena duces tecum, is a written command to bring records, documents, or other evidence described in the subpoena to a trial or other investigative proceeding. The subpoena is served on the individual or entity able to produce such records. Refusal to respond to a subpoena duces tecum is considered to be contempt of court and carries a penalty of a fine, imprisonment, or both.




▸ BURDEN OF PROOF The burden of proof in a civil case is the obligation of the plaintiff to persuade the jury regarding the truth of his or her case. A preponderance of the credible evidence must be presented for a plaintiff to recover damages. Credible evidence is evidence that, in the light of reason and common sense, is worthy of belief. A preponderance of credible evidence requires that the prevailing side of the case carry more weight than the evidence on the opposing side. In a negligence case, the burden of proof requires that the plaintiff’s attorney show that the defendant violated a legal duty by not following an acceptable standard of care and that the plaintiff suffered injury because of the defendant’s breach. If the evidence presented does not support the allegations made, the case is dismissed. When a plaintiff, who has the burden of proof, fails to sustain such burden, the case can be dismissed despite the failure of the defendant to present any evidence to the contrary on his or her behalf. The burden of proof in some states shifts from the plaintiff to the defendant when it is obvious that the injury would not have occurred unless there was negligence.

The burden of proof in a criminal case requires that evidence presented against the defendant must be proven beyond a reasonable doubt by the prosecuting attorney. Note the terminology: reasonable doubt—not “all” doubt. In a criminal case, the burden of proof lies with the prosecution. The prosecution has the burden of proving each element of a crime beyond a reasonable doubt. In a civil suit, the plaintiff has the burden of proving the case by a preponderance of the evidence. In other words, the evidence presented must demonstrate that, in a malpractice case for example, it is more likely than not that the defendant or defendants caused the patient’s alleged injuries. The evidence presented by the plaintiff need only tip the scales of justice.





▸ RES IPSA LOQUITUR Res ipsa loquitur (“the thing speaks for itself” or “circumstances speak for themselves”) is the legal doctrine that shifts the burden of proof in a negligence case from the plaintiff to the defendant. It is an evidentiary device that allows the plaintiff to make a case legally adequate to go to the jury on the basis of well-defined circumstantial evidence, even though direct evidence is lacking. This does not mean that the plaintiff has fully proven the defendant’s negligence—it merely shifts the burden of going forward in a lawsuit to the defendant, who must argue to dismiss the circumstantial evidence presented.

The general rule for negligence cases going forward on the basis of res ipsa loquitur does not require the plaintiff to eliminate all possible causes of a patient’s injuries. The inference under the doctrine of res ipsa loquitur is that the circumstantial evidence offered is sufficient to shift the burden of proof from the plaintiff to the defendant because it is more probable than not that the defendant’s actions were the cause of the patient’s injuries. In other words, an inference of negligence is permitted from the mere occurrence of an injury when the defendant owed a duty and possessed the sole power of preventing the injury by the exercise of reasonable care.

The three elements necessary to shift the burden of proof from the plaintiff to the defendant under the doctrine of res ipsa loquitur are as follows:

1. The event would not normally have occurred in the absence of negligence.

2. The defendant had exclusive control over the instrumentality that caused the injury.

3. The plaintiff did not contribute to the injury.

Burns While Bathing Patient An action was brought against the nursing facility in Franklin v. Collins Chapel Correctional Hospital to recover damages for the wrongful death of an 82- year-old resident. Extensive thermal burns were discovered soon after an attendant bathed the resident. The complaint sought to invoke the doctrine of res ipsa loquitur because the injuries suffered by the resident do not occur in the absence of negligence, and the decedent was in the defendant’s sole care, custody, and control.

The trial court entered a judgment for the nursing facility pursuant to a jury verdict, and the administrators of the estate appealed. The appeals court held that proof that the nursing facility had exclusive control over the bath wherein burns were allegedly suffered and that the burns normally would not occur absent negligence entitled the administrators to a jury instruction on the





doctrine of res ipsa loquitur. The case was reversed and remanded for a new trial.

Burn by Electrocautery Unit The patient in Mack v. Lydia E. Hall Hospital was properly permitted to invoke the doctrine of res ipsa loquitur in her suit to recover damages for a third-degree burn on the side of her left thigh, which was caused by an electro- coagulator used during surgery.

The plaintiff, while under anesthesia, sustained third degree burns on the side of her left thigh during the course of a surgical procedure for the treatment of rectal cancer. The defendant Dr. Josef Jahr was the surgeon in charge of the operation. An electrical instrument called an electro- coagulator was used during the procedure to coagulate blood vessels and stop bleeding. A component part of the electro-coagulator known as a grounding pad was placed on the plaintiff’s left thigh and remained there throughout the surgery. Electric current flowed through this grounding pad and the flow. Dr. Jahr controlled increase of that current. When the grounding pad was removed at the conclusion of the operation, a burn more than one-half-inch deep and over two inches in diameter was discovered on the skin directly underneath the area where the pad had been.

The prerequisites for application of the doctrine were satisfied by the circumstantial evidence presented. The injury could not have occurred in the absence of negligence, the surgeon had exclusive control over the electro- coagulator, and the patient had not been a participant in the surgical procedure and therefore did not contribute to her injury.


Citation: Seavers v. Methodist Medical Center of Oak Ridge, 9 S.W.3d 86 (Tenn. 1999)

Facts While in the intensive care unit (ICU), a nurse’s note indicated that the grip in Seavers’s right hand was weaker than that in her left hand. Both of her hands had been placed in wrist restraints and fastened to bed rails to prevent her from pulling out her endotracheal tube. When the endotracheal tube was removed and the appellant could speak, she complained that her right arm was numb; Seavers had suffered severe damage to her right ulnar nerve. The appellant and her husband filed suit against the medical center, alleging that the injury was the result of the nurses negligently restraining her arm. She later amended her complaint to include the theory of res ipsa loquitur.






The medical center filed a motion for summary judgment, supported by the affidavits of two experts. Both experts opined that the nerve damage in the appellant’s right arm was “of unknown etiology” and that the injury could have developed during her stay in the ICU without any deviation from standards of professional care.

The appellant opposed the medical center’s motion for summary judgment, arguing that there were genuine issues of material fact. The appellant’s response was supported by the deposition of Natelson, a neurosurgeon, and the affidavits of both Natelson and Woodworth, a registered nurse who worked in the ICU. Both Natelson and Woodworth opined that the appellant was under the exclusive control and care of the medical center’s nursing staff when the nerve injury occurred. Natelson and Woodworth stated that when treating ICU patients who are unconscious or under heavy sedation or restraint, the standard of professional care requires the protection of the patients’ extremities so that injuries to the ulnar nerves do not occur. Based on their independent review of the appellant’s medical records and electromyography (EMG) results, they opined that the injury was the type that would not have occurred if the nursing staff had upheld the standard of care.

Finding no genuine issues of material fact, the trial court granted the medical center’s motion for summary judgment. A majority of the court of appeals affirmed the trial court’s order granting summary judgment for the medical center. The court of appeals held that res ipsa loquitur did not apply because the appellant’s injury was not within the common knowledge of laypersons.

Issue Does the doctrine of res ipsa loquitur apply in this case?

Holding The judgments of the lower courts were reversed, and the case was remanded to the trial court for further proceedings under the doctrine of res ipsa loquitur.

Reason The parties agreed that the appellant was under the exclusive control and care of the medical center when the nerve injury occurred. The record further shows that the appellant’s right arm and hand were fully functional when she entered the medical center’s ICU and that no problem was detected until the ICU nurses noticed that the grip in her right hand was not as strong as the grip in her left hand. During that time, the appellant was heavily sedated, restrained, and under the complete care of the ICU nurses.




Based on EMG results, the appellant has shown that the dysfunction in her right arm resulted from damage to her right ulnar nerve. According to Natelson, this injury was likely caused by prolonged pressure on the nerve from a hard object such as a bed rail. This theory was corroborated by evidence that the appellant’s arms were strapped to the hospital bed during her stay in the ICU. The appellant satisfied the res ipsa loquitur requirements under Tennessee code and raised a genuine issue of material fact on the allegation of negligence. Summary judgment for the medical center was improper in this case.

Oxygen Mask Catches Fire The oxygen mask in Gold v. Ishak caught fire during surgery. In performing surgery, the physician used an electrocautery unit provided by the hospital. At some point during surgery, the oxygen mask caught on fire, and the patient was injured. A claim of negligent treatment was presented to a medical review panel, which concluded that the medical providers had complied with the requisite standard of care.

The plaintiff filed a complaint against the medical providers for medical malpractice. The trial court refused to apply the doctrine of res ipsa loquitur. On appeal, the trial court was found to have erred by refusing to apply the doctrine. The evidence presented at trial, as described here, clearly shows that the elements necessary for the inference of res ipsa loquitur had been established:

1. A fire under these circumstances is such that in the ordinary course of things would not have occurred if the medical providers had used proper care in relation to the electrocautery unit and oxygen mask.

2. The injuring instrumentality was under the management or exclusive control of the medical providers.

3. The patient could not have contributed to her injury, as she was not a participant in her surgery.

Expert testimony is not required because a fire occurring during surgery where an instrument that emits a spark is used near a source of oxygen is not beyond the realm of the layperson to understand. It is easily understandable to the common person that careless use of the two could cause a fire and result in bodily injury.








▸ OPENING STATEMENTS During the opening statement, the plaintiff’s attorney presents a summary of the allegations against the defendant and the credible evidence favorable to his or her client. The opening statement by the plaintiff’s attorney provides, in capsule form (1) the facts of the case, (2) what he or she intends to prove by means of a summary of the evidence to be presented, and (3) a description of the damages to the plaintiff(s). The opening statement must be concise and relevant.

The defense attorney makes his or her opening statement indicating the position of the defendant and the points of the plaintiff’s case he or she intends to refute. The defense attorney explains the facts as they apply to the case for the defendant.




▸ EXAMINATION OF WITNESSES After conclusion of the opening statements, the judge calls for the plaintiff’s witnesses. An officer of the court administers an oath to each witness, and direct examination begins. The attorney obtains information from each witness in the form of questions. On cross-examination by the defense, an attempt is made to challenge or discredit the plaintiff’s witness. The defense may claim, for example, that the witness is biased toward the defendant, the plaintiff’s witness lacks knowledge as to the facts of the case, or the witness’s testimony is inconsistent with other facts presented in the case. Redirect examination by the plaintiff’s attorney can follow the cross-examination, if so desired. The plaintiff’s attorney may at this time wish to have his or her witness review an important point that the jury may have forgotten during cross-examination. The plaintiff’s attorney may ask the same witness more questions in an effort to overcome the effect of the cross-examination. The defense attorney may then conduct a recross-examination of the witness, if necessary, in defense of the defendant.

A sampling of a seemingly endless number of questions that a defendant physician, for example, might expect to be asked during a personal injury case often includes the following:

1. Could you state for the court your name, residence, and any prior residences?

2. Where did you attend medical school? 3. Are you licensed in this state? 4. Are you licensed to practice medicine in any other state? 5. Where did you serve your internship? 6. Where did you serve your residency? 7. Is your practice general medicine? 8. Are you qualified to practice in any other specialty? 9. Are you board certified?

10. In what specialties are you board certified? 11. How does a physician obtain board certification? 12. Are you presently practicing medicine? 13. How long have you been in practice? 14. On or about ________ (date), did you have occasion to see the patient

on a professional basis? 15. Where did you first see the patient? 16. Could you describe the patient’s condition at the time? 17. What, if anything, did you do on that occasion? 18. Have you been practicing as a physician since that date? 19. What initial complaints did the patient present to you? 20. Describe the initial assessment you performed on the patient. 21. Did you see the patient daily, several times a day, at first?




22. Did you continue to see the patient? 23. How often did you see the patient? 24. Describe the treatment you rendered. 25. Did you find it necessary to refer the patient for consultation purposes? 26. Did there come a time when you found it necessary to refer, admit, or

transfer the patient to a hospital, different hospital, rehab facility, or other healthcare entity?

The credibility of a witness may be impeached if prior statements are inconsistent with later statements or if there is bias in favor of a party or prejudice against a party to a lawsuit. As noted previously, either attorney to a lawsuit may ask the judge for permission to recall a witness for questioning.




▸ JUDICIAL NOTICE RULE The judicial notice rule prescribes that well-known facts (e.g., fractures require prompt attention, two X-rays of the same patient may show different results) need not be proven. In other words, a court recognizes that a particular fact in a case is so commonly known by the average person that expert testimony is not necessary to establish the fact. The importance of this ruling is to prevent the parties to a lawsuit from endlessly arguing issues that are well known and accepted by the average person as fact. If a fact can be disputed, the rule does not apply. The need to order a computed tomography (CT) scan or magnetic resonance imaging (MRI), for example, as a diagnostic tool to diagnose a suspected skull fracture, can be considered a matter of common knowledge to which a court, in the absence of expert testimony, can take judicial notice. Should a patient have a serious fall and a fracture is indicated, under the foregoing rule, it is a matter of common knowledge that the ordinary physician in good standing, in the exercise of ordinary care and diligence, would have ordered the appropriate diagnostic tests.

The court applied the judicial notice rule in Arthur v. St. Peter’s Hospital, where the patient-plaintiff sought treatment in the emergency department of St. Peter’s Hospital after an injury to his left wrist. After being examined, he was sent to the radiology department for X-rays of his wrist. He later was released after being advised that there were no fractures. As a result of continued swelling and pain, the plaintiff decided to seek care from another physician, who subsequently diagnosed a fracture of the navicular bone. The plaintiff sued, and the hospital motioned for summary judgment, stating that the physicians were independent contractors and not employees of the hospital. Copies of the emergency department record, X-ray report, and billing record contained the logo of the hospital. There was no notification on the records to identify the physicians as being independent contractors. The court took judicial notice, finding that people who seek medical help through hospital emergency departments are unaware of the status of the different professionals working there. Unless a patient had been put, in some manner, on notice that those physicians with whom he might come into contact during the course of his treatment were independent contractors, it would be natural to assume that they were employees of the hospital.





▸ EVIDENCE Evidence consists of the facts proved or disproved during a lawsuit. The law of evidence is a body of rules under which facts are proven. The rules of evidence govern the admission of items of proof in a lawsuit. A fact can be proven by either direct or circumstantial evidence. Evidence must be competent, relevant, and material to be admitted at trial. In a negligence case, there must be reasonable evidence that the resulting injury does not occur in the ordinary course of patient care if proper care is rendered.

Evidence is generally offered in the form of oral testimony through witnesses, written or computer-generated documents, and physical evidence, such as digital imaging studies. The different forms of evidence are presented below.

Direct Evidence Direct evidence is proof offered through direct testimony. It is the jury’s function to receive testimony presented by witnesses and draw conclusions in the determination of facts. The law recognizes that a jury is composed of ordinary men and women and that some fact-finding will involve subjects beyond their knowledge. When a jury cannot otherwise obtain sufficient facts from which to draw conclusions, an expert witness who has special knowledge, skill, experience, or training can be called on to submit an opinion. The expert witness assists the jury when the issues to be resolved in the case are outside the experience of the average juror.

Laypeople are able to render opinions about a great variety of general subjects, but for technical questions, the opinion of an expert is necessary. During the examination of an expert witness, his or her training, experience, and special qualifications are explained to the jury. The experts will be asked to give an opinion concerning hypothetical questions based on the facts of the case. Should the testimony of two experts conflict, the jury will determine which expert opinion to accept. Expert witnesses may be used to assist a plaintiff in proving the wrongful act of a defendant or to assist a defendant in refuting such evidence. In addition, expert testimony may be used to show the extent of the plaintiff’s damages or to show the lack of such damages. To qualify as an expert witness in a specified area, that person must have the appropriate training, experience, and qualifications necessary to explain and/or answer questions based on the facts of a particular case.

Not all negligence cases require testimony from an expert witness. Citing Donovan v. State: “If a doctor operates on the wrong limb or amputates the wrong limb, a plaintiff would not have to introduce expert testimony to establish that the doctor was negligent. On the other hand, highly technical questions of diagnoses and causation which lie beyond the understanding of a layperson require introduction of expert testimony.”19




Admissibility of Expert Testimony Expert testimony concerning what a reasonable patient wants to know and what doctors think patients want to know was found to be admissible in Marsingill v. O’Malley, where the patient sued the physician for medical malpractice, alleging that information he had given her over the telephone, relating to her report of abdominal pain and nausea several months after stomach surgery, did not allow her to make an intelligent decision to seek emergency room treatment. Expert testimony by doctors who had extensive experience in interacting with patients was found to be relevant concerning the amount and kinds of information that patients generally want in late-night phone calls and was relevant to establish whether the physician had given the patient as much information as a reasonably prudent patient would want to know.

Pharmacist Not Always a Qualified Witness The pharmacist in Nail v. Laros was found not competent to render an expert opinion regarding the proper standard of care required of a physician practicing a medical specialty. The patient, Mrs. Nail, developed a staphylococcal infection following spinal surgery. The orthopedic surgeon, Dr. Laros, treated the patient with the antibiotic Ancef for 6 days. The patient was released from the hospital without any sign of an infection. The patient, while under the treatment of another orthopedic surgeon (Hanley), was discovered through blood tests to have contracted a staphylococcal infection at the operative site. The patient eventually developed osteomyelitis. She brought a lawsuit against Laros for negligence in diagnosing and treating her infection. Nail obtained an affidavit from a pharmacist (Neff), who stated an opinion that Laros should have treated the patient for a longer period on Ancef and that his failure to do so was the proximate cause of Nail’s staphylococcal infection found by Hanley. The court reasoned that there was nothing in the record to support the pharmacist’s claim of being an expert in this case. Neither his education nor his training qualified him to be an expert on equal footing with a board-certified orthopedic surgeon in diagnosing and treating infections associated with surgical implants. The court of appeals took judicial notice by ruling that the pharmacist cannot legally prescribe medication and is even prohibited from dispensing a dangerous drug, which by definition includes Ancef, without a valid prescription from a practitioner.

Gross Negligence In medical malpractice cases where lack of care or want of skill is so gross as to be apparent or the alleged breach relates to noncomplex matters of diagnosis and treatment within the understanding of lay jurors by resort to common knowledge and experience, failure to present expert testimony on the accepted standard of care and degree of skill under such circumstances is not fatal to a plaintiff’s prima facie case showing of negligence. The court in McGraw v. St. Joseph’s Hospital reviewed cases addressing hospital fall







incidents and found that a majority of jurisdictions do not require expert testimony in cases such as the following:

1. A bed rail is left down contrary to the physician’s order and the patient falls and is injured.

2. A patient known to be in weakened condition is left alone in a shower and falls.

3. A nurse fails to respond to a sedated patient’s call and the patient gets out of bed and falls.

A hospital owes the patient a duty to exercise reasonable care in rendering care, and in the performance of such duty, due regard must be given to the mental and physical condition of the patient of which the hospital, in the exercise of reasonable care, should have knowledge. If a patient requires professional care, then expert testimony as to the standard of care is necessary. The standard of nonmedical, administrative, ministerial, or routine care in a hospital need not be established by expert testimony. A jury is competent from its own experience to determine and apply a reasonable care standard.

Demonstrative Evidence Demonstrative (real) evidence is proof furnished by things themselves. It is considered the most trustworthy and preferred type of evidence. It consists of tangible objects to which testimony refers (e.g., medical instruments and broken infusion needles) that can be requested by a jury. Demonstrative evidence is admissible in court if it is relevant, has probative value, and serves the interest of justice. It is not admissible if it will prejudice, mislead, confuse, offend, inflame, or arouse the sympathy or passion of the jury. Other forms of demonstrative evidence include photographs, motion pictures, X-ray films, drawings, human bodies as exhibits, pathology slides, fetal monitoring strips, safety committee minutes, infection committee reports, medical staff bylaws, rules and regulations, nursing policy and procedure manuals, census data, and staffing patterns. The plaintiff’s attorney uses all pertinent evidence to reconstruct chronologically the care and treatment rendered.

Photographs Photographs are a form of evidence. When presenting photographs as evidence, the photographer or a reliable witness who is familiar with the object photographed must testify that the picture is an accurate representation and a fair likeness of the object portrayed. The photograph must not exaggerate a client’s physical condition, as such exaggeration could unfairly prejudice a jury. Photographs can be valuable legal evidence when they illustrate graphically the nature and extent of a medical injury.

Videos also are valuable evidence. The same principles that apply to photographs apply to videos. Videos must be accurately portrayed; the cutting




and/or splicing of videos are suspect and may have no probative value. Videos are admissible in court, assuming the matter being recorded, the time of the recording, and the manner in which such recording took place can be authenticated.

Under the Federal Rules of Evidence, Rule 1008— Functions of the Court and Jury provide:

Ordinarily, the court determines whether the proponent has fulfilled the factual conditions for admitting other evidence of the content of a writing, recording, or photograph under Rule 1004 or Rule 1005. But in a jury trial, the jury determines — in accordance with Rule 104 (b) — any issue about whether:

(a) an asserted writing, recording, or photograph ever existed; (b) another one produced at the trial or hearing is the original; or (c) other evidence of content accurately reflects the content.

On the state level, the rules of evidence can differ from one state to another.

Imaging Studies Imaging studies are pictures of the interior of the object portrayed and are admissible under the same requirements as photographs and videos. Competent evidence must be offered to show that the scans and films are those of the patient, the object, or body part under consideration; that the images were taken in a recognized manner by a competent technician; and a competent physician trained to read the images interpreted them. The value of the images lies in the fact that they identify fractures, foreign objects, and other patient ailments.

Viewing Patient Injuries Where an issue regarding personal injuries is involved, the plaintiff may be permitted to show to the jury the relevant wound or injury. The exhibition is allowable under the discretion of the court, which considers whether or not the jury will become biased and prejudiced as a result of the observation of the plaintiff’s injuries.

The human body is considered the best evidence as to the nature and extent of the alleged injury/injuries. If there is no controversy about either the nature or the extent of an injury, presenting such evidence could be considered prejudicial, and an objection can be made as to its presentation to a jury.

Demonstrations are permitted in some instances to illustrate the extent of injuries. The resident in Hendricks v. Sanford developed serious bedsores on her back. The defendant objected to the offer of the plaintiff to display her back to the jury. The court found that the plaintiff’s injuries, which had healed, were completely relevant as evidence. Even though the injuries had healed







and a skin graft had been performed, a declivity of approximately 3.5 inches in diameter and about the depth of a shallow ashtray was still discernible on the plaintiff’s back.

Documentary Evidence Documentary evidence is written information capable of making a truthful statement (e.g., drug manufacturer inserts, autopsy reports, birth certificates, and medical records). Documentary evidence must satisfy the jury as to authenticity, though proof of authenticity is not necessary if the opposing party accepts its genuineness. In some instances (e.g., wills), witnesses are necessary. In the case of documentation, the original of a document must be produced unless it can be demonstrated that the original has been lost or destroyed, in which case a properly authenticated copy may be substituted.

Medical Records Preliminary questions that a witness might be asked on entering a medical record into evidence include the following:

1. Please state your name. 2. Where are you employed? 3. What is your position? 4. What is your official title? 5. Did you receive a subpoena for certain records? 6. Did you bring those records with you? 7. Can you identify these records? 8. Did you retrieve the records yourself? 9. Are these the complete records?

10. Were any records destroyed in the normal course of business? If your answer is yes, please describe for the jury which records were destroyed and why they were destroyed.

11. Are these the original records or copies of the originals? 12. How were these records prepared? 13. Are these records maintained under your care, custody, and control? 14. Were these records made in the regular course of business? 15. Was the record made at the time the act, condition, or event occurred

or transpired? 16. Is this record regularly kept or maintained?

Manufacturer’s Drug Inserts A manufacturer’s drug insert or manual describing the proper use of medical equipment is generally admissible in court as evidence. In Mueller v. Mueller, a physician was sued by a patient who charged that she had suffered a deterioration of bone structure and ultimately a collapsed hip as a result of the administration of cortisone over an extended period. The jury decided that the physician’s prolonged use of cortisone was negligent, and the physician appealed. “The busy doctor has no alternative but to prescribe these





drugs according to the recommendations of the drug manufacturers. No one would expect him to stop his practice and conduct tests and experiments so that he could prescribe the drug solely from his own independent findings on its usefulness and possible side effects. Every doctor who testified in this trial admitted to the use of the drug manufacturer’s recommendations as a guide in prescribing drugs.” The appeals court held that the manufacturer’s recommendations are not only admissible but also essential in determining a physician’s possible lack of proper care. “We see no reason for the courts to hesitate to use a standard so widely and favorably used in the medical profession.”

In another case, Mulligan v. Lederle Laboratories, the plaintiff, a medical laboratory technician, brought an action against the drug manufacturer as the result of the side effects of the drug Varidase. The plaintiff developed several chronic health problems, including mouth sores, microscopic hematuria, and red cell cast, indicating kidney disease. The trial court awarded $50,000 in compensatory damages and $100,000 in punitive damages for the drug manufacturer’s failure to warn of the side effects of Varidase. On appeal by the manufacturer, the appeals court held that the products liability action was not barred by a 3-year statute of limitations contained in an Arkansas products liability act and that the evidence was sufficient to award punitive damages. Evidence presented at trial indicated that several side effects were associated with the drug.

Statutes, Rules, and Regulations Statutes, rules, and regulations can voice a duty that is owed to a particular class of persons who are protected by the statute or regulation. For example, assume a regulation specifies a nurse–patient ratio of no less than one registered nurse to care for no more than two patients in an ICU. This regulation is an expression of the duty imposed on the facility to provide adequate nursing care to patients. Patients are, therefore, a class of people identified within the regulation who are to have the benefits of the protection to be gained by having a predetermined minimum standard nurse–patient care ratio.

Policies and Procedures The policies and procedures of a healthcare organization established for day- to-day operations are a form of documentary evidence. If a violation of a facility’s policy and procedures causes injury to one whom the policy or procedure is designed to protect, such violation can give rise to evidence for negligent conduct.

Facebook Entries and Emails A federal district court judge ruled in favor of the employer in Lineberry v. Detroit Medical Center et al. The employer was found to have a reasonable belief that its employee was abusing her Family and Medical Leave Act








(FMLA) leave when it concluded she was dishonest when she was confronted with questions about her Facebook postings of vacation pictures taken while on FMLA leave, and the employer was therefore entitled to terminate the employee. The Court granted summary judgment to the employer, dismissing the employee’s suit accusing the hospital of interfering with her FMLA rights and retaliating against her for taking legally protected leave. The plaintiff had claimed that she had to use wheelchairs in all airports on her trip to Mexico. She was reminded that airports have cameras. Upon being shown her Facebook postings, she admitted that she had lied about the use of wheelchairs, as she had never used a wheelchair on her Mexico vacation. At her deposition, she testified:

Q. Is it not true that at the beginning of the [April 19, 2011] meeting, you told the group that you had used wheelchairs?

A. Yes.

Q. Then later on in the meeting, you admitted lying about that, correct?

A. Yes.

Q. Why did you initially lie to the group about using the wheelchair?

A. Because I had lied previously in an email [the March 7, 2011, email to Richards] and I wanted to remain consistent.

The plaintiff’s acknowledgment of her behavior during family leave was sufficient evidence of the facts in this case upon which the defendants “could reasonably rely to support their decision to terminate Plaintiff. As such, Defendants are also entitled to summary judgment based on their honest belief that Plaintiff lied and misused her FMLA leave.”

Hearsay Evidence Hearsay evidence is based on what another has said or done and is not the result of the personal knowledge of the witness. Hearsay consists of written and oral statements. When a witness testifies to the utterance of a statement made outside court and the statement is offered in court for the truth of the facts that are contained in the statement, this is hearsay and therefore objectionable.

The court in Costal Health Services, Inc. v. Rozier held that a written report by an ombudsman (who did not testify at trial) concerning injuries and treatment of an 85-year-old patient was inadmissible as evidence. It contained hearsay accounts of conversations as well as impressions, opinions, and conclusions regarding the nursing facility’s negligence when a patient wandered into another patient’s room and was injured by that resident. However, the court found that the testimony about one patient’s own account of his violent past, made to the nursing home personnel upon his admission, was admissible as original evidence, not as proof of the actual prior incidents,






but to show the defendant’s notice of the possibility of violent behavior on the part of that patient.

If a statement is offered not as proof of the facts asserted in the statement, but rather only to show that the statement was made, the statement can come into evidence. For example, if it is relevant that a conversation took place, the testimony relating to the conversation may be entered as evidence. The purpose of that testimony would be to establish that the conversation took place, not to prove what was said during the course of the conversation. If testimony is based on personal knowledge, it would be admissible as evidence.

Because of the ability to challenge hearsay evidence successfully, which rests on the credibility of the witness as well as on the competency and veracity of other persons not before the court, it is admitted as evidence in a trial under very strict rules.

There are many exceptions to the hearsay rule that allow testimony that ordinarily would not be admitted. Included in the list of exceptions are admissions made by one of the parties to the action, threats made by a victim, dying declarations, statements to refresh a witness’s recollection if he or she is unable to remember the facts known earlier, business records, medical records, and other official records (e.g., certified copies of birth and death records). “Where hearsay evidence is admitted without objection, its probative value is for the jury to determine.” This list of exceptions to hearsay evidence is by no means all-inclusive, and therefore, both federal and state statutes should be consulted.


