Business Finance - Operations Management Assignment

Tort Law and Reform

Tort • A civil wrong, other than a breach of contract, committed against a person or property for

which a court provides a remedy in form of an action for damages. Objectives of Tort Law • Preservation of peace between individuals. • Find fault for wrongdoing. • Deterrence by discouraging the wrongdoer from committing future tortious acts • Compensation to indemnify injured person/s.

Categories of Tort Law • Negligence • Intentional • Strict liability regardless of fault

– e.g., products liability Negligence • Commission or omission of an act that a reasonably prudent person would or would not

do under given circumstances. Commission of an Act • Administering the wrong medication • Administering the wrong dosage of a medication • Administering medication to the wrong patient • Performing a surgical procedure without patient consent • Performing a surgical procedure on the wrong patient • Performing the wrong surgical procedure

Omission of an Act • Failing to conduct a thorough history & physical examination • Failing to assess & reassess a patient's nutritional needs • Failing to administer medications • Failing to order diagnostic tests • Failing to follow up on abnormal test results

Malpractice • Negligence of a professional person

– surgeon who conducts a surgical procedure on wrong body part Criminal Negligence • Reckless disregard for safety of another. • Willful indifference to injury that could follow an act.

Forms of Negligence • Malfeasance

– Execution of an unlawful or improper act, i.e., performing a partial birth abortion when prohibited by law

• Misfeasance – Improper performance of an act, i.e., wrong sided surgery.

• Nonfeasance

– Failure to act when there is a duty to act, i.e., failing to prescribe medications that should have been under the circumstances

Degrees of Negligence • Slight

– Minor deviation of what is expected under the circumstances. • Ordinary Negligence

– Failure to do what a reasonably prudent person would or would not do. • Gross Negligence

– Intention or wanton “omission of care” that would be proper to provide or the “commission of an act” that would be improper to perform.

Elements of Negligence • Duty to Use Due Care

– Standard of care • Breach of Duty • Injury/Actual Damages • Proximate Cause/Causation

– Foreseeability I. Duty to Care • Obligation to conform to a recognized standard of care.

Standard of Care • Describes the conduct expected of an individual in a given situation. • Describes how a “reasonably prudent person” would or would not act under “similar

circumstances”. • Measuring stick for properly assessing actual conduct required of an individual.

Reasonably Prudent Person • A nonexistent - hypothetical person who is put forward as community ideal of what

would be considered reasonable behavior. Similar Circumstances • Circumstances at the time of the injury. • Circumstances of the alleged wrongdoer/s at the time of injury.

– Age – Physical condition – Education & training – Licenses held – Mental capacity, etc.

Determining Standard • Established by legislative enactment or administrative regulation. • Adopted by the court from a legislative enactment or administrative regulation. • Established by judicial decision. • Applied to the facts of the case by the trial judge or jury, if there is no such enactment,

regulation or decision. – courts often rely on testimony of an expert witness as to the standard of care

required. Community v. National Standard • Community Standard

– hometown standard (we want to do things our way).

• National Standard – most currently accepted standard of care on a national basis.

Case: Hiring Practices • Nurse hired sight unseen over telephone. • Applicant falsely stated in an employee application that he was licensed as an LPN. • His license was not verified by the employer. • He had committed 56 criminal offenses of theft. • He assaulted a resident a resident & broke his leg.

Case: Hiring Practices Duty • Standard expected:

– Employer had a “duty” to validate the nurse’s professional license. II. Breach of Duty • Deviation from the recognized standard of care. • Failure to adhere to an obligation. • Failure to conform to or the departure from a required duty of care owed to a person. • Occurs when

– a physician fails to respond to his/her on-call duties. – an employer fails to adequately conduct a pre-employment check (e.g., licensure,

background check). Case: Hiring Practices Breach of Duty • The employer failed to verify the applicant’s licensure. • A more thorough background check should have revealed this employee’s previous

criminal conduct.

III. Injury • Actual damages must be established. • If there are no injuries, no damages are due.

Case: Hiring Practices Injury • The resident suffered a broken leg. • Hospital vicariously liable for nurse’s conduct.

IV. Causation • Proximate cause

– breach of duty was the proximate cause of the injury • But-for Rule

– the defendant’s action, the injury would not have occurred – Case: Hiring Practices

Causation • Reasonable anticipation that harm or injury was likely to occur.

– The patient suffered a broken leg • Departing from recognized standard of care

– failure to verify licensure & conduct an adequate background check Hiring Practices – III • Injury resulted from the breach of duty. • Injury was foreseeable.

Failure to Hydrate Causation • Failure to administer proper hydration.

– Not unreasonable to conclude that one’s dehydration can be caused by failing to provide water.

