CEO SUMMARY: When the lab director resigned from his post at a clinical lab in a hospital in rural New York, the resignation letter was sent to the hospital administration and copy went to the New York State Department of Health. In the letter, the lab director outlined eight reasons for tendering his resignation. A lawyer who reviewed the facts in this case explained that the most significant of the eight reasons for resignation was the hospital administration’s lack of support for correcting the lab’s deficiencies.
IT WAS A LETTER OF RESIGNATION by the hospital’s laboratory director that set off the chain of events that led to last month’s closure of E.J. Noble Hospital in Gouverneur, New York, by officials of the New York State Department of Health (NYSDOH).
It is a rare occurrence for the laboratory director of a hospital to become, in effect, a whistleblower and alert clinical laboratory regulators about serious deficiencies in the laboratory. To understand the ramifications of this development, THE DARK REPORT asked Peter Kazon, a lawyer with Alston + Bird, a law firm in Washington, D.C., to review the published reports of the case. Kazon is not representing any principals in this case.
Kazon advises clinical laboratories and diagnostic companies on regulatory and compliance matters and is an expert in the Clinical Laboratory Improvement Amendments (CLIA), which govern labo- ratory operations. The New York State Department of Health regulations governing laboratory operations are similar to those of CLIA.
Kazon’s observations are based on the news accounts of the closure of E.J. Noble Hospital, and the steps the NYSDOH took on September 28, 2012. The previous story on pages 6-8 provided the facts of this case and the role of ClearPath Diagnostics, LLC, of Syracuse, as the contracted entity which provided the services of pathologist Kenneth Strumpf, M.D., as laboratory director at E.J. Noble Hospital
“It would take some very unusual circumstances to cause a laboratory director to resign and provide notice to state regulators of the resignation,” stated Kazon. “The case raises many issues for lab directors to consider.
“The most important issue is always whether the tests are being done accurately,” Kazon said. “If tests are inaccurate, there are definite steps to take under CLIA. But the bigger issue involves the possibility of causing patient harm.
“If the lab makes a mistake and gives someone an incorrect test result that harms a patient, then the facility could be liable in a lawsuit,” he explained. “A lawsuit could be a possibility in the E.J. Noble case because there are claims about potential harm from a blood transfusion.
“But every lab deficiency needs to be addressed,” continued Kazon. “Under CLIA, any lab that has problems needs to put a corrective action policy in place and follow that policy so that it can ensure that it is producing accurate and reliable tests and reports. The laboratory director has responsibility to ensure that the lab’s correction action policy is followed.
Escalating Steps to Follow
“Each situation is different, of course, but there are escalating steps to follow,” he said. “If the laboratory director can’t get the money from the hospital to buy reagents, he or she has to stop testing and identify the corrective steps.
“As laboratory director, if you find yourself in this situation, go to the hospital administration and explain the problem,” Kazon explained. “Document any and all steps. Be diligent about keeping records of email and other correspondence with the administration.
“If the hospital administration is intransigent and won’t do what is needed to eliminate lab deficiencies, then, as laboratory director, you may have no choice,” advised Kazon. “You may have to go to the state or CLIA regulators. Hopefully, that would always be the last resort.
Mistakes in Lab Test Results
“However, if uncorrected issues in the lab were to cause the lab director to terminate the relationship, that laboratory director cannot just walk away if inaccurate results went out the door,” he added. “At a minimum, the laboratory director should see that the patients or physicians are notified that there were mistakes in the lab test results and report these problems to state officials or CLIA or both.
“Having said all that, I don’t believe the E.J. Noble Hospital case will affect labs in other states,” observed Kazon. “In New York, it may cause the NYSDOH to be more vigilant and it is certainly a lesson case for lab directors in every state. There is clearly more risk when serving as the laboratory directory for a laboratory that is in a financially-strapped hospital.
“The E.J. Noble case shows us how, when hospital and lab reimbursement declines, cost pressures may make it harder for labs in these financially-struggling hospitals to complete all the quality assurance steps they are required to follow,” noted Kazon. “The problem is that failure to follow QA steps will not be a valid excuse for any enforcement agency. That means laboratory directors may need to be more vigilant and resourceful.
“One significant problem cited in the letter was the frequent turnover of lab supervisors due to a lack of support by Noble hospital’s administration and a general lack of responsiveness from administration to laboratory issues and concerns,” he commented.
When It’s Time to Resign
“Those two complaints—a lack of support and a lack of responsiveness from administration—show that the laboratory director was not getting what he needed to operate the lab correctly,” he said. “No wonder this laboratory director felt the need to resign.”
Across the United States, a significant number of rural hospitals and community hospitals are reporting financial losses. Like E.J. Noble Hospital, these hospitals are more likely to shrink the budgets of their laboratories, starving these labs of the resources they need to retain adequate numbers of med techs, purchase reagents and consumables, and comply fully with CLIA and other regulatory requirements. Thus, it is likely that the lab industry will see more laboratory directors turn “whistleblowers” for all the appropriate reasons.