Citation: Stroud v. Golson, 741 So. 2d 182 (La. App. 2d Cir. June 16, 1999)

Facts Dr. Mikey examined Stroud. After viewing X-rays, Mikey told Stroud that she might have lung cancer and referred her to Dr. Gullatt for follow-up care. A CT scan was performed at St. Francis Medical Center and Dr. Golson, a radiologist, interpreted Stroud’s CT scan as negative for lung cancer. Approximately 1 year later, Stroud was hospitalized at St. Francis for a cerebral hemorrhage. X-rays and CT scans revealed inoperable cancer in Stroud’s left lung.

Stroud was discharged from St. Francis and later died as a result of the cancer. The decedent’s husband and sons filed a suit seeking damages arising from Golson’s failure to properly interpret Stroud’s CT scan. Before trial, the plaintiffs settled with Golson and his insurer.





On February 23, 1998, a trial by jury commenced against the Patients’ Compensation Fund (PCF), which admitted medical negligence but claimed that Stroud would have died from the fast-acting cancer even if it had been diagnosed earlier. The jury returned a verdict finding that Stroud lost a less- than-even chance of survival because of Golson’s negligence.

The defendant argued that the trial judge erred when he overruled the hearsay objection regarding Mr. Stroud’s testimony concerning his wife’s reasons for declining treatment after her cancer was diagnosed. The testimony at issue centered around the following exchange:

Mr. Thomas: Now, did your wife discuss—you—you and your wife discuss whether or not she should have treatment for her cancer?

Mr. Stroud: Yes, we did.

Mr. Thomas: And were you a part in making a decision with her with why she did not agree to have treatment?

Mr. Stroud: Yes.

Mr. Thomas: Share with the jury what she said about that.

Mr. Stroud: She, ah,—

Mr. Anzelmo: Your Honor, I object to hearsay.

The Court: I understand. But, I think it—it is hearsay but it’s reliable. I’ll allow it.

Mr. Thomas: Go ahead.

Mr. Stroud: Ah, I had a—my sister passed away in November ’94 with lung cancer, and she found out in July of ’94 that she had lung cancer. So she went and took the radium treatments, and she weighed 125 pounds and was eating and doing all right until she started taking the radium treatments, and by the end of the radium treatments she could hardly get about, and actually she just laid down and starved herself to death. She weighed 65 pounds when she passed away, and was bedridden all that time. And the wife felt that it was too far gone in her for any treatments to do any good, plus what few days she had left she didn’t want to be like my sister.

Issue Did the trial judge err when he overruled the hearsay objection regarding Stroud’s testimony?





The appeals court found no abuse of discretion by the trial court.

Reason Stroud suffered a great deal of mental anguish from the hopeless condition she faced, knowing that earlier detection was lost because her CT scan was not properly read. Her decision not to undergo the painful and debilitating chemotherapy, when the odds were so stacked against her recovery, was justified. It is a reasonable conclusion that Stroud would have, in all likelihood, opted for the treatment had the cancer been diagnosed sooner.

Stroud’s testimony regarding statements his wife made provided statements of her then-existing state of mind. The testimony showed the motive behind Stroud’s decision not to receive treatment, namely, her belief that the treatments would not be effective, as well as her desire to avoid the severe pain and discomfort that can accompany chemotherapy.

A police officer’s testimony that he overheard a drug dealer tell an informant, who was wearing a concealed transmitter, that he could obtain drugs for the informant from a pharmacist friend was properly admitted in a disciplinary proceeding in Brown v. Idaho State Board of Pharmacy. The testimony was presented before the Idaho State Board of Pharmacy for proving a dealer’s state of mind and explaining his subsequent visit to the pharmacy. The testimony was not subject to hearsay objection.

Medical Books as Hearsay Evidence Medical books are considered hearsay because the authors are not generally available for cross-examination. Although medical books are not admissible as evidence, a physician may testify as to how he or she formed an opinion and what part textbooks played in forming that opinion. During cross-examination, medical experts may be asked to comment on statements from medical books that contradict their testimony.





▸ DEFENSES AGAINST PLAINTIFF’S ALLEGATIONS When a plaintiff’s case has been established, the defendant may put forward a defense against the claim for damages. The defendant’s case is presented to discredit the plaintiff’s cause of action and prevent recovery of damages. This section reviews various defenses available to defendants in a negligence suit (FIGURE 8-1) that may relieve a defendant from liability.

FIGURE 8-1 Defenses against a plaintiff’s claims.

Ignorance of Fact and Unintentional Wrongs

Ignorance of the law excuses no man; not that all men know the law, but because it is an excuse every man will plead, and no man can tell

how to confute him.

—John Selden (1584–1654)

Ignorance of the law is not a legal defense in a lawsuit; otherwise, the plaintiff would be rewarded by pleading ignorance. Arguing that a negligent act is unintentional is not a defense. If such a defense were acceptable, all defendants would use it.

Assumption of the Risk Assumption of the risk is knowing that a danger exists and voluntarily accepting the risk by exposing oneself to it, aware that harm might occur. Assumption of the risk may be implicitly assumed, as in alcohol consumption, or expressly assumed, as in relation to warnings found on cigarette packaging.




This defense provides that the plaintiff expressly has given consent in advance, relieving the defendant of an obligation of conduct toward the plaintiff and taking the chances of injury from a known risk arising from the defendant’s conduct. For example, a provider who agrees to care for a patient with a communicable disease and then contracts the disease would not be entitled to recover from the patient for damages suffered. In taking the job, the individual agreed to assume the risk of infection, thereby releasing the patient from all legal obligations.

The following two requirements must be established in order for a defendant to be successful in an assumption of the risk defense:

1. The plaintiff must know and understand the risk that is being incurred. 2. The choice to incur the risk must be free and voluntary.

The patient in Faile v. Bycura was awarded $75,000 in damages on her allegations that a podiatrist used inappropriate techniques during an unsuccessful attempt to treat her heel spurs. On appeal, it was held that the trial court erred in striking the podiatrist’s defense of assumption of the risk. Evidence established that the patient signed consent forms that indicated the risks of treatment as well as alternative treatment modalities.

Prior to both surgeries, Faile signed a consent form in which she acknowledged that the surgery would probably result in stiff toes. She further acknowledged that the surgery may not work and the heel spurs may have to be surgically removed at a later date. These consent forms were written out in Faile’s own handwriting, and Faile testified one of Bycura’s employees had discussed the risks with her. Faile also signed a form in which she acknowledged there were various methods for treating heel pain, but she was electing these treatments.

The appeals court reversed the judgment of the trial and the case was remanded for a new trial.

Contributory Negligence Contributory negligence occurs when a person does not exercise reasonable care for his or her own safety. As a general proposition, if a person has knowledge of a dangerous situation and disregards the danger, then that person is contributorily negligent. Actual knowledge of the danger of injury is not necessary for a person to be contributorily negligent. It is sufficient if a reasonable person should have been aware of the possibility of the danger.

The rationale for contributory negligence is based on the principle that all persons must be both careful and responsible for their acts. A plaintiff is required to conform to the broad standard of conduct of the reasonable person. The plaintiff’s negligence will be determined and governed by the






same tests and rules as the negligence of the defendant. A person incurs the risk of injury if he or she knows of a danger, understands the risks involved, and voluntarily exposes him- or herself to such danger.

In some jurisdictions, contributory negligence, no matter how slight, is sufficient to defeat a plaintiff’s claim. Generally, the defense of contributory negligence has been recognized in a medical malpractice action when the patient has failed to follow a physician’s instructions; refuses or neglects prescribed treatment; or intentionally provides erroneous, incomplete, or misleading information that leads to the patient’s injury.

Contributory negligence is established when: (1) the plaintiff’s conduct falls below the required standard of personal care, and (2) there is a causal connection between the plaintiff’s careless conduct and the plaintiff’s injury. Therefore, the defendant contends that some, if not all, liability is attributable to the plaintiff’s own actions. To establish a defense of contributory negligence, the defendant must show that the plaintiff’s negligence was an active and efficient contributing cause of the injury.

This was not the case in Bird v. Pritchard, in which the plaintiff, on July 3, 1970, slipped and fell, cutting her right hand on a mayonnaise jar and thus injuring the ulnar nerve. She was taken to Hocking Valley Memorial Hospital where she requested the services of Dr. Najm, a board-certified general surgeon. However, he was not available. The defendant, an osteopathic surgeon, was available, and he treated the patient’s wound. The patient complained that the fourth and fifth fingers of her right hand were numb. The defendant cleaned the wound and advised the patient to see him on Monday, July 7. The patient did not return to the osteopathic surgeon, but went to see Najm that same Monday. A suit was filed, the court of common pleas rendered a judgment for the defendant, and the plaintiff appealed. The court of appeals held that the patient could not be found to have been contributorily negligent or to have assumed the risk. By the time of her scheduled visit, it was impossible to perform primary or secondary repair of the injured nerves that had not been treated on the initial visit when she had first complained of numbness. For contributory negligence to defeat the claim of the plaintiff, there must not only be negligent conduct by the plaintiff, but also a direct and proximate causal relationship between the negligent act and the injury the plaintiff received.

The Delaware Supreme Court affirmed a lower court’s dismissal of a wrongful death action against a medical center’s emergency department personnel in Rochester v. Katalan. The decedent, Rochester, and a friend had been brought to the emergency department at approximately 6:30 PM under the custody of two police officers. Rochester and his friend, claiming to be heroin addicts suffering withdrawal symptoms, requested some form of medication. Rochester stated that he had a habit requiring four to five bags of heroin a day. His actions were symptomatic of withdrawal. He and his friend were loud,






abusive, and uncooperative. Rochester complained of abdominal pains, his eyes appeared glassy, and his body was shaking, among other symptoms that he exhibited. The physician on duty in the emergency department asked whether Rochester had ever participated in a methadone clinic program. Rochester indicated that he had but that he had dropped out of it because he found a new supply source for heroin. The physician then ordered the administration of 40 mg of methadone. Rochester began beating his head against a wall, claiming that he was still sick and needed more methadone. The plea was granted, and the physician ordered a second dose of 40 mg of methadone. After eventually calming down, Rochester was taken to a cell by police officers. The following morning, it was impossible to awaken him, and he was later pronounced dead. It was discovered that he had never been an addict or in a methadone program; rather, the previous night he had been drinking beer and taking Librium. He had not told this to hospital authorities. Rochester’s estate sued the physician, and the trial court dismissed the suit. The appellate court affirmed, saying that by Rochester’s failure to provide the physician accurate information, he had contributed to his own death. On appeal, the plaintiff argued that the physician and staff could have done more to determine the truth of Rochester’s assertions that he was a drug addict. The Delaware Supreme Court held that it already had assumed negligence in that respect. Rochester contributed to his own death by failing to provide a true account of the facts to the emergency department staff. He was guilty of negligent conduct, more accurately “willful” or “intentional” conduct, which was the proximate cause of his death, resulting from multiple drug intoxication. His estate was barred from recovering any monetary damages.

The patient, Cammatte, in Jenkins v. Bogalusa Community Medical Center, was admitted to Bogalusa Community Medical Center on September 11 for the treatment of a severe gouty arthritic condition. He had been advised not to get out of bed without first ringing for assistance. On the morning of September 16, he got out of bed without ringing for assistance and went to a bathroom across the hall. As he returned to his room, he fell and fractured his hip. Cammatte was transferred to Touro Infirmary in New Orleans, where he underwent hip surgery and died on October 5, during recuperation, as a result of an apparent pulmonary embolism. The trial court entered judgment for the defendants, and the plaintiffs appealed. The appeals court found that the patient was in full possession of his faculties at the time he fell and fractured his hip. The accident was the result of the patient’s knowing failure to follow instructions not to get out of bed without ringing for assistance. The injury in this case was not the result of any breach of the institution’s duty to exercise due care.

In another case, the plaintiff in Quinones v. Public Administrator sought to recover damages for the alleged negligence of the defendant’s physicians for their failure to treat a fractured ankle. The plaintiff claimed that there was a nonunion of the fracture and that he was advised to put weight on his leg. As a






result of this advice, the plaintiff claimed that there was an exacerbation of the original injury requiring two operative procedures, which resulted in the fusion of his left ankle. The defendant claimed that if there was any subsequent injury, it was because of the failure of the plaintiff to return for care. The New York Supreme Court entered a judgment in favor of the defendant hospital, and the plaintiff appealed. The New York Supreme Court, Appellate Division, held that a patient’s failure to follow instructions does not defeat an action for malpractice where the alleged improper professional treatment occurred before the patient’s own negligence. Damages would be reduced to the degree that the plaintiff’s negligence increased the extent of the injury.

Comparative Negligence A defense of comparative negligence provides that the degree of negligence or carelessness of each party to a lawsuit must be established by the finder of fact and that each party then is responsible for his or her proportional share of any damages awarded. For example, when a plaintiff suffers injuries of $10,000 from an accident and the plaintiff is found 20% negligent and the defendant 80% negligent, the defendant would be required to pay $8,000 to the plaintiff. Thus, with comparative negligence, the plaintiff can collect for 80% of the injuries, whereas an application of contributory negligence would deprive the plaintiff of any monetary judgment. This doctrine relieves the plaintiff from the hardship of losing an entire claim when a defendant has been successful in establishing that the plaintiff contributed to his or her own injuries. A defense that provides that the plaintiff will forfeit an entire claim if he or she has been contributorily negligent is considered too harsh a result in jurisdictions that recognize comparative negligence.

Good Samaritan Statutes Various states have enacted Good Samaritan statutes, which relieve physicians, nurses, dentists, and other healthcare professionals and, in some instances, laypersons from liability in certain emergency situations. Good Samaritan legislation encourages healthcare professionals to render assistance at the scene of emergencies. The language that grants immunity also supports the conclusion that the physician, nurse, or layperson covered by the act will be protected from liability for ordinary negligence in rendering assistance in an emergency.

Under most statutes, immunity is granted only during an emergency or when rendering emergency care. The concept of emergency usually refers to a combination of unforeseen circumstances that require spontaneous action to avoid impending danger. Some states have sought to be more precise regarding what constitutes an emergency or accident. According to the Alaska statute 09.65.090(a), the emergency circumstances must suggest that the giving of aid is the only alternative to death or serious bodily injury.





Apparently, this provision was inserted to emphasize that the actions of a Good Samaritan must be voluntary. To be legally immune under the Good Samaritan laws, a physician or nurse must render help voluntarily and without expectation of later pay.

Emergency Assistance A physician not on call who responds to an emergency call by a surgeon on call to assist in the completion of a tubal ligation most likely will be immune from a negligence claim under the state’s Good Samaritan law if he or she had a good faith belief that the patient was in a life-threatening situation. Such was the case in Pemberton v. Dharmani, where the court of appeals held that the Michigan Good Samaritan statute merely requires a good faith belief by healthcare personnel that they are attending a life-threatening emergency in order to be cloaked with the immunity provided by the statute, regardless of whether a life-threatening emergency actually exists. To construe the statute otherwise would controvert the purpose of the statute and render it meaningless. Healthcare personnel would be discouraged from giving treatment in emergency situations if an actual life-threatening situation were required to exist before they would be cloaked with immunity. Treatment may even be delayed in a given case, worsening the condition of the patient by waiting until the patient is in an obviously life-threatening situation before rendering treatment.

Borrowed Servant Doctrine The borrowed servant doctrine is a special application of the doctrine of respondeat superior and applies when an employer lends an employee to another for a particular employment. Although an employee remains the servant of the employer, under the borrowed servant doctrine, the employer is not liable for injury negligently caused by the servant while in the special service of another. For example, in certain situations, a nurse employed by a hospital may be considered the employee of the physician. In these situations, the physician is the special or temporary employer and is liable for the negligence of the nurse. To determine whether a physician is liable for the negligence of a nurse, it must be established that the physician had the right to control and direct the nurse at the time of the negligent act. If the physician is found to be in exclusive control of the nurse at the time of the alleged malpractice, the nurse is deemed to be the physician’s temporary special employee and the hospital is not generally considered liable for the nurse’s negligent acts.

Hospital Responsible for Resident’s Negligence The hospital in Brickner v. Osteopathic Hospital was held vicariously liable for a surgical resident’s failure to diagnose testicular cancer during exploratory surgery performed under the supervision of a staff physician. The hospital was not insulated from liability under the borrowed servant doctrine even though the supervising surgeon had authority over the resident during the operation.







The hospital never relinquished control over the resident, who was required under the hospital’s training program to assist in diagnosis and who could have taken a biopsy without express instructions of the operating surgeon. Liability was not precluded because of the hospital’s lack of actual control over the resident’s medical decision not to perform a biopsy. The resident was performing a service for which he had been employed.


Citation: Deal v. Kearney, 851 P.2d 1353 (Alaska 1993)

Facts The plaintiff, Kearney, suffered a life-threatening injury and was taken by ambulance to the emergency department of Kodiak Island Hospital (KIH). The on-call emergency department physician, a family practitioner, examined Kearney. It was determined that a surgical consultation was necessary and Deal, a surgeon with staff privileges at the hospital, was called. After ordering certain tests, Deal was of the opinion that Kearney could not survive a transfer to Anchorage. Deal then performed emergency surgery that lasted for over 9 hours, ending the following morning.

The plaintiff was eventually transferred to Anchorage. His condition worsened, and he suffered loss of circulation and tissue death in both legs. The plaintiff alleged that KIH was negligent in failing to properly evacuate him to Anchorage. Kearney reached a settlement totaling $510,000. He also brought an action against Deal for negligent acts. Deal moved for summary judgment, claiming to be immune from suit under the Good Samaritan statute.

The trial court denied Deal’s motion for summary judgment, ruling that the Good Samaritan statute was not applicable to Deal because he was acting under a preexisting duty to render emergency care to Kearney. Deal petitioned for review, and his petition was granted.

The superior court held that the immunity provided by the Good Samaritan statute is unavailable to physicians with a preexisting duty to respond to emergency situations. The court concluded that Deal was under a preexisting duty in the instant case by virtue of his contract with KIH, the duty being part of the consideration that Deal gave to KIH in exchange for staff privileges at the hospital. The court further found that the Good Samaritan statute did not apply to Deal in any event, because the actions allegedly constituting malpractice occurred during the follow-up care and treatment given to Kearney after surgery. By then, the court reasoned, Deal




had become Kearney’s treating physician and was no longer responding to an emergency situation. Deal appealed to the Alaska Supreme Court.

Issue Does the Good Samaritan statute extend immunity to physicians who have a preexisting duty to render emergency care?

Holding The Alaska Supreme Court held that the Good Samaritan statute does not extend immunity to physicians who have preexisting duty to render emergency care.

Reason Alaska Statute 09.65.090(a) states:

A person at a hospital or any other location who renders emergency care or emergency counseling to an injured, ill, or emotionally distraught person who reasonably appears to be “in immediate need of emergency aid in order to avoid serious harm or death is not liable for civil damages as a result of an act or omission in rendering emergency aid.”

The legislature clearly intended this provision to encourage healthcare providers, including medical professionals, to administer emergency medical care, whether in a hospital or not, to persons who are not their patients, by immunizing them from civil liability. The clear inference of this recommendation is that the statute would not cover those with a preexisting duty to care.

Physician Not Liable for Technician’s Negligence Oberzan brought a medical malpractice action against a hospital radiologist, Dr. Smith, for injuries allegedly incurred because of an X-ray technician’s negligence in performing a barium enema. The plaintiff alleged that either Dr. Smith or the X-ray technician, Davis, perforated his rectum during a barium enema procedure. Davis inserted the enema tip into the rectum of the plaintiff for the barium enema before Dr. Smith entered the X-ray room for the procedure. After Dr. Smith entered the room, the examination began. Immediately after Davis began injecting the barium, she noticed bleeding at the tip of the rectum.

Oberzan claimed the physician was vicariously liable for the employee’s negligent conduct. The Kansas Supreme Court held that the respondeat superior doctrine did not apply to the relationship between the technician





employed by the hospital and the radiologist so as to impose vicarious liability on the radiologist.

Davis was not an employee of Dr. Smith. She was not under his direct supervision and control at the time the injury occurred. Dr. Smith did not select Davis to perform the insertion of the enema tip; she was assigned by the hospital. A master–servant relationship was not established because Dr. Smith was not exercising personal control or supervision over Davis.

Oberzan argued that Kansas law K.A.R. 28-34-86(a) provides that “the radiology department and all patient services rendered therein shall be under the supervision of a designated medical staff physician; wherever possible, this physician shall be attending or consulting radiologist.” The plaintiff claimed this imposes a duty on radiologists to supervise patient services rendered in a hospital’s radiology department. The plaintiff, however, failed to show that any of the statute’s subsections require that the preparation of a patient for a barium enema be performed under the direct supervision of a physician. The purpose of K.A.R. 28-34-12(c) “is to establish an administrative head for the radiology department.” Oberzan cited no authority in support of his position that the Kansas statute created a legal duty for a designated medical staff physician to personally control and supervise all activities that occur in a radiology department. Such an interpretation of the statute would create physician liability extending far beyond the intent of the regulation.

Captain of the Ship Doctrine In the context of the operating room, the application of the borrowed servant doctrine generally is referred to as the captain of the ship doctrine. Historically, under this doctrine, the surgeon was viewed as being the one in command in the operating room. The rationale for this concept was provided in the Minnesota case of St. Paul-Mercury Indemnity Co. v. St. Joseph Hospital, when the court stated:

[t]he desirability of the rule is obvious. The patient is completely at the mercy of the surgeon and relies upon him to see that all the acts relative to the operation are performed in a careful manner. It is the surgeon’s duty to guard against any and all avoidable acts that may result in injury to his patient. In the operating room, the surgeon must be master. He cannot tolerate any other voice in the control of his assistants. In the case at bar, the evidence is clear that the doctor had exclusive control over the acts in question, and therefore the hospital cannot be said to have been a “joint master” or “comaster,” even though the nurses were in its general employ and paid by it.

In Krane v. Saint Anthony Hospital Systems, the factual question that had to be determined was whether, at the time of the alleged negligent act, the operating surgeon had assumed control of a surgical nurse. If so, the






responsibility of the surgeon supersedes that of the hospital. It was uncontradicted that the alleged negligent act of the surgical nurse took place over 2.5 hours into surgery, and there could be no factual dispute that the surgeon had assumed control over the nurse.

Several courts have developed a distinction between a nurse’s clerical or administrative acts and those involving professional skill and judgment, which are considered medical acts. Some courts use this distinction in allocating liability for the acts of a nurse to either the surgeon or the hospital. If the act is characterized as administrative or clerical, it is the hospital’s responsibility; if the act is considered to be medical, it is the surgeon’s responsibility. This rule was followed in the Minnesota case of Swigerd v. City of Ortonville, in which the court found that the hospital is liable as an employer for the negligence of its nurses in performing acts that are basically administrative. Administrative acts, although constituting a component of a patient’s prescribed medical treatment, do not require the application of specialized procedures and techniques or the understanding of a skilled physician or surgeon.

Today’s courts recognize that surgeons do not always have the right to control all persons within the operating room. An assignment of liability based on the theory of who had actual control over the patient more realistically reflects the actual relationship that exists in a modern operating room. For example, summary dismissal in Thomas v. Raleigh was properly ordered for those portions of a patient’s medical malpractice action that sought to hold a surgeon vicariously liable for throat injuries suffered by his patient because of the negligent manner in which an endotracheal tube was inserted during the administration of anesthesia. The patient’s allegations that the surgeon exercised control over the administration of anesthesia were rebutted by evidence to the contrary. Liability of the surgeon could not be premised on the captain of the ship doctrine because that doctrine would not be recognized in West Virginia, where the surgery took place. Deposition testimony made it clear that Dr. Isaac had nothing to do with the anesthesia procedure. “In the present case Thomas presented no evidence to dispute the finding that Dr. Isaac had no control over the anesthesia procedure, and therefore the trial court’s ruling on this matter was correct.”

Statute of Limitations The statute of limitations refers to legislatively imposed time constraints that restrict the period after the occurrence of an injury during which a legal action must be commenced. Should a cause of action be initiated later than the period prescribed, the case cannot proceed. Many technical rules are associated with statutes of limitations. Statutes in each state specify that malpractice suits and other personal injury suits must be brought within fixed periods of time. An injured person who is a minor or is otherwise under a legal disability may, in many states, extend the period within which an action for







injury may be filed. Computation of the period when the statute begins to run in a particular state may be based on any one or more of the following factors:

The date that the physician terminated treatment The time of the wrongful act The time when the patient should have reasonably discovered the injury The date that the injury is discovered The date when the contract between the patient and the physician ended

The running of the statute will not begin if fraud (the deliberate concealment from a patient of facts that might present a cause of action for damages) is involved. The cause of action begins at the time fraud is discovered.

The statute of limitations does not generally begin to run in those cases where a patient is unaware that an act of malpractice has occurred. Such is the case when foreign objects are left in a patient during surgery. A New Hampshire patient in Shillady v. Elliot Community Hospital sued the hospital for negligence in treatment that was administered 31 years earlier. A needle had been left in the patient’s spine after a spinal tap in 1940. In 1970, an X-ray showed the needle. The patient had suffered severe pain immediately after the spinal tap, which had decreased over the intervening years to about three “spells” per year. The court held that the 6-year statute of limitations does not begin “until the patient learns or in the exercise of reasonable care and diligence should have learned of its presence.” Therefore, the defendant’s motion to dismiss the case on the grounds that the statute of limitations had run out was not granted.

Sovereign Immunity Sovereign immunity is a legal doctrine by which federal and state governments historically have been immune from liability for harm suffered from the tortious conduct of government employees. For the most part, both federal and state governments have abolished sovereign immunity. Congress enacted the Federal Tort Claims Act (FTCA) of 1948 to provide redress for those who have been negligently injured by employees of the federal government acting within their scope of employment.

FTCA and Veterans Hospital In an action under the FTCA, the plaintiff was permitted to sue the Veterans Administration Hospital of Memphis, Tennessee, in a federal court for injuries sustained by an 83-year-old patient found lying in a hallway of the hospital. The patient suffered severe head injuries that required surgery. Damages in the amount of $80,000 were awarded to the plaintiff. The court held that the evidence was sufficient to raise a duty on the part of government employees attending the patient to use reasonable care to protect him from getting out of







bed and injuring himself. This duty was breached, and the patient was injured. The proximate cause of the patient’s injuries was related to the hospital’s failure to put up the patient’s bed rails and its failure to remind him to call a nurse if he needed help.

FTCA and Failure to Refer Action was brought on behalf of a minor in Steele v. United States who received treatment at a U.S. Army hospital and suffered injury because of the optometrist’s failure to refer the child to an ophthalmologist for examination. The U.S. district court held that it was probable that an ophthalmologist would have diagnosed the child’s problem and prevented the loss of his right eye. Recovery was permitted against the United States under the FTCA.

State Immunity Laws The various states provide that government employees can be held liable for their tortious acts. The Texas Tort Claims Act, for example, allows an individual to file a private tort suit against a government entity.


Citation: J.B. v. Sacred Heart Hosp. of Pensacola, 635 So. 2d 945 (Fla. 1994)

Facts The facts of this case reveal that the hospital on or about April 17, 1989, was requested by its medical staff to arrange transportation for the patient, diagnosed with acquired immunodeficiency syndrome (AIDS), to another treatment facility in Alabama. The social services department, unable to arrange ambulance transport, asked the patient’s brother to provide the transportation. J.B., having visited his brother at the hospital when he was first admitted, was under the impression that his brother’s diagnosis was Lyme disease. He had not been notified that there was a change in diagnosis. The patient was released to his brother from the hospital with excessive fever and a heparin lock in his arm. During the trip, J.B.’s brother began to thrash about and accidentally dislodged the dressing to his heparin lock, causing J.B. to reach over while driving in an attempt to prevent the lock from coming out of his brother’s arm. In doing so, J.B. came in contact with fluid around the lock site. J.B.’s hand had multiple nicks and cuts as a result of a recent fishing trip. [Id. at 947]

The complaint, which was filed after the 2-year statute of limitation had tolled, alleged that the hospital was negligent in arranging for J.B. to transport his brother in that it knew of the patient’s condition, the level of care that would be required in transporting him, and the risk involved. J.B.





alleged that because he contracted the AIDS virus, his wife was exposed to it through him and his children have suffered a loss of relationship with him.

The Florida District Court ruled that J.B.’s complaint stated a claim for medical malpractice and was thus subject to the pre-suit notice and screening procedures set out in Florida statutes. Because J.B. did not follow those procedures, the court dismissed the complaint. On appeal, the Florida Circuit Court declined to rule on J.B.’s claim, concluding that the issues were appropriate for resolution by the Florida Supreme Court.

Issue Was the claim of the patient’s brother a claim for medical malpractice and therefore subject to a 2-year statute of limitations?

Holding The Florida Supreme Court answered that the claim was not a claim for medical malpractice for purposes of the 2-year statute of limitations or pre- suit notice and screening requirements.

Reason Florida statutes set a 2-year limitation period for medical malpractice actions. J.B.’s injury arose solely through the hospital’s use of him as a transporter. Accordingly, this suit is not a medical malpractice action, and the 2-year statute of limitations is inapplicable. According to the allegations in J.B.’s complaint, the hospital was negligent in using J.B. as a transporter. The complaint does not allege that the hospital was negligent in any way in the rendering of, or the failure to render, medical care or services to J.B.


