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Case 4:14-cv-00036-RRE-ARS Document 274 Filed 10/09/15 Page 1 of 49
UNITED STATES DISTRICT COURT
DISTRICT OF NORTH DAKOTA
NORTHWESTERN DIVISION
Lilas Guttormson and John Fenner, on )
behalf of themselves and all others )
similarly situated,
)
)
Plaintiffs,
)
)
vs.
)
)
ManorCare of Minot, ND, LLC, d/b/a )
ManorCare Health Services, and HCR )
ManorCare Medical Services of Florida, )
LLC.
)
)
Defendants and Third- )
Party Plaintiffs,
)
)
vs.
)
)
Trinity Hospitals, Inc. and Trinity Health,
)
Inc.
)
)
Third-Party
)
Defendants.
)
Civil No. 4:14-cv-00036
MEMORANDUM OF LAW IN SUPPORT OF
MANORCARE’S MOTION FOR LEAVE
TO SEEK PUNITIVE DAMAGES
Randall J. Bakke
Bradley N. Wiederholt
SMITH BAKKE PORSBORG
SCHWEIGERT & ARMSTRONG
122 East Broadway Avenue
P.O. Box 460
Bismark, ND 58502-0460
Telephone: +1 701 258 0630
Michael Kendall
(admitted pro hac vice)
Matthew Knowles
(admitted pro hac vice)
MCDERMOTT WILL & EMERY
28 State Street
Boston, MA 02109
Telephone: +1 617 535 4000
Attorneys for ManorCare of Minot ND, LLC and
ManorCare Medical Services of Florida, LLC
Paul M. Thompson
(admitted pro hac vice)
MCDERMOTT WILL & EMERY
500 North Capitol Street, N.W.
Washington, DC 20001
Telephone: +1 202 756 8000
Dated: October 9, 2015
Case 4:14-cv-00036-RRE-ARS Document 274 Filed 10/09/15 Page 2 of 49
TABLE OF CONTENTS
I.
INTRODUCTION ............................................................................................................. 1
II.
BACKGROUND ............................................................................................................... 4
A.
Trinity .................................................................................................................... 4
B.
ManorCare ............................................................................................................ 4
C.
The Hepatitis C Outbreak .................................................................................... 5
D.
III.
1.
The Virus .......................................................................................................... 5
2.
The Joint Trinity / Department of Health Investigation ................................... 6
3.
The Department of Health and CDC Investigate Employee A ......................... 7
4.
New Cases in 2014: Former Trinity Patients with No
Connection to ManorCare................................................................................ 8
Procedural History................................................................................................ 9
1.
The Plaintiffs’ Federal Lawsuit ........................................................................ 9
2.
The Plaintiffs Dismiss Class Certification With Prejudice ............................ 10
3.
The State Court Complaints ........................................................................... 10
TRINITY’S OPPRESSIVE, MALICIOUS, AND FRAUDULENT CONDUCT ....................... 11
A.
Employee A Reused Phlebotomy Needles, and Trinity
Concealed her Conduct ...................................................................................... 11
1.
Trinity Failed to Train or Supervise Employee A .......................................... 11
2.
Trinity Ignored and Concealed Complaints about Employee A
Reusing Needles and Breaching Trinity’s Infection Control
Policies ........................................................................................................... 14
a)
Two Nurses Caught Employee A Reusing Needles ............................... 14
b)
Other Complaints about Employee A ..................................................... 18
3.
Trinity Failed to Act on Credible and Repeated Complaints
about Employee A ........................................................................................... 19
4.
Trinity Concealed the Complaints about Employee A from
ManorCare and the Department of Health .................................................... 21
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5.
B.
C.
IV.
V.
Trinity Banned Employee A from Drawing Blood at its own
Nursing Home................................................................................................. 21
Trinity Ignored and Concealed Extensive Drug Diversion by
its Employees ....................................................................................................... 22
1.
