Genetic Testing Creates New Legal Risks for Labs

In just two cases of ‘wrongful’ birth, juries awarded $28 million and $50 million to defendants

CEO SUMMARY: Last month, in Seattle, Washington, a jury ordered Laboratory Corporation of America and Valley Medical Center each to pay $25 million following a lawsuit about a ‘wrongful’ birth. At issue was how genetic tests were ordered, performed, and reported. This court case is the latest example of the heightened legal risk labs face when performing molecular diagnostic and genetic tests. Lab directors may want to update liability cover- age and review their lab’s workflow and gene testing policies.

EVERY NEW TECHNOLOGY comes with its own risk factors. That is certainly true for genetic testing. Recent court cases demonstrate the substantial legal exposure labs have when performing genetic testing.

How about a laboratory and a hospital that were just ordered to pay $50 million after a jury trial involving alleged errors in genetic testing? As a consequence, a child with severe disabilities was born to the Wuth family of Seattle, Washington. We provide an interview with the plaintiff’s lawyer and full details of this important court decision on pages 5-8 of this issue.

The Tineo case has many of the same issues. In New Jersey, following the birth of a child with myotubular myopathy, the mother, Wanda Tineo, filed a lawsuit that was resolved in 2007. This case also dealt with errors involved in genetic testing and resulted in a jury award of $28 million. Found liable were the physician, the pathologist who directed the cytogenetics laboratory, and the lab company that performed the genetic testing. (See TDR, June 25, 2007).

In the Tineo case, a settlement agreement lowered the final settlement amount to $18 million. Half was paid by the physician, Aldo Khoury, M.D., and the other half was paid by Laboratory Corporation of America. In the original jury award, LabCorp’s cytology lab director, James Tepperberg, M.D., was held liable for 10% of the amount, or $2.8 million.

In the Wuth case, the defendants were Dynacare Laboratories Inc., a subsidiary of Laboratory Corporation of America; Valley Medical Center in Renton, Washington; and perinatologist James Harding, M.D. The jury excluded Harding from the settlement and ordered LabCorp and Valley Medical Center each to pay $25 million. The defendants are expected to appeal.

Huge Legal Awards

What should be considered here is the amount of the award in each case, $50 million in the Wuth case and $28 million in the Tineo case. These legal cases involving genetic testing gone wrong represent a much higher risk to laboratories than the more typical malpractice cases involving Pap smear testing or cancer misdiagnoses.

Also, these two cases involving errors in genetic testing got enough news coverage to come to the attention of THE DARK REPORT. There are other cases of genetic testing errors now winding through the court system that may similarly produce very large jury awards, possibly in the tens of millions of dollars.

Given these developments in the legal system, it would be timely for laboratories that offer molecular and genetic tests to review the legal risks associated with this type of diagnostic testing. At the same time, a review of the lab’s liability coverage and malpractice insurance should also be done as part of a risk assessment process.

Design Of Internal Processes

Such a risk review should include the role of the pathologist in the lab test workflow. In the Tineo case, which settled in 2007, the plaintiffs named the pathologist who was medical director of the cytogenetics laboratory as a defendant. At question during the trial was the internal procedures the lab used and whether the cytogenetics lab medical director had followed them properly.

Both of these cases with large jury awards highlight another area that molecular and genetic tests labs should review. It is workflow and whether existing policies, procedures, and protocols have kept pace with the advances in diagnostic technology. A careful reading of the Wuth and Tineo court documents reveals that gaps existed in the work procedures the labs used when ordering the genetic tests, performing the tests, and reporting the results.

The juries in both cases learned about these gaps and how they contributed to the errors which led to an inaccurate genetic test result being reported to the ordering physicians. Every laboratory should use these $50 million and $28 million jury awards as motivation to improve their internal work processes and management checks and balances that apply to genetic testing.

Process Improvement

On this point, labs that use Lean, Six Sigma, and other process improvement methods have a head start in fixing these sources of legal exposure and malpractice risk—while also improving patient safety. One goal of these management methods is for labs to design a “system of prevention” in which each process in the workflow is designed to produce perfect work and perform at a Six Sigma level of 3.4 defects per million events.

Finally, another interesting area of genetic testing that has yet to be rigorously tested by the court system is the clinical standard of care. As the 23andMe battle with the FDA has demonstrated, the public is learning that different labs look at different gene sequences when evaluating an individual’s risk for the same disease. What happens when malpractice lawyers get into this evolving area of gene testing and genetic medicine?

Meanwhile, all labs have the time to fix internal problems associated with the handling and genetic testing of specimens. The goal is to eliminate the clerical, workflow, and procedural errors that, during the Wuth and Tineo pregnancies, led those parents to make a decision about their unborn children, with the result that a wrongful birth occurred and an expensive lawsuit was initiated.

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