Foreseeability • Reasonable anticipation that harm or injury is likely to result from an act or an omission

to act. Test for Foreseeability • The test for foreseeability is whether a person of ordinary prudence and intelligence

should have anticipated danger to others caused by his or her negligent act. Case: Hiring Practices Foreseeability • A person of ordinary prudence and intelligence should have anticipated the danger to the

resident caused by the employer’s negligent act. Hot Radiator Foreseeability • A patient’s left foot came in contact with a radiator and she suffered third-degree burns. • The defendant had knowledge of the plaintiff’s condition. • The defendant should have shielded the radiator or not placed the plaintiff next to it.

Sponge & Instrument Count • Dr. Smith owns the local Outpatient Surgery Center. • He instructs employees to count all instruments & surgical sponges following a surgical

procedure, prior to closing the surgical site. • Annie, an employee, failed to conduct the count following Bills surgery. • Two months later, Bill, suffering from extreme abdominal pain, was noted to have

several sponges and an instrument in his abdomen. • He had developed a massive infection. • Was the doctrine of Vicarious liability applicable in this case? • YES • Even though Annie had strict instructions to count the sponges & surgical instruments

prior to closing the surgical site, she failed to do so. • To determine otherwise would undermine the doctrine of vicarious liability, since

employers would almost always escape liability by presenting evidence that employees were given careful instructions.

Failure to Follow Instructions • Sarah has a minor surgical procedure under general anesthesia at ABC Surgery Center. • She was instructed not to drive home after release. Her daughter Leslie picks her up. • On the way home Leslie stops for a donuts. Meanwhile, her mother moves to the driver

seat. • Upon leaving the parking lot, Sarah hits Carol’s car. • Carol sustains a broken arm & sues ABC for releasing Sarah before she is completely

recovered from the anesthesia. • Was the hospital liable for Sarah’s injuries?

NO! • Sarah was negligent, not the hospital. She failed to adhere to both verbal & written

instructions not to drive following anesthesia. • It was Sarah’s duty not to drive and her breach of that duty that caused Carol’s injury.

Remember • The four elements of negligence must be presented in order for the plaintiff to recover

damages caused by negligence.

Intentional Torts • Assault and Battery • False Imprisonment • Defamation of Character • Fraud • Invasion of Privacy • Intentional Infliction of Mental Distress

Assault • Deliberate threat, coupled with apparent ability to do physical harm to another. Actual

contact not necessary. 1. Person attempting to touch another unlawfully must possess apparent present ability to

commit battery. 2. Person threatened must be aware of or have actual knowledge of an immediate threat of a

battery and must fear it. Battery • Intentional touching of another’s person in socially impermissible manner without

person’s consent. • Failure to obtain consent prior to surgery. • Administering blood against patient’s express wishes. • Physically restraining one who refuses to eat.

False Imprisonment • Unlawful restraint of individual’s personal liberty or unlawful restraining or confining an

individual. • Restraining patient without cause. • Locking patient in secluded room for failing to attend therapy session.

Legal Justification for Restraint or Seclusion • Person represents a danger to self or others. • Criminal conduct. • Persons with highly contagious diseases, as provided by state or federal statutes.

Reducing Use of Restraints – I • Development of policies and procedures that conform to state & federal guidelines • Education & orientation of staff • Education for patients & families • Sound appraisal of need for restraints • Application of least restrictive restraints • Continuous monitoring of patients to determine continuing need for restraints

Defamation of Character • The offense of injuring a person’s character, fame, or reputation by false & malicious

statements. • False oral or written communications to someone other than person defamed that tends to

hold that person’s reputation up to scorn or ridicule in eyes of others. Defamation of Character • Libel – written form of defamation

– Signs – Letters – Photographs

– Cartoons • Slander – oral form of defamation

Proof of Defamation • A false & defamatory statement. • Communication of a statement to a person other than the plaintiff. • Fault on the part of the defendant. • Special monetary harm.

Proof of Harm Not Required to recover damages when: • Accusing a person of a crime. • Accusing a person of having a loathsome disease. • Using words are harmful to a person’s profession or business. • Calling a woman unchaste.

Libel – Performance Appraisals • Performance appraisals are not meant for general publication. • To recover damages, the appraisal must be published in defamatory manner that injures

one’s reputation. Cartoon – I • Jack draws a cartoon depicting Paul having a rendezvous with a new grad nurse in an

empty patient room. The incident in fact never occurred. • Can a defamatory statement can take the form of a cartoon? • Yes, a defamatory statement can take the form of a cartoon because it is capable of

adversely affecting a person’s reputation. Newspapers Articles • Newspaper editorial cartoon depicting 3 persons resembling gangsters in dilapidated

building, identified as particular facility that had been closed by state order, was an expression of pure opinion and was protected by 1st Amendment.

Accused of an Affair • Nurse Rachet suggests to Dr. Smith that he should leave his wife Sharon because she is

having an affair with Dr. Doe. Dr. Smith writes a letter to Mrs. Doe, repeating Rachet’s statement.

• Assuming Dr. Smith’s letter is defamatory, is it libel or slander? Accused of an Affair • It is libel, even though Dr. Doe is repeating a slanderous statement. • The reverse is not true – the spoken repetition of a written defamation is still considered

libel. • The rule is: once libel, always libel.