The Dangers of Drug Diversion ..................................................................... 22
2.
Trinity’s Drug Supply is Not Secure ............................................................... 24
3.
Trinity Concealed Evidence of Drug Diversion and Failed to
Report Drug Diverters to the State as North Dakota Law
Requires .......................................................................................................... 27
4.
Trinity Refused to Test the Drug Diverters for Hepatitis C ........................... 28
Trinity Told the Public and the Press that ManorCare was
Responsible for the Outbreak ............................................................................ 30
LEGAL ARGUMENT ..................................................................................................... 31
A.
Legal Standard .................................................................................................... 31
B.
Trinity’s Conduct Merits Punitive Damages .................................................... 33
1.
Phlebotomy ..................................................................................................... 33
2.
Drug Diversion ............................................................................................... 35
3.
Trinity’s Public Statements............................................................................. 38
CONCLUSION............................................................................................................... 39
ii
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TABLE OF AUTHORITIES
Cases:
Page(s):
A & R Fugleberg Farm, Inc. v. Triangle Ag, LLC,
828 F. Supp. 2d 1045 (D.N.D. 2011) .......................................................................................32
Atkinson v. McLaughlin,
No. 1:03-CV-091, 2007 WL 557024 (D.N.D. Feb. 15, 2007) ...........................................32, 34
Dahlen v. Landis,
314 N.W.2d 63 (N.D. 1981) ..............................................................................................32, 36
Harwood State Bank v. Charon,
466 N.W.2d 601 (N.D. 1991) ..................................................................................................32
Ingalls v. Paul Revere Life Ins. Group,
561 N.W.2d 273 (N.D. 1997) ..................................................................................................32
Olmstead v. First Interstate Bank of Fargo, N.A.,
449 N.W.2d 804 (N.D. 1989) ..................................................................................................36
Olson v. Fraase,
421 N.W.2d 820 (N.D. 1988) ..................................................................................................33
Ross Ericksmoen, Inc. v. Cont’l Res., Inc.,
No. 4:13-CV-107, 2014 WL 1410509 (D.N.D. Apr. 10, 2014) ..............................................31
Statutes and Regulations:
21 U.S.C. § 801 ..............................................................................................................................36
N.D.C.C. § 23-34-04 ......................................................................................................................26
N.D.C.C. § 32–03.2–11(1) .......................................................................................................31, 33
N.D.C.C. § 43-17-31 ......................................................................................................................26
21 C.F.R. § 1301.71 .......................................................................................................................36
iii
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Other Authorities and Sources:
Jeff German, Hepatitis C Outbreak Dr. Dipak Desai Sentenced to Federal Prison
for Fraud, Las Vegas Review-Journal, July 9, 2015 (available at
http://goo.gl/dD3rTk) ...............................................................................................................36
Kurt Eichenwald, When Drug Addicts Work in Hospitals, No One is Safe,
Newsweek, June 18, 2015 (available at http://goo.gl/XLUh4b) .............................................23
North Dakota Pattern Jury Instructions C-72.................................................................................38
North Dakota Pattern Jury Instructions C–72.10 .....................................................................32, 34
North Dakota Pattern Jury Instructions C–72.16 .........................................................33, 34, 38, 39
iv
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TABLE OF ABBREVIATIONS AND TERMS
Bakke Aff.
Affidavit of Randall J. Bakke, counsel for Defendants ManorCare
and ManorCare of Florida.
Black Dep.
Transcript of the deposition of Tam Black, the daughter and personal
representative of a former ManorCare patient infected with the
outbreak strain of hepatitis C. The deposition transcript is attached as
Exhibit 5 to the Bakke Aff.
Bossert Dep.
Transcript of the deposition of Linda Bossert, a former Trinity
employee who was in charge of Trinity’s phlebotomy services. The
deposition transcript is attached as Exhibit 11 to the Bakke Aff.
