Employee Bad Acts

A hospital needs to hire individuals who meet certain criteria; i.e., that they: 1) graduated high school, trade school or college; 2) have an LPN, RN, MD or DO; 3) do not have a criminal conviction; 4) have a valid driver's license and do not have a history of moving violations or DUIs; and 5) have actual experience in the job for which they have applied. A sufficient background investigation should include the gathering of historical information about an individual that, when interpreted, will confirm pertinent data about the person's past. Its purpose is often to verify that the person has not lied when completing the employment application.

In order to establish that an employer should have known of danger posed by an employee, the plaintiff needs expert testimony from someone who has spent substantial time as a hospital or medical administrator with a focus on patient safety. That expert must examine and explore the procedures implemented at the hospital to determine compliance with industry standards.

The problem facing the plaintiff's attorney is that, ostensibly, the actual written procedures are likely to be within industry standards. The case must really be made by delving deeper. For instance, most, if not all, hospitals have written internal procedures. St. Luke's Hospital did at the time Cullen was employed there. They required all prospective employees to be vetted through: 1) a Pennsylvania State Police Criminal History Report; 2) Application for a Child Abuse History Clearance; 3) a Child Abuse History Clearance; 4) an FBI Finger-print Submission, consistent with the Older Adults Protective Services Act (OAPSA); 5) an FBI Criminal History Record Report; and 6) a County Criminal Record Check.

Obviously, the fact that St. Luke's or any other hospital has these stated policies in effect does not mean that the program is sufficient or that it was followed in the particular instance. In prosecuting a claim for negligent hiring and supervision, it is critical that the plaintiff's attorney explore all aspects of the program.

The plaintiff's attorney should also have in mind that no security plan or program can be effective unless it is based upon a clear understanding of the actual risks the hospital and its patients face. This concept should be the basis for all security activity. Until the actual threat to patients is assessed accurately, precautions and countermeasures ' even those of the highest quality, reliability and repute ' cannot be chosen, except by guesswork. The value of a security program lies in understanding the potential problems that could arise, and then considering solutions.

Further, it is critical that the plaintiff's attorney determine whether the hospital or medical institution met its responsibility to comply with requirements imposed by the Joint Commission on Accreditation of Hospitals (JCAH), the Occupational Safety and Health Act of 1970 (OSHA) and other federal, state, and local codes. The 1981 Manual on Accreditation states:

• Security Measures will be taken to provide security for patients, personnel, and the public, consistent with the conditions and risks inherent in the hospital's location. When used, these measures shall be uniformly applied. Based on administrative decision, these measures may include but are not necessarily limited ” ' effective screening and observation of new employees … .
• Job applicant screening is the process of obtaining the most appropriate individual for a particular job. This can be accomplished thorough interviews and testing, among other methods. Screening is a major loss prevention tactic.
• Doing a good job of conducting thorough reference checks and background investigations of job applicants has become increasingly important in healthcare in preventing personnel crime and the consequence of negligent hiring people who commit such crimes … .

Finally, the plaintiff's attorney must check for laws that bolster the client's case, even though they may not seem at first glance to apply. For example, in the state of Pennsylvania, something commonly referred to as Act 73 requires all Pennsylvania employers, including hospitals and medical facilities, to perform criminal background checks on any employees having “significant likelihood of regular contact with children.” Even though the Act was intended to protect children, failure to follow its mandates can lead to civil liability even if it is an adult who is ultimately injured.

Some Common Defenses

If an employer is truly involved in the safety of patients, its logical goal is the proactive prevention of harm rather than the reactive investigation of the incidents. One of the most significant components of an effective assets protection program is a system to gather and analyze as much relevant information about employment candidates as is lawfully available. “Lawfully available” is, many times, where the real battle will take place. The hospital or medical institution will defend any claim for negligent hiring or supervision, at least in part, by arguing it was “hamstrung” by state and federal law governing hiring procedures. They will argue that many laws have been created to impose significant penalties on employers who make unfair and inconsistent decisions and that the law requires employers to take an inclusive, as opposed to an exclusive, approach in considering applicants for employment. Among the commonly cited obstacles to an employer's gaining a full picture of a job candidate are:

1. Affirmative Action and Equal Employment Opportunity (EEO): These laws require employers with 15 or more employees to comply with federal fair employment practices that prohibit discrimination in all aspects of employment on the basis of race, national origin, religion, gender, age, and disability.

