42 terms

Chapter 8

Organizational Ethics & the Law
Learning Objectives
Describe corporate structure
Describe the value statements that should be included in an organization's code of ethics.
Explain the doctrine of respondent superior & the concept of corporate negligence.
Learning Objectives
Describe corporate duties, responsibilities, & the ethical & legal risks of organizations.
Describe various strategies that can be taken to restore organizational trust.
Introduces ethical responsibilities & legal risks of organizations.
Describe an organization's code of ethics which:
build trust.
increase awareness of ethical issues.
guide decision-making.
encourage staff to seek advice & report misconduct.
Introduction, continued
develop & maintain an environment that fosters high ethical & legal standards.

provide quality care.

treat patients with honesty, dignity, respect, & courtesy.
Corporate Authority
Described under the laws in which a corporation is chartered.

Described in a corporation's articles of incorporation.
Kinds of Authority
Express Corporate Authority

Implied Corporate Authority

Ultra Vires Acts
Code of Ethics for Organizations
An organization's code of ethics should provide guidelines for behavior that help carry out an organization's mission, vision, & values.
Organizational codes of ethics build trust, increase awareness of ethical issues, guide decision making, & encourage staff to seek advice & report misconduct.
Code of Ethics Basic Principles
Compassionate care, an understanding & acceptance of the organization's mission, vision, & values, & adherence to one's professional code of conduct.
Be honest & fair in dealings with employees.
Develop & maintain an environment that fosters the highest ethical & legal standards.
Code of Ethics Basic Principles, con't
Employers & employees will be impartial when personal interests conflict with those of others.
Employees will be free to speak-up without fear of retribution or retaliation.
The pitfalls of group think will not be acceptable conduct in the organization.
Employees will be provided with a safe environment within which to work.
Code of Ethics Basic Principles, con't
The drive to increase revenues will not be tied to unethical activities.
Employees will avoid conflict of interest situations by not favoring one's own self-interests over others, including the organization.
Patients will be provided with care that is of the highest quality regardless of the setting.
Code of Ethics Basic Principles, con't
All patients will be treated with honesty, dignity, respect, & courtesy.
Patients will be informed as to the risks, benefits, & alternatives to care.
Patients will be treated in a manner that preserves their rights, dignity, autonomy, self-esteem, privacy, & involvement in their care.
Code of Ethics Basic Principles, con't
Each patient's culture, religion, & heritage will be respected & addressed as appropriate.
The organization will provide assistance to patients & their families through a patient advocate.
The organization will provide appropriate support services for those with physical disabilities (e.g., language barriers
Code of Ethics Basic Principles, con't
Patients will be provided with a "Patient's Bill of Rights & Responsibilities" on admission to the hospital.
Each patient's rights to execute advance directives will be honored.
Conduct Under Scrutiny
False advertisements

Knowingly using flawed data

Schemes designed to deny patients insurance benefits
Conduct Under Scrutiny, con't
Accepting kickbacks

Entering into financial arrangements that are clearly a conflict of interest

Covering up wrongdoing
Conduct Under Scrutiny, con't
Falsification of records

Fraudulent activities (e.g., reimbursement schemes)
Respondeat Superior
A legal doctrine holding employers liable for wrongful acts of their employees.

Doctrine also referred to as vicarious liability.
Elements Needed to Impute Liability to Employer
Master-servant relationship must exist between employer & employee

Wrongful act of employee must have occurred within scope of employee's employment
Independent Contractor
Relationship established when principal has no right of control over manner in which agent's work is to be performed.

Independent contractor responsible for his or her own negligent acts.
Corporate Negligence Elements
Duty to Care
Breach of Duty
- Corporation fails to perform duties it owes directly to a patient.
Patient is injured
- Corporate failure to perform required duty
is the cause of the patients injury.
Benchmark Darling Case
The court in this case enunciated a "corporate negligence doctrine" under which hospitals have a duty, for example, to provide adequately trained medical & nursing staff.