Complaint
Plaintiffs’ Complaint against ManorCare (ECF No. 1).
Emmett Aff.
Affidavit of Linda Emmett, Assistant Vice President of HCR
ManorCare.
Employee A
A Trinity phlebotomist whom ManorCare and the Plaintiffs allege is
responsible for spreading the hepatitis C outbreak.
Employee A Dep.
Transcript of the deposition of Employee A. The deposition
transcript is attached as Exhibit 10 to the Bakke Aff.
English Dep.
Transcript of the deposition of Mike English, a Trinity employee who
supervised Employee A. The deposition transcript is attached as
Exhibit 1 to the Bakke Aff.
Freed Dep.
Transcript of the deposition of Diane Freed, R.N. Nurse Freed
worked at the Job Corps facility in Minot, and complained to Trinity
that Employee A had been reusing needles on students at Job Corps.
The deposition transcript is attached as Exhibit 7 to the Bakke Aff.
Kruger Dep.
Transcript of the deposition of Kirby Kruger. Mr. Kruger is the head
of the Disease Control division of the North Dakota Department of
Health, and led the Department’s investigation of the outbreak. The
deposition transcript is attached as Exhibit 2 to the Bakke Aff.
ManorCare
Defendant ManorCare of Minot, ND, LLC, d/b/a ManorCare Health
Services.
ManorCare of Florida
Defendant HCR ManorCare Medical Services of Florida, LLC.
Physician Dep.
Transcript of the deposition of a former Trinity physician fired for
alleged drug diversion. The deposition transcript is attached as
Exhibit 6 (unredacted) and Exhibit 25 (redacted) to the Bakke Aff.
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Plaintiffs
Plaintiffs Lilas Guttormson and John Fenner.
Nurse Dep.
Transcript of the deposition of a former Trinity nurse fired for alleged
drug diversion. After Trinity fired him, this nurse got a job at a
hospital in Minnesota, where he was caught diverting drugs again,
and sent to jail. The deposition transcript is attached as Exhibit 8 to
the Bakke Aff.
Nwaigwe Dep.
Transcript of the deposition of Dr. Casmiar Nwaigwe, Trinity’s
infectious disease specialist. The deposition transcript is attached as
Exhibit 24 to the Bakke Aff.
Somerset Court
An assisted-living facility in Minot. At least five Somerset Court
patients have the outbreak strain of hepatitis C.
Sulkowski Dec.
Declaration 1 of Dr. Mark Sulkowski, expert witness for ManorCare.
Trinity
Third-Party Defendants Trinity Health and Trinity Hospitals.
Trinity Dep.
Transcript of the Rule 30(b)(6) deposition of Trinity. This deposition
is still ongoing, but the partial deposition transcripts for two
witnesses are attached as Exhibit 3 (Simonson) and Exhibit 4
(Seehafer) to the Bakke Aff.
Trinity Homes
Trinity’s skilled-nursing facility in Minot. Several Trinity Homes
patients are infected with the outbreak strain of hepatitis C.
Trinity Outreach
Laboratory
Trinity’s laboratory testing services. Among other things, Trinity
Outreach Laboratory provided phlebotomy services at ManorCare,
the Wellington, and Somerset Court.
Wellington
An assisted-living facility in Minot. At least one Wellington resident
is infected with the outbreak strain of hepatitis C. This resident has
no connection to ManorCare or Somerset Court.
1
Dr. Sulkowski is traveling overseas, and is therefore unable to submit a notarized affidavit.
Accordingly, he has submitted a declaration under the penalties of perjury pursuant to
28 U.S.C. § 1746(1).
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I.
INTRODUCTION
ManorCare operates a skilled-nursing facility in Minot, North Dakota. It has sued Trinity
and now seeks punitive damages because Trinity infected at least 52 people with hepatitis C.
Trinity then hid its role in causing the infection, and falsely tried to blame ManorCare for the
injuries Trinity has caused.
