CEO SUMMARY: Unable to overcome problems at a rural hospital laboratory caused by the parent hospital’s financial problems and the inability of the hospital to recruit adequate numbers of lab staff, the laboratory director terminated his agreement with the hospital and notified the New York State Department of Health about the situation. Alerted by this notice, NY state lab regulators inspected the hospital lab and found additional deficiencies. When the hospital failed to keep the terms of a corrective agreement, the state revoked the lab’s license and the hospital closed.
RESIDENTS OF RURAL GOUVERNEUR, NEW YORK, have been without a hospital following an order from the New York State Department of Health (NYSDOH) to shut down the local hospital’s clinical laboratory last month. The severe regulatory action was taken in response to serious deficiencies found at the hospital’s lab.
Events leading up to the revocation of the clinical laboratory’s license at 37-bed E.J. Noble Hospital tell a fascinating story. These events also provide a timely case study of how widespread lab industry trends are combining in ways that increase the financial liability, legal risk, and compliance exposure of any pathologist serving as director of a CLIA-licensed medical laboratory that is part of a hospital or health system.
Here are the facts: the hospital was shut down on September 28 after officials from the NYSDOH found serious deficiencies in the hospital’s clinical laboratory. State officials listed 14 deficiencies. For example, state inspectors found that the laboratory was using expired reagents for testing and was storing human specimens and reagents in a freezer with plasma for transfusion, which could result in contamination of the blood supply.
Most serious was the transfusion of the incorrect blood type as the result of a laboratory testing error. State inspectors found that lab personnel had switched samples while doing testing. The lab also failed to pass a required proficiency test, and again this error resulted from switching samples, state officials said.
Given Incorrect Blood Type
The Watertown Daily Times reported that the patient who was transfused with the incorrect blood type has since died and the family is considering a lawsuit against the hospital. The patient had lung cancer and had been transferred to another hospital in Syracuse. It was at this facility that the patient learned he had been given the wrong type of blood at E.J. Noble Hospital.
These actions represent a sentinel event for the laboratory industry for two reasons. The first involves the consequences at a lab operated by an inadequate number of qualified staff. The second, most interestingly, is the departure of the laboratory director in response to the understaffing situation, along with other relevant issues.
Because of its rural location, it appears that Noble hospital was finding it very difficult to hire and retain adequate numbers of the medical technologists and other skilled lab scientists needed to properly operate the laboratory. Administrators at E.J. Noble Hospital told the local newspaper that the hospital had a loss at the end of the most recent fiscal year as a result of losing a managed care contract.
Notified State of Termination
Second, the pathology group that provided the laboratory director named on the lab’s CLIA license terminated its service contract with Noble Hospital. It then notified the NYSDOH of this termination, along with the specific reasons why it had taken this action.
ClearPath Diagnostics, Inc., of Syracuse, New York, had the laboratory management agreement with E.J. Noble Hospital. Pathologist Kenneth B. Strumpf, M.D., a partner at ClearPath, served as E.J. Noble’s laboratory director.
It was August 25 when state officials inspected the laboratory after getting a copy of a letter that Michael Warner, Chief Operating Officer of ClearPath Diagnostics, had sent to the administrator of E.J. Noble Hospital. The letter from ClearPath to E.J. Noble stated that it was ending its relationship with E.J. Noble and that Strumpf would no longer serve as laboratory director, state officials said.
State Officials Cite Problems
In its letter to E.J. Noble, the NYSDOH explained numerous and serious concerns that ClearPath had with operation of the clinical lab. These reasons were described in an “Order for Summary Action” that state officials said the NYSDOH issued on September 28. The order cited the following problems, state officials said:
- The laboratory’s inability to obtain reagents due to the vendor credit hold for nonpayment of bills;
- The laboratory’s inability to perform critical testing due to lack of reagents;
- The laboratory’s inadequate staffing, which placed patients at risk and required staff to work excessive overtime, including double shifts;
- The laboratory supervisor spent excessive time performing testing, preventing her from performing supervisory duties;
- The laboratory’s failure to address deficiencies cited during previous surveys due to understaffing;
- The laboratory’s inability to revise standard operating procedures in a timely manner due to understaffing;
- The frequent turnover of laboratory supervisors due to the lack of support from E.J. Noble’s administration; and,
- The general lack of responsiveness from E.J. Noble’s administration to laboratory issues and concerns.