More than a dozen times a day, doctors sew up patients with sponges and other surgical objects mistakenly left inside. It’s a deadly, yet easily avoidable phenomenon.

• • • The consequences are enormous. Many patients carrying surgical sponges suffer for months or years before anyone determines the cause of the searing pain, digestive dysfunction and other typical ills.

—Peter Eisler, USA Today, March 8–10, 2013




The Texas Tort Claims Act (“The Act”) is a set of statutes that determine when a governmental entity may be liable for tortious conduct under state law. Prior to the adoption of the Act, individuals could not recover damages from state or local governmental units for injuries resulting from the actions of a government employee or officer in the performance of a governmental function.

The Mississippi Supreme Court, as demonstrated in the case below, determined there was no qualified immunity for public hospital employees making treatment decisions.


Citation: Sullivan v. Sumrall by Ritchey, 618 So. 2d 1274 (Miss. 1993)

Facts In April 26, 1988, the patient was admitted to the hospital suffering from a severe headache. Her physician ordered a CT scan for the following morning and prescribed Demerol and Dramamine to alleviate pain. Referring to the patient’s medical chart, the nurse stated in her deposition that the patient received injections of Demerol and Dramamine at 6:45 PM and 10:00 PM on April 26. The nurse checked on the patient at 11:00 PM. The patient’s temperature and blood pressure were taken at midnight. Her blood pressure was recorded at 90/60, down from 160/80 at 8:00 PM. At 12:25 AM, 2 hours and 25 minutes after her last medication, the nurse administered another injection of Demerol and Dramamine because the patient was still complaining of pain. Although hospital rules require consultation with a patient’s admitting physician when there is a question regarding the administration of medication, the nurse stated that she did not call the physician before administering another injection.

At 4:00 AM, when the nurse made an hourly check of the patient, she discovered that the patient was not breathing. She called a Code 99, which was an emergency signal that alerted designated staff to come to the assistance of the patient. In this case, an emergency department physician responded and revived the patient. The patient was diagnosed as having suffered “respiratory arrest, with what appears to be hypoxic brain injury.” CT scans revealed no bleeding, but other tests revealed a grossly abnormal electroencephalogram (EEG). The patient was transferred to a nursing facility where she remained in a coma at the time of trial.

The patient’s daughter and husband filed a complaint against the hospital, alleging that the hospital had been negligent in monitoring and medicating the patient, in failing to notify a physician when her vital signs became





irregular, in failing to properly assess her condition and intervene, and in failing to exercise reasonable care. Later, the complaint was amended to include the nurse.

The defendant nurse filed a motion for summary judgment. She asserted that, as a matter of law, she was shielded from liability under the qualified immunity afforded public officials. The circuit court denied the motion, and the nurse appealed.

Issue Is a nurse employed by a county hospital shielded by public official qualified immunity from a medical negligence action brought against her individually?

Holding The Mississippi Supreme Court affirmed the decision of the circuit court denying the nurse’s motion for summary judgment and remanded to the circuit court for further proceedings.

Reason There is no qualified immunity for any public hospital employees making treatment decisions. Discretion exercised by medical personnel in making treatment decisions is not the sort of individual judgment sought to protect by the qualified immunity bestowed upon public officials.

Miss. Code Ann. § 41-13-11 expressly provides for the acquisition of liability insurance by boards and owners of community hospitals and waives immunity to the extent insurance is available to satisfy any judgment rendered. It is undisputed that Jones County Community Hospital carried such a policy. Thus, the hospital itself waived immunity to the extent of its liability coverage. The record is silent, however, as to whether Jones County Community Hospital also carried a liability policy for the benefit of its employees.

Intervening Cause Intervening cause arises when the act of a third party, independent of the defendant’s original negligent conduct, is the proximate cause of a patient’s injury. If the negligent act of a third party is unforeseeable as a normal and probable consequence of the defendant’s negligence, then the third party’s negligence supersedes that of the defendant and relieves the defendant of liability. For example, in DePesa v. Westchester Square Medical Center, a 49-year-old woman experiencing severe pain in her abdomen entered the emergency department at Westchester Square Medical Center (WSMC). There, she was prescribed Mylanta and sent home with the advice that she should contact her personal physician if her condition worsened. She took the





Mylanta, but her condition continued to deteriorate, and after 20 more days, she went to the emergency department at a second hospital. She was admitted and was operated on for a perforated bowel and peritonitis. Although the evidence indicated that the operation itself was successful, she died at the hospital on May 25. The autopsy report indicated the presence of yellow fluid in the pleural cavity and peritoneal cavity and the cause of the death as status post-bowel resection, bronchopneumonia, and congestive heart failure.

The appellate court found that the trial court should have provided an instruction directing the jury to decide whether the postoperative care of the decedent by the second hospital, despite WSMC’s negligence in misdiagnosing the patient’s condition, was the proximate and superseding cause of death. WSMC’s expert testified, based on the medical evidence, that while the decedent was recovering from surgery, employees at the second hospital administered almost double the amount of fluids that the decedent could output, resulting in congestive heart failure and her ultimate demise. WSMC’s theory at trial was that the perforation of the bowel occurred at the second hospital, where staff allegedly administered substantially more fluid to the patient than she could excrete, that these causes of death were independent of WSMC’s own negligence in failing to detect bowel conditions, and that such intervening cause would not have been foreseeable by a reasonably prudent person.

Since plaintiff’s expert’s opinion presented an issue of fact as to whether fluid overload in decedent’s system was a cause of her death, there is a triable issue as to whether the treatment rendered by nonparty Jacobi Hospital was an intervening cause, superseding, as a matter of law, any liability of defendant arising from defendant’s emergency room treatment 20 days earlier.

We have considered plaintiff’s contentions for affirmative relief and find such relief to be unwarranted under the circumstances.

Cause of Injury by Sterilized Needle Not Foreseeable In Cohran v. Harper, a patient sued a physician, charging him with malpractice for an alleged staphylococcal infection that she received from a hypodermic needle used by the physician’s nurse. The nurse gave the patient an injection that resulted in osteomyelitis. The grounds of negligence included an allegation that the physician failed to properly sterilize the hypodermic needle that was used to administer penicillin. The evidence showed, without dispute, that a prepackaged sterilized needle and syringe were used in accordance with proper and accepted medical practice. The physician was not liable. There was inadequate proof that either the physician or his nurse was negligent. The court found that even if there was evidence that the needle was contaminated and that the patient’s ailment was caused thereby, there was no evidence that the physician, his nurse, or anyone in his office knew, or by the exercise of ordinary care could have discovered, that the prepackaged needle






and syringe were contaminated. The defense of intervening cause would have been an adequate defense against recovery of damages if it had been established that the needle was contaminated when packaged.




▸ CLOSING STATEMENTS After completion of the plaintiff’s case and the defendant’s defense, the judge calls for closing statements. The defense proceeds first, followed by the plaintiff. Closing statements provide attorneys with an opportunity to summarize for the jury and the court what they have proven. They may point out faults in their opponent’s case and emphasize points they want the jury to remember.

The court will grant a motion for a directed verdict if (1) there is no question of fact to be decided by the jury, or (2) the evidence presented failed to establish a legal basis for a verdict favoring the plaintiff. “In civil proceedings, either party may receive a directed verdict in its favor if the opposing party fails to present a prima facie case, or fails to present a necessary defense.”59




▸ JUDGE’S CHARGE TO THE JURY After the attorneys’ summations, the court charges the jury before the jurors recess to deliberate. Because the jury determines issues of fact, it is necessary for the court to instruct the jury with regard to applicable law. This is done by means of a charge. The judge’s charge describes the responsibility of the jury, the law applicable to the case heard by the jury, and advises the jury of the alternatives available to it. The following quote summarizes some important points in the judge’s instruction to the jury.

The judge will instruct the jury in each separate case as to the law of that case. For example, in each criminal case, the judge will tell the jury, among other things, that a defendant charged with a crime is presumed to be innocent and the burden of proving his guilt beyond a reasonable doubt is upon the Government. Jurors must follow only the instructions of law given to them by the trial judge in each particular case.

The trial judge’s charge to the jurors in Estes Health Care Centers v. Bannerman, in which a nursing facility resident died after transfer to a hospital after suffering burns in a bath, included:

The complaint alleges the defendant Jackson Hospital undertook to provide hospital and nursing care to the deceased, and that the defendant negligently failed to provide proper hospital and nursing care to the plaintiff’s intestate. . . .

The defendants in response to these allegations . . . have each separately entered pleas of the general issue or general denial. Under the law, a plea of the general issue has the effect of placing the burden of proof on the plaintiffs to reasonably satisfy you from the evidence, the truth of those things claimed by them in the bill of the complaint. The defendants carry no burden of proof. . . .

As to the defendant Jackson Hospital, the duty arises in that in rendering services to a patient, a hospital must use that degree of care, skill, and diligence used by hospitals generally in the community under similar circumstances. . . .

Negligence is not actionable unless the negligence is the proximate cause of the injury. The law defines proximate cause as that cause which is the natural and probable sequence of events and without the intervention of any new or independent cause, produces the injury, and without which such injury would not have occurred. For an act to constitute actionable negligence, there must not only be some causal connection between the negligent act complained of and the injury suffered, but connection must be by natural and unbroken sequence, without intervening sufficient causes,






so that but for the negligence of the defendant, the injury would not have occurred. . . .

If one is guilty of negligence, which concurs or combines with the negligence of another, and the two combine to produce injury, each negligent person is liable for the resulting injury. And the negligence of each will be deemed the proximate cause of the injury. Concurrent causes may be defined as two or more causes which run together and act contemporaneously to produce a given result or to inflict an injury. This does not mean that the causes of the acts producing the injury must necessarily occur simultaneously, but they must be active simultaneously to efficiently and proximately produce a result. . . .

In an action against two or more defendants for injury allegedly caused by combined or concurring negligence of the defendants, it is not necessary to show negligence of all the defendants in order for recovery to be had against one or more to be negligent. If you are reasonably satisfied from the evidence in this case that all the defendants are negligent and that their negligence concurred and combined to proximately cause the injury complained by the plaintiffs, then each defendant is liable to the plaintiffs.

When a charge given by the court is not clear enough on a particular point, it is the obligation of the attorneys for both sides to request clarification of the charge. When a jury retires to deliberate, the members are reminded not to discuss the case except among themselves.

Jury Instructions Must Not Be Prejudicial The nursing assistant in Myers v. Heritage Enterprises, Inc. was determined not to be in a professional position. The standard of care required by the nursing assistant was one of ordinary negligence. Therefore, the trial court should have instructed the jury that it had to decide how a reasonably prudent person would have acted under the circumstances. The trial court abused its discretion by instructing the jury on professional negligence rather than ordinary negligence. The instructions given misled the jury and resulted in prejudice to the plaintiff. The case was remanded for a new trial.

Court Erred in Jury Instructions The medical malpractice action in Houserman v. Garrett was filed after a gauze pad was discovered in the patient approximately 8 months after surgery. The trial court was found to have erred when it instructed the jury that the physician’s conduct was negligent without any argument as to the surrounding circumstances (negligence per se). The physician alone was understood to be liable for failure to remove the pad from the patient’s body. Without clarification elsewhere in the charge, it was hard to determine what, if anything, a physician could do to have defended himself.







It is undisputed that a nurse was responsible for counting the surgical sponges and surgical devices used in this procedure before and after the surgery and that she apparently did not include the pad in her presurgery count. In addition, she did not advise the physician, before the surgical site was closed, that a pad was unaccounted for.

The trial judge charged the jury that the nurse’s count amounted only to an added precaution when, in fact, in light of the evidence, the jury was entitled to find that the nurse’s count was valid evidence that the physician had satisfied one component of the standard of care. On appeal, the judgment was reversed, and the case was remanded to the trial court for further proceedings.




▸ JURY DELIBERATION AND DETERMINATION After the judge’s charge, the jury retires to the jury room to deliberate and determine the defendant’s liability. The jury members return to the courtroom upon reaching a verdict, and their determinations are presented to the court.

If a verdict is against the weight of the evidence, a judge may dismiss the case, order a new trial, or set his or her own verdict. At the time judgment is rendered, the losing party has an opportunity to motion for a new trial.




▸ AWARDING DAMAGES Monetary damages generally are awarded to individuals in cases of personal injury and wrongful death. Damages generally are fixed by the jury and are nominal, compensatory, hedonic, or punitive. General damages can be awarded as compensation “not only for physical pain but for fright, nervousness, grief, anxiety, worry, mortification, shock, humiliation, indignity, embarrassment, apprehension, terror or ordeal.”

1. Nominal damages are awarded as a mere token in recognition that a wrong has been committed when the actual amount of compensation is insignificant.

2. Compensatory damages are estimated reparation in money for detriment or injury sustained (including loss of earnings, medical costs, and loss of financial support).

3. Hedonic damages are those damages awarded to compensate an individual for the loss of enjoyment of life. Such damages are awarded because of the failure of compensatory damages to compensate an individual adequately for the pain and suffering that he or she has endured as a result of a negligent wrong.

4. Punitive damages are additional money awards authorized when an injury is caused by gross carelessness or disregard for the safety of others.

Plaintiffs seek recovery for a great variety of damages. Specific damages typically sought by plaintiffs include those for personal injuries, permanent physical disabilities, permanent mental disabilities, past and future physical and mental pain and suffering sustained and to be sustained, loss of enjoyment of life, loss of consortium where a spouse is injured in an accident, loss of child’s services where a minor child is injured by an accident, medical and other health expenses reasonably paid or incurred or reasonably certain to be incurred in the future, past and future loss of earnings sustained and to be sustained, and permanent diminution in the plaintiff’s earning capacity. The following cases illustrate a variety of damages sought by plaintiffs.

Punitive Damages/Mighty Engine of Deterrence Punitive damages are awarded over and above that which is intended to compensate the plaintiff for economic losses resulting from the injury. Punitive damages cover such items as physical disability, mental anguish, loss of a spouse’s services, physical suffering, injury to one’s reputation, and loss of companionship. Punitive damages were referred to as that mighty engine of deterrence in Johnson v. Terry.

The court in Henry v. Deen held that allegations of gross and wanton negligence incidental to wrongful death in the plaintiff’s complaint gave







sufficient notice of a claim against the treating physician and physician’s assistant for punitive damages. The original complaint, which alleged that the treating physician, the physician’s assistant, and the consulting physician agreed to create and did create false and misleading entries in the patient’s medical record, was sufficient to allege a civil conspiracy. The decision of the lower court was reversed, and the case was remanded for further proceedings.

In Estes Health Care Centers v. Bannerman, discussed earlier, the court stated:

While human life is incapable of translation into a compensatory measurement, the amount of an award of punitive damages may be measured by the gravity of the wrong done, the punishment called for by the act of the wrongdoer, and the need to deter similar wrongs in order to preserve human life.

A punitive damage award in the amount of $1.7 million for the wrongful death of a patient from infected decubitus ulcers in Payton Health Care Facilities, Inc. v. Estate of Campbell was found to be justified. The treating physician had agreed to a settlement prior to trial in the amount of $50,000. The decedent, a stroke victim, had been admitted to the Lakeland Health Care Center for nursing and medical care. While at the center, the patient developed several severe skin ulcers that eventually necessitated hospitalization in Lakeland General Hospital. The patient’s condition deteriorated to such a state that further treatment was inadequate to prolong his life. Expert testimony had been presented that indicated that the standard of care received by the patient while at the nursing facility was an outrageous deviation from acceptable standards of care. There was sufficient evidence of the willful and wanton disregard for rights of others to permit an award of punitive damages against the companies who owned and managed the nursing facility. The cause of death was determined to be bacteremia with sepsis, caused by the extensive infected necrotic decubitus ulcers the patient developed at the nursing facility.

Punitive Damages Not Awarded Punitive damages in Brooking v. Polito were determined to be inappropriate in an action alleging failure to diagnose pancreatic cancer in a timely manner. It was undisputed that the defendants performed various tests on the decedent, which included blood tests, CT scans, MRI, and ultrasound. The tests had been analyzed, and the patient was treated accordingly.

Future Pain and Suffering In Luecke v. Bitterman, an award of $490,000 for future pain and suffering was found reasonable with respect to a 20-year-old patient who, as a result of a physician’s negligent application of liquid nitrogen to remove a wart, suffered








a 4 by 12–inch third-degree burn. The burn resulted in a scar on the right buttock extending to the back of the thigh. The plaintiff suffered excruciating pain and posttraumatic stress disorder.

Damages for Surviving Spouse and Children Damages may be awarded given evidence of a patient’s pain and the mental anguish of the surviving spouse and children. In Jefferson Hospital Association v. Garrett, damages in the amount of $180,000 were found not to be excessive given evidence of the patient’s pain and the mental suffering of the surviving spouse and children.

Damages/Emotional Distress The court of appeals in Haught v. Maceluch held that under Texas law, the mother was entitled to recover for her emotional distress, even though she was not conscious at the time her child was born. The mother had brought a medical malpractice action, alleging that the physician was negligent in the delivery of her child, causing her daughter to suffer permanent brain injury. The district court entered judgment of $1,160,000 for the child’s medical expenses and $175,000 for her lost future earnings. The court deleted a jury award of $118,000 for the mother’s mental suffering over her daughter’s impaired condition. On appeal, the court of appeals permitted recovery, under Texas law, for mental suffering. The mother was conscious for more than 11 hours of labor and was aware of the physician’s negligent acts, his absence in a near-emergency situation, and the overadministration of the labor-inducing drug Pitocin.

Damages/Not Excessive The plaintiff in Burge v. Parker suffered a laceration of his right foot on April 2 and was taken to St. Margaret’s Hospital. A physician in the emergency department cleaned and stitched the laceration and released the patient with instructions to keep the foot elevated. Even though reports prepared by the fire medic who arrived on the scene of the accident and by ambulance personnel indicated the chief complaint as being a fracture of the foot, no X-rays were ordered in the emergency department. The admitting clerk had typed a statement on the admission form indicating possible fracture of the right foot. However, a handwritten note stated the chief complaint as being a laceration of the right foot. The patient returned to the hospital later in the day with his mother, complaining of pain in the right foot. His mother asked if X-rays had been taken. The physician said that it was not necessary. The wound was redressed, and the patient was sent home again with instructions to keep the foot elevated. The pain continued to worsen, and the patient was taken to see another physician on April 5. X-rays were ordered, and an orthopedic surgeon called for a consultation diagnosed three fractures and a compartment syndrome, a swelling of tissue in the muscle compartments. The swelling increased pressure on the blood vessels, thus decreasing circulation, which tends to cause muscles to die.







Approximately one-half pint of clotted blood was removed from the wound. By April 11, the big toe had to be surgically removed. It was alleged that the emergency department physician failed to obtain a full medical history, to order the necessary X-rays, and to diagnose and treat the fractures of the foot. As a result, the patient ultimately suffered loss of his big toe. The Macon County Circuit Court awarded damages totaling $450,000 for loss of a big toe, and the physician appealed. The Alabama Supreme Court found the damages not to have been excessive.

Award Was Fair and Just In Tesauro v. Perrige, Mrs. Tesauro, the appellee, went to Dr. Perrige, the appellant, to have a lower left molar removed. A blood clot failed to form, and the appellant administered an injection of alcohol near the affected area. The appellee began to experience pain, burning, and numbness on the left side of her face at the site of the injection. Several physicians diagnosed her as suffering from muscle spasms caused by a damaged trigeminal nerve. Over a 5-year period, the appellee was treated by a variety of specialists. In 1989, the plaintiff underwent radical experimental surgery. The surgery corrected the plaintiff’s most oppressive symptoms. Although the most painful symptoms had been eliminated, the appellee continued to suffer numbness and burning on the left side of her face. A dental malpractice lawsuit was filed against Dr. Perrige alleging that he was negligent in administering the alcohol injection so close to the trigeminal nerve. The jury returned a verdict in favor of the plaintiffs in the amounts of $2,747,000 to Mrs. Tesauro and $593,000 to Mr. Tesauro for loss of consortium. Dr. Perrige appealed for a new trial to be based on the excessiveness of the jury verdict.

The superior court determined that the severity of the plaintiff’s injury would support the compensatory award. The plaintiff spent 5 years trying to find a cure for her pain. Although much recovered, the plaintiff continued to suffer from numbness and burning. Her experience clearly fell into the category of severe injury. The severity of the injury had a huge impact on the marital relationship. The compensation awarded to Mr. Tesauro was, therefore, fair and just.

Damages Not Based on Prejudice and Passion A medical malpractice action was brought against the employer of a physician, alleging that the physician’s failure to properly treat an abscess some 3 weeks after an infant received a live polio vaccine resulted in suppression of the infant’s immune system and the infant’s contraction of paralytic polio. The jury in the circuit court returned a $16 million verdict in favor of the plaintiffs, and the defendant appealed. The case was transferred from the court of appeals to the state supreme court. Was the $16 million verdict excessive, and did the trial court err in denying a new trial based on the alleged excessive verdict?






The Missouri Supreme Court held that there was no basis for a new trial on the grounds of excessiveness of the $16 million verdict. There is no formula for determining the excessiveness of a verdict. Each case must be decided on its own facts to determine what is fair and reasonable. A jury is in the best position to make such a determination. The trial judge could have set aside the verdict if a determination was made that passion and prejudice brought about an excessive verdict. The size of the verdict alone does not establish passion and prejudice. The appellant failed to establish that the verdict was: (1) glaringly unwarranted and (2) based on prejudice and passion. Compensation of a plaintiff is based on such factors as the age of the patient, the nature and extent of injury, diminished earnings capacity, economic condition, and awards in comparable cases. A jury is entitled to consider such intangibles that do not lend themselves to precise calculation, such as past and future pain, suffering, effect on lifestyle, embarrassment, humiliation, and economic loss.

Damages Excessive A jury verdict totaling $12,393,130 was considered an excessive award in Merrill v. Albany Medical Center, in which damages were sought with respect to the severe brain damage sustained by a 22-month-old infant as the result of oxygen deprivation. This occurred when the infant went into cardiac arrest during surgery for removal of a suspected malignant tumor from her right lung. Reduction of the amount to $6,143,130 was considered appropriate.

Damages Capped The trial court in Judd v. Drezga was found to have properly limited a brain- damaged infant’s recovery of quality-of-life damages to $250,000. The Idaho cap on damages was designed to reduce healthcare costs, increase the availability of medical malpractice insurance, and secure the continued availability of healthcare resources—all legitimate legislative goals given the clear social and economic evil of rising healthcare costs and a shortage of qualified healthcare professionals. In attempting to meet its goals, the legislature had not unreasonably or arbitrarily limited recovery. Rather, it had chosen to place a limit on the recovery of noneconomic quality-of-life damages —one area where legislation had been shown to actually and substantially further these goals. Applying each individual test, the open courts, uniform operation of laws, and due process provisions of the constitution were not offended by the damage cap. Additionally, neither the right to a jury trial nor the constitutional guarantee of separation of powers was offended by the cap.






▸ JOINT AND SEVERAL LIABILITY Joint liability is based on the concept that all joint or concurrent tortfeasors are actually independently at fault for their own wrongful acts. Both a hospital and its physicians can be held jointly liable for damages suffered by patients. In Gonzales v. Nork & Mercy Hospital, the hospital was found negligent for failing to protect the patient, a 27-year-old man, from acts of malpractice by an independent, privately retained physician. The patient had been injured in an automobile accident and was operated on by Dr. Nork, an orthopedic surgeon. The plaintiff’s life expectancy was reduced as a result of an unsuccessful and allegedly unnecessary laminectomy. It was found that the hospital knew or should have known of the surgeon’s incompetence because the surgeon previously had performed many operations either unnecessarily or negligently. In such cases, the defendant produced false and inadequate findings as well as false-positive myelograms. He deceived his patients with this information and caused them to undergo surgery. Evidence was presented showing that the surgeon had performed more than three dozen similar operations unnecessarily or in a negligent manner. Even if the hospital was not aware of the surgeon’s acts of negligence, an effective monitoring system should have been in place for monitoring his abilities. Consequently, the surgeon and hospital were jointly liable for damages suffered. An organization owes its patients a duty of care, and this duty includes the obligation to protect them from negligent and fraudulent acts of those physicians with a propensity to commit malpractice. The courts will not permit organizations to hide behind a cloak of ignorance in this responsibility.

Several liability should not be confused with joint and several liability. In several liability, each party to a lawsuit is liable only to the degree he or she has been determined to contribute to the injury. In other words, when there are multiple defendants in a lawsuit, each defendant’s responsibility for damages will not exceed the degree or percentage that his or her carelessness contributed to the patient’s injury. The doctrine of joint and several liability, however, provides that any one of the defendants to a lawsuit can be responsible to pay the full cost of damages awarded to the plaintiff(s).





▸ APPEALS An appellate court reviews a case on the basis of the trial record, as well as written briefs and, if requested, concise oral arguments by the attorneys. A brief summarizes the facts of a case, testimony of the witnesses, laws affecting the case, and arguments of counsel. The party making the appeal is the appellant. The party answering the appeal is the appellee. After hearing oral arguments, the court takes the case under advisement until such time as the judges consider it and agree on a decision. An opinion is then prepared explaining the reasons for a decision.

Grounds for appeal can result from one or more of the following: the verdict was excessive or inadequate in the lower court; the evidence was rejected that should have been accepted; inadmissible evidence was permitted; testimony that should have been admissible was excluded; the verdict was contrary to the weight of the evidence; the court improperly charged the jury; the jury is confused by jury instructions; and/or the jury verdict is the result of bias, prejudice, and/or passion.

Notice of appeal must be filed with the trial court, the appellate court, and the adverse party. The party wishing to prevent execution of an adverse judgment until such time as the case has been heard and decided by an appellate court also should file a stay of execution.

The appellate court may modify, affirm, or reverse the judgment or reorder a new trial on an appeal. The majority ruling of the judges in the appellate court is binding on the parties of a lawsuit. If the appellate court’s decision is not unanimous, the minority may render a dissenting opinion. Further appeal may be made, as set by statute, to the highest court of appeals. If an appeal involves a constitutional question, it eventually may be appealed to the U.S. Supreme Court.

When the highest appellate court in a state decides a case, a final judgment results, and the matter is ended. The instances when one may appeal the ruling of a state court to the U.S. Supreme Court are rare. A federal question must be involved, and even then, the Supreme Court must decide whether it will hear the case. A federal question is one involving the U.S. Constitution or a statute enacted by Congress, so it is unlikely that a negligence case arising in a state court would be reviewed and decided by the Supreme Court.


The Supreme Court of Mississippi found that Dorrough’s arguments were without merit, holding that the verdict by the jury was supported by the




weight of the evidence. When evidence is in conflict, the jury is the sole judge of both the credibility of a witness and the weight of his or her testimony. The jury was presented with conflicting testimony concerning the alleged negligence of Dorrough. The jury, being the sole judge of the weight and credibility of the witnesses, determined that Dorrough was liable for the death of Gwendolyn and awarded damages.80




▸ EXECUTION OF JUDGMENTS Once the amount of damages has been established and all the appeals have been heard, the defendant must comply with the judgment. If he or she fails to do so, a court order may be executed requiring the sheriff or other judicial officer to sell as much of the defendant’s property as necessary, within statutory limitations, to satisfy the plaintiff’s judgment.




▸ CHAPTER REVIEW 1. The pleadings of a case are the written statements of fact and law filed

with a court by the parties to a lawsuit. Pleadings generally include such papers as a complaint, demurrer, answer, and bill of particulars.

If only questions of law are at issue, the judge will decide the case based on the pleadings. If there are questions of fact, a trial will be held to determine those facts. In a negligence action, the first pleading filed with the court is a complaint, which identifies the parties to a suit, the cause of action, and the demand for damages.

2. Once a defendant receives a copy of the complaint, the defendant can file a preliminary objection before submitting an answer, or response, to the complaint. A formal objection to the lawsuit is called a demurrer, and it holds that the evidence presented by the plaintiff is insufficient to sustain an issue or case. The defendant can file a counterclaim if he or she has a claim against the plaintiff.

3. Before the trial, facts are investigated in a process called discovery. The discovery process helps to prevent surprises during trial.

Examination before trial is part of the discovery process that allows for witnesses to be examined prior to trial. Generally, hospital incident and investigation reports are not protected from discovery. Communications between client and attorney are protected under attorney–client privilege.

4. A motion to dismiss a case can be made before, during, or after the trial.

The motion alleges that the plaintiff’s complaint does not set forth a claim or cause of action that is recognized by law. If either party to a suit believes that there are no issues of fact in contention, only issues of law, they may make a motion for a summary judgment, in which the court is asked to rule without a trial.

5. The case is heard in the court that has jurisdiction over the subject in controversy.

The judge presides over court proceedings and decides questions of law. The jury reviews the facts of a case offered by opposing counsels and makes an impartial decision as to the guilt of the defendant(s).

6. A subpoena is a legal order requiring a person to appear in court.




7. Res ipsa loquitur (“the thing speaks for itself” or “circumstances speak for themselves”) is the legal doctrine that shifts the burden of proof in a negligence case from the plaintiff to the defendant.

8. The judicial notice rule prescribes that well-known facts need not be proven (e.g., fractures require prompt attention).

9. There are multiple types of evidence that can be presented at trial.

Direct evidence Demonstrative evidence Documentary evidence Hearsay evidence

10. When the issues to be resolved in the case are outside the understanding or experience of the average juror, an expert witness is allowed to offer testimony to assist in explanation of technical matters. The testimony of two experts may conflict, in which case the jury will determine which opinion to accept. An expert witness must have experience and training sufficient to explain the facts or answer the questions of a particular case.