Trinity’s victims include a number of ManorCare’s residents.
Trinity tolerated and concealed behavior by its employees and contractors that violated the most
fundamental standards of infection control and patient safety, and presented an obvious recipe
for a hepatitis C outbreak. For years, Trinity’s doctors and nurses diverted injectable drugs for
personal use, and its outpatient phlebotomist reused the same needles on multiple patients.
Instead of stamping out such unsafe practices, Trinity let them continue while hiding
them from outsiders. Thus, ManorCare, Trinity’s patients, and the Minot community did not
learn about Trinity’s risky practices until it was too late. Rather than prevent these breaches and
inform those affected by them, Trinity did nothing – apart from banning the phlebotomist from
drawing blood at Trinity’s own nursing home and allowing some of the drug diverters to shuffle
off to other states, where they continued treating patients. If Trinity had been vigilant about
implementing safe practices, there would have been no hepatitis C outbreak in Minot.
Once the outbreak became public, Trinity falsely accused ManorCare to draw attention
away from its own reckless disdain for the community’s safety. Trinity told the press and the
public that ManorCare (which treated some, but not all of the infected Trinity patients) was
somehow responsible for spreading the hepatitis C virus, and that “it is impossible for it to be an
accident.” But Trinity – not ManorCare – is the only common link among all infected patients.
Trinity’s bad-faith conduct led to one of the largest hepatitis C outbreaks in United States
history, put innumerable North Dakotans at risk, and caused substantial damage to ManorCare.
This oppressive, malicious, and fraudulent conduct fully merits an award of punitive damages.
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Since at least 2005, Trinity has received a deluge of complaints about a traveling Trinity
phlebotomist known to the parties as “Employee A.”
Nurses and administrators at other
facilities in Minot complained that Employee A ignored even the most basic infection control
practices:
•
She left needles on the floor or on a tray before using them on patients.
•
She failed to wash her hands and wear gloves.
•
At least three times, she walked out of a room after drawing blood, leaving a used needle
sitting on the patient or on the floor nearby.
•
And in 2011, patients and two registered nurses at another facility caught Employee A
reusing phlebotomy needles on multiple patients.
Each of these acts is an obvious breach of Trinity’s rules and accepted medical standards, and
each was promptly reported to Trinity. Yet Employee A’s manager failed to record them in
Employee A’s personnel file, failed to document all of the complaints he received, and failed to
reprimand Employee A in any way. Instead, Trinity waited until the fall of 2013 to issue a “first
written warning” to Employee A. Even then, Trinity allowed her to continue drawing blood –
except at its own skilled nursing facility, where Trinity had long banned Employee A as a result
of what it describes disingenuously as “personality conflicts.”
Trinity’s conduct extends beyond its phlebotomy practices. In 2012 – a year before the
outbreak in Minot was discovered – the FBI called about a nurse Trinity had fired for stealing
drugs. During that call, the agent asked a Trinity manager whether Trinity had experienced a
hepatitis outbreak. This call should have come as no surprise, as Trinity has an extensive
problem with “drug diversion” – the theft or misuse of drugs by medical personnel. Drug
diversion is a leading cause of hepatitis C outbreaks in the medical context. As one former
Trinity physician put it, Trinity is a hospital that “has a tendency to attract [employees] with
addiction problems,” and “the tracking, the storage, the quality assurance” with respect to
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injectable drugs was “lacking.” But this physician’s concerns “fell on deaf ears” in the Trinity
administration. Since 2009, Trinity has fired as many as 13 employees for stealing drugs,
including at least two doctors. Even Trinity’s central drug supply is insecure, as on at least two
occasions, narcotics went missing from Trinity’s pharmacy vault. Yet Trinity failed to disclose
its drug diversion problem to ManorCare.