2. References and Background Checks: The hospital defendant will argue that informing all applicants that background screenings and reference checks will be completed often discourages falsification of information contained in employment applications and encourages applicants to be truthful and forthcoming. The plaintiff's attorney cannot allow the hospital or medical institution to hide behind this shield, but must press this issue.

3. Interviewing: The hospital will argue that, just as the written questions an employer asks on an application form can be construed as discriminatory, so too can the questions asked during a job interview. All questions should be related to the job and its requirements. Again, here is fertile ground for the plaintiff's attorney. Much of communication is non-verbal. The hospital or other medical institution must employ experienced interviewers capable of picking up on non-verbal cues ' someone mindful of the potential for a bad actor to “sneak” his or her way through the door of the medical facility.

The Medical Bad Actor

So far, we have primarily focused on the traditional bad actor ' the one anyone can identify, who commits violent crimes like murder or sexual assault. But another type of bad actor is the surgeon who convinces patients to undergo multiple medical procedures, either to make additional money or to feed his or her ego. These cases are even more complicated than the more obvious bad-actor actions, and they implicate many more aspects of the civil law.

In many instances, the physician performing these medical procedures is not actually an employee of the hospital and may only ostensibly be an employee of the hospital. While the claims against the hospital or other medical institution in these instances will still include ordinary negligence where the plaintiff can establish that the defendant knew or should have known of the medical provider's tortious conduct, claims beyond ordinary negligence may also be warranted, to include common law fraud and misrepresentation, corporate liability, unjust enrichment, unfair trade practices and consumer fraud.

The battle in these cases is fought on three fronts. First, is the physician or surgeon who is performing the unwarranted procedures an agent or ostensible agent of the hospital or other medical Institution? Second, were the procedures performed actually unwarranted? And, third, can each of the above-mentioned potential claims (common law fraud and misrepresentation, corporate liability, unjust enrichment, unfair trade practices and consumer fraud) survive legal scrutiny?

The issue of ostensible agency has been well litigated and written about over the years and we will forego that discussion for purposes of this article.

The issue of whether or not the procedures were actually warranted will depend on the specific medical evidence adduced in any particular case, and will require an expert medical opinion similar to any medical malpractice case.

With respect to the issue of the legal scrutiny of the claims, again each case will be fact-specific. In Pennsylvania, the Unfair Trade Practices and Consumer Protection Law (UTPCPL) provides a private cause of action for purchasers of goods or services for harm caused as a result of “unfair and deceptive acts or practices.” 72 P.S. ' 201-9.2(a). Unfair and deceptive acts or practices include “[k]nowingly misrepresenting that services ' are needed if they are not needed” and “[e]ngaging in any other fraudulent conduct which creates a likelihood of confusion or misunderstanding.” 73 P.S. ” 201-2(4)(xi), (xv), (xvii). The Pennsylvania Supreme Court has stated that the purpose of the UTPCPL is to protect the public from and eradicate “unfair and deceptive business practices.” Commonwealth v. Monumental Props. , 329 A.2d 812, 815-17 (Pa. 1974). Further, the UTPCPL seeks to place consumers andsellers of goods and services on equal terms; to achieve this, courts have been instructed to construe the statute liberally to further its remedial goals. See id .; accord. Ash v. Cont'l lns. Co.' 932 A.2d 877, 881 (Pa. 2007).

The plaintiffs will argue that there is no Pennsylvania Supreme Court precedent setting forth the applicability of the UTPCPL to the specific facts before the court. The hospital or other medical facility will argue that the UTPCL does not apply to providers of medical services as decided in Walter vs. Magee Women's Hospital, 906 A. 2nd 1194 (Pa 2006).