11. Types of defenses offered by the defendant(s):

Ignorance of fact and unintentional wrongs Assumption of the risk Contributory negligence Comparative negligence Good Samaritan statutes Borrowed servant doctrine Captain of the ship doctrine Statute of limitations Sovereign immunity Intervening cause

12. Damages, which are usually determined by the jury, come in four forms:

Nominal damages Compensatory damages Hedonic damages Punitive damages




▸ REVIEW QUESTIONS 1. Discuss the pretrial discovery process. 2. Describe the trial process. 3. Describe the role of the judge and jury in the trial process. 4. Explain the terms res ipsa loquitur and judicial notice rule. 5. Describe the forms of evidence presented by a plaintiff at trial. 6. Describe defenses to a lawsuit a defendant can offer at trial. 7. Explain the purpose of the judge’s charge to the jury. 8. Describe the various types of damages that can be awarded to the






1. Dorrough v. Wilkes, 817 So. 2d 567 (2002).

2. The Honorable Susan K. Gauvey and Heather R. Pruger, “Trials, Verdicts and Mediation,” Maryland Bar Journal, July 2010.

3. Collins v. Park, 423 Pa. Superior Ct. 601,606, 621 A.2d 996 (Pa. Super. Ct. 1993).

4. Kern v. Gulf Coast Nursing Home of Moss Point, Inc., 502 So. 2d 1198, 1202 (Miss. 1987).

5. 244 Wis. 2d 112, 629 N.W.2d 66 (2001).

6. Id. at 111.

7. Id. at 112.

8. Personal Representative, etc., Appellant, v. Osceola Mental Health, Inc., etc., et al. Appellee, Court of Appeal of Florida, Fifth District, No. 5D11–2513 (Opinion filed January 11, 2013).

9. 725 N.Y.S.2d 35 (2001).

10. 600 A.2d 1063 (D.C. 1991).

11. Id. at 1070.

12. Steve Cohen, “Malpractice,” The New Yorker, October 1 (1990): 43, 47.

13. NOLO, “What are the elements of a crime?” encyclopedia/what-the-elements-crime.html.

14. 696 S.W.2d 16 (Tenn. Ct. App. 1985).

15. 503 N.Y.S.2d 131 (N.Y. App. Div. 1986).

16. Id. at 432.

17. 720 N.E.2d 1175 (Ind. App. 1999).

18. 405 A.2d 443 (N.J. Sup. Ct. 1979).

19. 445 N.W.2d 763 (Iowa 1989).

20. 128 P.3d 151 (Alas. 2006).

21. 854 S.W.2d 250 (Tex. Ct. App. 1993).

22. 488 S.E.2d 389 (W. Va. 1997).

23. The National Court Rules Committee, “Rule 1008 – Functions of the Court and Jury,”

24. Jeffrey Bellin, “The Virginia and Federal Rules of Evidence,” April 9, 2015.

25. 337 P.2d 974 (Or. 1959).

26. 221 N.W.2d 39 (S.D. 1974).




27. Id.

28. Id.

29. 786 F.2d 859 (8th Cir. 1986).

30. No. 11-13752 (E.D. Mich. Feb. 5, 2013).

31. Id.

32. 335 S.E.2d 712 (Ga. Ct. App. 1985).

33. Spirito v. Temple Corp., 466 N.E.2d 491 (Ind. Ct. App. 1984).

34. 746 P.2d 1006 (Idaho Ct. App. 1987).

35. 346 S.E.2d 528 (S.C. 1986).

36. Id.

37. 291 N.E.2d 769 (Ohio Ct. App. 1973).

38. 320 A.2d 704 (Del. 1974).

39. 340 So. 2d 1065 (La. Ct. App. 1976).

40. 373 N.Y.S.2d 224 (N.Y. App. Div. 1975).

41. 320 A.2d 704 (Del. 1974).

42. 469 N.W.2d 74 (Mich. Ct. App. 1991).

43. Id. at 76.

44. 746 S.W.2d 108 (Mo. Ct. App. 1988).

45. Oberzan v. Smith, 869 P.2d 682 (Kan. 1994).

46. 4 N.W.2d 637–639 (Minn. 1942).

47. 738 P.2d 75 (Colo. Ct. App. 1987).

48. 75 N.W.2d 217 (Minn. 1956).

49. 358 S.E.2d 222 (W. Va. 1987).

50. Id. at 224.

51. 320 A.2d 637 (N.H. 1974).

52. Id.

53. Wooten v. United States, 574 F. Supp. 200 (W.D. Tenn. 1982).

54. 463 F. Supp. 321 (D. Alaska 1978).

55. Texas Municipal League, “Texas Tort Claims Act Q&A,” February 2005,

56. 657 N.Y.S.2d 419, 239 A.D.2d 287 (1997).

57. 248 A.D.2d 322 (1988).

58. 154 S.E.2d 461 (Ga. Ct. App. 1967).

59. Stephen H. Gifis, Law Dictionary (Hauppauge, NY: Barron’s Educational Series, 1996), 145.




60. United States District Court Southern District of New York, “Handbook for Trial Jurors,”

61. 411 So. 2d 109 (Ala. 1982).

62. 657 N.Y.S.2d 419 (N.Y. App. Div. 1997).

63. 820 N.E.2d 604, 354 Ill. App.3d 241, 289 (Ill. App. Ct. 2004).

64. Nos. 1030587 & 1030789 (Ala. 2004).

65. Capelouto v. Kaiser Foundation Hospitals (1972) 7 Cal. 3d 889, 892-893 [103 Cal. Rptr. 856, 500 P.2d 880].

66. No. 537–907 (Wis. Cir. Ct. Mar. 18, 1983).

67. 310 S.E.2d 326 (N.C. 1984).

68. 411 So. 2d 109, 113 (Ala. 1982).

69. 497 So. 2d 1233 (Fla. Dist. Ct. App. 1986).

70. 16 A.D.3d 898, 791 N.Y.S.2d 686 (N.Y. App. Div. 2005).

71. 658 N.Y.S.2d 34 (N.Y. App. Div. 1997).

72. 804 S.W.2d 711 (Ark. 1991).

73. 681 F.2d 291 (5th Cir. 1982).

74. 510 So. 2d 538 (Ala. 1987).

75. 650 A.2d 1079 (Pa. Super. 1994).

76. Callahan v. Cardinal Glennon Hosp., 863 S.W.2d 852 (Mo. 1993).

77. 512 N.Y.S.2d 519 (N.Y. App. Div. 1987).

78. 103 P.3d 135, 2004 UT 91 (Utah, 2004).

79. No. 228566 (Cal. Super. Ct. Sacramento Co. 1976).

80. Roussel v. Robbins, 688 So. 2d 714, 723–724 (Miss. 1996).




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Corporate Structure and Legal Issues


NURSE ANESTHETIST: MEDICAL SUPERVISION REQUIRED Mrs. LaCroix was admitted to the hospital’s women’s pavilion for the birth of her first child, Lawryn. She was admitted to the hospital under the care of Dr. Dulemba, her obstetrician. Prior to undergoing a cesarean section, LaCroix complained several times of breathing difficulty. When Dr. McGehee, the pediatrician, arrived, he noticed that LaCroix appeared to be in respiratory distress and heard her say, “I can’t breathe.” McGehee asked Nurse Blankenship, a certified registered nurse anesthetist (CRNA), if LaCroix was okay. She responded that LaCroix was just nervous. Mr. LaCroix claimed his wife whispered to him that she could not breathe. Mr. LaCroix then shouted, “She can’t breathe. Somebody please help my wife.” Blankenship asked that Mr. LaCroix be removed from the operating room because his wife was having what appeared to her to be a seizure.

Blankenship could not establish an airway. She told one of the nurses: “Get one of the anesthesiologists here now!” Dr. Green, who was in his car, was paged. Upon receiving the page, he immediately drove to the women’s pavilion, where Dulemba had already started the cesarean section. When Lawryn was delivered, she was not breathing, and McGehee had to resuscitate her. Meanwhile, Blankenship worked to establish an airway for LaCroix. The intubation was, however, an esophageal intubation. Dulemba stated that he thought that the intubation was esophageal. LaCroix’s blood pressure and pulse dropped, and she went into cardiac arrest. A physician and nurse from the hospital’s emergency department responded to a code for assistance. McGehee testified that the emergency department physician said that he did not know how to resuscitate pregnant women and left without providing any medical care. Dulemba and a nurse began cardiopulmonary resuscitation on LaCroix. McGehee, having finished treating Lawryn, took control of the code. LaCroix suffered irreversible brain damage.

Blankenship and Dr. Hafiz, the Denton Anesthesiology Associates (DAA), PA, anesthesiologist on call for the women’s pavilion on the day of LaCroix’s incident, settled with the LaCroixes by paying $500,000 and $750,000,




respectively. The trial court entered a judgment against the hospital, awarding the LaCroixes approximately $8.8 million in damages.

Was the evidence sufficient to hold the hospital liable for medical negligence under a theory of corporate liability?


It is of utmost importance that each organization recognizes that its successes lies with its ability to assure the staff, community, and

patients that it holds itself accountable to ensuring the highest standards of quality professional care and the well-being of all that enter its hallowed halls.







The reader, upon completion of this chapter, will be able to:

Explain from where a corporation derives its authority. Explain the difference between express, implied, and corporate authority. Discuss corporate organization and committee structure. Describe corporate ethics, the Sarbanes Oxley Act of 2002, and corporate compliance. Explain the terms corporate negligence, respondeat superior, and independent contractor. Describe the duties of healthcare organizations, the chief executive officer (CEO), and medical staff. Explain the purpose of corporate reorganization and the process of restructuring. Describe what is meant by parent holding company model. Describe what the Safe Harbor Act is designed to regulate.

This chapter introduces the healthcare professional to the responsibilities, as well as legal risks, of healthcare organizations and their governing bodies. Healthcare organizations are incorporated under state law as freestanding for- profit or not-for-profit corporations. Each corporation has a governing body (e.g., board of directors) that has ultimate responsibility for the operation of the organization. The existence of this authority creates certain duties and liabilities for governing boards and their individual members. The governing body is legally responsible for establishing and implementing policies regarding the management and operation of the organization. Responsibility for the day-to-day operations of an organization is generally accomplished by appointing a chief executive officer.

Not-for-profit healthcare organizations are exempt from federal taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. Such federal exemption usually entitles the organization to an automatic exemption from state taxes as well. Such tax exemption not only relieves the organization from the payment of income taxes and sales taxes, but also permits the organization to receive contributions from donors, who then may obtain charitable deductions on their personal income tax returns.

The tax-exempt status of healthcare corporations is increasingly coming under scrutiny as they diversify their activities to generate higher revenues. The City of Pittsburgh initiated a challenge to the payroll tax exemption claimed by the University of Pittsburgh Medical Center (UPMC), which claims the exemption on the basis of its status as an “institution of purely public charity,” or “IPPC,” under Pennsylvania law. Questionable activities of UPMC’s alleged offenses




include: expanding business operations that include investment partnerships and more than 50 taxable corporations; not offering charitable services through many of its 400 doctors’ offices and outpatient sites; closing facilities in locations with relatively high numbers of Medicare-eligible, Medicaid- eligible, or uninsured patients and opening or expanding facilities where there are proportionately more privately insured patients; paying more than 20 officers, directors, and key employees compensation in excess of $1 million, with the chief executive officer (CEO) receiving significantly more, as well as a lavish office space, private chef and dining room, private chauffeur, and private jet; turning over unpaid accounts to a collection agency or a law firm for further collections and legal action against its patients; and the list goes on. Failure of hospitals to show that their expanding joint ventures with physicians are not-for-profit activities, for example, could jeopardize their tax exempt status.




▸ AUTHORITY OF CORPORATIONS Healthcare corporations—governmental, charitable, or proprietary—have certain powers expressly or implicitly granted to them by state statutes. Generally, the authority of a corporation is expressed in the law under which the corporation is chartered and in the corporation’s articles of incorporation. The existence of this authority creates certain duties and liabilities for governing bodies and their individual members. Members of the governing body of an organization have both express and implied corporate authority.

Fiduciary Responsibility Board members (trustees, directors) are not always fully aware of the fiduciary responsibilities and legal risks they undertake when serving on a corporate board. Although it is an honor to be a member of a hospital board, board members must be fully knowledgeable regarding their legal liability risks in their positions of trust and service to the organization.

A person who has a relationship of trust or confidence with another is called a fiduciary. A fiduciary’s relationship with an organization is one- sided, meaning that the relationship is designed to meet only the needs of the organization and the fiduciary must act without regard to his or her own needs. In hospitals and systems, board members are fiduciaries because they have been entrusted with overseeing the fulfillment of the organization’s mission. They must be principally concerned about the performance of the nonprofit and that its interests are pursued faithfully.

Corporate boards must act in the best interests of the healthcare entities they represent and the communities they serve. Their fiduciary responsibilities include: corporate finances; providing quality care and a safe work environment for staff, patients, and visitors; and periodically assessing the organization’s progress, programs, and services. Trustees must be fully informed by the CEO prior to making business decisions. They must abide by applicable laws, rules, regulations, and standards that regulate hospital operations. Trustees must be objective in their decision-making processes and free from the pressures and the all-to-often challenging demands and influences from within (e.g., professional staff requests designed to improve personal economic gain) and outside the organization. Board members must be free of conflicts of interest when discussing and making policy and financial decisions. Conflict of interest statements for trustees and staff should disclose on an annual basis known financial interest with any business entity that transacts business with the corporation or its subsidiary businesses, when applicable. Board members can be held liable for their actions or inactions when carrying out their fiduciary duties and responsibilities.





The directors are entrusted with the management of the affairs of the railroad. If in the course of management they arrive at a decision for which there is a reasonable basis, and they acted in good faith, as the result of their independent judgment, and uninfluenced by any consideration other than what they honestly believe to be for the best interests of the railroad, it is not the function of the court to say that it would have acted differently and to charge the directors for any loss or expenditures incurred.

The “Courts have properly decided to give directors a wide latitude in the management of the affairs of a corporation provided always that judgment, and that means an honest, unbiased judgment, is reasonable [sic] exercised by them.”

Express Corporate Authority Express corporate authority is the power specifically delegated by statute. A healthcare corporation derives its authority to act from the laws of the state in which it is incorporated. The articles of incorporation set forth the purpose(s) of the corporation’s existence and the powers the corporation is authorized to exercise in order to carry out its purposes.

Implied Corporate Authority Implied corporate authority is the right to perform any and all acts necessary to exercise a corporation’s expressly conferred authority and to accomplish the purpose(s) for which it was created. Generally, implied corporate authority arises from situations in which such authority is required or suggested as a result of a need for corporate powers not specifically granted in the articles of incorporation. A governing body, at its own discretion, may enact new bylaws, rules, and regulations; purchase or mortgage property; borrow money; purchase equipment; select employees; and adopt corporate resolutions that delineate decision-making responsibilities. These powers can be enumerated in the articles of incorporation and, in such cases, would be categorized as express rather than implied corporate authority.

Select Competent Physicians The Florida Supreme Court held in Insinga v. LaBella that the corporate negligence doctrine imposes on hospitals an implied duty to patients to select competent physicians who, although they are independent practitioners, would be providing in-hospital care to their patients through staff privileges. Hospitals are in the best position to protect their patients and consequently have an independent duty to provide staff privileges only to competent independent physicians.

In this case, an action was brought against Canton (who was masquerading as a physician, Dr. LaBella), a hospital, and others for the wrongful death of a 68-year-old woman whom Canton had admitted. The patient died while she was in the hospital. Canton was found to be a fugitive from justice in Canada







where he was under indictment for the manufacture and sale of illegal drugs. He fraudulently obtained a medical license from the state of Florida and staff privileges at the hospital by using the name of LaBella, a deceased physician. Canton was extradited to Canada without being served process.


Jim, the administrator of East Campus Hospital, one of three hospitals in a multihospital system, was reviewing his mail and reports placed in his inbox by Carol, his secretary. He noticed what appeared to be a copy of correspondence that had been forwarded to him from the Bishop. The letter, describing a donation that had been made, read:

Dear Bishop John,

Enclosed is a contribution from David and his wife. He originally heard about our fundraising activities through the co-chairman of the fundraising appeal. The care he received at the East Campus Hospital was outstanding and he would like to make a contribution on our behalf.


After reading his morning mail and reports, Jim placed the letter in his outbox for filing. Carol later picked up Jim’s mail and other reports from his outbox. Later that afternoon, Carol walked back into Jim’s office and inquired, “Did you read this letter forwarded to you from the corporate office?” Handing the letter to Jim, he replied, “Yes, I read it.” Carol then asked, “Did you see anything that piqued your curiosity in this letter?” Jim replied that he had not. Carol, pointing at a strip of whiteout tape, urged Jim to look more closely. She then asked Jim to turn the letter over and read the words the tape was covering. He turned the letter over, noting what the letter had said. It appeared that only a copy of the original correspondence had been intended for Jim, not the original correspondence. With the missing words inserted, the correspondence read:

Dear Bishop John,

Enclosed is a contribution from David and his wife. He originally heard about our fundraising activities through the co-chairman of the fundraising appeal. The care he received at the East Campus Hospital was outstanding and he would like to make a contribution on our behalf, earmarked for the East Campus Hospital.





The question arises as to why the whiteout tape was placed over the words, “earmarked for the East Campus Hospital.” Jim was in a quandary as to what further action he should take to determine the amount of and the location of the funds earmarked for the hospital. Also, he could not absolutely determine who placed the whiteout tape on the correspondence. Was it the letter’s author or addressee or corporate employee? To question the bishop directly would be tantamount to political suicide. Jim decided to ask the VP for financial affairs at the corporate offices about the amount of the donation and where it would appear on his hospital’s financial statements. The VP, however, resisted discussing the matter with Jim. The hospital’s controller, who had double reporting obligations to both Jim and the VP, stated that he was unaware of the specifics of the donation.

The surgeon in Purcell & Tucson General Hospital v. Zimbelman performed inappropriate surgery because of his misdiagnosis of the patient’s ailment. Prior malpractice suits against the surgeon revealed that the hospital had reason to know or should have known that the surgeon apparently lacked the skill to treat the patient’s condition. The court held that the hospital had a clear duty to select competent physicians; to regulate the privileges granted to staff physicians; to ensure that privileges are conferred only for those procedures for which the physician is trained and qualified; and to restrict, suspend, or require supervision when a physician has demonstrated an inability to perform certain procedures. The hospital assumed the duty of supervising the competence of its physicians. The department of surgery was acting for and on behalf of the hospital in fulfilling this duty. The court noted that it is reasonable to conclude that if the hospital had taken some action against the surgeon, the patient would not have been injured.

Ultra Vires Acts Ultra vires is a Latin term meaning “beyond the powers.” Ultra vires acts are those acts conducted by an organization that lie beyond the scope of authority of a corporation to perform. A governing body, which acts in and on behalf of the corporation, can be held liable for acting beyond its scope of authority, which is either expressed (e.g., in its articles of incorporation) or implied in law. If any action is in violation of a statute or regulation, it is illegal. An example of an illegal act would be the “known” employment of an unlicensed person in a position that by law requires a license. The state, through its attorney general, has the power to prevent the performance of an ultra vires act by means of an injunction.








▸ CORPORATE COMMITTEE STRUCTURE Ultimate responsibility for the functioning of a healthcare corporation rests with the governing body. Ideally, the governing body includes representation from both the community and the organization’s medical staff. The business of the governing body is generally conducted through a variety of committees. It should be noted that committee titles and responsibilities often vary from organization to organization based on size, complexity, and services rendered. Some of those committees are described here.

Executive Committee The executive committee is a working group of the governing body that has delegated authority to act on behalf of the full board. It must act within the scope and authority assigned by the governing body. The duties and responsibilities of the committee should be delineated in the corporate bylaws. The functions of the executive committee generally include acting as a liaison between management and the full board, reviewing and making recommendations on management proposals, and performing special assignments as may be delegated by the full board from time to time. Business transactions and actions taken by the executive committee should be reported at regular sessions of the governing body and ratified. The executive committee generally has all the powers of the governing body, except such powers as the governing body may be prohibited from delegating in accordance with applicable laws.

Bylaws Committee The bylaws committee reviews and recommends bylaw changes to the governing body. Bylaws generally are amended or rescinded by a majority vote of the governing body.

Finance Committee The finance committee is responsible for overseeing the financial affairs of the organization and making recommendations to the governing body. This committee is responsible for directing and reviewing the preparation of financial statements, operating budgets, major capital requests, and so on. The governing body must approve actions of the finance committee.

Joint Conference Committee The joint conference committee is a committee composed of an equal number of representatives from the executive committees of the governing body and medical staff, along with representation from administration and nursing. The committee acts as a forum for discussion of matters of policy and practice pertaining to patient care. The committee generally meets quarterly and reports on its activities to the governing body.




Nominating Committee The nominating committee is generally responsible for developing and recommending to the governing body criteria for governing body membership. The requirements for membership to a governing body generally include a willingness to devote the time and energy necessary to fulfill the commitment as a board member, residence in the community or an identifiable association with the community served, demonstration of a knowledge of local healthcare issues, possession of the traits of good moral character and maturity, and professional and appropriate life experiences necessary to make managerial decisions in the healthcare setting.

Planning Committee The planning committee is responsible for recommending to the governing body the use and development of organizational resources as they relate to the mission and vision of the organization. Specifically, the planning committee oversees the development of short-term and long-range goals, acquisition of major equipment, addition of new services based on identified community need, program development, and the preparation of progress reports for the full board. Major issues that the planning committee reviews include the organization’s need to increase market share, expand services, downsize where appropriate, and integrate services across the entire continuum of care in a competitive marketplace.

The committee generally includes representation from the governing body, administration, medical staff, and nursing. When organizational planning affects the delivery of patient care services, a mechanism for obtaining employee and community input is incorporated into the planning process. Although there are times this does not occur, every effort should be made to include staff and community input when planning new services or major capital expenditures that are designed to serve the community. When planning a new emergency department for example, such input is of the utmost importance when addressing community concerns about the hospital’s ability to provide adequate emergency services.

Patient Care Committee The patient care committee reviews the quality of patient care rendered in the organization and makes recommendations for the improvement of such care. The committee is generally responsible for developing a process to identify patient and family needs and expectations and to establish a process to continuously improve customer relations. This process often includes development of a tool to identify patient and family needs and expectations; methodology for reviewing data; identification of patterns of concern; a mechanism for forwarding information to those responsible for implementing change in the organization; and continuing review, evaluation, and implementation of plans for improving organizational performance.




Audit and Regulatory Compliance Committee The audit and regulatory compliance committee is responsible for the assessment of various functions and control systems of the organization and for providing management with analysis and recommendations regarding activities reviewed. Healthcare organizations must be vigilant in conducting their financial affairs. As the boards of several investment organizations have experienced in recent years, failure to do so can result in fines and imprisonment. An effective audit committee can be helpful in uncovering and thwarting poor or inept financial decision making. The committee should include members from the governing body and internal auditing staff. Responsibilities of the committee include developing corporate auditing policies and procedures; recommending independent auditors to the governing body; reviewing the credentials of the independent auditors and facilitating change in auditors as may be deemed appropriate; reviewing with independent auditors the proposed scope and general extent of their auditing duties and responsibilities; reviewing the scope and results of the annual audit with the independent auditors and the organization’s management staff; setting, overseeing, reviewing, and acting on the recommendations of the internal audit staff; reviewing the internal accounting practices of the corporation, including policies and procedures; reviewing and evaluating financial statements (e.g., income statements, balance sheets, cash flow reports, investment accounts); promoting the prevention, detection, deterrence, and reporting of fraud; reviewing the means for safeguarding assets and, as appropriate, the existence of such assets; ensuring that financial reporting functions are in keeping with generally accepted accounting principles; and reviewing the reliability and integrity of financial and operating information.

Failure on the part of an audit committee to question management’s representations may be the basis for committee malfeasance, because the committee and the governing body may be held liable for their failure to know what they were responsible for recognizing.

Safety Committee The safety committee is generally charged with responsibility for overseeing the organization’s safety management program. The committee reviews and acts on reports involving the organization’s emergency preparedness, equipment management, fire safety, risk management, and utilities management programs.




▸ CORPORATE ETHICS Corporate ethics describes the ethics of an organization and how it responds to internal or external circumstances affecting the organization’s mission and values. Ethical behavior in an organization can be enhanced by providing staff members with a written code of ethics; providing training and education to improve each staff member’s knowledge base, skills, and competencies; providing easy access to professional sources to assist in resolving ethical issues in the workplace; and providing systems for confidential reporting of breaches in ethical conduct within and outside of the organization. Although most healthcare organizations have published their mission, vision, and values statements, policy and practice continue to be distant relatives. Commitment to organizational ethics begins with the organization’s leadership.

The purpose of organizational ethics in the healthcare setting is to promote responsible behavior in the decision-making process. Recent interest in organizational ethics is, in part, the result of concerns of government regulations (e.g., Sarbanes–Oxley Act, Emergency Medical Treatment and Active Labor Act) and accrediting agencies that certain unethical practices continue to plague the industry. These practices include billing scams, false advertising and marketing, and patient care issues (e.g., inappropriate patient transfers based on ability to pay, transferring patients before they have been clinically stabilized). Commitment to organizational ethics must begin with the organization’s leadership.

Corporate Code of Ethics The following list provides some value statements that should be considered when preparing an organization’s code of ethics:

1. Employees and staff members will comply with the organization’s code of ethics, which includes compassionate care; an understanding and acceptance of the organization’s mission, vision, and values; and adherence to one’s professional code of conduct.

2. The organization will be honest and fair in dealings with employees. 3. The organization will develop and maintain an environment that fosters

the highest ethical and legal standards. 4. Employers and employees will be impartial when personal interests

conflict with those of others. 5. Employees will be free to speak up without fear of retribution or

retaliation. 6. The preservation of harmony will not become more important than the

critical evaluation of ideas by “all” employees. The pitfalls of groupthink occur when a committee, for example, prefers harmony and conformity to rational resolutions to a stated problem in the decision-making process. This will not be acceptable conduct in the organization.




7. Employees will be provided with a safe environment within which to work.

8. The drive to increase revenues will not be tied to unethical activities, such as workforce cutbacks as a means to discharge employees when they are encouraged to speak up and then ostracized because of their honesty.

9. Employees will avoid conflict of interest situations by not favoring their own self-interests over those of others, including the organization.

10. Patients will be provided with care that is of the highest quality regardless of the setting.

11. All patients will be treated with honesty, dignity, respect, and courtesy. 12. Patients will be informed of the risks, benefits, and alternatives to care. 13. Patients will be treated in a manner that preserves their rights, dignity,

autonomy, self-esteem, privacy, and involvement in their care. 14. Each patient’s culture, religion, and heritage will be respected and

addressed as appropriate. 15. The organization will provide assistance to patients and their families

through a patient advocate. 16. The organization will provide appropriate support services for those

with language barriers or physical disabilities (e.g., hearing and seeing impaired).

17. Patients will be provided with a “Patient’s Bill of Rights and Responsibilities” on admission to the hospital.

18. Each patient’s right to execute advance directives will be honored.

Sarbanes–Oxley Act The Sarbanes–Oxley Act of 2002, commonly called SOX or SARBOX, was enacted as a response to the misconduct committed by executives at companies such as Enron, World Com, and Tyco, resulting in investor losses exceeding a half trillion dollars. To protect investors in public companies and improve the accuracy and reliability of corporate disclosures, SOX requires top executives of public corporations to vouch for the financial reports of their companies. The act encourages self-regulation and the need to promote due diligence; selecting a leader with morals and core values; examining incentives; constantly monitoring the organization’s culture; building a strong, knowledgeable governing body; continuously searching for conflicts of interest in the organization; focusing attention on processes and controls that support accurate financial reporting through documented policies and procedures; and establishing strong standards of conduct and a code of ethics that encourages employees to report unethical or fraudulent behavior without fear of retribution.

The act covers issues such as establishing a public company accounting oversight board, auditor independence, corporate responsibility, and enhanced financial disclosure. Major provisions of SOX include certification of financial reports by CEOs and chief financial officers (CFOs); ban on personal loans to any executive officer or director; accelerated reporting of trades by insiders;




prohibition on insider trades during pension fund blackout periods; public reporting of CEO and CFO compensation and profits; internal audit board independence; criminal and civil penalties for securities violations; obligation to have an internal audit function, which will need to be certified by external auditors; significantly longer jail sentences and larger fines for corporate executives who knowingly misstate financial statements; and codes of ethics and standards of conduct for executive officers and board members (most companies have expanded their code of ethics to include all employees and attach the document to their public reports).

Although not-for-profit organizations are not legally required to adopt SOX, the accountability and financial reporting requirements are being adopted by many not-for-profit hospitals. Two provisions of the Act that have universal application to both for-profit and not-for-profit corporations are:

Section 802: prohibition from knowingly altering, destroying, mutilating, concealing, and impeding or covering up government investigations. Section 1107: Proscription of criminal penalties for retaliation against whistleblowers.