Consistent with this pattern, Trinity’s CEO also rejected a recommendation from the
hospital’s own infectious disease physician that Trinity should require hepatitis C testing for all
Trinity employees who had been in contact with the infected patients. Likewise, very few
Trinity patients were tested for the virus. In contrast, ManorCare requested that the Department
of Health conduct mandatory testing of all current and former ManorCare employees and
residents. None of ManorCare’s employees tested positive for the outbreak strain of the virus.
The Plaintiffs initiated this lawsuit as a class action alleging that ManorCare was
responsible for the hepatitis C outbreak. Indeed, a number of current or former ManorCare
patients are infected with the outbreak strain of hepatitis C. But ManorCare, like its patients, is a
victim of Trinity’s conduct. Confronted with the evidence above, the Plaintiffs now recognize
that Trinity is at fault. They have dismissed their class certification claim with prejudice, and
they are now pursuing lawsuits against Trinity in state court. The Plaintiffs’ only claim against
ManorCare is that ManorCare is somehow liable for Trinity’s negligence.
There is ample evidence upon which the jury could find that Trinity’s actions were
oppressive, malicious, or fraudulent. Accordingly, ManorCare respectfully seeks leave of the
Court to plead a claim for punitive damages against Trinity with respect to Counts VI through X
of ManorCare’s Amended Third-Party Complaint (ECF No. 187).
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II.
A.
BACKGROUND
Trinity
Trinity operates a number of medical facilities in Minot. Nearly all ManorCare residents
receive care at Trinity Hospital. Emmett Aff. ¶ 5. Among other things, Trinity also operates a
skilled-nursing facility (Trinity Homes), a travelling hospice service, an outpatient laboratory
service (Trinity Outreach Laboratory), and an outpatient medical care facility (Trinity Medical
Arts). Id.
B.
ManorCare
ManorCare operates a 114 bed skilled-nursing and long-term care facility in Minot.
Emmett Aff. ¶¶ 3, 9. A central focus of ManorCare’s work is post-acute and rehabilitation care
to help residents return home after injuries or hospitalization. Id. ¶ 3. As a result, many
ManorCare residents come to the facility after having surgery at Trinity Hospital.
Like most skilled-nursing facilities, outside independent contractors, agencies, and
physicians provide many specialized medical and other services to ManorCare’s residents. Id.
¶ 4. For example, each resident has his or her own independent primary care physician. Doctors
from Trinity provide podiatry care at ManorCare.
Id.
Trinity’s hospice service provides
specialized care for residents nearing the end of their lives. Id. Outside contractors provide hair
care and cosmetic services to residents. Id. And until early November 2013, Trinity provided
phlebotomy (blood draw) services to ManorCare’s residents under contract with ManorCare. Id.
¶ 6 and Ex. 1 and 2. These contracts make clear that Trinity was an independent contractor. See
id. Ex. 1 (p. 3) and Ex. 2 (p. 7). Trinity billed ManorCare for phlebotomy services provided
pursuant to these contracts. Id.
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Mike English, Trinity’s outpatient laboratory supervisor, confirmed during his deposition
that Trinity, not ManorCare, was responsible for training and supervising the phlebotomists who
provided services at ManorCare:
Q. In other words, you weren’t expecting ManorCare to supervise the phlebotomists
from Trinity when they were doing their blood draw work?
A. Correct [. . .]
Q. That was left strictly to Trinity –
A. Correct [. . .]
Q. – and to make sure they were following safe practices?
A. Yes.
Q. [. . .] in terms of the methodology or procedures to follow in terms of performing
the phlebotomy work done by Trinity at ManorCare, Trinity was responsible for
that?
A. Yes [. . . ]
Q. In other words, you understood that ManorCare had an expectation that
appropriate protocols and procedures and safety practices would be followed by
the Trinity phlebotomists in performing phlebotomy work on the ManorCare
residents?
A. Yes. And that’s [Trinity’s] expectation, too.
English Dep. 89:17-20; 91:13-15; 90:17-23; 90:3-7.