Slander • Person who brings suit must prove special damages. • When defamatory words refer to person in professional capacity, professional need not

show that words caused damage. Defenses to a Defamation Action • Truth – no liability for defamation if it can be shown that statement is true. • Privilege

– Absolute – Qualified

Absolute Privilege

• Statements made during judicial & legislative hearings • Confidential communications between spouses

Qualified Privilege • Statements made as result of a legal or moral duty to speak in interests of 3rd persons

– Statements must be without malice Public Figures • Vulnerable to public scrutiny • Suits generally dismissed in absence of

– malice – actual knowledge statements are false – recklessness as to truth

Proof of Fraud • Misrepresentation by the defendant. • Knowledge of falsity. • Intent to reduce reliance on misrepresentation. • Justifiable reliance by the plaintiff. • Damage to the plaintiff.

Health Care Fraud • Billing Tradename Drugs/Issuing Generic • Office Visits/Double Billing • Billing for Services not Rendered • Accepting referral fees

Invasion of Privacy • The right to

– be left alone – be free from unwarranted publicity – be free from exposure to public view – be free from unwarranted intrusions into a one’s personal affairs – personal privacy – have records/kept confidential

Intentional Infliction of Mental Distress • Conduct that is so outrageous that it goes beyond bounds tolerated by decent society.

Mental Distress • Grief • Shame • Public humiliation • Despair • Shame • Human pride

Mental Distress • Mother shown premature infant in a jar.

Johnson v. Womens Hospital • Verbally abusive physician to patient and/or spouse.

Greer v. Medders Fraud

• Willful & intentional misrepresentation that could cause harm or loss to person or property. – e.g., purposeful concealment from patient of the presence of surgical sponges in

his/her abdomen following surgery. Products Liability • 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. Products Liability Legal Theories • Negligence • Breach of warranty

– Express – Implied

• Strict liability Negligence • Duty

– Product manufactured by the defendant • Breach

– Product defective when it left the manufacturer • Injury

– Plaintiff/s injured by the product • Causation

– Product proximate cause of injury Defective X-ray Unit – I • Mindy places Candice on the table of the hospital’s newly manufacturer-installed x-ray

unit. • While in the control room, Mindy hears a crash. • She rushes to the patient & finds that a section of the x-ray unit fell on Candice, further

injuring her already broken leg. • Candice sues the manufacturer for negligence. • Can the manufacture be held liable for the plaintiff’s injuries?

YES! • Duty: manufacturer to properly install the x-ray unit. • Breach: failure to properly install the x-ray unit. • Injury: plaintiff suffered injury. • Causation: improper installation was the proximate cause of the plaintiff’s injury.

Express Warranty • Includes specific promises or affirmations made by seller to buyer. • e.g., drug manufacturer represents the product as free from addiction & is not

Crocker v. Winthrop Laboratories Implied Warranty • A warranty that exists by operation of the law as a matter of “public policy” for

protection of the public. • e.g., consumers have right to assume that food is not contaminated

Jacob E. Decker & Sons v. Capps Strict Liability • Liability without fault

• Elements required to establish strict liability – Product manufactured by defendant – Product defective at time it left manufacturer – Plaintiff injured by product – Defective product proximate cause of injuries

• Wrong Medication – I • Stanley refills his drug prescription at D Drugs, where he has been a customer for 10

years. • Prior to taking his nightly dosage, he noticed the pill appeared larger than normal. • He phoned D Drugs & explained his concern. • The Pharmacist assured Stanley generic drugs sometimes are larger because of formula

fillers but that the medication dosage in his drug was correct. • Wrong Medication – II • Stanley took the drug & never woke up; the dosage given was 5 times that which had

been prescribed. • The container from which the pharmacist filled Stanley’s prescription had been

mislabeled by the manufacturer. • Wrong Medication – III

Court’s Decision • Product was manufactured by the defendant • Product defective at time it left manufacturer

– The drug was placed in a mislabeled container. • Plaintiff injured by the product

– Stanley passed away in his sleep. • Defective product proximate cause of injuries

– The mislabeled container was the proximate cause of Stanley’s death. Products Liability Res Ipsa Loquitur • Must establish

– Product did not perform in way intended – Product not tampered with by buyer/3rd parties – Defect existed at time it left defendant

Products Liability Cases

Tainted Tylenol Capsules – Elsroth v. Johnson & Johnson

Manufacture of unsafe drugs – Merck’s Vioxx

Products Liability Defenses – I • Assumption of the Risk

– voluntary exposure to risks: Smoking, radiation therapy, Chemotherapy • Intervening Cause

– an IV solution contaminated by product user • Contributory Negligence

– use of product in a way it was not intended to be used. Products Liability Defenses – III • Comparative Fault

– injury due to concurrent negligence of both manufacturer & plaintiff. • Disclaimers

– manufacturers inserts