Corporate Compliance Program The federal government’s initiative to investigate and prosecute healthcare organizations for criminal wrongdoing, coupled with strong sanctions imposed after conviction, have resulted in healthcare organizations establishing corporate compliance programs. These programs establish internal mechanisms for preventing, detecting, and reporting criminal conduct. Sentencing incentives are in place for organizations that establish such programs. An effective compliance program should include the design, implementation, and enforcement of program policies, procedures, and processes to facilitate the prevention and detection of criminal conduct. An effective corporate compliance program should include the following elements:

1. Appointment of a corporate compliance officer to oversee the corporate compliance program.

2. Development of standards of conduct, policies, procedures, and processes to help reduce the risk of criminal conduct.

3. Assignment of duties, authority, and responsibility to employees with high integrity.

4. Communication and education of all employees and agents as to the organization’s corporate compliance standards. This can be accomplished through required education programs, computer training modules, and disseminating publications that describe the organization’s compliance program.

5. Utilization of monitoring and auditing systems designed to detect criminal conduct by employees and agents. This should include a program for publicizing a reporting system whereby employees and




other agents are easily able to report criminal conduct by others within the organization without fear of retribution. A hotline number should be available to receive and review complaints. Procedures should be implemented to protect the anonymity of complainants from retaliation.

6. Policies must be consistently enforced through appropriate disciplinary mechanisms. Suspected illegal conduct should be handled through the corporate compliance officer.

7. The organization must take all reasonable steps to respond appropriately to any offense in order to prevent similar offenses.

8. An audit of the organization’s corporate compliance program should be conducted annually. Policies, procedures, and processes should be redesigned as necessary. It is important that the corporate board participate in the review and evaluation process.

9. The integrity and effectiveness of a compliance program will hold up only as long as there is trust in management on all levels within the organization.

As noted in the following reality check, the duties and responsibilities of the compliance officer can be compromised when the corporation pays the salary of the compliance officer. As they say in the world of finance, “follow the money” and then you will know where loyalties lie.




▸ CORPORATE NEGLIGENCE There are duties that a healthcare corporation itself owes to the general public and to its patients. These duties arise from statutes, regulations, principles of law developed by the courts, and the internal operating rules of the organization. A corporation is treated no differently than an individual. If a corporation has a duty and fails in the exercise of that duty, it has the same liability to the injured party that an individual would have.


The employee who decides to place confidence and trust in a corporate compliance officer must understand the following points, among others, prior to filing a complaint against any organizational practice, individual, and/or department within or entity owned by the organization:

The compliance officer is hired by and is responsible to the corporation by which he or she is hired. Compliance officers often report directly to the organization’s corporate counsel, CEO, and/or board of directors/trustees. The compliance officer is expected to abide by the laws of the land and follow the code(s) of ethics applicable to compliance officers in general and any ethical principles or codes of ethics that apply to his or her profession. For example, a compliance officer who is a lawyer is expected to adhere to those professional code(s) of ethics that apply to lawyers from both a professional and state licensing standpoint. Failure to do so can result in professional discipline and sanctions against the compliance officer. Compliance officers are expected to maintain confidentiality regarding the names of employees who file complaints. Organizations often have compliance hotlines to protect the identity of employees who file complaints.

The position of compliance officers is difficult; they must try to balance: (1) the confidentiality and privacy rights of employees; (2) satisfying the expectations of management and the governing body who pays the compliance officer’s salary; and (3) adhering to applicable laws, rules, and regulations pertaining to the compliance officer’s duties and responsibilities. Visualizing Lady Justice, these three demands weigh heavily on the compliance officer who sits alone on the opposite side of the scales.




When working for a salary paid by an organization, adhering to standards of ethical conduct is not necessarily consistent with a compliance officer’s list of priorities, as Phil was about to learn.

Phil, having exhausted all other appeals in his complaint, called Beth, the compliance officer, to speak with her about a decision that the human resources department had made that he believed was out of compliance with the Federal Equal Pay Act. The office assistant, Mary, stated, “Beth will not be in the office until next week.” Phil then scheduled a telephone conference with Beth for the following week. He asked Mary, “Will my telephone conference with Beth remain confidential?” Mary said, “Most certainly. Our office is here for you. Everything in our office is confidential.”

The following week Phil called Beth to discuss his concern that certain professionals were getting paid more for performing the same work that he was. He described the specifics of his concern. Beth asked, “Is it OK for me to reveal your name to human resources so I can obtain the necessary records that I would need from them to see if you are being paid equally to others for the same work?” Phil agreed to Beth’s request. During his discussion with Beth, Phil discussed several other corporate leadership concerns with her and asked that his conversations remain confidential. Beth replied, “If you wanted confidentiality, then you should have asked for it before speaking to me.” Phil replied, “Confidentiality was promised prior to our discussion, and I am surprised at your response.” Beth replied, “Well, you are wrong.”

Corporate negligence is a doctrine under which the hospital is liable if it fails to uphold the proper standard of care owed the patient, which is to ensure the patient’s safety and well-being while at the hospital. This theory of liability creates a non-delegable duty which the hospital owes directly to a patient. Therefore, an injured party does not have to rely on and establish the negligence of a third party.

Corporate negligence occurs when a healthcare corporation fails to perform the duties it owes directly to a patient or to anyone else to whom a duty may extend. If such a duty is breached and a patient is injured as a result of that breach, the organization can be held culpable under the theory of corporate negligence.

Hospitals once enjoyed complete tort immunity as charitable institutions. However, as hospitals evolved into more sophisticated corporate entities that expected fees for their services, their tort immunity receded. Courts first recognized that hospitals could be held liable for the negligence of their





employees under the theory of respondeat superior. Liability was later extended for nonemployees who acted as a hospital’s ostensible agents. In Thompson v. Nason Hospital, the evolution continued. The Pennsylvania court recognized that hospitals are more than mere conduits through which healthcare professionals are brought into contact with patients. Hospitals owe some nondelegable duties directly to their patients, independent of the negligence of their employees or ostensible agents, such as a duty to do the following:

Use reasonable care in the maintenance of safe facilities and equipment. Select and retain competent staff. Appoint competent physicians and other healthcare professionals to the medical staff. Oversee all persons who practice medicine within the organization. Formulate, adopt, and enforce rules and policies to ensure quality care.

Darling—A Benchmark Case A benchmark case in the healthcare field that has had a major impact on the liability of healthcare organizations was decided in 1965 in Darling v. Charleston Community Memorial Hospital. The court enunciated a corporate negligence doctrine under which hospitals have a duty to provide an adequately trained medical and nursing staff. A hospital is responsible, in conjunction with its medical staff, for establishing policies and procedures for monitoring the quality of medicine practiced within the hospital.

The Darling case involved an 18-year-old college football player who was preparing for a career as a teacher and coach. The patient, a defensive halfback for his college football team, was injured during a play. He was rushed to the emergency department of a small, accredited community hospital where the only physician on emergency duty that day was Dr. Alexander, a general practitioner. Alexander had not treated a major leg fracture in 3 years.

The physician examined the patient and ordered an X-ray that revealed that the tibia and fibula of the right leg had been fractured. The physician reduced the fracture and applied a plaster cast from a point 3 or 4 inches below the groin to the toes. Shortly after the cast had been applied, the patient began to complain continually of pain. The physician split the cast and continued to visit the patient frequently while the patient remained in the hospital. Not thinking it was necessary, the emergency department physician did not call in any specialists for consultation.

After 2 weeks, the student was transferred to a larger hospital and placed under the care of an orthopedic surgeon. The specialist found a considerable






amount of dead tissue in the fractured leg. During a period of 2 months, the specialist removed increasing amounts of tissue in a futile attempt to save the leg until it became necessary to amputate the leg 8 inches below the knee. The student’s father did not agree to a settlement and filed suit against the emergency department physician and the hospital. Although the physician later settled out of court for $40,000, the case continued against the hospital.

The documentary evidence relied on to establish the standard of care included the rules and regulations of the Illinois Department of Public Health under the Hospital Licensing Act; the standards for hospital accreditation, today known as The Joint Commission; and the bylaws, rules, and regulations of Charleston Hospital. These documents were admitted into evidence without objection. No specific evidence was offered that the hospital failed to conform to the usual and customary practices of hospitals in the community.

The trial court instructed the jury to consider those documents, along with all other evidence, in determining the hospital’s liability. Under the circumstances in which the case reached the Illinois Supreme Court, it was held that the verdict against the hospital should be sustained if the evidence supported the verdict on any one or more of the 20 allegations of negligence. Allegations asserted that the hospital was negligent in its failure to: (1) provide a sufficient number of trained nurses for bedside care—in this case, nurses who were capable of recognizing the progressive gangrenous condition of the plaintiff’s right leg; and (2) failure of its nurses to bring the patient’s condition to the attention of the administration and staff so that adequate consultation could be secured.

Although these generalities provided the jury with no practical guidance for determining what constitutes reasonable care, they were considered relevant to aid the jury in deciding what was feasible and what the hospital knew or should have known concerning its responsibilities for patient care.

Evidence relating to the hospital’s failure to review Alexander’s work, to require consultation or examination by specialists, and to require proper nursing care was found to be sufficient to support a verdict for the patient. Judgment was eventually returned against the hospital in the amount of $100,000. The Illinois Supreme Court held that the hospital could not limit its liability as a charitable corporation to the amount of its liability insurance.

[T]he doctrine of charitable immunity can no longer stand . . . a doctrine which limits the liability of charitable corporations to the amount of liability insurance that they see fit to carry permits them to determine whether or not they will be liable for their torts and the amount of that liability, if any.

In effect, the hospital was liable as a corporate entity for the negligent acts of its employees and physicians. Among other things, the Darling case





demonstrates the importance of the governing body’s duty to establish a mechanism for the evaluation, counseling, and, when necessary, taking action against those physicians who pose an unreasonable risk of harm to patients. Physician review and monitoring is best accomplished through peer review. Most states provide statutory protection from liability for peer review activities conducted in a reasonable manner without malice.

Corporate Officer/Director An officer or a director of a corporation is not personally liable for the torts of corporate employees. To incur liability, the officer or the director ordinarily must be shown to have in some way authorized, directed, or participated in a tortious act. The administrator of the estate of the deceased in Hunt v. Rabon brought a malpractice action against hospital trustees and others for the wrongful death of the decedent during an operation at the hospital. A contractor had incorrectly crossed the oxygen and nitrous oxide lines of a newly installed medical gas system leading to the operating room. The trustees filed a demurrer—a pleading claiming that the facts of the case were not sufficient for an action against them individually as trustees. The lower court sustained the demurrer, and the plaintiff appealed. On appeal, the South Carolina Supreme Court held that the allegations presented were insufficient to hold the trustees liable for the wrongs alleged.





▸ DOCTRINE OF RESPONDEAT SUPERIOR Respondeat superior (“let the master respond”) is a legal doctrine holding employers liable, in certain cases, for the wrongful acts of their agents (employees). This doctrine also has been referred to as vicarious liability, whereby an employer is answerable for the torts committed by employees. In the healthcare setting, an organization, for example, is liable for the negligent acts of its employees, even though there has been no wrongful conduct on the part of the organization. “Hospitals are vicariously liable for the negligence of an independent contractor emergency-room physician where the patient enters the emergency room seeking treatment from the hospital rather than a specific physician of the patient’s own choosing”

For liability to be imputed to the employer, both of the following statements must be true:

1. A master–servant relationship must exist between the employer and the employee.

2. The wrongful act of the employee must have occurred within the scope of his or her employment.

The question of liability frequently rests on whether providers treating a patient are independent agents (responsible for their own acts) or employees of the organization. The answer to this depends on whether the organization can exercise control over the particular act that was the proximate cause of the injury. The basic rationale for imposing liability on an employer developed because of the employer’s right to control the physical acts of its employees. It is not necessary that the employer actually exercise control, only that it possesses the right, power, or authority to do so.

When filing a lawsuit, the plaintiff’s attorney generally names both the employer and employee. This occurs because the employer is generally in a better financial condition to cover the judgment. The employer is not without remedy if liability has been imposed against the organization as a result of an employee’s negligent act. The employer, if sued, may seek indemnification (i.e., compensation for the financial loss caused by the employee’s negligent act) from the employee.

Independent Contractor An independent contractor relationship is established when the principal has no right of control over the manner in which the agent’s work is to be performed. The independent contractor, therefore, is responsible for his or her own negligent acts. However, some cases indicate that an organization may be held liable for an independent contractor’s negligence. For example, in Mehlman v. Powell, the court held that a hospital could be found vicariously






liable for the negligence of an emergency department physician who was not a hospital employee but who worked in the emergency department in the capacity of an independent contractor. The court reasoned that the hospital maintained control over billing procedures, maintained an emergency department in the main hospital, and represented to the patient that the members of the emergency department staff were its employees, which may have caused the patient to rely on the skill and competence of the staff.

In another case, a hospital was found vicariously liable for the negligent acts of independently contracted emergency department physicians. In Schiavone v. Victory Mem. Hosp., the decedent was transported to the hospital emergency department by ambulance. “. . . the plaintiff’s decedent was taken by ambulance to the Victory Memorial Hospital . . . emergency room complaining of a burning sensation in the chest, belching, and pain in both arms. There, she was examined and treated by an emergency-room physician who rendered a diagnosis of gastritis and discharged her. The decedent died approximately 5 days later, allegedly of a myocardial infarction.” A suit was filed against the hospital. The New York Supreme Court, Appellate Division, ruled that the patient sought emergency treatment from the hospital, not from any specific physician of the patient’s own choosing. Although the hospital could be vicariously liable for the alleged malpractice of the appellant even though he was an independent contractor with the hospital at the time of the occurrence, the cause of action was not filed on a timely basis against the hospital.

The doctrine of respondeat superior may impose liability on an organization for a nurse’s acts or omissions that result in injury to a patient. Whether such liability attaches depends on whether the conduct of the nurse was wrongful and whether the nurse was subject to the control of the organization at the time the act in question was performed.


Citation: Hoffman v. Moore Reg’l Hosp., Inc., 441 S.E.2d 567 (N.C. Ct. App. 1994)

Facts Hoffman was admitted to the hospital with an order for a renal arteriogram. After her admission, Hoffman was presented with a consent form for the procedure. The consent listed five radiologists on the form but did not specify which radiologist would perform the procedure. The list of radiologists was composed of members of the Pinehurst radiology group, which determined which radiologist would cover the hospital each day. Dr. Lina was assigned to perform Hoffman’s procedure. Following the renal arteriogram, Lina determined that an angioplasty was necessary. Because






of complications during the procedure, Hoffman had to be transferred to University Medical Center. Her condition deteriorated during the following year and she eventually died. Mr. Hoffman then sought to hold the hospital liable for the negligence of the radiologist under the theory of respondeat superior. The trial court dismissed the claim that the hospital was liable under the theory of respondeat superior.

Issue Was the hospital liable for the malpractice of Lina under the theory of respondeat superior?

Holding The North Carolina Court of Appeals held that the hospital was not liable for the negligence of Lina under the theory of respondeat superior.

Reason The court of appeals held that Lina was not an employee of the hospital. He was not subject to supervision or control by the hospital. There was no evidence that Hoffman would have sought treatment elsewhere if she had known for a fact that Lina was not an employee.

Determination of whether a nurse practitioner’s conduct was wrongful in a given situation depends on the standard of conduct to which the nurse practitioner is expected to adhere. In liability deliberations, the nurse practitioner who is subject to the control of the organization at the time of the negligent conduct is considered an employee and not a borrowed servant of the organization.




▸ GOVERNING BODY RESPONSIBILITIES Along with the corporate authority that is granted to the governing body, duties are attached to its individual members. These responsibilities are considered duties because they are imposed by law and can be enforced in legal proceedings. Governing body members are considered by law to have the highest measure of accountability. They have a fiduciary duty that requires acting primarily for the benefit of the corporation. The general duties of a governing body are both implied and express. Failure of a governing body to perform its duties may constitute mismanagement to such a degree that the appointment of a receiver to manage the affairs of the corporation may be warranted.

The duty to supervise and manage is as applicable to the trustees as it is to the managers of any other business corporation. In both instances, there is a duty to act as a reasonably prudent person would act under similar circumstances. The governing body must act prudently in administering the affairs of the organization and must exercise its powers in good faith.

Appointment of a Chief Executive Officer The governing body is responsible for appointing a CEO to act as its agent in the management of the organization. The CEO is responsible for the day-to- day operations of the organization. The CEO plans, directs, and coordinates the operational activities of the organization. The CEO must possess the competence and the character necessary to maintain satisfactory standards of patient care within the organization. The responsibilities and authority of the CEO should be expressed in an appropriate job description, as well as in any formal agreement or contract that the organization has with the CEO. Some state health codes describe the responsibilities of administrators in broad terms. They generally provide that the CEO/administrator shall be responsible for the overall management of the organization; enforcement of any applicable federal, state, and local regulations, as well as the organization’s bylaws, policies, and procedures; appointment of, with the approval of the governing body, a qualified medical director; liaison between the governing body and medical staff; and appointment of an administrative supervisor to act during the CEO’s absence from the organization.

The general duty of a governing body is to exercise due care and diligence in supervising and managing the organization. This duty does not cease with the selection of a CEO. A governing body can be liable if the level of patient care becomes inadequate because of the governing body’s failure to properly supervise the management of the organization. With these responsibilities in mind, the governing body must closely monitor the effectiveness of the organization’s leadership, beginning with the CEO. The Board should require a




self-evaluation by the CEO on an annual basis, after which the board also reevaluates the CEO.

Hospital Administrator Licensure There are no formal licensing requirements for hospital administrators, although there are common educational career paths to follow when seeking executive positions in hospitals. A master’s degree in health services administration or a related field is often required. “Hospital administrators may also earn voluntary professional certification.” The American College of Healthcare Executives is the premiere professional organization offering a certification process.

The American College of Healthcare Executives is an international professional society of 40,000 healthcare executives who lead hospitals, healthcare systems and other healthcare organizations. ACHE’s mission is to advance its members and healthcare management excellence. ACHE offers its prestigious FACHE credential, signifying board certification in healthcare management.

Nursing Home Administrator Licensure To comply with federal requirements, the various states have incorporated licensing requirements in their regulations. Administrators are licensed under the laws of their individual states. Statutes generally provide that the administrator of a nursing facility be licensed in accordance with state law. Alaska statutes, for example, require licensing of nursing home administrators.

Sec. 08.70.080. License required. Only a licensed nursing home administrator may manage, supervise, or be generally in charge of a nursing home. The care provided by a nursing home or a licensed hospital providing nursing home care through the use of skilled nursing beds or intermediate care beds shall be supervised by a licensed nursing home administrator or by a person exempted from licensure requirements under this section.

Licensure requirements include higher education, such as in New York State, which provides that “An applicant shall be deemed in fulfillment of Licensure Qualification 3 upon receipt of a baccalaureate or higher level degree from an accredited educational institution including, or supplemented by, 15 credit hours of required coursework in long-term care/health care, gerontology and personnel management.” In Massachusetts, 245 CMR 2.00 governs the licensure and practice of nursing home administrators and establishes the standards of conduct for the practice of nursing home administrators that include a written examination.

The National Association of Long Term Care Administrator Boards (NAB) offers the nursing home administrator examination. The NAB in July 2017











“will transition its examinations to a new structure: examinees will need to pass a 100-item ‘core of knowledge’ section and a 50-item line of service section.” The nursing home administrator exam “has been developed and administered by NAB for decades and is taken by over 2,000 candidates across the nation annually.”

States that require administrators to be licensed provide penalties ranging from fines to imprisonment for those administrators functioning without a license. The Alaska statutes cited earlier provide that “A person convicted of violating a provision of this chapter is guilty of a class B misdemeanor.”

A $5,000 fine was imposed on a nursing facility for operating without a licensed administrator for 54 days in Magnolias Nursing and Convalescent Center v. Department of Health and Rehabilitation Services. The statute prohibiting operation of a nursing home without a licensed administrator was not considered vague, ambiguous, or unconstitutional.

Responsibility The CEO is responsible for the supervision of the administrative staff and managers who assist in the daily operations of the organization. The CEO derives authority from the owner or governing body. The CEO of an organization owned and operated by a governmental agency may be an appointed public official. The CEO is responsible to lead and oversee the implementation of the company’s long- and short-term plans in accordance with its strategy.

The CEO must implement the policies of the governing body, as well as interpret policies. Appropriate action must be taken where noncompliance with rules and regulations occurs. The CEO is responsible for making periodic reports to the governing body regarding policy implementation.

There may be occasions when the CEO believes that following a direction of the governing body may create a danger to the patients or others. If the CEO knows or should have known, as a reasonably prudent person, of a danger or unreasonable risk or harm that will be created by certain directed activity but nevertheless proceeds as directed, he or she could become personally liable for any resulting injury. The CEO, therefore, must take appropriate steps to notify the governing body of any policies that create dangers or unreasonable risks. Although the CEO cannot assume the functions of the professional staff, he or she must ensure that proper admission and discharge policies and procedures are formulated and carried out. The CEO must cooperate with the professional staff in maintaining satisfactory standards of medical care. The CEO is responsible to keep current as to regulatory changes that affect organizational operations. Periodic meetings should be conducted to inform the staff of regulatory changes affecting their duties and responsibilities. The CEO should designate a representative for administrative coverage during








those hours he or she is absent from the organization. This individual should be capable of dealing with administrative matters and be able to contact the CEO when major problems arise.

Tort Liability The wrongful injury to another by the CEO in the performance of his or her duties can result in the CEO being liable to the one injured. Because the CEO is subject to the control of the organization, the organization also may be liable for the torts of the CEO that occur within the scope of his or her employment. When performing the duties that he or she was employed to perform, the CEO works for the benefit of the organization and not as an individual. Because the organization gains from the work performed by its employees, the law renders the organization legally responsible for the acts of employees while performing the work of the organization.

Liability for the Acts of Others The CEO is not liable for the negligent acts of other employees as long as he or she personally took no part in the commission of the negligent act and was not negligent in selecting or directing the person committing the injury. However, under the doctrine of respondeat superior, a healthcare facility can be liable for an employee’s negligent acts.

Case Reviews Over the years, a fair number of cases have dealt with administrators and their management of healthcare organizations. In general, an administrator employed for the duration of satisfactory performance has no property right in the position, as was pointed out in Bleeker v. Dukakis. The administrator of the Woodland Nursing Home had been hired through an oral agreement under which his continued employment was contingent upon satisfactory work performance. “The assistant commissioner determined that Woodland was being managed improperly and that the appellant should be replaced.” The administrator’s appointment was considered to be at the will of the employer even though the nursing facility’s policies provided a procedure for warning and an opportunity to correct work performance deficiencies.


Anytown Hospital has an outstanding reputation for surgical services. The operating room supervisor and a surgical nurse told Bob Wright, the CEO, that Dr. Flipton, an anesthesiologist, was abusing the use of anesthesia gases in the hospital’s dental suite. He was reportedly seen by operating staff testing “laughing gas” by holding a mask against his face for short periods of time. This scene would be followed by a string of silly, seemingly meaningless jokes. Bob has repeatedly discussed this matter with the medical executive committee. The medical executive committee refuses to






take any action without definitive action by the department chair. Bob suspects that if he pursues the matter further with the governing board, he could end up without a job. The governing body is generally unable to resolve disciplinary actions against a physician without support of the medical executive committee. Bob knows that if he pursues the matter further with the governing board, it will more likely result in a disgruntled board and medical staff. In this case, Bill knew enough to pick his battles, and this was one he could not win.

Dealing with the legal system can be a harrowing experience, even in those instances where the administrator is eventually exonerated from either negligence or criminal activity. Presented here are a few agonizing moments in the lives of some boards and their administrators.

An administrator’s license was revoked for concealment of the identities of the facility’s owners in Loren v. Board of Examiners of Nursing Home Administrators. The court found that the record contained substantial evidence to support the board’s finding. The administrator had actively participated in a scheme to divert checks belonging to the nursing home to undisclosed partners of the home. The crime of knowingly filing false statements as to the facility’s ownership with the intent of defrauding the U.S. government and the state of New York involved moral turpitude and subjected the administrator to disciplinary action. An administrator’s plea to misdemeanor counts for mismanagement was considered a proper basis for suspending his nursing home license for 1 year. A nursing facility’s exclusion from a Medicaid rate incentive program was considered rationally related to the encouragement of superior health care after the administrator was indicted for accepting excessive payments from the residents’ relatives. Although cases of alleged wrongdoing do not always end in a finding for the plaintiff, going through the ordeal is, at best, a most uncomfortable experience for the defendant. The court in State v. Serebin held that the evidence of inadequate staffing and diet was found to be insufficient to support homicide charges against the administrator when the resident left the facility and died of exposure.

Leadership is responsible for leading, and that includes accepting responsibility for addressing those areas in the organization that need improvement, as noted in the following reality check.

Medical Staff Appointments and Privileging








The governing body is responsible for ensuring the medical staff bylaws, rules, and regulations include application requirements for clinical privileges and admission to the medical staff; a process for granting emergency staff privileges; requirements for medical staff consultations; a peer review process; a process for auditing medical records; a process for addressing disruptive physicians and substance abuse; and a process for instituting corrective action (disciplinary actions can take the form of a letter of reprimand, suspension, or termination of privileges).


The hospital’s board of directors had hired a consulting firm to review the quality of patient care being delivered at the hospital where Nathan was employed as the CEO. Following the 2-week review, the consultants presented Nathan and his leadership group with a verbal report. During the consultant’s exit review, Nathan appeared somewhat agitated by the report as he sat restlessly in his seat. When the written preliminary report listing the hospital’s deficiencies was presented to Nathan following the verbal report, he abruptly stood up and said, “This is not just about the hospital! This is about my job!” Nathan then angrily left the room, followed by his managers, with the exception of two. They never looked back—no goodbyes, just angry and disgruntled.

The governing body has a responsibility to appoint competent members to its professional staff. Failure of the governing body to properly screen a medical staff applicant’s credentials can lead to liability for injuries suffered by patients as a result of that omission, as was the case in Johnson v. Misericordia Community Hospital, where the patient brought a malpractice action against the hospital and its liability insurer for alleged negligence in granting orthopedic privileges to a physician who performed an operation to remove a pin fragment from the patient’s hip. The Wisconsin Court of Appeals found the hospital negligent for failing to scrutinize the physician’s credentials before approving his application for orthopedic privileges. The hospital failed to adhere to procedures established under both its own bylaws and state statute. The measure of quality and the degree of quality control exercised in a hospital are the direct responsibilities of the medical staff. Hospital supervision of the manner of appointment of physicians to its staff is mandatory, not optional. On appeal by the hospital, the Wisconsin Supreme Court affirmed the appellate court’s decision, finding that if the hospital had exercised ordinary care, it would not have appointed the physician to the medical staff.

Ensure Medical Staff Competency





Healthcare organizations have a responsibility to ensure the competency of their medical staff and to evaluate the quality of medical treatment rendered on their premises. The California Court of Appeals in Elam v. College Park Hospital reviewed a question as to “whether a hospital is liable to a patient under the doctrine of corporate negligence for negligent conduct of independent physicians and surgeons who, as members of the hospital staff, avail themselves of the hospital facilities, but who are neither employees nor agents of the hospital.” The Court of Appeals upheld that a hospital is liable to a patient under the doctrine of corporate negligence for the negligent conduct of independent physicians and surgeons who are neither employees nor agents of the hospital.

In Dykema v. Carolina Emergency Physicians, P.C., Dykema began having respiratory symptoms, cough, and shortness of breath for which Dr. King, his family physician, treated him. He sought a second opinion from the Center for Family Medicine (“Center”), part of the Greenville Hospital System. Dykema went to the Center with complaints of cough, shortness of breath, and tightness in the chest. A third-year medical student, Dr. Gemas, and Dr. Pearman, an attending faculty member, saw Dykema that day. Pearman prescribed antibiotics for persistent bronchitis and told Dykema to return in 1 week or sooner if his condition worsened.

Early Sunday morning, February 6, Mrs. Dykema called the Center concerning her husband’s worsening condition and was advised to take him to the hospital the next day. She brought him to the hospital at approximately 1:00 PM on February 6, and Dr. Connell, a medical resident and employee of Greenville Hospital System, saw him. Connell diagnosed viral bronchitis and advised Dykema to continue his antibiotics and keep his follow-up appointment at the center on February 8. The next morning, February 7, Mrs. Dykema called the Center and spoke with a receptionist and requested that her husband be seen immediately because of his worsening condition. She was told there were no earlier appointments available and that she should keep the appointment on February 8. Dykema died on the morning of February 8, prior to his scheduled appointment. The cause of death was a progressive showering of pulmonary emboli, pieces of which moved to his lungs and caused a fatal blockage. The South Carolina Supreme Court held the defendant hospital was liable for the full $2 million in actual damages and reinstated the $500,000 award in punitive damages and finding that “the trial court’s ruling that the statutory caps are inapplicable to this case is affirmed.”

Discipline Abusive Behavior It is the responsibility of the CEO, medical board, and governing body to ensure that caregivers who engage in verbal or abusive behavior are appropriately disciplined. Accrediting bodies that claim a zero tolerance for such behavior must support surveyors who report inappropriate behavior. Furthermore, to punish an individual for reporting such behavior and abuse is








tantamount to being complicit with allowing inappropriate behavior to continue. The healthcare industry has a long history of making excuses for allowing abusive behavior. Failure to effectively address such behavior cannot be tolerated in a civil society.