The elements of unjust enrichment in Pennsylvania are: l) Benefits are conferred on the defendant by the plaintiff; 2) Appreciation of such benefits by the defendant; and 3) The defendant's acceptance and retention of such benefits under such circumstances that it would be inequitable for the defendant to retain the benefit without payment of value. Temple Univ. Hosp., Inc. v. Healthcare Mgmt. Alternatives, Inc., 832 A.2d 501, 507 (Pa. Super. 2003) (citing AmeriPro Search Inc. v. Fleming Steel Co. , 787 A.2d 988 (Pa. Super. 2001)). Pennsylvania's courts have said that the most “significnt element of the doctrine is whether the enrichment of the defendant is unjust; the doctrine does not apply simply because the defendant may have benefited as a result of the actions of the plaintiff.” Temple Univ. Hosp., 832 A.2d at 507. The hospital or other medical institution's argument against a finding of unjust enrichment is part and parcel of it's the argument about whether the procedure was warranted, and it will rely heavily on its medical evidence to dispute the plaintiff's legal argument.

The issue of corporate negligence is once again fact-specific. In deciding whether to impose a duty, a Pennsylvania court considers five factors: 1) The relationship between the parties; 2) The utility of the defendant's conduct; 3) The nature and foreseeability of the risk in question; 4) The consequences of imposing the duty; and 5) The overall public interest in imposing the duty. R.W. v. Manzek, 888 A.2d 740 (Pa. 2005).

Conclusion

Claims against hospitals and/or medical institutions asserting they should be held responsible for the bad actions of their employees will always be hard fought. These cases simply are not often straightforward, unless the medical institution had actual knowledge of an employee's crimes or civil wrongs yet did nothing to stop them. But even though each case will have it own special complications and unique areas of the law to be dealt with, an understanding of some of the typical issues in bad-actor medical cases should help the litigator to avoid potential pitfalls.

Brandon Swartz , a member of this newsletter's Board of Editors, is a partner in Swartz Culleton, PC, in Newtown, PA.

Editor's note: In last month's newsletter, the author began discussion of medical institutions and their liability exposure for the bad acts of their employees by highlighting the notorious case of nurse Charles Cullen. Cullen admitted to deliberately killing at least 40 patients, yet the plaintiffs who sued the last hospital that employed him were unable to recover because they could not prove causation. Are all such cases doomed?

Negligent Hiring

Obviously, in any particular case, if the plaintiff establishes that the hospital or other medical institution had actual knowledge that crimes were being committed by an employee, the case would be over, for all intents and purposes, and the defendant institution would be held liable. In almost every instance, however, the case is going to come down to whether or not the hospital or medical institution should have known about the bad acts being committed. So, assuming the families in the Cullen case could have overcome the issue of medical causation, the primary issue at trial would have been establishing that the hospital “knew or should have known” that Cullen was committing or could have been committing these crimes. This would have established the necessary elements of a claim for negligent hiring and supervision.

A hospital needs to hire individuals who meet certain criteria; i.e., that they: 1) graduated high school, trade school or college; 2) have an LPN, RN, MD or DO; 3) do not have a criminal conviction; 4) have a valid driver's license and do not have a history of moving violations or DUIs; and 5) have actual experience in the job for which they have applied. A sufficient background investigation should include the gathering of historical information about an individual that, when interpreted, will confirm pertinent data about the person's past. Its purpose is often to verify that the person has not lied when completing the employment application.

In order to establish that an employer should have known of danger posed by an employee, the plaintiff needs expert testimony from someone who has spent substantial time as a hospital or medical administrator with a focus on patient safety. That expert must examine and explore the procedures implemented at the hospital to determine compliance with industry standards.

The problem facing the plaintiff's attorney is that, ostensibly, the actual written procedures are likely to be within industry standards. The case must really be made by delving deeper. For instance, most, if not all, hospitals have written internal procedures. St. Luke's Hospital did at the time Cullen was employed there. They required all prospective employees to be vetted through: 1) a Pennsylvania State Police Criminal History Report; 2) Application for a Child Abuse History Clearance; 3) a Child Abuse History Clearance; 4) an FBI Finger-print Submission, consistent with the Older Adults Protective Services Act (OAPSA); 5) an FBI Criminal History Record Report; and 6) a County Criminal Record Check.

Obviously, the fact that St. Luke's or any other hospital has these stated policies in effect does not mean that the program is sufficient or that it was followed in the particular instance. In prosecuting a claim for negligent hiring and supervision, it is critical that the plaintiff's attorney explore all aspects of the program.

