Colorado High Court says health providers may be sued for reporting drug theft




The Gazette, Colorado Springs


The Colorado Supreme Court clarified on Monday that, even if individual healthcare workers enjoy immunity from lawsuits when investigating potential prescription drug theft, organizations are not also shielded for their role in reporting criminal activity. Certain laws in Colorado grant immunity to “persons” who report crimes or elder abuse. However, the question for the Supreme Court was whether New Century Hospice could be held liable for turning in one of its employees to the Colorado Nursing Board when it suspected she may have diverted a patient’s opioid medications for an illicit purpose. The court said “yes,” as New Hospice is not a “person.” “Relying on the plain meaning of ‘person,’ we hold that New Century is not entitled to immunity,” wrote Chief Justice Brian D. Boatright in the Sept. 25 opinion, “because it is a corporation, not a person.” Two members of the court wrote separately to ask state lawmakers to reconsider whether the lack of immunity for healthcare organizations amounts to wise public policy. Specifically, warned Justice William W. Hood III, the law as written could deter reports of prescription opioid theft at a time when drug overdose deaths are skyrocketing in Colorado. “By providing immunity to individuals who report suspected prescription drug diversion, the legislature clearly seeks to encourage such reporting,” wrote Hood for himself and Justice Monica M. Márquez. Yet, organizations that make similar reports may be met with lawsuits if the allegations are not substantiated. “This inconsistent treatment seems sufficiently striking that perhaps it was unintended. If so, I encourage the legislature to clarify through new legislation the scope of the immunity it meant to provide,” Hood added. Currently, a legislative committee is meeting before the next session to study opioid and other substance use disorders. The committee’s chair, Rep. Chris degruy Kennedy, D-lakewood, called New Hospice’s case “interesting,” but did not believe the committee would have enough time to explore the specific issue of liability for healthcare providers raised by Hood’s concurrence. “I would certainly be open to discussing whether changes here are warranted, but the potential implications go far beyond the question of diverted opioids and would require a more comprehensive conversation,” he said. The committee’s vice chair, Sen. Kevin Priola, D-henderson, told Colorado Politics: “We will look into it.” In the underlying case, Tana Edwards was a nurse who worked for New Century in its various offices in the Denver and Colorado Springs areas. After she began caring for a 92-year-old patient through the Castle Rock office, her supervisor, Kathleen Johnson, noticed the patient was receiving an unusually large number of prescription oxycodone pills. Johnson and another New Hospice employee traveled to the patient’s home in December 2019 to inventory all medication, and they calculated that 465 pills were unaccounted for. Believing Edwards had taken them, New Century launched an investigation. The company filed a report with Castle Rock police and notified the state’s health department, plus the Colorado Board of Nursing. Edwards agreed to voluntarily suspend her nursing license in the face of the allegations. However, local prosecutors declined to pursue criminal charges and the nursing board similarly cleared Edwards, giving her only a warning for the future. Edwards then sued Johnson and New Century, alleging the investigation was faulty and ignored the presence of an “overflow” pill container in the patient’s home that would have explained where the missing medication went. In December 2022, Denver District Court Judge Mark T. Bailey dismissed most of Edwards’ claims. Johnson acted in good faith to report suspected drug theft, he concluded, so she was entitled to immunity. However, New Hospice could be sued for the damage it allegedly caused Edwards because it was not a “person” and, therefore, not immune. “The consequences of incorrect reporting are serious and, as demonstrated by this case, may include a criminal investigation, suspension of a nurse’s license, interference with patient relationships, and embarrassment and anxiety for the reported individual,” Bailey wrote. New Hospice appealed to the Supreme Court, arguing it was facing trial for doing what the law required it to do — report a potential crime. Furthermore, the loss of immunity would lead other healthcare organizations to think twice about investigating prescription drug theft. “Because the Trial Court’s ruling undermines public policy by discouraging healthcare entity cooperation in reportable offenses and its ruling yields an absurd result, it abused its discretion,” wrote New Hospice’s attorneys. The Supreme Court concluded the context of the immunity laws made clear that they only applied to people, not corporations. Although one provision did clearly shield corporations, the immunity only kicks in when a report raises the possibility that additional criminal conduct may happen in the future. Because it was unclear whether New Century’s report satisfied that criterion, the Supreme Court left the issue for trial. Hood, in his concurrence, said he would “urge” the General Assembly to reexamine the immunity laws, given the potential chilling effect the court’s ruling could have on the cooperation healthcare organizations provide in combating drug overdoses. “What’s at stake here is not lost on this court,” he wrote.