C.
The Hepatitis C Outbreak
1.
The Virus
Hepatitis C is an infectious disease that primarily affects the liver. Sulkowski Dec. ¶ 22.
The disease is caused by the hepatitis C virus, which is transmitted through the blood and
occasionally other bodily fluids. Id. ¶¶ 26. Hepatitis C is not transmitted through casual contact,
through saliva, through food, or through the air. Id. Healthcare exposures, such as the reuse of
needles, drug diversion, or improperly sterilized surgical equipment, can transmit hepatitis C. Id.
¶ 27.
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2.
The Joint Trinity / Department of Health Investigation
In March 2013, an infectious disease physician at Trinity Hospital notified the North
Dakota Department of Health that he had recently diagnosed two cases of hepatitis C. Bakke
Aff. Ex. 14 (p. 2). Both patients were over the age of 60. Id. In May 2013, the Department of
Health received a third report of acute hepatitis C in an elderly patient. Id.
After receiving reports of three elderly patients with hepatitis C, the North Dakota
Department of Health sent a team to Minot. Id. at 2-3. Trinity was intimately involved in the
early stages of the investigation. Until the investigation began to focus on ManorCare, Trinity
representatives attended the Department’s weekly teleconferences, and Trinity would edit the
Department’s press releases.
Bakke Aff. Ex. 23 (DOH33982) and Ex. 27.
Likewise, the
Department’s team would even take Trinity’s team out to dinner. Id. Ex. 23 (DOH37393 (“Took
Trinity administrators to dinner at 5:30pm, so the day was cut rather short.”)). After these
meetings and conversations, the focus of the investigation shifted to ManorCare.
The Department of Health began testing all patients who had spent time at ManorCare’s
Minot facility since 2011. The Department also conducted random testing of a subset of patients
at Trinity Homes, but did not conduct systematic testing of Trinity Hospital patients. Id. Ex. 14
p. 3.
There are three steps to the testing process.
Initially, the Department conducted
preliminary “antibody” or “rapid” tests for hepatitis C. See Sulkowski Dec. ¶ 25. This simply
indicates whether the patient has ever been infected with hepatitis C. Next, patients who test
positive would then undergo another test to determine whether they are presently carrying the
virus’s RNA, and if so, the type and subtype of the virus. This outbreak involves subtype 1b.
Finally, the Department of Health relied on the CDC to conduct further testing of elderly subtype
1b patients – but it declined to test younger patients with subtype 1b. This “quasispeices”
analysis is analogous to DNA testing, and it identified that the patients in question had a
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genetically similar strain of the virus – suggesting common exposure. Id. The initial tests of
nursing home patients identified 20 current or former ManorCare residents with the outbreak
strain, including one person then residing at Trinity Homes. Bakke Aff. Ex. 14 (p. 3).
The Department of Health’s limited testing raises serious concerns about the true scope
of the outbreak. When employees at a hospital divert injectable drugs and contaminate the
syringes and vials those drugs are stored in, they can expose patients to hepatitis C and other
communicable diseases. But despite this broad risk, the Department quickly limited its
investigation to elderly patients. It did almost nothing to determine whether people in the
community who had received medical care at Trinity Hospital were also infected. See
Kruger Dep. 169:3-17 (“. . . we sent a handful of samples down [for quasispeices testing]. I
can’t even say a handful. A handful would assume five and that may not – but we sent some
community samples down [. . .] You know, we sent some 1b’s.”).
There may be additional
patients in the community who received care from Trinity and were infected with the
outbreak strain of hepatitis C as a result of drug diversion by hospital staff. There is no
reason to limit testing or concern to elderly Trinity patients.
3.