Darling v. Charleston Community Memorial Hospital
Corporate Responsibility
Appointment of CEO
Medical Staff Appointments
Screen Job Applicants
Supervise Medical Staff
Comply with Applicable Rules & Regulations
Corporate Responsibility, continued
Comply with Joint Commission Standards
Provide Timely Treatment
Avoid Conflicts of Interest
Provide a Safe Environment
Maintain a Culture of Safety
Corporate Responsibility, con't
Address Patient Concerns & Complaints
Prevent Decisions that Collide with Professional Ethics
Disclose Financial Incentives
Allocate Scarce Resources
Management Decisions Collide with Professional Ethics
The principles of autonomy, beneficence, & justice & ability to practice what is right according to such principles often collide when organizations have to, for example, ration scarce resources. Such rationing may require managers to cut costs at the expense of quality.
Letter of Recommendation
A former employer who knew that an employee had committed offensive sexual acts gave a letter of recommendation that vouched for him without reservation. The employee after being hired by the new employer injured the student-plaintiff.

Discuss the legal & ethical issues.
Legal Issues
Liability may be imposed if the recommendation letter amounts to an affirmative misrepresentation presenting a

(1) foreseeable, &

(2) substantial risk of physical harm to a third person.
Legal Issues, con't
The defendants could foresee that, had they not recommended the employee, the employer would not have hired him.
The defendants could foresee that the employer would read & rely on the defendant's letters of recommendation & that the employee after being hired by the new employer might molest or injure a student such as the plaintiff.
Randi W. v. Muroc Joint Unified School Dist., 14 Cal.4th 1066, 929
Ethical Issues
Do no harm

Letter of Recommendation
Mr. R's supervisor had received several reports alleging misconduct between Mr. R & some of the female residents in the Lee Allan nursing home. The supervisor was unable to verify them.
Mr. R applied for a supervisory position with Parke County Nursing Home. Parke County was sent a pre-printed reference form from Lee Allan. The form indicated Mr. R was eligible for re-hire. The form reflected that Mr. R performed his job adequately.
Letter of Recommendation, con't
The Parke County hired Mr. R in part on the basis of a favorable recommendation from Lee Alan. The claim here is that Mr. R assaulted a patient at Parke County. The plaintiff asserts that the former employer, Lee Allan, wrongly gave a favorable recommendation & thus should be liable for the injury.
Legal Issues
Summary judgment was granted in favor of Lee Alan.
The facts did not reflect that Lee Alan had any substantial information indicating that Mr. R had committed sexual misconduct with residents at Lee Alan.
Legal Issues, con't
Recommendations should not be filled with rumors & innuendo instead of facts. Without substantial evidence, employers would subject themselves to possible defamation litigation.
Declaring employers liable for negligence in providing employment references will lead to employer reluctance to provide any information.
Passmore v. Multi-Management Svcs., Inc., 810 N.E.2d 1022 (Ind. 2004).
Ethical Issues
Surgical Site Infection
OR staff observe a 10 inch by 2 inch tear in a surgical table mattress. It is 2:00 PM & the room has been prepared for Mrs. Smith's surgery. A surgical sheet is placed on the table. The sheet is worn & has several tears in it. Mrs. Smith is placed on the surgical table. [Note: Prior to Mrs. Smith's surgery, a bowel resection was performed on the same table.].

Discuss the legal & ethical concerns.
Legal Issues
Legal Issues
Consider the hospital's responsibility
Torn mattress is a known infection control concern

Due to body fluid seepage into the mattress
Recurrent use of the mattress by various patient
Ethical Issues
Ethical Issues

Nonmaleficience (first, do no harm)

Professional codes of ethics (see next slide)
Professional Ethics
OR staff recognized that the mattress should have been taken out of service but failed to do so. It is common knowledge that body fluids that can seep into a mattress pad & provide a breeding ground for infecticious diseases.
Describe how hospital policy should address this issue.
Defrauding the Government
The government filed an indictment against eleven individuals & four corporations. In the indictment, the government alleged a health care fraud scheme that involved several residential care facilities, thousands of claims. The government alleged that over at least five years fifteen defendants, in various conspiracies, defrauded the government by falsely certifying patients as homebound & submitting false claims to Medicare & Medicaid.

States v. Liveoak, 377 F.3d 859 (C.A. 8, Mo. 2004)
Defrauding the Government, con't
Joinder of Medicare fraud was proper where the charges here were linked not only by common conspiracy members, but also by an overall scheme in which each conspiracy member participated to fraudulently charge the government for health care costs.
Legal & Ethical Issues
Legal Issues

Ethical Issues
Failure to Disclose Financial Incentives
HMO failed to disclose financial incentive system it provided to its physicians to discourage referrals to specialists.

Discuss the legal & ethical issues