The plaintiff's attorney should also have in mind that no security plan or program can be effective unless it is based upon a clear understanding of the actual risks the hospital and its patients face. This concept should be the basis for all security activity. Until the actual threat to patients is assessed accurately, precautions and countermeasures ' even those of the highest quality, reliability and repute ' cannot be chosen, except by guesswork. The value of a security program lies in understanding the potential problems that could arise, and then considering solutions.

Further, it is critical that the plaintiff's attorney determine whether the hospital or medical institution met its responsibility to comply with requirements imposed by the Joint Commission on Accreditation of Hospitals (JCAH), the Occupational Safety and Health Act of 1970 (OSHA) and other federal, state, and local codes. The 1981 Manual on Accreditation states:

• Security Measures will be taken to provide security for patients, personnel, and the public, consistent with the conditions and risks inherent in the hospital's location. When used, these measures shall be uniformly applied. Based on administrative decision, these measures may include but are not necessarily limited ” ' effective screening and observation of new employees … .
• Job applicant screening is the process of obtaining the most appropriate individual for a particular job. This can be accomplished thorough interviews and testing, among other methods. Screening is a major loss prevention tactic.
• Doing a good job of conducting thorough reference checks and background investigations of job applicants has become increasingly important in healthcare in preventing personnel crime and the consequence of negligent hiring people who commit such crimes … .

Finally, the plaintiff's attorney must check for laws that bolster the client's case, even though they may not seem at first glance to apply. For example, in the state of Pennsylvania, something commonly referred to as Act 73 requires all Pennsylvania employers, including hospitals and medical facilities, to perform criminal background checks on any employees having “significant likelihood of regular contact with children.” Even though the Act was intended to protect children, failure to follow its mandates can lead to civil liability even if it is an adult who is ultimately injured.

Some Common Defenses

If an employer is truly involved in the safety of patients, its logical goal is the proactive prevention of harm rather than the reactive investigation of the incidents. One of the most significant components of an effective assets protection program is a system to gather and analyze as much relevant information about employment candidates as is lawfully available. “Lawfully available” is, many times, where the real battle will take place. The hospital or medical institution will defend any claim for negligent hiring or supervision, at least in part, by arguing it was “hamstrung” by state and federal law governing hiring procedures. They will argue that many laws have been created to impose significant penalties on employers who make unfair and inconsistent decisions and that the law requires employers to take an inclusive, as opposed to an exclusive, approach in considering applicants for employment. Among the commonly cited obstacles to an employer's gaining a full picture of a job candidate are:

1. Affirmative Action and Equal Employment Opportunity (EEO): These laws require employers with 15 or more employees to comply with federal fair employment practices that prohibit discrimination in all aspects of employment on the basis of race, national origin, religion, gender, age, and disability.

2. References and Background Checks: The hospital defendant will argue that informing all applicants that background screenings and reference checks will be completed often discourages falsification of information contained in employment applications and encourages applicants to be truthful and forthcoming. The plaintiff's attorney cannot allow the hospital or medical institution to hide behind this shield, but must press this issue.

3. Interviewing: The hospital will argue that, just as the written questions an employer asks on an application form can be construed as discriminatory, so too can the questions asked during a job interview. All questions should be related to the job and its requirements. Again, here is fertile ground for the plaintiff's attorney. Much of communication is non-verbal. The hospital or other medical institution must employ experienced interviewers capable of picking up on non-verbal cues ' someone mindful of the potential for a bad actor to “sneak” his or her way through the door of the medical facility.

The Medical Bad Actor

So far, we have primarily focused on the traditional bad actor ' the one anyone can identify, who commits violent crimes like murder or sexual assault. But another type of bad actor is the surgeon who convinces patients to undergo multiple medical procedures, either to make additional money or to feed his or her ego. These cases are even more complicated than the more obvious bad-actor actions, and they implicate many more aspects of the civil law.

In many instances, the physician performing these medical procedures is not actually an employee of the hospital and may only ostensibly be an employee of the hospital. While the claims against the hospital or other medical institution in these instances will still include ordinary negligence where the plaintiff can establish that the defendant knew or should have known of the medical provider's tortious conduct, claims beyond ordinary negligence may also be warranted, to include common law fraud and misrepresentation, corporate liability, unjust enrichment, unfair trade practices and consumer fraud.