The Department of Health and CDC Investigate Employee A
In October 2013, the Department requested more help from the federal Centers for
Disease Control. Bakke Aff. Ex. 14 (p. 3). The CDC and Department of Health conducted a
joint investigation of the outbreak, which included on-site visits, interviews, and chart review at
ManorCare and Trinity. Id. (pp. 3-6). During the Department’s visit to ManorCare in September
2013, investigators attempted to evaluate Trinity’s outreach phlebotomy services. Id. (p. 5).
However, Employee A was not present, citing family illness. Instead, the Department observed
blood draws by another Trinity phlebotomist. Id. The Department’s report notes that this
phlebotomist did not “wash hands or conduct hand hygiene after removing gloves . . . .” Id. The
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Department was able to interview Employee A later, but only at Trinity Hospital, in the presence
of her supervisor. Id. The investigators did not watch her draw blood during this interview. Id.
The Department observed Employee A perform blood draws at another facility, id. p. 5, and their
observations – and concerns raised by that facility’s staff – are described in the sealed appendix
to this brief.
4.
New Cases in 2014: Former Trinity Patients with No Connection to ManorCare
During the spring, summer, and fall of 2014, the Department of Health announced it had
identified additional patients infected with the outbreak strain of hepatitis C. See Bakke Aff. Ex.
15. On May 23, 2014, the Department revealed that it had identified a 46th case, and reported:
Up until identification of this case, the outbreak has been confined to current or
former residents of ManorCare. The newly identified case has not been a resident of
and has no direct connection to ManorCare . . . Because this case presents a slightly
different history than the prior cases, it may provide additional clues about where this
infection originated and how it has been passed between individuals.
Id. (emphasis added). Next, on July 21, 2014, the Department announced another case, and
noted that both of these new cases (the 46th and 47th patients) involved residents at an assistedliving facility called Somerset Court who “have not been residents” of ManorCare:
In December, the NDDoH released their preliminary findings, which stated that
statistical information suggested that having hepatitis C may be associated with
receipt of: (1) podiatry and phlebotomy (blood draw) services through contractual
agreements with Trinity Health; and (2) nail care services by ManorCare. So far in
the investigation, the two new cases fit within the original findings without the
exposure to ManorCare.
Id. (July 21, 2014 release). The Department identified four more cases during the fall of 2014,
including a 51st case that “is not associated with residency at ManorCare.” Id. (December 23,
2015 release). The Department confirmed “[t]here has been no evidence of disease transmission
at ManorCare, Minot since the fall of 2013,” id., which is when ManorCare terminated Trinity’s
phlebotomy services. Emmett Aff. ¶ 6.
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In late 2014, the Department of Health identified yet another new case: the Wellington,
an assisted-living facility in Minot, has an infected resident with no connection to ManorCare or
Somerset Court. Kruger Dep. 140:3-4. This patient had his or her blood drawn by Employee A
at Trinity’s medical clinic. Id. 144:2-12. (“the same phlebotomist that was doing the outreach at
ManorCare also had contact with this individual . . . [at Trinity’s] Town & Country Clinic.”).
D.
Procedural History
1.
The Plaintiffs’ Federal Lawsuit
On April 2, 2014, the Plaintiffs filed a lawsuit against ManorCare. ECF No. 1. The
Complaint alleged three counts: negligence, res ipsa loquitur, and violation of North Dakota’s
consumer protection laws. Id. ManorCare filed an Answer, ECF No. 21, and partial Motion to
Dismiss, ECF No. 22, on June 10, 2014. The Plaintiffs filed a stipulation of dismissal of Count
III (consumer protection) on July 18, 201. ECF No. 43. The Court denied the rest of
ManorCare’s partial motion to dismiss on February 13, 2015. ECF No. 144.
On June 23, 2014, ManorCare filed a Third-Party Complaint against Trinity. ECF No.
