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The Colorado Supreme Court recently ruled that healthcare companies in the state
are not immune from employee lawsuits for reporting suspected
controlled substances diversion. The case points to issues facing
providers nationwide.
Why It Matters
Federal and state laws require healthcare providers to report
potential controlled substances diversion.
- However, regulatory authorities determine what, if any, action
to take based on the reported conduct. - This exposes the reporting entity to potential legal and
financial liability from allegedly diverting employees resulting
from a process the entity cannot control. - Providers, of course, also face potential government
enforcement liability for diversion they report.
What Providers Can Do
The ruling highlights the importance of conducting a thorough
and well-designed investigation before reporting to a state or
federal regulatory authority.
- Providers should define the parameters of the investigation and
fully investigate the facts before determining what to report and
which authorities to involve. - Providers should also consider what, if any, process changes to
make in response to the suspected diversion. - Experienced legal counsel can help providers navigate these
issues and conduct investigations under privilege, where
appropriate.
Dig Deeper
In 2019, a Colorado hospice suspected that a nurse had diverted
over 400 oxycodone pills from an elderly patient.
- The hospice reported the nurse to local law enforcement, the
state department of public health, and the state nursing board.
Ultimately, no criminal charges were filed, and no formal
disciplinary actions were taken against the nurse. - In response, the nurse sued the hospice and its director for
negligent supervision, negligent hiring, defamation, and
intentional infliction of emotional distress.
Immunity Claim
The hospice asserted immunity under four state statutes that
provide immunity for reporting potential misconduct. But the
Colorado Supreme Court denied immunity across the board.
- Three of the statutes provide immunity only for a
“person.” The court held that, in this context,
“person” excludes a corporation. - The fourth statute provides immunity only for reporting conduct
to warn against future criminal activity. The court found that the
hospice failed to show this was its purpose in making the
reports.
The hospice must now litigate the nurse’s claims and face
monetary exposure if found liable.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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