Disruptive physicians can have a negative impact on an organization’s staff and ultimately affect the quality of patient care, as noted in the following reality check.

Implementing the appropriate policies and procedures to address conflict resolution are necessary to ensure a safe and functional environment for both patients and employees. Criteria other than academic credentials (e.g., a physician’s ability to work with others) must be considered before granting an applicant privileges on the hospital’s professional staff. This reality check illustrates how disruptive physician behavior can be harmful to patients, staff, and hospital surveyors who are onsite to examine the hospital’s quality of care.


Citation: Candler Gen. Hosp., Inc. v. Persaud, 442 S.E.2d 775 (Ga. Ct. App. 1994)

Facts On or about February 15, 1990, the patient in this case was referred to Dr. Freeman for consultation and treatment of gallstones. Freeman recommended that the patient undergo a laparoscopic laser cholecystectomy procedure.

On February 16, 1990, Freeman requested and was granted temporary privileges to perform the procedure. The privileges were granted based on a certificate he had received after completing a laparoscopic laser cholecystectomy workshop, which he took on February 10, 1990. Freeman performed the cholecystectomy on February 20, 1990, with the assistance of Dr. Thomas.

A complaint by the administrator of the patient’s estate, supported by an expert’s affidavit, alleged that the cholecystectomy was negligently performed, and as a result, the patient bled to death. The complaint charged the hospital with negligence in permitting Freeman to perform the procedure on the decedent without having instituted any standards, training requirements, or “protocols,” or otherwise instituted any method for judging the qualifications of a surgeon to perform the procedure. The complaint also alleged that the hospital knew or reasonably should have known that it did




not have a credentialing process that could have assured the hospital of the physician’s education, training, and ability to perform the procedure.

The trial court denied the hospital’s motion for summary judgment, finding that the plaintiffs’ evidence was sufficient to raise a question of fact regarding whether surgical privileges should have been issued by the hospital to Freeman. The hospital appealed.

Issue Was there a material issue of fact as to whether the hospital was negligent in granting the specific privileges requested by Freeman?

Holding The Georgia Court of Appeals held that there was a material issue of fact as to whether the hospital was negligent in granting the specific privileges requested, thus precluding summary judgment.

Reason The court found that a hospital has a direct and independent responsibility to its patients to take reasonable steps to ensure that physicians using hospital facilities are qualified for the privileges granted. The hospital owed a duty to the plaintiffs’ decedent to act in good faith and with reasonable care to ensure that the surgeon was qualified to practice the procedure that he was granted privileges to perform.

Privileges Denied: Inability to Work with Others The court, in Ladenheim v. Union County Hospital District, held that the physician’s inability to work with other members of the staff was sufficient grounds to deny him staff privileges. The physician’s record was replete with evidence of his inability to work effectively with other members of the hospital staff. As stated in Huffaker v. Bailey, most courts have found that the ability to work smoothly with others is reasonably related to the objective of ensuring patient welfare. The conclusion seems justified because healthcare professionals frequently are required to work together or in teams. A staff member who, because of personality characteristics or other problems, is incapable of getting along with others could severely hinder the effective treatment of patients.

In another case, the court, in Pick v. Santa Ana-Tustin Community Hospital, held that the petitioner’s demonstrated lack of ability to work with others in the hospital setting was sufficient to support the denial of his application for admission to the medical staff. There was evidence that the petitioner presented a real and substantial danger to patients treated by him and that the patients might receive less than a high quality of medical care.








Dr. X came into my outer office standing in the doorway complaining that there were no beds available in the intensive care unit (ICU) for his patient whom he said was in critical condition.

I could hear his voice from my inner office. My secretary called me through the intercom and said “Dr. X is out here and says he wants to see you now. He wants you to discharge a patient from the ICU to a different nursing unit so he can move his patient in to an ICU bed.”

I walked out of my office into the reception area. Before I could speak, Dr. X began an explosive tirade as to how his patient needed to be in the ICU more than the other patients already admitted. Dr. X said, “I want a patient moved from ICU to a different patient care unit. My patient is in critical condition.” I suggested he calm down and stated that the priority for admission to the unit must to be reviewed with Alex, who is the director of the ICU. Dr. X became more angry and said, “Step outside and you and I will handle this.” I then instructed my secretary to call security. She was so stunned that she sat there in a daze and failed to call security. Turning to Dr. X, I said, “Dr. X, it is time for you to leave and I will speak to Alex and he will make the appropriate accommodations for your patient. Alex will consult with you.” He then stormed out of my office as Stu, the president of the medical staff walked in smiling and chuckling, “I see you met Dr. X. I heard him offer to go out to the parking lot with you. Lucky you didn’t go with him. He just got back from Vietnam. I think he was used to being in charge and is having some difficulty readjusting to civilian life.”

Dr. X was sent a letter of reprimand. There was no reply and thereafter he was seldom seen in the hospital.



For generations, bad behavior by doctors has been explained away as an inevitable product of stress or tacitly accepted by administrators. . . . but that time-honored tolerance is waning . . . as a result of regulations imposed in 2009 by The Joint Commission, the group that accredits hospitals. These rules require hospitals to institute procedures for dealing with disruptive behavior, which can take passive forms such as refusing to answer pages or




attend meetings. The commission has called for a “zero tolerance” approach.

—Sandra G. Boodman, The Washington Post, March 4, 2013

Suspension Privileges A physician who challenges a board’s decision to suspend his medical staff privileges will find that a court will generally uphold the board’s decision in a legal action. As was the case in Bouquett v. St. Elizabeth’s Corp., where an ophthalmologist brought an action to challenge suspension of his medical staff privileges after a felony conviction in a federal court for conspiracy to distribute Dilaudid. He later was sentenced to 5 years of incarceration. On appeal, the Ohio Supreme Court held that the conviction of the ophthalmologist justified summary suspension of the physician’s staff privileges pursuant to a hospital bylaw permitting summary suspension in the best interest of patient care in the hospital. A governing body has broad discretion in determining who shall be granted medical staff privileges. Unless an organization has been arbitrary and/or capricious or has abused its discretion, the courts generally will not interfere with a board’s decision to suspend physicians convicted on drug- related felony charges.

Enforce Standards of Professional Ethics Meyers applied for medical staff privileges. Shortly thereafter, the Credentials Committee, the Medical Executive Committee (MEC), and the board of the hospital approved Meyers for appointment to the medical staff. All initial appointments to the medical staff were provisional for 1 year.

Within a year of Meyers’s initial appointment, the Credentials Committee began to evaluate Meyers for advancement to active staff. The Credentials Committee was concerned about Meyers’s history: moving from hospital to hospital after disputes with hospital staff; his failure to fully, and in a timely manner, disclose disciplinary and corrective action taken against him in another state; and the quality of his patient care. The MEC voted to accept the Credentials Committee decision to revoke Meyers’s staff privileges. The MEC then recommended to the board the revocation of Meyers’s privileges.


Stephen, a hospital administrative consultant, selected a complex case on the 10th floor orthopedic unit for review. Stephen reviewed the patient’s record. Following several questions about the patient’s care, a staff nurse asked, “Would you like Dr. Williams, the orthopedist, to discuss this case with you?” Stephen said, “Sure, that will be fine.” Dr. Williams soon arrived and appeared a bit disturbed that he had been summoned. Stephen





introduced himself and said that he just had a few questions he would like to ask.

Stephen asked Dr. Williams which diagnoses the patient related to the organization at the time of admission and which diagnoses were made during the course of the patient’s hospitalization. Dr. Williams said, “I am treating the patient for her orthopedic problems, not all of these other diagnoses.” Following a few questions with the physician, Stephen asked to interview the patient. Dr. Williams agreed, “OK.” Stephen asked, “Could you please ask the patient if I could speak with her?” Dr. Williams said, “That’s not necessary.” Dr. Williams and Stephen walked to the entrance of the patient’s room. Stephen waited outside the patient’s room. Dr. Williams walked into the patient’s room, returned to the hallway, and said, “The patient was sleeping, but I woke her up.”

Upon entry to the patient’s room, sensing that Dr. Williams had forgotten Stephen’s name, Stephen introduced himself to the patient. Dr. Williams asked Stephen if he wanted him to leave the room. Stephen replied, “It’s OK. I only have a few questions. You can stay if you would like.”

The patient said, “Oh, I know what you do. My husband is a nurse.” Stephen smiled and asked about her care. She said that it was excellent. She said the food could be better but she was pleased with her overall care. She talked about her hip fracture and back problems. Dr. Williams, interrupting the conversation, proceeded to tell the patient about her orthopedic issues. He described in explicit and frightening detail how the discs in her back were collapsing and how things could progress and how she could eventually be confined to a wheelchair.

Following his brief conversation with the patient, Stephen said, “You will be all OK.” The patient smiled and said, “Thank you.” Upon leaving the room, Dr. Williams asked, “What kind of doctor are you?” Stephen replied, “I am not a doctor; I am an administrative consultant.” Not having listened to Stephen’s answer, Dr. Williams said in a threatening manner, just outside the patient’s room, “Don’t you ever tell one of my patients they are going to be OK!” Stephen said calmly, “I was not speaking clinically; I was relating a compassionate goodbye to the patient.” Stephen then extended his hand to Dr. Williams, saying, “Thank you for your time.” Dr. Williams shook Stephen’s hand and then quickly walked away down the corridor. Stephen later learned that this was not the first time that Dr. Williams had had behavioral issues with both patients and with the nursing staff. Questions arise as to: (1) what information should Stephen share with the corporate




leaders regarding Dr. Williams’ disruptive behavior on the patient care unit; and, (2) what action, if any, should the hospital take.

Dr. Williams eventually apologized to Stephen several months later for his conduct, stating that he thought Stephen was a physician and believed him to be out of place for saying that his patient would be OK.

The board notified Meyers that a three-member board committee would conduct an independent review. This committee discussed concerns about Meyers’s behavior and his inability to get along with others, in addition to questions about his surgical technique. The committee questioned Meyers about several incident reports concerning disruptive behavior, his history of problems at other hospitals, his failure to complete medical records, his hostility toward the operating room staff, and his failure to provide appropriate coverage for patients while he was unavailable. Meyers did acknowledge that he had a personality problem.

The three-member committee of the board voted to deny Meyers’s appointment to active staff. The reasons cited for the committee’s decision were Meyers’s failure to satisfy requirements that he abide by the ethics of the profession, work cooperatively with others, complete medical records in a timely manner, and abide by hospital standards. The committee outlined Meyers’s pattern of rude, abusive, and disruptive behavior that included, but was not limited to, temper tantrums, attempted interference with the right of an attending physician to refer a patient to the surgeon of his choice or to transfer the patient, condescending remarks toward women, refusal to speak to a member of his surgical team during surgical procedures, and several instances of throwing a scalpel during surgery. The committee informed Meyers that this behavior could have an adverse effect on the quality of patient care. As for his failure to complete timely medical records, the committee stated that delinquent records can place patients at risk.

The committee issued its recommendation that Meyers not be reappointed to the hospital’s staff because of his failure to meet ethical standards and his inability to work cooperatively with others. In May, the board adopted and affirmed the Fair Hearing Committee’s recommendation. Ultimately, after further appeals, the board revoked Meyers’s privileges.

Meyers brought suit, seeking a permanent injunction to require the hospital to reinstate him to staff. The court denied Meyers’s motion. Quality patient care requires that physicians possess at least a reasonable ability to work with others. The board was concerned that Meyers’s behavior would continue resulting in a patient injury.

Duty to Be Financially Scrupulous





Healthcare organizations searching for alternate sources of income must do so scrupulously and not find themselves in what could be construed as questionable corporate activities. Smith v. van Gorkum involved a board of directors that authorized the sale of its company through a cash-out merger for a tendered price per share nearly 50% over the market price. Although that might sound like a good deal, the governing body did not make any inquiry to determine whether it was the best deal available. In fact, it made no decision during a hastily arranged, brief meeting in which it relied solely on the CEO’s report regarding the desirability of the move. The Delaware Supreme Court held that the board’s decision to approve a proposed cash-out merger was not a product of informed business judgment and that it acted in a grossly negligent manner in approving amendments to the merger proposal.

A triable claim of illegal fee splitting was stated in Hauptman v. Grand Manor Health Related Facility, Inc., by the allegations of a psychiatrist that a nursing home barred him from continuing to treat its residents unless he joined a professional corporation, the members of which included owners of the nursing home. Under the proposed agreement, the nursing home would retain 20% of the fees collected on his behalf. Although Section 6509(a) of the New York Education Law does not prohibit members of a professional corporation from pooling fees, the statute did not apply to forced conscription into a corporation at the price of surrendering a portion of one’s fees unwillingly. Likewise, Title 8, Section 29.1[b][4] of the New York Compilation of Codes and Rules expressly forbids a professional corporation from charging a fee for billing and office expenses based on a percentage of income from a practice. The psychiatrist’s allegations also showed possible violation of New York Public Health Law § 2801(b), which prohibited exclusion of a practitioner on grounds not related to reasonable objectives of the organization.

A California bank, in Lynch v. Redfield Foundation, refused to honor corporate drafts unless all trustees concurred. They could not agree, and funds in a noninterest-bearing account continued to grow in principal from $4,900 to $47,000 over a 5-year period. Although two trustees did try to carry on corporate functions despite a dissident trustee, their good faith did not protect them from liability in this case. The money could have been transferred to at least an interest-bearing account without the third trustee’s signature. The trustees were held jointly liable to pay to the corporation the statutory rate of simple interest.

Duty to Require Competitive Bidding Many states have developed regulations requiring competitive bidding for work or services commissioned by public organizations. The fundamental purpose of this requirement is to eliminate or at least reduce the possibility that abuses, such as fraud, favoritism, improvidence, or extravagance, will intrude into an organization’s business practices. Contracts made in violation of a statute are considered illegal and could result in personal liability for board members,







especially if the members become aware of a fraudulent activity and allow it to continue. The mere appearance of favoritism toward one contractor over another could give rise to an unlawful action. For example, a board member’s pressing the administrator to favor one ambulance transporter over others because of his or her social acquaintance with the owner is suspect. An organization’s governing body should avoid even the appearance of wrongdoing by requiring competitive bidding.

Duty to Avoid Conflicts of Interest A conflict of interest involves those situations in which a person has opportunity to promote self-interests that could have a detrimental effect on an organization with which he or she has a special relationship (e.g., employee, board member). The potential for conflict of interest exists for individuals at all levels within an organization. Disclosure of potential conflicts of interest should be made so that appropriate action may be taken to ensure that such conflict does not inappropriately influence important organizational and/or healthcare decisions. Board members, physicians, and employees are required by most organizations to submit a form disclosing potential conflicts of interest that might negatively impact the organization’s reputation or financial resources.

Governing body members must refrain from self-dealing and avoid conflict-of- interest situations. Each board member should submit in writing all outstanding voting shares (where applicable) or any relationships or transactions in which the director might or could have a conflict of interest. Membership on the governing body or its committees should not be used for private gain. Board members are expected to disclose potential conflicts of interest and withdraw from the boardroom at the time of voting on such issues. Board members who suspect a conflict of interest by another board member have a right and a duty to raise pertinent questions regarding any potential conflict. Conflict of interest is presumed to exist when a board member or a firm with which he or she is associated may benefit or lose from the passage of a proposed action.


At a time when many hospitals were on the brink of bankruptcy and struggling to survive, Brad, the administrator of Hospital A, one of three in a multihospital system, had a positive bottom line of approximately $6 million. The hospital was located in an upscale, affluent community. The corporate directors siphoned off funds from Hospital A for many years to support the operations and pet capital projects of two of the system’s failing hospitals. Meanwhile, Hospital A was suffering from lack of supplies and funds for Hospital A’s own capital projects, leading to a slow deterioration of Hospital A’s facilities. The physicians and community members, aware of the positive bottom line, were disturbed that Hospital A’s funds from operations and what few donations being made were allocated to fund the day-to-day operations




of the system’s two failing hospitals. As a result, it was difficult to get community members to donate to their own community hospital. The community had no trust their donations would remain in the community.

The needs of the hospital continued to suffer as corporate leadership was expanding nonrevenue-producing projects, relocating corporate offices to more costly sites, building lavish office suites, adding staff with vague job descriptions that only served to burden and penalize the revenue-producing entities, and jeopardizing patient care with their pet projects by deluging hospital staff with paperwork so they could produce even more paperwork to justify their own existence. Hospital staff felt that corporate staff had become an obstacle to the provision of quality patient care. No relief from battlefield fatigue seemed to be on the horizon.

Brad was able to work with a variety of local community leaders (e.g., a banker, lawyer, physician, newspaper editor, and real estate agent) to establish a fundraising board whose mission was to oversee the local fundraising process and help assure that donations were used for Hospital A’s needs. Although many of the corporate leaders privately objected to the concept, the board reluctantly recognized the community fundraising board’s existence, hoping to make inroads into the pockets of the wealthy. With halfhearted support by corporate leadership, the death of many of the board’s founding fathers, and eventual resignation of battle fatigued Brad, who had developed community trust, the community board slowly faded out of existence under the leadership of the administrators that followed him.

Brad’s dilemma regarding cash flow to other entities in the corporation was a decision made on the system’s corporate level. When working in a multihospital system, the CEO of any one division of the system will face many agonizing nights about what he can and cannot control. This is but one of many ethics-driven dilemmas that occur in multihospital systems. The modern-day CEO understands that allocation of scarce resources is often politically driven. Thus, the CEO must have both the oral and written skills to justify to the corporate leadership the funding needed for the functioning of his division.

Membership on the governing body of a nonprofit organization is deemed a public service. Neither the court nor the community expects or desires such public service to be turned to private gain. Thus, the standards imposed on board members regarding the investment of trust funds, self-dealing transactions, or personal compensation may be stricter than those for directors of business corporations.




The essential rules regarding self-dealing are clear. Generally, a contract between the organization and a trustee financially interested in the transaction is voidable by the organization in the event that the interested trustee spoke or voted in favor of the arrangement or did not disclose fully the material facts regarding his or her interest. This resolution of the self-dealing problem is based on the belief that if an interested board member does not participate in the governing body’s action and does make full disclosure of his or her interest, the disinterested remaining members of the governing body are able to protect the organization’s interests. Statutory provisions in some states specifically forbid self-dealing transactions altogether, irrespective of disclosure or the fairness of the deal.

Duty to Provide Adequate Insurance One basic protection for tangible property is adequate insurance against negligence, fire, and other risks. This duty extends to keeping the physical plant of the corporation in good repair and appropriating funds for such purpose when necessary.

It is the duty of the governing body to purchase adequate insurance to cover the various risks associated with conducting organizational business, and thus protect the organization’s assets. Organizations face as much risk of losing their tangible and intangible assets through judgments for negligence as they do through fires or other disasters. When this is true, the duty to insure against the risks of fire is as great as the duty to insure against the risks of negligent conduct.

Criminal Activity Insurance Settlement Johns Hopkins Hospital agreed to a $190 million settlement as the result of Dr. Nikita Levy’s secret taping of patients during pelvic examinations. An investigation was begun, and Dr. Levy was later found dead at home, which was attributed to suicide. The hospital stated that the settlement would be paid by insurance. But many legal and ethical questions remain unanswered—for example, how were Dr. Levy’s activities able to go undetected for so many years? The “patient’s rights to privacy,” amongst many others, were severely violated. The pain and suffering will not be relieved by this settlement. It is difficult to place this case in any particular chapter; however, his chapter perhaps may be most appropriate, as ultimately, it is the hospital’s responsibility to be ever vigilant for both negligent and criminal acts that impact the lives of the patients it serves to heal. Peer review should not merely be a process for meeting regulatory requirements. Hospital boards should continuously improve the process and consider the pros and cons of a profession’s process of self-review.

Duty to Comply with Law The governing body in general, and its agents (assigned representatives) in particular, are responsible for compliance with federal, state, and local laws




regarding the operation of the organization. Depending on the scope of the wrong committed and the intent of the governing body, failure to comply could subject board members and/or their agents to civil liability and, in some instances, to criminal prosecution. The organization and its designated officers are responsible to address deficiencies identified during inspections by both governmental and nongovernmental agencies.


San Jose, CA—When a California cardiologist and cardiac surgeon went to their superiors complaining of woeful patient care at their hospital, one had her job shifted to a satellite outpatient clinic, while the other’s contract was terminated. Now, as their ensuing lawsuit—naming two additional cardiologists among the defendants—moves into its next phase, the plaintiffs have given an exclusive interview to heartwire detailing their experiences.

• • • Some of their complaints have already been upheld. For example, the JC— a not-for-profit organization that accredits over 19,000 health care organizations in the U.S.—put the SCVMC on “conditional accreditation” for six months in 2010/2011.

—Lisa Nainggolan, heartwire, January 25, 2012

Failure to comply with applicable statutory regulations can be costly. This was the case in People v. Casa Blanca Convalescent Homes, in which there was evidence of numerous and prolonged deficiencies in resident care. The nursing home’s practice of providing inadequate staffing constituted not only illegal practice, but also unfair business practice in violation of Section 17200 of the California Business and Professions Code. The trial court was found to have properly assessed a fine of $2,500 for each of 67 violations, totaling $167,500, where the evidence showed that the operator of the nursing home had the financial ability to pay that amount.

Duty to Comply with Accreditation Standards The governing body is responsible for compliance with applicable standards promulgated by accrediting bodies. Noncompliance could cause an organization to lose accreditation, which, in turn, could provide grounds for third-party reimbursement agencies such as Medicare, to deny payment for treatment rendered to patients.





The findings by The Joint Commission surveyors, for example, during accreditation surveys must be addressed and corrected. Consultative remarks are often offered during a survey to highlight an area of concern. Suggestions by surveyors should be addressed as determined to be appropriate by the organization. They should be regarded as being of considerable importance in identifying areas needing corrective action, as are the written reports provided by surveyors at the time of a survey.

Conflicts of Interests The following news report describes how pervasive the conflicts of interest are between inspection agencies and accrediting bodies.

Hospital Accreditation and Conflicts of Interest The mission of accrediting bodies is to improve the quality of care rendered in the nation’s hospitals through its survey process. The Joint Commission (TJC), an accrediting body in the healthcare industry, for example, is dependent upon the hospitals it surveys/inspects to reimburse it for the costs of those surveys. Therefore, TJC, out of its own necessity for financial survival, must maintain satisfied clients, and in so doing, a conflict arises. How credible can a survey be when the accrediting body is dependent on the organizations it surveys for financial survival? Furthermore, hospitals evaluate the performance of the surveyors. The survival of the surveyor in his or her job is dependent upon satisfactory evaluations from the contracting hospitals. Conflicting interests here encourage surveyors/inspectors to be careful about what he or she scores because of fear of retaliation by both the organizations surveyed and the employer. Accrediting organizations are far from effective in protecting the consumer from the human errors that result in numerous deaths and injuries annually in the nation’s hospitals.


The voluntary quality control system widely used in the nation’s $1 trillion domestic food industry is rife with conflicts of interest, inexperienced auditors and cursory inspections that produce inflated ratings, according to food retail executives and other industry experts.

• • • Suppliers “will hunt down the fastest, cheapest, easiest and least-intrusive third-party auditors that will provide the certificate” that will allow them to sell their product. . . . until that model flips, there will continue to be a false sense of security in terms of what these systems offer.

—Lena H. Sun, The Washington Post, October 22, 2010




The food inspection process is similar to that of the healthcare industry. Food makers often know when inspectors will audit their facilities, and they vigorously prepare for those inspections. This was also true for hospitals up until several years ago, when TJC decided to conduct unannounced surveys. This change occurred mostly due to criticism from its own surveyors, the Centers for Medicare and Medicaid Services, the public, and some of the surveyed organizations.

Food makers often score high in their inspections yet still have recalls and foodborne diseases from eating contaminated food or beverages. TJC, up until several years ago, scored hospitals. They discontinued the scoring process because of criticism, once again from its own surveyors and others. Because of the competition between hospitals, the surveyors were pressured to provide high scores by the organizations they surveyed. Large billboards could be seen on Florida highways advertising scores of 100, yet they may have not provided any better quality of care then a hospital that scored 80. One small town hospital advertised in a newspaper that it scored 100 on a TJC survey. This same hospital had no full-time emergency department physician. One young lady said, “I was home recently and saw plastered in a full page ad that my hometown hospital scored 100 in its most recent accreditation survey. I would not take my dog to that hospital. They killed my mom.” As with hospitals, the food companies typically pay food industry inspectors, creating a conflict of interest for inspectors who might fear that they will lose business if they do not hand out high ratings.

Accreditation in both the healthcare and food industries is plagued by one major disturbing issue: There is a transparent conflict of interest between various inspecting agencies and the entities they inspect, placing the public’s health at risk to benefit their bottom line. Someone has to regulate the regulators.

The Joint Commission National Patient Safety Goals TJC is striving to improve patient safety by identifying national patient safety goals, as well as adding and revising standards in the accreditation process. National patient safety goals have included improving the patient identification process (e.g., using two patient identifiers when administering medications); eliminating transfusion errors; improving the effectiveness of communication among caregivers; timely reporting of critical test results; improving the safety of medication use; reducing harm from anticoagulation therapy; reducing the risk of hospital-acquired infections; accurately reconciling medications; communicating each patient’s medication list to the next provider; providing a reconciled medication list to each patient at discharge; reducing the risk of patient harm resulting from falls; preventing healthcare-associated pressure ulcers; identifying and addressing safety risks inherent in various patient populations served (e.g., adults, children); identifying individuals at risk for suicide; reducing the risks for falls and injury; and developing a Universal




Protocol for Preventing Wrong Site, Wrong Procedure, and Wrong Patient Invasive Procedures. The protocol requires implementation of a process verifying the correct procedure, for the correct patient, at the correct site, including the marking of the procedure site with the patient’s participation. A preprocedure time-out (immediately prior to surgery) requires that all participants involved in an invasive procedure unanimously agree that the correct patient is on the surgical table and is about to undergo the correct procedure at the correct site.

Periodically, TJC introduces new national patient safety goals into its survey process. Surveyors from TJC evaluate organizations at the time of an organization’s accreditation survey, determining compliance with patient safety goals and the standards outlined in its accreditation manual. From time to time, goals are incorporated into the standards section of the accreditation manual. The goals encourage compliance with safe practices in the delivery of patient care and are designed to reduce the likelihood of medical errors. As a result of the frequency of questions asked regarding interpretation, implementation, and the periodic introduction of new goals into the survey process, TJC website ( should be referenced for current information.

The Joint Commission Complaint Process TJC has put into practice a patient complaint process that requires the healthcare organizations it accredits to educate employers and employees as to their right to report safety or quality concerns to TJC. TJC policy forbids accredited organizations from taking retaliatory actions against employees for having reported quality of care concerns to TJC. Patient complaints may be reported using the following means:

Email ( Fax (Office of Quality Monitoring at 630-792-5636) Mail (Office of Quality Monitoring, The Joint Commission, One Renaissance Boulevard, Oakbrook Terrace, IL 60181) Telephone (800-994-6610) for questions about how to file a complaint (8:30 AM to 5:00 PM, Central Time, weekdays). Note: Surveyors may query staff during the survey process as to what procedures an organization has in place for addressing quality of care concerns and how employees and patients are educated as to TJC’s complaint process.

Duty to Provide Adequate and Competent Staff Adequate staffing requires that managers not merely employ sufficient staff to provide patient care but also insure that each position is filled with an individual with the appropriate qualifications for the job for which he or she is hired. The importance of sound hiring practices is well borne out in the following reality check.




Under federal law, nursing homes must have sufficient nursing staff to provide nursing and related services adequate to attain and maintain the highest practicable physical, mental, and psychosocial well-being of each resident, as determined by resident assessments and individual plans of care. As nursing homes are increasingly filled with older, disabled residents with ever- increasing complex care requirements, demand for highly educated and trained nursing personnel continues to grow. Organizations that fail to meet federal standards can lose certification as a provider of patient care. This, in turn, can lead to the denial of reimbursement under federal entitlement programs.

“Federal health officials have concluded that most nursing homes are understaffed to the point that patients may be endangered. For the first time, the government is recommending strict new rules that would require thousands of the homes to hire more nurses and health aides.” A report released by Representative Ciro Rodriguez and Representative Gene Green in 2002 found that the vast majority of Texas nursing homes are understaffed and fail to comply with federal standards. The continuing problems of nursing home staffing prompted Representative Waxman to introduce the Nursing Home Staffing Act of 2005 to establish minimum staff requirements for nursing homes receiving payments under the Medicare or Medicaid program.

Many medical and regulatory investigators who work in nursing homes every day characterize the number of wrongful deaths in terms such as “massive” and “pervasive,” based on their daily experience. Most of the deaths can be traced to an inadequate number of nurses and aides to provide life-sustaining care. The U.S. Department of Health and Human Services reported to Congress this year [2002] that nine out of 10 nursing homes have staffing levels too low to provide adequate care.


An off-duty TJC surveyor entered a hospital in his hometown with his wife for urgent care. When he entered the emergency department (ED) reception waiting area, a sign was noted at the reception desk that read, “Please have a seat. There is a 3½ hour wait for nursing triage.” The surveyor was unable to satisfy the receptionist that his wife needed urgent care. The receptionist insisted that his wife would have to wait her turn. The surveyor eventually spoke to the hospital’s on-call night administrator. The surveyor explained current practice requires that triage be readily available for all patients. The administrator agreed and the surveyor’s wife was attended to. The sign was later removed.

