Notes on Corporate Negligence of Hospitals

[Source: Pozgar, George D., Legal Aspects of Health Care Administration, 7th ed., 1999]

There are duties that the hospital (as a corporate entity) owes to the general public and to its patients. These duties arise from statutes, regulations, principles of law developed by the courts, and the interal operating rules of the organization.

"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 nondelegeable duty which the hospital owes directly to the patient. Therefore, an injured party does not have to rely on and establish the negligence of a third party." Thompson v. Nason Hospital, 591 A.2d 703, 707 (Pa. 1991).

The Pennsylvania Supreme Court in Thompson recognized several nondelegable duties owed by hospitals to patients, such as the duty to:

• use reasonable care in the maintenance of safe and adequate facilities and equipment
• select and retain only competent physicians
• oversee all persons who practice medicine within its wall as to patient care
• formulate, adopt, and enforce adequate rules and policies to ensure quality care for its patients

A benchmark case in the health care field, which has had a major impact on the liability of health care organizations, was decided in 1965 in Darling v. Charleston Community Memorial Hospital, 211 N.E.2d 253 (Ill. 1965). The court here enunciated a corporate negligence doctrine under which hospitals have a duty to provide adequately trained medical and nursing staff. A hospital is responsible, for establishing policies and procedures for monitoring the quality of medicine practiced within the hospital.

Among other things, the Darling case indicates the importance of instituting effective credentialing and continuing medical evaluation and review programs for all members of a professional staff.

The Supreme Court of Arizona in Fridena v. Evans, 622 P.2d 463 (Ariz. 1980), affirmed that the hospital could be held liable for the negligent supervision of a physician where it has actual or constructive knowledge of the procedures carried on within the hospital.

The hospital generally owes a duty to ensure the competency of its medical staff and to evaluate the quality of medical treatment rendered on its premises.

Compliance Guidelines for Pharmaceutical Industry

See generally, Health Care Compliance Association (HCCA)
See also, HCCA Compliance Certification Examination

OIG Compliance Program Guidance for Pharmaceutical Manufacturers - a set of guidelines that pharmaceutical manufacturers should consider when developing and implementing a compliance program or evaluating an existing one. For those manufacturers with an existing compliance program, this guidance may serve as a benchmark or comparison against which to measure ongoing efforts.

PhRMA Code on Interactions with Health Professionals - this Code addresses interactions with
respect to marketed products and related pre-launch activities. It does not address relationships with clinical investigators relating to pre-approval studies.

AdvaMed's Code of Ethics - discusses relationships in which health care professionals work with the medical technology industry as advisors, researchers, students, and teachers to bring innovation to patients and the practice of medicine.

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[Source: HCCA Compliance Information]

Brief overview of health care complianceThe move by many in the health care industry to develop corporate compliance programs came after passage of the Health Insurance Portability and Accountability Act of 1996. This Act gives the Department of Health and Human Services’ Office of Inspector General and the U. S. Department of Justice more investigational funding and authority to increase penalties for health care fraud and abuse. Using these and other enforcement tools the government continues to investigate health care institutions across the U. S. searching for violations of the False Claims Act and other federal laws.

To protect their institutions from liability, health care providers are implementing corporate compliance programs using the seven elements outlined in the U. S. Sentencing Guidelines for Organizations and appointing corporate compliance officers to develop, implement, and manage them.

While law does not require an organization to meet the Guidelines seven elements of a compliance program, these elements provide the backbone of a well-designed compliance program. An organization that is found guilty of violating federal criminal laws and has a compliance program in accord with the Guidelines, may reduce assessed penalties by up to 70% against the fines that the law requires.

The U. S. Sentencing Commission was created by Congress in 1984 to promulgate the U. S. Sentencing Guidelines for Organizations and the U. S. Sentencing Guidelines for Individuals to increase sentencing uniformity for those found guilty of violating federal laws. To encourage good corporate citizenship, the Commission outlined a punishment structure based on the culpability of the organization and the seriousness of the crime.

U.S. Sentencing Guidelines Revisions:
Effective Compliance and Ethics Programs
Click here to download the U.S. Sentencing Guidelines revisions regarding an effective compliance and ethics program.