When contacted by THE DARK REPORT, executives of ClearPath Diagnostics declined to comment about the letter or these events.
In the state inspection of the laboratory on August 25, state officials said they substantiated all the allegations in the letter from Warner. State lab inspectors identified 14 deficiencies and other unsafe practices, state officials said. Within two weeks, more problems surfaced at Noble Hospital’s laboratory.
Samples Switched at Testing
On September 7, state officials learned about the blood transfusion error. The patient had presented at the hospital’s emergency department and was transfused with the incorrect blood type as a result of a laboratory testing error, state officials said. After an investigation, state officials said they discovered that the laboratory had switched samples while performing testing.
As a result of the inspection and the blood transfusion error, state officials worked out an agreement with hospital administrators. The lab would reduce its test menu to concentrate its resources on tests required to continue operation of the emergency department and to manage acute care patients.
The basic elements of the agreement between NYSDOH and E.J. Noble Hospital are presented in the sidebar on page 7. Under this agreement, the hospital could continue to provide most of its clinical services while it worked to fix the problems identified in the operation of its laboratory.
More Errors with PT Tests
By the end of the month, state officials found that the lab reported PT results inaccurately, again because of switched samples, said state lab regulators. On September 28, therefore, state officials declared that, despite efforts to correct the deficiencies, the continued operation of the laboratory posed an imminent threat to the public health, safety and welfare. As a result, the laboratory permit was suspended for 30 days while the hospital corrected the deficiencies, state officials said.
In response to the state’s suspension of the laboratory permit, hospital administrators closed the hospital. On October 26, state officials lifted the lab suspension order. In collaboration with another hospital, Noble Hospital will reopen on Monday, October 29 with a limited menu of laboratory tests, state officials said.
THE DARK REPORT observes that the situation involving E.J. Noble is similar to what happened to Peninsula Hospital in the Far Rockaway section of Queens, New York, earlier this year. In that case, NYSDOH officials found a facility struggling financially that had deficiencies in its lab operations. State officials shut down the lab and forced the hospital to transfer patients elsewhere.
What is different in the Noble Hospital case is that the laboratory director resigned because deficiencies went uncorrected by hospital administration, and this former lab director notified state regulators about these problems. These developments should be studied by laboratory directors in other CLIA-licensed labs, since they demonstrate how concepts of legal liability can evolve due to contemporary events.
E.J. Hospital Laboratory Did Have Corrective Plan
OFFICIALS AT E.J. NOBLE HOSPITAL had an opportunity to correct deficiencies in the laboratory. But the effort fell short.
As a result of the inspection and the blood transfusion error, regulators from the New York State Department of Health worked out an agreement with hospital administrators. The hospital was to reduce the lab’s test menu to concentrate its resources on tests required to continue operation of the emergency department and to manage acute care patients.
As part of the agreement, the hospital also agreed to end all blood bank activities, except to store O negative blood for emergencies and to cancel all elective surgeries and transfer patients who need transfusions to other facilities. According to state officials, ambulances could no longer bring patients to the ER, and physicians could not refer patients to the facility.
However, by the end of September, state officials found that the lab reported proficiency testing results inaccurately, again because of switched samples, state officials said. That spurred state officials to revoke the hospital lab’s license. Following that decision, Dr. Timothy J. Monroe, a veterinarian who serves as president of the hospital’s board of directors, told the Watertown newspaper that state officials considered the PT failure to be “the straw that broke the camel’s back.”