In another instance a surveyor noted that there was a two-step process before a triage nurse would examine a patient. The first step required the








patient to sign in at the receptionist desk upon arriving in the ED, where the patient was required to write his or her name, date, and time on a sign-in sheet. The patient was then be requested to sit in the ED waiting area until summoned by a business office admissions intake clerk, who was responsible for gathering demographic and financial information. The clerk would then prioritize the order in which patients would be seen by a triage nurse, who would then determine who would be treated next in the ED treatment area. In speaking with two admissions clerks, the surveyor asked, “Do you feel comfortable making medical decisions as to in what order patients should be examined by a triage nurse?” The admissions clerk handing the surveyor a notice posted at her desk said, “We are provided this posting that lists 14 patient symptoms to look for to help us determine in what order they should be referred to a triage nurse.” The surveyor asked, “Are you comfortable that this list provides you with sufficient information and training to make such a decision?” Simultaneously they both said, “No!” In this instance, the admitting clerk’s responsibilities and qualifications to perform the assigned tasks were inadequate to perform the requirements of the job.

The answer to staffing requires a continuing emphasis on recruitment and education, development of career ladders, respect for caregivers, salaries commensurate with the requirements of the job, and severe prosecution of those who seek financial gain by purposely understaffing their homes.

Deficient Nursing Care The nursing facility in Our Lady of the Woods v. Commonwealth of Kentucky Health Facilities was closed because of deficiencies found during an inspection of the facility, the most serious of which was the lack of continuous nursing care on all shifts. The court held that evidence that the nursing facility lacked continuous services required by regulation was sufficient to sustain an order to close the facility. Many witnesses testified concerning the deficiencies, and even the administrator admitted to the most serious violation—lack of continuous nursing services. The hearing officer, although noting that the quality of care provided to the facility’s residents was satisfactory, concluded:

The facts clearly reveal that the respondent has long violated one of the “essential functions of a nursing home” by not providing continuous graduate nursing supervision. To contend that such supervision can be provided from afar (by an “on-call” nurse) is to contend that a resident will never be confronted with a medical problem of such immediacy that his health or even his life would not be endangered while awaiting the arrival of the “on-call” professional. Such contention is unacceptable; the facility violated on a protracted basis one of its most substantive mandates.





Absent proof that an adequate nursing staff could not be obtained (there is no such proof herein), it must be concluded that there is no justification for this violation.

The court held that “deference is given to the trier of the fact, and agency determinations are to be upheld if the decision is supported by substantial, reliable, and probative evidence in the record as a whole.”

Timely Response to Patient Calls Healthcare organizations must provide for adequate staffing. The court of appeals in Leavitt v. St. Tammany Parish Hospital held that the hospital owed a duty to respond promptly to patient calls for help. The hospital breached its duty by having less than adequate staff on hand. In addition, the staff failed to at least verbally answer an assistance light to inquire what the patient needed.

Postoperative Care The patient in Czubinsky v. Doctors Hospital, recovering from anesthesia, went into cardiac arrest and sustained permanent damages. The court of appeals held that the injuries sustained by the patient were the direct result of the hospital’s failure to properly monitor and render aid when needed in the immediate postoperative period. The registered nurse assigned to the patient had a duty to remain with her until the patient was transferred to the recovery room. The nurse’s absence was the proximate cause of the patient’s injuries. Failure of the hospital to provide adequate staff to assist the patient in the immediate postoperative period was an act in dereliction of duty—a failure that resulted in readily foreseeable permanent damages.

Nursing Facility Staffing Residents in nursing facilities must be under the care and supervision of a physician. Provision should be made by the facility to obtain the services of at least one physician to oversee the quality of medical care.

States are more exacting than Medicare regulations in expressing nurse– resident ratios. In Koelbl v. Whalen, regulations requiring the employment of sufficient personnel to provide for resident needs in nursing or convalescent homes were found to be sufficiently clear to avoid their being held unconstitutionally vague. State regulations vary in the methods used to establish staffing requirements. State regulations often are developed to ensure that the resident receives treatment, therapies, medications, and nourishment as prescribed in the resident care plans; the resident is kept clean, comfortable, and well groomed; and the resident is protected from accident, infection, and so forth.

In addition to nurses and physicians, a variety of other healthcare workers in nursing facilities support the care and services provided to residents. They









include dietitians, physical therapists, social workers, activity directors, and others. The members of this group have specialized training and usually are licensed or certified by the state to practice their specialties. They differ from the medical or nursing staff in that they may not be involved with all residents, but rather limit their activities to residents needing their special skills.

Deficient Care Given In Montgomery Health Care Facility v. Ballard, three nurses testified that the nursing facility was understaffed. One nurse testified that she asked her supervisor for more help but did not get it. The estate of a nursing home resident that passed away as the result of multiple infected bedsores brought a malpractice action against the nursing home. First American Health Care, Inc., is the parent corporation of the Montgomery Health Care Facility. The trial court entered a judgment on a jury verdict against the home, and an appeal was taken. The Alabama Supreme Court held that reports compiled by the Alabama Department of Public Health concerning deficiencies found in the nursing home were admissible as evidence. Evidence showed that the care given to the deceased was deficient in the same ways as noted in the survey and complaint reports, which indicated deficiencies in the home, including:

[I]nadequate documentation of treatment given for decubitus ulcers; 23 patients found with decubitus ulcers, 10 of whom developed those ulcers in the facility; dressings on the sores were not changed as ordered; nursing progress notes did not describe patients’ ongoing conditions, particularly with respect to descriptions of decubitus ulcers; ineffective policies and procedures with respect to sterile dressing supplies; lack of nursing assessments; incomplete patient care plans; inadequate documentation of doctor’s visits, orders or progress notes; AM care not consistently documented; inadequate documentation of turning of patients; incomplete “activities of daily living” sheets; “range of motion” exercises not documented; patients found wet and soiled with dried fecal matter; lack of bowel and bladder retaining programs; incomplete documentation of ordered force fluids.

The defendants argued that the punitive damage award of $2 million against the home was greater than what was necessary to meet society’s goal of punishing them. The Alabama Supreme Court, however, found the award not to be excessive. “The trial court also found that because of the large number of nursing home residents vulnerable to the type of neglect found in Mrs. Stovall’s case, the verdict would further the goal of discouraging others from similar conduct in the future.”

Duty to Provide Timely Treatment Healthcare organizations can be held liable for delays in treatment that result in injuries to their patients. For example, the patient in Heddinger v. Ashford Memorial Community Hospital filed a malpractice action against the hospital








and its insurer, alleging that a delay in treating her left hand resulted in the loss of her little finger. Medical testimony presented at trial indicated that if proper and timely treatment had been rendered, the finger would have been saved. The U.S. District Court entered judgment on a jury verdict for the plaintiff in the amount of $175,000. The hospital appealed, and the U.S. Court of Appeals held that even if the physicians who attended the patient were not employees of the hospital but were independent contractors, the risk of negligent treatment was clearly foreseeable by the hospital.

Provide Adequate Facilities, Equipment, and Supplies Healthcare organizations are under a duty to exercise reasonable care to furnish adequate facilities, equipment, and supplies for use in the diagnosis or treatment of patients. Buildings and equipment should be maintained and operated to prevent fire and other hazards to personal safety. Patient rooms should be designed and equipped for adequate nursing care, comfort, and privacy. Mechanical, electric, and patient care equipment should be maintained in a safe operating condition.


At the main health-care facility for veterans in the nation’s capital, doctors have had to halt operating room procedures and dialysis treatments in the past year because of the lack of supplies, nurses have frantically run through the facility hunting for nasal oxygen tubes during an emergency, and sterile surgical items have been left in dirty or cluttered supply rooms, according to a new report.

—Aaron C. Davis, The Washington Post, April 14, 2017

Driftwood Convalescent Hospital, operated by Western Medical Enterprises, Inc., in Beach v. Western Medical Enterprises, Inc., was fined $2,500 in civil penalties because of nonfunctioning hallway lights and the facility’s failure to provide the type and amount of decubitus preventive equipment necessary for resident care as required by the California Health and Safety Code. The regulations required that equipment necessary for care of patients, as ordered or indicated, be provided.

Though no evidence was introduced to show that the decubitus equipment had been ordered by a physician, the phrase “as indicated” supports an inference that when a patient’s condition requires certain equipment, the fact that no physician has ordered that equipment does not relieve the hospital (nursing facility) of the responsibility for providing equipment necessary for patient care.






Provide a Safe Environment Organizations are encouraged to create and maintain a culture of safety in order to reduce the risks of patient injuries and deaths as a result of common mistakes. Patients expect hospitals to provide a safe environment for medical care. Although healthcare organizations are aware of where systems break down, evidence suggests that they have been ineffective in preventing patient injuries that are often the result of human error or just plain carelessness.

Develop a Culture of Safety Implementation of the following suggestions will help hospitals move toward a culture of safety:

Ensure that accountability and responsibility have been assigned for monitoring an organization’s safety initiatives. Involve the medical staff in the development and implementation of systems that are designed to create a culture of safety. Educate all staff as to their individual roles in establishing and maintaining a safe environment for patients. Encourage patients to question their care. Provide guidelines in patient handbooks as to the kinds of questions that patients should be asking caregivers (e.g., I don’t recognize this medication, is it new? What is this medication for? Did you wash your hands before changing my surgical dressing? Is my nurse, Ms. X, off today?). Appoint a safety officer to oversee the patient safety committee and day-to-day safety activities. Establish a patient safety committee with responsibility for oversight of the organization’s patient safety program. The patient safety committee is a multidisciplinary committee that includes representation from administration, nursing, and medical staff. Set up a dedicated, 24-hour-a-day safety hotline. Establish a voluntary event reporting system. Educate employees and patients as to reporting options (e.g., telephone, email). Assure employees that there will be no retaliation for reporting patient safety concerns. Implement lifesaving initiatives that include: (1) establishing a rapid response team; (2) improving care for myocardial infarctions; (3) preventing adverse drug events; (4) preventing central line–associated bloodstream infections; (5) preventing surgical site infections; and (6) preventing ventilator-associated pneumonia. Use the online tools released by Agency for Healthcare Research and Quality (AHRQ) to assist in evaluating and improving safe care.





With windows wide open, what happened to the pharmacy employees who were exposed to carbon monoxide from the tailpipes of ambulances backed up to the open windows of City Medical Center’s ground floor pharmacy?

During a tour of City Medical Center, Bill, the surveyor-inspector asked to tour the pharmacy as part of the survey process. He was taken to the ground floor where the pharmacy was located. He was escorted into the pharmacy by several hospital staff members assigned to escort him during the 5-day survey process and respond to any questions he might have. As Bill entered the pharmacy, he noticed a strong odor of exhaust fumes.

He observed that windows were open along the length of the pharmacy’s outside wall. He walked toward the open windows and counted and observed 8 to 10 ambulances that were parked and backed up to the open windows, some with engines running.

The odor from the fumes permeated the pharmacy. He noticed the admixture room where IV solutions were prepared for patients. He noticed the windows were open in this room as well. The room was quite warm, as was the rest of the pharmacy. There were no intake or ventilation systems in place other than the hoods under which the staff worked. There were no air conditioning or air exhaust systems in the room other than the open windows. Bill asked the staff, “Do these fumes bother you?” They replied, “Oh no, we don’t notice it anymore.” Bill asked, “How long have these windows been opened?” Their reply, “Not sure. Several years.”

After touring and speaking to the staff working in the pharmacy, Bill turned to the pharmacy manager and asked, “Have you ever reported this to your manager.” She replied, “Yes, I have. But it gets too hot in the pharmacy during the summer to keep them closed.” Looking at his escorts, Bill said, “This is not a good situation. Employees have been exposed to exhaust fumes for way too long. And it is likely that the exhaust fumes contain carbon monoxide. Everyone working in the pharmacy needs to be tested for carbon monoxide poisoning. The windows need to be closed and the ambulances removed to a safer location. And the intake and exhaust systems need to be addressed.” One of the escorts replied, “Mayor X will not be happy with this.” Bill replied, “This is not about the mayor, this is about the people working here.”

The following morning Bill was asked by his escorts to go back to the pharmacy for another tour. He agreed to go back. He was presented with architectural drawings prepared during the night addressing the air intake




and exhaust systems flaws. Not only were the drawings prepared but the necessary construction work was completed, with air-conditioning and exhaust ducts installed. The ambulances had been removed to a more appropriate location. Bill looked at the escorts and pharmacy manager and said, “Your work has only begun. Everyone here needs to be tested, and if necessary, treated for carbon monoxide poisoning.” The question is: After each survey, do hospitals actually follow through with recommendations for improving the working environment and protect patients, staff, and visitors from harm?

City Medical Center could be liable for any harm suffered. The seriousness is easy to understand; knowingly failing to address such issues in a timely manner is gross negligence.

Physical Environment Each organization is responsible for providing a safe physical environment for patients, staff, and visitors. Responsibility for this function is often assigned to an organization’s plant services/engineering department. Among other duties, the department is responsible for the provision of heat, water, electricity, and refrigeration and for maintenance of the organization’s equipment and physical plant. The duties of the department may vary depending on the size of the organization and a particular organization’s facilities.

An organization can be subject to corporate liability if it fails to ensure a patient’s safety and well-being. Healthcare corporations are liable for injuries to both patients and employees arising from environmental hazards. For example, the license of a nursing facility operator was revoked in Erie Care Center, Inc. v. Ackerman on findings of uncleanliness, disrepair, inadequate record keeping, and nursing shortages. The court held that although the violation of a single public health regulation may have been insufficient in and of itself to justify revocation of the nursing home’s operating license, multiple violations, taken together, established the facility’s practice and justified revocation.

In the following reality check, management failed in its responsibility to provide a safe working environment for its employees. The case in point here is that environmental issues need to be addressed in a timely manner.

Unsafe Walking and Driving Conditions The plaintiff in Lutheran Hosp. of Ind. v. Blaser crossed the street one evening after visiting her husband in the hospital and was hit by a car as she was walking up the driveway to the hospital parking lot. She was struck from behind when the car was turning into the parking lot exit. The patient and her






husband brought a negligence suit against the hospital as a result of the injuries she suffered.

Drivers, in general, could not determine that the driveway was not an exit until such time as they were alongside it or were in the process of turning into the driveway. Each night, three or four cars mistakenly mistook the exit for an entrance. Outside visual cues actually drew pedestrians to cross the highway mid-block in order to enter the lot. Neither security guards nor the parking lot attendants had attempted to dissuade pedestrians from crossing the street mid-block. The superior court found that the funneling of pedestrians and vehicular traffic into the exit driveway created a dangerous condition that the hospital should have reasonably foreseen, and the court entered judgment for the plaintiffs. The hospital appealed, claiming that although it maintained the driveway, it did not have control over the driveway.

The Indiana Court of Appeals held that the accident was sufficiently foreseeable to require the hospital to protect its invitees from such a mishap. The hospital had a legal duty to exercise reasonable care for the plaintiff’s protection. The hospital’s failure to post adequate safeguards or warnings to pedestrians and automobiles against the use of the exit driveway as an entrance to the parking lot was the proximate cause of the injuries suffered by the plaintiff.

Construction Hazards The nursing facility’s operating certificate in Slocum v. Berman was revoked for violations of nursing home regulations relating to construction and safety standards. The most critical issues related to the facility’s structure, which was neither protected wood frame nor fire resistive as required by regulation. This was a violation that adversely affected the health, safety, and welfare of the occupants. It was determined that the nursing home could not be made reasonably safe or functionally adequate for nursing home occupancy.

Fire Hazards In Stacy v. Truman Medical Center, the patients’ families brought wrongful death actions against the medical center and one of its nurses. The wrongful death actions resulted from a fire in the decedents’ room at the medical center. On the day of the fire, Ms. Stacy visited her brother, Stephen Stacy. When she arrived, Stephen, who suffered from head injuries and was not supposed to walk around, was sitting in a chair smoking a cigarette with the permission of one of the nurses. Ms. Stacy also lit a cigarette, and because she did not see an ashtray in the room, she used a juice cup and a plastic soup tray for her ashes.

At approximately 5:00 PM, a nurse came in and restrained Stephen in his chair with ties to prevent him from sliding out of the chair. Before Stacy left, she lit a cigarette, held it to Stephen’s mouth, and extinguished it in the soup






tray. When Ms. Stacy left, she believed there were one or two cigarette butts in the soup container. She did not recall dumping the soup tray into the wastebasket.

Shortly after 5:00 PM, a fire started in a wastebasket in the room. There was no smoke detector in the room. Another patient, Wheeler, was in the bed next to the windows. When Ms. Schreiner, the nurse in charge, discovered the fire, she did not think Wheeler was in immediate danger. She unsuccessfully tried to untie Stephen from his restraints. Then she attempted to put out the fire by smothering it with a sheet. When her attempts to extinguish the fire failed, she ran to the door of the room and yelled for help, which alerted Nurses Cominos and Rodriguez. After calling for help, Ms. Schreiner resumed her attempts to smother the flames with bed linens. Subsequently, she and others grabbed Stephen by the legs and pulled him and his chair toward the hallway. In the process, Stephen’s restraints burned through, and he slid from the chair to the floor. Schreiner and her assistants pulled him the remaining few feet out of the room and into the hallway. Schreiner tried to get back into the room but was prevented by the intense smoke, flames, and heat.

After initially entering the room, both Rodriguez and Cominos returned to the nurse’s station to sound alarms and to call security; neither attempted to remove Wheeler from the room. Both ran directly past a fire extinguisher, but neither grabbed it before returning to the room. After Stephen was removed from the room, Cominos entered the room with a fire extinguisher and tried to rescue Wheeler but was unable to safely reach Wheeler. Wheeler died in the room from smoke inhalation. Stephen survived for several weeks and then died as a result of complications from infections secondary to the burns he sustained.

The medical center’s policy in case of fire provided for the removal of patients from the room and out of immediate danger first. In its fire-training programs, the medical center used the acronym “RACE” to describe the chronology of steps to take in the event of a fire.

R—Rescue or remove the patient first.

A—An alarm should be sounded second.

C—Contain the fire third.

E—Extinguish the fire last.

The medical center’s written smoking policy at the time of the fire stated: “No smoking shall be permitted in the Truman Medical Center Health Care Facility except in those areas specifically designated and posted as smoking areas. This shall be the responsibility of all employees and particularly supervisory and security employees.” Nurse Cominos admitted that she was a supervisor




and that she violated this portion of the smoking policy on the date of the fire by observing smoking and the use of a juice cup for an ashtray.

On appeal, the Missouri Supreme Court held that a causal connection between the medical center’s negligence and the patients’ deaths was sufficiently established.

Testimony was offered that training received by the medical center’s nurses was below the standard of care and that attempting to put the fire out with linens would also be indicative of a lack of training. The medical center’s expert, Fire Captain Gibson, testified that throwing dry sheets on the fire would have added to the problem by fueling the fire. The jury could have found that if the medical center’s nurses had been properly trained, they would have followed their training and prevented Wheeler’s death by removing him from the room, in accordance with their training acronym “RACE.”

Storage Hazards for Medications and Medical Gases Employees should be warned of any unusual hazards related to their jobs. For example, pregnant employees may abort because of exposure to anesthetic gases in the operating or delivery room, or the fetus of a pregnant employee may suffer cell damage because of exposure to chemotherapeutic agents and radioactive materials.

An employee’s skin condition was found to be compensable in Albertville Nursing Home v. Upton. The employee had developed a severe skin condition on his hands and feet as a result of daily exposure to various caustic cleaning solutions that he used while performing his duties in the nursing facility. The court held that the claimant was entitled to disability benefits for a period of 26 weeks.

A plan for the handling, safe storage, and disposal of hazardous materials to prevent user exposure should include policies and procedures (e.g., receipt, storage, and disposal of hazardous materials); engineering controls (e.g., vertical laminar flow hood for the preparation of chemotherapy medications); personal protective clothing and equipment (e.g., masks, gowns, foot and head coverings, gloves); work practices (who, where, when, and how hazardous materials are handled); medical surveillance of those who handle hazardous materials (e.g., hazardous material handling history and exposure follow-up by employee); inventory of the location, use, and security of all hazardous materials; orientation, education, training, and annual updates; and maintaining readily available, up-to-date material safety data sheets in appropriate locations for all staff.

Refuse generated by healthcare facilities can be divided into five separate categories: (1) infectious, (2) biohazardous, (3) hazardous, (4) radioactive, and





(5) general (solid) waste. Each category poses its own particular problems for receiving, storing, handling, and disposal.


So there I was, inspecting a newly opened infusion center for chemotherapy patients. I was impressed with the state-of-the-art medical equipment, facility cleanliness, and expertise of the physicians and nurses. I complimented the staff as to the design, comfort, working environment, and calming decor for both staff and patients.

After reviewing patient records, I asked to see the storage area for chemotherapy agents. I inquired as to the dollar value of the medications stored in the refrigeration systems. The figure was well over $250,000. I then asked, “How do you monitor the temperature to ensure the efficacy and safe usage of the chemo agents.” An engineer replied. “There are alarms and continuous temperature recording devices that chart temperatures 24 hours a day 365 days a year.” I inquired, who monitors the temperatures when the infusion center is closed, such as on weekends.” The engineer replied, “An alarm will go off at the main switchboard.” I asked, “Can we test the effectiveness of this system without causing panic at the switchboard?” The engineer replied, “Sure. We test the alarm system quarterly but can test now for you.” The alarm was tested and there was no response from the central switchboard. After some discussion the staff decided that the system should be tested on a more regular basis. The words are often heard as to the need for continuous quality improvement. The staff was pleased that they learned of the problem now before there was a bigger issue with the storage of the chemotherapy agents.

Failure to Educate Staff The plaintiff in Parris v. Uni Med, Inc. was admitted to St. Francis Hospital with a decubitus ulcer. While there, he used a Mediscus bed, which was designed with air pockets to prevent decubitus ulcers. Upon discharge on May 31, 1987, the pressure ulcer was healing well. The plaintiff was readmitted on June 15. At the time of the June admission, his pressure ulcer was healing. Four days later, a nurse noted that the ulcer condition had worsened and a new pressure ulcer had formed. The nurse noticed that the dressing on the first site was touching the metal frame on the bed, thus putting pressure on his sacral area. The nurse called Uni Med, and a company employee made adjustments to the bed. Despite the observed improvement in the pressure ulcers at the time of discharge, the patient deteriorated, and surgery was required. Evidence showed that the beds were not monitored regularly and





that the nurses were not trained to turn the patients or adjust or regulate the beds.

The plaintiff brought a legal action against Uni Med, Inc., for pressure ulcers he sustained during his hospital stay. The jury found that the inadequate pressure setting on the bed was caused by its being improperly set up, thus causing worsening of the condition of the ulcers, necessitating surgery. An appellate court agreed that failure to set the bed up properly was the cause of the patient’s pressure ulcers and subsequent surgery.

Failure to Properly Maintain Equipment Hospitals must have appropriate procedures in place for the proper selection, training, handling, storage, and maintenance of medical equipment. The plaintiff, Thibodeaux, in Thibodeaux v. Century Manufacturing Co., a nurse’s aide at the Rosewood nursing facility, sued Century Manufacturing Company after she was injured while operating a Saf-Kary chair lift, which was manufactured by Century. The plaintiff was injured when the chair fell and smashed her finger when the chair’s lifting arm failed. The failure occurred when a patient was being lifted from a whirlpool bath. The plaintiff alleged that Century manufactured a defective chair lift that was the cause of her injuries.

Century argued that the chair lift was not defective in design and that the failure of the chair was caused by air in the Saf-Lift hydraulic system, resulting from the nursing facility’s lack of maintenance. The plaintiff’s expert witness testified that after inspecting the equipment, he found that the accident was caused by the safety lock failing to prevent the chair from disconnecting from the lift. Century theorized that this lack of maintenance caused the whole lift apparatus, including the chair still connected to the lifting arm of the lift column, to rapidly descend on Irene’s finger. Approximately 4 months before the accident, a Century-licensed service technician performed an inspection of the equipment. He found leaks of hydraulic fluid, deteriorating seals and rings, a corroded lift base, and an air-contaminated lifting column.

He took the chair lift out of service and recommended that Rosewood not use it until repairs were made to restore it to safe operation. These findings were communicated to Rosewood in writing. Rosewood did not make the repairs.

The trial court, on a jury verdict, found that the sole cause of the accident was a result of poor maintenance on the part of the nursing facility. The plaintiff appealed.

The Louisiana Court of Appeal held that the evidence supported the conclusion that the accident was caused by the nursing facility’s failure to properly maintain the equipment and that the injury was not the result of poor design. The nursing facility had been warned by the manufacturer of the need for repairs on the chair lift but failed to heed that warning.





Contracted Maintenance Services In Palka v. Servicemaster Management Services, Servicemaster Management Services contracted with Ellis Hospital to develop and implement a maintenance program for the hospital. Servicemaster’s duties included the training, management, and direction of support service employees, including the maintenance department. There had been preexisting wall-mounted fans that had been inspected for safety prior to Servicemaster taking over. The plaintiff, a registered nurse employed by the hospital, was injured when one of the fans fell from the wall onto her. She sued Servicemaster for negligence. The jury rendered a verdict for the plaintiff, and Servicemaster appealed, alleging that they had no duty to her. The appellate division reversed and dismissed the complaint. The nurse appealed. The court of appeals reversed the decision of the appellate division and reinstated the jury verdict for the plaintiff. Servicemaster, by its contract with the hospital, assumed a duty to act. Servicemaster contracted with the hospital to perform certain services and performed those services negligently, which caused Palka’s injury.

Prevent Falls Falls are frequent occurrences in healthcare settings. They can occur anywhere from the time of arrival to the time of departure. Maintaining a safe environment, as well as providing ongoing staff and patient education, can reduce the frequency of falls. The following cases describe some of the more common falls.

PARKING LOT. The plaintiff, Harkins, in Harkins v. Natchitoches Parish Hospital, tripped on a piece of black vinyl garden border material, hidden in the grass, and seriously injured herself. Although the plaintiff had surgery, she never regained full use of her right shoulder. The loss of use was permanent, and the shoulder continued to be painful. On appeal, the court held that a hospital owes a duty to its visitors to exercise reasonable care commensurate with the particular circumstances. Harkins established that she fell because she tripped on the black vinyl plastic gardening border, which was partially hidden by the grass. It was up to the hospital to exculpate itself from this presumption of liability. The appellate court agreed with the trial judge. The failure to either remove the vinyl or place warning signs was a failure to exercise reasonable care.

HOSPITAL LOBBY. The plaintiff in Blitz v. Jefferson Parish Hospital Service District brought a slip-and-fall suit against a hospital, alleging that her fall was caused by loose vinyl stripping in the front entrance of the hospital. The plaintiff testified that as she walked across the lobby, her foot got caught in vinyl stripping. She contended further that the vinyl stripping was defectively installed and maintained. An expert testified that there was an insufficient amount of vinyl adhesive on the underside of the vinyl trim stripping in contact with the top of the terrazzo floor. The plaintiff filed suit against the hospital and was awarded $80,000 after a bench trial. The hospital appealed, contending







that the finding of liability was erroneous and that the trial judge erred in refusing to accept several defense witnesses as experts. The appellate court held that the evidence supported a liability determination.

STRETCHER SAFETY. On June 14, 1986, Hussey, in Hussey v. Montgomery Memorial Hospital, became ill and was taken to the Montgomery Memorial Hospital by his wife. Upon arrival, he was seated on a stretcher in the emergency department. The stretcher had no side rails. Hussey fell from the stretcher and suffered a severe head injury. Hussey was eventually moved by ambulance to another hospital, where he was diagnosed with a dislocated clavicle, laceration of the skin, and two fractures of the lateral wall of the right orbit. The plaintiffs alleged that on several occasions, they questioned Dr. Andrews, the attending physician, as to whether there was any permanent brain damage. On each occasion, Andrews answered that there would not be any brain damage. Two months after the fall, the plaintiffs consulted with an attorney concerning a possible claim against the Montgomery Memorial Hospital but decided not to pursue a lawsuit at that time because they feared doing so might impair the plaintiff husband’s ability to receive medical treatment. For the next 3.5 years, Hussey continued to see his medical providers. No physicians ever disclosed to the plaintiffs that Hussey may suffer permanent brain impairment. By April 1990, Hussey’s behavior became severely erratic and unpredictable to the point that Mrs. Hussey took him to Sandhills Center for Mental Health. Hussey was examined and transferred to the Dartmouth Clinic. A physician at the clinic informed the plaintiffs that test results indicated permanent and residual brain impairment. On June 12, 1990, the plaintiffs filed a complaint alleging negligence against the hospital. The hospital filed a motion to dismiss on the grounds that the action was barred by the 3-year statute of limitations.

The trial judge granted the hospital’s motion for summary judgment, and the plaintiffs appealed. The appellate court held that the action was time barred. The statute of limitations accrued on June 14, 1986, the date of Hussey’s fall. The head injury was not latent. Hussey had a cause of action on the date he fell from the stretcher. Upon falling from the stretcher, he suffered a severe head injury and was rendered unconscious. A treating physician in the emergency department advised Hussey’s wife that swelling in the brain caused her husband’s condition. The probable cause of the accident was the hospital’s negligence. On the date of the fall, it was apparent that there had been wrongdoing, most likely attributable to the hospital. The ultimate injuries sustained by Hussey were a direct result of the June 14, 1986, fall caused by the hospital’s wrongdoing. Hussey’s failure to pursue a cause of action on this date resulted in the tolling of the statute of limitations.