The battle in these cases is fought on three fronts. First, is the physician or surgeon who is performing the unwarranted procedures an agent or ostensible agent of the hospital or other medical Institution? Second, were the procedures performed actually unwarranted? And, third, can each of the above-mentioned potential claims (common law fraud and misrepresentation, corporate liability, unjust enrichment, unfair trade practices and consumer fraud) survive legal scrutiny?

The issue of ostensible agency has been well litigated and written about over the years and we will forego that discussion for purposes of this article.

The issue of whether or not the procedures were actually warranted will depend on the specific medical evidence adduced in any particular case, and will require an expert medical opinion similar to any medical malpractice case.

With respect to the issue of the legal scrutiny of the claims, again each case will be fact-specific. In Pennsylvania, the Unfair Trade Practices and Consumer Protection Law (UTPCPL) provides a private cause of action for purchasers of goods or services for harm caused as a result of “unfair and deceptive acts or practices.” 72 P.S. ' 201-9.2(a). Unfair and deceptive acts or practices include “[k]nowingly misrepresenting that services ' are needed if they are not needed” and “[e]ngaging in any other fraudulent conduct which creates a likelihood of confusion or misunderstanding.” 73 P.S. ” 201-2(4)(xi), (xv), (xvii). The Pennsylvania Supreme Court has stated that the purpose of the UTPCPL is to protect the public from and eradicate “unfair and deceptive business practices.” Commonwealth v. Monumental Props. , 329 A.2d 812, 815-17 (Pa. 1974). Further, the UTPCPL seeks to place consumers andsellers of goods and services on equal terms; to achieve this, courts have been instructed to construe the statute liberally to further its remedial goals. See id .; accord. Ash v. Cont'l lns. Co. ' 932 A.2d 877, 881 (Pa. 2007).

The plaintiffs will argue that there is no Pennsylvania Supreme Court precedent setting forth the applicability of the UTPCPL to the specific facts before the court. The hospital or other medical facility will argue that the UTPCL does not apply to providers of medical services as decided in Walter vs. Magee Women's Hospital, 906 A. 2nd 1194 (Pa 2006).

The elements of unjust enrichment in Pennsylvania are: l) Benefits are conferred on the defendant by the plaintiff; 2) Appreciation of such benefits by the defendant; and 3) The defendant's acceptance and retention of such benefits under such circumstances that it would be inequitable for the defendant to retain the benefit without payment of value. Temple Univ. Hosp., Inc. v. Healthcare Mgmt. Alternatives, Inc. , 832 A.2d 501, 507 (Pa. Super. 2003) (citing AmeriPro Search Inc. v. Fleming Steel Co. , 787 A.2d 988 (Pa. Super. 2001)). Pennsylvania's courts have said that the most “significnt element of the doctrine is whether the enrichment of the defendant is unjust; the doctrine does not apply simply because the defendant may have benefited as a result of the actions of the plaintiff.” Temple Univ. Hosp., 832 A.2d at 507. The hospital or other medical institution's argument against a finding of unjust enrichment is part and parcel of it's the argument about whether the procedure was warranted, and it will rely heavily on its medical evidence to dispute the plaintiff's legal argument.

The issue of corporate negligence is once again fact-specific. In deciding whether to impose a duty, a Pennsylvania court considers five factors: 1) The relationship between the parties; 2) The utility of the defendant's conduct; 3) The nature and foreseeability of the risk in question; 4) The consequences of imposing the duty; and 5) The overall public interest in imposing the duty. R.W. v. Manzek , 888 A.2d 740 (Pa. 2005).

Conclusion

Claims against hospitals and/or medical institutions asserting they should be held responsible for the bad actions of their employees will always be hard fought. These cases simply are not often straightforward, unless the medical institution had actual knowledge of an employee's crimes or civil wrongs yet did nothing to stop them. But even though each case will have it own special complications and unique areas of the law to be dealt with, an understanding of some of the typical issues in bad-actor medical cases should help the litigator to avoid potential pitfalls.

Brandon Swartz , a member of this newsletter's Board of Editors, is a partner in Swartz Culleton, PC, in Newtown, PA.