SAFE USE OF RESTRAINTS. Falls by patients often involve mixed allegations of a failure to restrain, supervise, assist, or attend the patient. Some plaintiffs have argued that, although restraints were applied, they were


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improperly applied. The plaintiff in Smith v. Gravois Rest Haven, Inc. brought a lawsuit arising out of a fall and subsequent injuries suffered by his 78-year- old mother. The plaintiff’s mother required use of a “posey” restraining device because of previous falls in the facility. There was sufficient evidence to establish that the restraints had been improperly applied.

WINDOW SAFETY. The plaintiffs in Horton v. Niagara Falls Memorial Medical Center sought recovery against the hospital for injuries sustained by the plaintiff patient’s fall from a second-story hospital window. The patient had been admitted to the hospital with a fever of unknown origin and was noted to be lacking in coordination and blurred vision. The patient had been placed in a private room with a single window that opened to a small balcony encircled by a 2- to 3-foot-high railing. Prior to the patient’s fall, construction workers notified hospital personnel that the patient was standing on his balcony calling for a ladder. The patient was confused and disoriented. On learning of the incident, the attending physician advised a nurse to keep the patient under restraint and to keep an eye on him. The patient’s wife was called, and she indicated that her mother would come to the hospital in 10 to 15 minutes to watch her husband. The patient fell shortly before the mother’s arrival. The Niagara Supreme Court entered judgment for the plaintiffs, and the hospital appealed. The New York Supreme Court, Appellate Division, held that the hospital had a duty to supervise the patient and prevent him from injuring himself.

SLIPPERY FLOORS. Slippery floors are a major source of lawsuits. To reduce liability caused by falls, floors should be maintained properly. The following actions should be taken to reduce patient falls: floors should not contain a dangerous amount of wax; caution signs (e.g., indicating slippery floors) should be used when and where appropriate; floors should be cared for and maintained properly on rainy and/or snowy days; broken floor tiles should be repaired promptly; foreign matter should be quickly and completely wiped from the floor; signs, ropes, and lights should be used where appropriate; and precautions should be taken for outdoor walkways to guard against dangers such as icy conditions and construction hazards.

The plaintiff in Borota v. University Medical Center, a hospital visitor, brought an action against University Medical Center to recover for injuries she suffered as a result of slipping on a puddle of milk in the hospital corridor. The plaintiff claimed that the spill appeared fresh and that there were several spots of milk on the floor and on the walls. She also noted that the corridor was well lit. The trial court granted summary judgment for the hospital, and the plaintiff appealed. The Arizona Court of Appeals held that the plaintiff did not establish constructive notice that would indicate that the hospital was aware of the spilled milk. Although it is the responsibility and duty of a hospital to keep its premises reasonably safe for invitees, the hospital does not ensure their safety. The hospital is not liable for the injuries sustained by the plaintiff unless







she can establish that either: (1) the hospital’s employees caused the spill and failed to clean it on a timely basis; or (2) the milk was there for a long period and the hospital had constructive notice that the spill was there and yet failed to clean it. The plaintiff failed to show evidence that the milk was spilled by a hospital employee or that the hospital was aware of the spill.

LOADING DOCK SAFETY. In Glowacki v. Underwood Memorial Hospital, a nurse, while employed as a pediatric transport nurse, was transporting a critically ill infant from the hospital. An isolette was needed for this purpose, and the nurse was responsible for wheeling it to the ambulance. The ambulance arrived at the hospital and drove to the emergency department area where it backed up to a loading platform. The bumper was separated from the concrete loading platform by intermittent rubber blocks, which left an open space of approximately 3.5 inches between the bumper and the dock. The nurse and driver began the process of lifting the isolette up into the ambulance. During this process, the nurse’s foot became wedged into the space between the wooden bumper and the concrete platform.

A civil engineer testified at trial as an expert on behalf of the nurse that it was unsafe to have a hole or gap in the bumper system. The hospital produced a civil engineer who testified that there was no standard in the industry applicable to hospital bumpers. He admitted that any design should consider the nature of traffic going over it. The hospital’s director of plant operations conceded that the hospital was aware of the spaces in the bumper system, but indicated there had never been a report of an incident since it was built.

The court charged the jury on principles of ordinary negligence and the liability of a property owner to business invitees for a dangerous condition on its property. The jury was also charged on contributory negligence. The jury returned a verdict finding that an unsafe condition existed on the hospital’s platform, that the hospital was negligent, and that the negligence was a proximate cause of the nurse’s accident. However, the court also found the nurse negligent and was found to be a proximate cause of the accident. The hospital was found 85% negligent and the nurse 15% negligent. The defendant argued that the court erred in denying its motion for a new trial on damages because the verdict of $908,000 constituted a miscarriage of justice; was against the weight of the evidence; and was the result of passion, prejudice, sympathy, or mistake. The appeals court disagreed. The nurse’s symptoms from the day following the accident to the date of trial 8 years later never changed.

Duty to Safeguard Patient Valuables Appropriate procedures should be developed for handling the personal property of patients. A healthcare facility can be held liable for the negligent handling of a patient’s valuables. The following points should be remembered and followed when handling the personal belongings and valuables of





patients: send the belongings home when feasible; deposit jewelry, wallets, and other appropriate items in the facility’s safe; select one department to handle valuables; provide proper communication between the department handling lost-and-found articles and the department holding patient valuables for safekeeping; encourage patients to keep with them as little money, jewelry, and other valuables as possible; establish a valuables procedure for deceased patients, patients entering the emergency department, and patients scheduled for a surgical procedure or other diagnostic tests; and provide prenumbered envelopes that list those items placed in each valuables envelope. Verification of the contents should be made between the employee delivering an envelope and the employee accepting the envelope for safekeeping. A receipt should be given to the patient making a deposit. Strikeouts or corrections should not be permitted on the envelope; this will help prevent claims of mishandling.




▸ CORPORATE REORGANIZATION AND MERGERS Traditionally, hospitals have functioned as independent, freestanding corporate entities or as units or divisions of multihospital systems. Until recently, freestanding hospitals functioned as a single corporate entity, with most programs and activities carried out within such entity to meet increasing competition. As competition increases, both stand-alone hospitals and smaller hospital groups continue to merge with larger systems. In 2015 there were 102 separate merger agreements involving 265 hospitals. As the number of health system mergers increases, the Federal Trade Commission will closely scrutinize proposed mergers for antitrust violations.


Penn State Hershey (Pa.) Medical Center and PinnacleHealth System, Harrisburg, Pa., abandoned their proposed merger in the wake of renewed regulatory opposition from the Federal Trade Commission.

In September, the 3rd U.S. Circuit Court of Appeals revived the FTC’s antitrust challenge to the proposed hospital merger, paving the way for an administrative trial probing the alleged anti-competitive effects of the deal. Rather than endure a long, costly battle with regulators, the central Pennsylvania health systems terminated their agreement.

—Erica Teichert, Modern Healthcare, October 22, 2016

Dependence on government funding and related programs (e.g., Medicare, Medicaid, and Blue Cross) and the continuous shrinkage occurring in such revenues have forced hospitals to seek alternative sources of revenue. Greater competition from nonhospital sources also has contributed to this need to seek alternative revenue sources. It has become apparent that traditional corporate structures may no longer be appropriate to accommodate both normal hospital activities and those additional activities undertaken to provide alternative sources of revenue.

The typical hospital is incorporated under state law as a freestanding for-profit or not-for-profit corporation. The corporation has a governing body. The governing body has an overall responsibility for the operation and management of the hospital, with a necessary delegation of appropriate responsibility to the administrative employees and the medical staff.





Given the need to obtain income and to meet competition, hospitals often consider establishing business enterprises. They also may consider other nonbusiness operations, such as the establishment of additional nonexempt undertakings (e.g., hospices and long-term care facilities). Because hospitals have resources, including the physical plant, administrative talent, and technical expertise in areas that are potentially profitable, the first option usually considered is direct participation by the hospital in health-related business enterprises. There are, however, regulatory and legal pressures that present substantial impediments.

Taxation Income earned by tax-exempt organizations from nonexempt activities is subject to unrelated business income taxes under the Internal Revenue Code. These taxes are similar to those paid by for-profit organizations. Tax-exempt status may be lost if substantial portions of the corporation’s activities are related to nonexempt activities and/or if the benefits of the tax-exempt status accrue to individuals who control the entity either directly or indirectly. Care also must be taken to avoid the use of facilities exempt from real estate taxation for nonexempt enterprises because this may lead to a partial or complete loss of such exemption.

Third-Party Reimbursement Medicare, Medicaid, Blue Cross, and other third parties that reimburse hospitals directly for patient care require that no reimbursement be available for activities unrelated to the provision of such care. Thus, costs associated with unrelated activities must be deducted from costs submitted to third-party payers for reimbursement. The “carving out” of these costs can be detrimental to the hospital unless alternative revenues are found.

Certificate of Need Generally, hospitals may not add additional programs or services and may not expend monies for the acquisition of capital in excess of specified threshold limits without first obtaining approval from appropriate state regulatory agencies. The process by which this approval is granted generally is referred to as the certificate of need (CON) process.

The National Health Planning and Resources Development Act of 1974, Public Law No. 93-641, sought to encourage state review of all plans calling for the construction, expansion, or renovation of health facilities or services by conditioning receipt of certain federal funds on the establishment of an approved state CON program. Most states responded to this law by instituting state CON programs that complied with federal standards.

Certificate of Need (C.O.N.) programs are aimed at restraining health care facility costs and facilitating coordinated planning of new services and facility construction. Many “CON” laws initially were put into effect across




the nation as part of the federal “Health Planning Resources Development Act” of 1974. Despite numerous changes in the past 30 years, most states retain some type of CON program, law or agency as of 2016.

The CON process can be lengthy and expensive. Furthermore, it may not always result in approval of the request to offer the new program or service or to make the capital expenditure. Healthcare providers have criticized CON requirements because they require review of those expenditures by or on behalf of a healthcare facility but may allow, for example, groups of physicians or independent laboratories to make large expenditures for equipment or services without triggering the state review mechanism.

Disapprovals of CONs often occur because they do not comply with state health plans that are designed to limit programs and services and prevent over-bedding in predefined geographic areas. Some CON applicants have attempted to seek revisions in state health plans to obtain approval of their projects. Nursing Home of Dothan v. Alabama State Health Planning & Development Agency was one such case. The nursing home filed a CON application with the State Health Planning and Development Agency (SHPDA) to construct a 110-bed nursing home. SHPDA informed Dothan that the state health plan failed to indicate a need for additional beds and advised Dothan to seek an amendment to the state health plan before proceeding with the CON process. The defendant filed the proposed amendment with the state health coordinating council, which approved the defendant’s request for additional beds. The amendment, which required the governor’s approval, was rejected. On appeal of the circuit court’s finding for SHPDA, denying Dothan’s proposed amendment to the state health plan and subsequent denial of the CON application, the appeals court held that the governor properly disapproved the requested amendment.

Disapproval of a CON application also can be based on the financial feasibility of the project. A CON proposal to construct a long-term care nursing facility with 65% Medicaid beds was found to have been properly denied in National Health Corp. v. South Carolina Department of Health & Environmental Control. The Department of Health and Environmental Control’s decision was considered proper, reasonable, and consistent with applicable laws and regulations. The unsuccessful applicant, National Health Corporation (NHC), failed to establish its project’s financial feasibility because of the unavailability of Medicaid funding. Discrepancies also existed between its budgets and its cost reports.

The record contained clear evidence that Medicaid funds would not be available for the NHC beds. The board also found that inconsistencies in four budgets submitted by NHC and the discrepancies between those budgets and the cost reports submitted by NHC to the state health and human services finance commission raised serious questions regarding the financial feasibility




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of the NHC project. The agency’s competitor had shown the financial feasibility of its project and was, therefore, granted a CON.

There can be disagreement among justices within the same court as to whether an applicant has established the criteria for need within a specific geographic area. The record in Heritage of Yankton, Inc. v. South Dakota Department of Health was found to have supported denial of a CON application for additional beds based on the argument that there was no need for additional beds in the service area. The Department of Health was found not to have acted arbitrarily and capriciously in denying the application: it provided valid reasons for rejecting new information submitted at a rehearing. The Department of Health rejected an argument that a bed shortage in the county demonstrated a need for more beds. The department argued that it had never considered county boundaries in determining bed need and that the population of the facility’s service area is the proper area for consideration. In view of its policy to maintain high occupancy rates in all facilities, the department also rejected Heritage’s claim that the department’s formula forces the elderly to be separated from their families and home communities.

Justice Henderson stated in a dissenting opinion:

This health care facility submitted three items of new evidence, which had not been previously considered. This consisted of population projections for the area and an in-and-out migration data with information pertaining to the existence of alternative services. The Department, summarily, expressed that it refused to consider this new evidence. Instead of opening its mind and then opening the door of reconsideration with relevant evidence, the Department of Health chose to be unyielding with its grip on the single formula and methodology it employed. If this health facility’s evidence had been reconsidered, an open mind would see that there was an extensive need for beds existing in the city of Yankton and Yankton county. . . .

I cannot in good conscience, join the majority opinion which prevents elderly citizens from having a bed, with medical care and treatment, administered compassionately, in a community where their children and grandchildren reside. I would elevate reality over a single methodology and accordingly dissent.

“[T]herefore never send to know for whom the bell tolls; it tolls for thee.” John Donne (1573–1631), Devotions upon Emergent Occasions, Meditation XVII. My mind drifts to Ernest Hemingway. And a clod of dirt. Chipped away at the shores of Europe by the sea. “If a clod be washed away by the sea, Europe is the less . . .” Supra. All from whence Hemingway’s great novel was born. And, yes, not a person is turned away from a bed of repose, in his older years, but South Dakota is lesser in spirit. A refrain also comes to my mind: “And crown thy good, with Brotherhood, from sea to shining sea.”







Financing Even when a hospital has determined that it can and should add a program or service and when it is allowed to do so, it may lack the necessary capital financing. The hospital could partner with private investors (who may, in fact, be members of the medical staff) to gain greater access to capital. Care must be taken, however, that no venture that includes physicians who refer to the hospital can be construed as providing an incentive or a reward for such referrals. Federal antifraud and abuse laws and regulations and similar state regulations impose severe penalties for such violations.

Recognizing the need to develop alternative sources of revenue, hospitals often establish an additional or restructured organization. Besides the need to develop alternative sources of capital, some restructurings come about simply because of the evolution of a multi-institutional system. Thus, when hospitals merge or consolidate, restructuring is virtually automatic. Also, when several hospitals fall under common ownership or when additional health enterprises are undertaken, restructuring usually evolves as more institutions are added to the system. In these instances, general legal principles applicable to corporations, as well as proper management considerations, will control the development of the appropriate corporate structure.

Corporate Restructuring Assuming the existence of a single, not-for-profit, tax-exempt hospital, any restructuring undertaken normally involves the creation of at least one additional not-for-profit, tax-exempt entity. This entity may be referred to as a parent, or holding company, or a foundation. Its general function is to serve as the corporate vehicle to receive the ultimate benefits from the revenue- producing activities and to confer some or all of these benefits on the hospital. Under current rules regarding income taxation, income received directly (by providing goods or services) or indirectly (by means of dividends or other investment income) does not give rise to any tax obligation if the receiver of such benefit is exempt from taxation under any of several subsections of Section 501(c) of the Internal Revenue Code, provided that exempt activities are the organization’s main source of income and expense.

Parent Holding Company Model Under this model, a new not-for-profit corporation is formed in conformity with the laws of the state in which the hospital is located. This corporation then can seek to obtain a tax exemption under the Internal Revenue Code. The overall purposes of the corporation are general in nature but involve a promotion of the health and welfare of the public and also may directly involve benefit to a named hospital or hospitals. In some states, when one organization exists to benefit a licensed hospital, such organization must itself be approved through a CON or similar process. The government of the parent holding company usually is derived from the governing body of the hospital. Qualifications for certain categories of exempt status under the Internal Revenue Code may




require overlapping governing bodies between the hospital and the new entity. Section 509(a) of the Internal Revenue Code deals with the qualification of a tax-exempt entity as a “private and/or non private” foundation. Nonprofit is the preferred status, and the qualification for such status may depend in part on the relationship between the entity seeking tax exemption and the already exempt entity (i.e., the hospital).

Because there is no stock involved in a not-for-profit corporation (the ownership of which would confer control by one corporation over another), control of the not-for-profit hospital by the not-for-profit parent holding company generally arises when the parent holding company is the sole member of the hospital corporation. Membership carries with it the right to elect directors and thus creates the necessary linkage for the parent– subsidiary relationship.

As a tax-exempt entity, the parent holding company also may own one or more for-profit subsidiaries. Although such ownership cannot represent most activities of the parent holding company, the ownership of such entities would not in and of itself disqualify the parent holding company from achieving and maintaining a tax-exempt status. It is through the subsidiaries that for-profit activities are carried on. The for-profit ventures (which may be independent corporations, joint ventures with other investors, etc.) are tax-paying entities. The net revenues (after payment of taxes) are paid out as dividends to the entity owning the stock or other ownership interest (the parent holding company), which, being tax exempt, pays no taxes on the receipt of such dividends. The parent holding company may then, as a donation, confer benefits directly on the hospital or any other entity intended to benefit from the parent holding company. Again, it is important to monitor closely the activities of this corporation so that its participation in or ownership of for-profit entities does not destroy its tax-exempt status.

Controlled Foundation An alternative structure to the parent holding company model is one in which the new, not-for-profit entity is controlled directly by the hospital. Instead of the parent holding company being a member of the hospital corporation, the reverse is true. The hospital is the member of the new entity. The structure described earlier to carry out for-profit activities would then fall under the controlled foundation. In many states, the regulators would view such a controlled foundation as nothing more than the alter ego of the hospital and therefore impose on this entity all regulatory restrictions, reimbursement restrictions, and the like.

Independent Foundation The establishment of a separate not-for-profit corporation and the substructure for carrying out for-profit activities may be accomplished independent of the hospital. Even though members of the hospital’s governing body are involved




in the creation of the new not-for-profit entity, the two corporations themselves may not necessarily be linked. This “brother–sister” relationship frequently is found to be desirable when the governing body of a hospital does not favor the creation of a parent organization to control the hospital but nevertheless seeks to create a viable structure within which for-profit activities may be carried on outside the hospital. A concern frequently expressed in this brother–sister relationship is that the new entity, not being controlled directly by the hospital, or in the alternative, not controlling the hospital, may “run away” and not necessarily ultimately benefit the hospital as was originally intended. Whether such a concern materializes is naturally dependent on the degree to which the governing bodies of the two organizations overlap and the degree to which each organization remains responsive to the other. The use of this model also may have certain reimbursement advantages regarding earnings on donated monies. If reimbursement regulations ever change to offset charitable gifts from reimbursable activities, an independent organization also may prove useful.

General Considerations The organizational structures just described are not intended to alter the way a hospital is managed or the way care is delivered. The driving force behind the creation of alternative structures is the desire to develop alternative sources of revenue and/or to streamline management of multi-institutional systems. In many states, substantial changes in the governance of a hospital require regulatory approval. The establishment of the alternative structures previously described normally does not require such regulatory approval as long as the hospital continues to be governed by a governing body and continues to carry out its functions in accordance with applicable laws, rules, and regulations.

After restructuring has taken place, many additional entities will require legal and accounting attention. These entities (normally corporations) must maintain minutes, books, and records; file tax returns; and make other such filings as are required by state laws and by federal and state income tax laws and regulations. It is important that the structures be viewed as running independent of one another. This includes establishing separate bank accounts, holding regular meetings among officers and directors, and maintaining appropriate minutes. Too often, the activities and records of one entity are difficult to discern from those of another, and then the benefits of the separate organizations may be lost. The concept of “piercing the corporate veil” may come into play when each corporate entity is not maintained separately and apart from every other entity. The corporate veil will be pierced when a court determines that the activities of the corporation are indistinguishable from the activities of either another corporation or the corporation’s directors, officers, or members.

The parent corporation in Boafo v. Hospital Corp. of America was held not liable for injuries sustained by a patient at a subsidiary hospital. Even though





the parent corporation shared some officers with the subsidiary and furnished it with substantial administrative services, there was no basis for piercing the corporate veil of the parent, absent some showing that the subsidiary was a sham formed for the purpose of promoting fraud, defeating justice, concealing crime, or evading contractual or tort responsibility.

Although the hospital was a wholly owned subsidiary of a national management corporation, it was a fully capitalized corporate entity that was insured, owned the hospital property, autonomously managed and operated the hospital on a day-to-day basis, maintained its own payroll, and employed its own employees. Therefore, there was no basis for holding the parent corporation liable.

Medical Staff and Restructuring Any discussion of corporate reorganization undertaken by a hospital must involve the medical staff. Although reorganization may have little or no direct impact on the medical staff, the perception of major change requires, at the very least, a full explanation and involvement in the process.

Many hospitals have come to realize that the medical staff presents a fertile area for developing relationships and projects leading to additional revenues. Projects such as imaging centers, laboratories, and durable medical equipment (DME) businesses may be organized in conjunction with one or more members of the medical staff. Other likely candidates to participate in joint ventures include existing laboratories, home care companies, DME companies, drug companies, surgical supply houses, and the like. As previously noted, ventures involving physicians are closely regulated. Laws and regulations have been designed to curb the practice of physicians and other professionals from referring patients to facilities or enterprises in which they have a financial interest.

Joint ventures with physician groups are not without risk, as was shown in Arango v. Reyka, in which a hospital entered into a joint venture with an anesthesiology group and thus was vicariously liable for the malpractice of the members of that group. The hospital billed patients for anesthesiology services, retained 12% of all collections, owned and furnished anesthesiology equipment and medications used by the group, scheduled patients, and referred to the group as the hospital’s department of anesthesiology. As a result, there existed a common purpose to provide anesthesiology services to hospital patients. Control was shared between the hospital and the group over the provision of anesthesia services, and there was a joint interest in the financial benefits and profits generated by the combination of their resources and services. The physicians had an obligation to maintain control over their medical judgment, but this did not prevent the creation of a joint venture contract.





Development of a business involving equity participation must be considered in the light of state and federal securities laws and other relevant laws, rules, and regulations to determine that there is full compliance. Shares of stock, shares in linked partnerships, and other similar equity participation interests may fall within the definition of a public offering of securities, requiring filings and/or registrations under state and federal securities laws.

Fundraising A not-for-profit hospital generally raises funds. Any new not-for-profit corporation formed as part of restructuring also may be able to engage in fundraising if such entity obtains a tax exemption under the Internal Revenue Code.

Also, as part of a reorganization and despite the creation of a new entity as indicated, hospitals frequently determine that it is desirable to create an additional foundation, the sole purpose of which is fundraising for the hospital. This, therefore, may lead to as many as three organizations with both the capability and the intent to engage in fundraising to benefit the hospital. Obvious confusion may arise in the minds of the public being asked to give to these organizations. A coordinated approach to fundraising is critical to avoid such confusion.

Any organization engaged in fundraising may have local filing requirements at the state or other governmental level. Care must be taken so that the public is informed completely as to the ultimate beneficiary of such fundraising and the manner in which the monies raised will be spent. A donor to a charity may have a claim against that charity if the donor can show that he or she was misled regarding the ultimate beneficiary of the gift or the purposes for which the gift would be used. Members of the public may be reluctant to donate when capital is to be used to fund for-profit enterprises. The overall charitable purposes of the entity must be carried out, and the activities may not be so concentrated on the operation or participation in for-profit ventures that either the tax exemption is jeopardized or it is determined (usually by the state attorney general) that the funds have been raised improperly from the public.

Regulatory Authority Checklist When considering restructuring, the following regulatory authority checklist may be helpful:

1. Not-for-profit corporations

a. Not-for-profit corporation law b. Internal Revenue Code (exemption and taxpayer identification

number) c. State and local tax laws on exemptions (including real property) d. Attorney general or similar charitable registration requirements




e. Bylaws, organization minutes, and minutes of the first governing body meeting

f. Bank account

2. For-profit corporations

a. Business corporation law b. Taxpayer identification number c. Bylaws, organization minutes, minutes of the first governing body

meeting, and issuance of stock d. Bank account

3. Hospitals

a. Reimbursement regulations b. CON regulations c. Governing body bylaws and relationship to additional corporations d. Fraud and abuse laws, rules, and regulations

Competition and Restructuring Because an organization exerts a certain amount of influence and dominance over its patient population, the participation in for-profit enterprises to which an organization’s patients are referred may give rise to anticompetitive activities and antitrust claims. Patients must be permitted free choice of goods and services. For example, if an organization (through its reorganized structure) participates in a DME business and seeks to recommend such business to its patients on discharge, these patients must be allowed to choose an alternate supplier and must be advised that they are not required to use the vendor recommended by the organization. An organization should disclose its relationship to the DME company so that the patient knows the organization’s involvement prior to making a choice.

Care must be taken that local vendors and merchants who have a traditional relationship with the organization or with the patients are not so affected by the proposed for-profit activity that ill will is generated within the community, leading to a potential legal claim regarding anticompetitive activity.

Restructuring requires a multidisciplinary approach. The issues to be considered include legal, financial, accounting, tax, regulatory, and reimbursement concerns. These disciplines must provide input on an ongoing basis, not merely at inception. Changing requirements and interpretations— especially in the areas of taxation and Medicare/Medicaid fraud and abuse regulations—mandate a continuous process of review and modification so that desired goals are not subverted by legal and financial problems.

Nonetheless, a word of caution. Today’s ventures require additional planning for the possibility that some, or part, of an enterprise might ultimately be found illegal. Therefore, potential buyers, and hopefully arrangements with them, as well as appropriate dissolution and unwinding




provisions, now more than ever, need to be part of the fabric and documentation of any new joint venture. As well, the documentation of existing ventures must be reviewed in the light of current considerations and where necessary, needed revisions crafted.

The Department of Justice and the Federal Trade Commission (FTC) periodically issue policy statements designed to educate and instruct members of the healthcare community on issues surrounding mergers and joint ventures. These statements outline the analysis the agencies will use to review conduct that falls outside antitrust safety zones. Restructuring is a complicated and lengthy process that requires involvement by legal council familiar with corporate restructuring.

Restructuring and acquisitions can lead to collusive practices that are harmful to consumers. Such was the case when the FTC determined that the Hospital Corporation of America (HCA), a proprietary hospital chain, violated Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18 (1982), by acquiring two hospital corporations in the Chattanooga area, Hospital Affiliates International, Inc., and Health Care Corporation, for $700 million. HCA already owned one hospital in the area. Hospital Affiliates International held management contracts with two other area hospitals. This, in effect, gave HCA control of more than 5 of the 11 hospitals in the Chattanooga area. The management contract with one of the hospitals was canceled after the FTC began investigating HCA’s acquisition of Hospital Affiliates. HCA sought judicial review by petitioning the court of appeals to set aside the decision of the FTC. The court of appeals held that there was substantial evidence to support the commission’s determination that the acquisitions were likely to foster collusive practices harmful to consumers.

Restructuring is an undertaking that requires careful planning and legal and accounting advice, and should be undertaken not because it is “fashionable,” but rather because it will provide the hospital with opportunities not available under its current structure.


The evidence was sufficient to hold the hospital liable for medical negligence under a theory of corporate liability. The evidence established that the hospital owed a duty to the plaintiff to have an anesthesiologist provide or supervise all anesthesia care, including having an anesthesiologist personally present or immediately available in the operating suite. The hospital’s breach of this duty proximately caused the patient’s brain damage.

The hospital’s anesthesia department policies and procedures required that an anesthesiologist perform the preanesthesia evaluation, that an






anesthesiologist discuss with the patient the anesthesia plan, and that an anesthesiologist supervise a CRNA by being “physically present or immediately available in the operating suite.”

According to Dr. Via, chairman of the hospital’s anesthesiology department in 1991, he complained to Mr. Ciulla, who was in charge of the DAA contract, about the lack of proper CRNA supervision in the women’s pavilion. According to Ciulla, he renewed the contract in conjunction with the hospital’s medical staff. According to Via, the hospital’s medical executive committee recommended to Ciulla that he not renew DAA’s contract and that he seek another anesthesia group for the women’s pavilion. The hospital’s board of directors renewed the contract anyway.88




▸ CHAPTER REVIEW 1. The governing body of a healthcare corporation:

Is incorporated under state law. Has specific duties that include holding meetings, establishing policies, being financially scrupulous, providing adequate insurance, and paying taxes. Oversees and controls corporate activities. Is legally responsible for establishing and implementing policies for the management and operation of the organization.

2. Authority of corporations

Express corporate authority is delegated by statute. Implied corporate authority is invoked in cases in which authority not specifically granted in the articles of incorporation is required to carry out its purpose. Ultra vires acts are those in which a governing body acts beyond its expressed or implied scope of authority.

3. Corporate committee structure

Executive committee has the authority to act on behalf of the full board. Bylaws committee reviews and recommends bylaws to the governing body. Finance committee oversees financial affairs and makes recommendations to the governing body. Joint conference committee acts as a forum for discussion of policy and practice matters. Nominating committee develops and recommends criteria for governing body membership. Planning committee makes recommendations for the use an