28. Trinity filed an Answer and Counterclaim on July 15. ECF No. 41. ManorCare moved to
dismiss the Counterclaim on August 5, 2014, ECF No. 49, and moved to strike Trinity’s Answer,
ECF No. 47. Trinity voluntarily withdrew its Counterclaim on September 9, 2014, ECF No. 59,
and filed a corrected Answer, ECF No. 63. With leave of the Court, ManorCare filed its
Amended Third-Party Complaint against Trinity on April 23, 2015. ECF No. 187. Trinity later
filed an Amended Counterclaim against ManorCare, ECF No. 215, which ManorCare has moved
to dismiss for Trinity’s failure to support it with an expert witness affidavit as North Dakota law
requires. ECF No. 267.
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2.
The Plaintiffs Dismiss Class Certification With Prejudice
The Plaintiffs moved to certify a class action against ManorCare on January 9, 2015.
ECF No. 117.
ManorCare and Trinity filed opposition briefs (ECF Nos. 146 and 149,
respectively) on February 27, 2015.
On March 20, 2015, the Plaintiffs agreed to withdraw their request for class certification,
and entered a stipulation, ECF No. 173, in which they agreed that they would not attempt to
certify a class action for any claim arising from the outbreak.
3.
The State Court Complaints
On February 27, 2015, two former ManorCare residents – Ernest Podolski and Carol Jean
Nichols – filed a lawsuit against Trinity and ManorCare in North Dakota State Court. See
Nichols et al. v. Trinity et al., Civil No. 51-2015-C-00300, North Dakota District Court for the
North Central Judicial District, Ward County. The federal Plaintiffs have moved to intervene in
this action, and the state court recently granted the Plaintiffs’ motion in this regard. The same
lawyers represent the Plaintiffs in this action and the state court plaintiffs.
On August 12, 2015, thirteen additional current and former ManorCare residents served
another state court lawsuit against Trinity and ManorCare. See Kerzman et al v. Trinity et al.
North Dakota District Court for the North Central Judicial District, Ward County (docket number
not assigned). The same lawyers represent these plaintiffs as well.
Finally, on September 9, 2015, two more patients filed a substantially identical suit
against Trinity and ManorCare, again represented by the same counsel. See Haugen et al v.
Trinity et al., North Dakota District Court for the North Central Judicial District, Ward County
(docket number not assigned).
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III.
A.
TRINITY’S OPPRESSIVE, MALICIOUS, AND FRAUDULENT CONDUCT 2
Employee A Reused Phlebotomy Needles, and Trinity Concealed her Conduct
Employee A is a long-time employee of Trinity Outreach Laboratory. English Dep.
51:1-22. She was the primary phlebotomist performing blood draws at ManorCare until
ManorCare terminated Trinity’s services in November 2013. Emmett Aff. ¶ 6. Employee A
drew blood from all patients affected by the outbreak, Sulkowski Dec. ¶ 38, and as described
below, there is clear and convincing evidence that she reused phlebotomy needles on multiple
patients.
1.
Trinity Failed to Train or Supervise Employee A
Trinity hired Employee A as a phlebotomist in 2001. Employee A Dep. 34:12-14. Prior
to this, Employee A had worked as a waitress, a food service employee at Trinity’s nursing
home, in Trinity’s mail room, as a records clerk, as a receptionist, and as a courier. Id. at 24:8-9,
25:1-2; 29:12-18; 31:20-22; 35:7-9. In 2001 – and now – Trinity did not and does not require
any certification or prior training for its phlebotomists. English Dep. 55:1-17 and 57:7-12;
Bossert Dep. 21:7-23:14 (no certification required due to “big turnover” among Trinity’s
phlebotomists, and admitting that Trinity’s phlebotomists have a “[l]ack of education. They’re
not professionals.”). Once it hired her, Trinity’s approach to “training” Employee A speaks for
itself:
Q. When you started as a phlebotomist at Trinity, what training, if any, did you
receive?
2
ManorCare also incorporates by reference the additional facts described in its Sealed Appendix,
filed together with this brief. In addition, ManorCare has recently learned that Trinity’s
counsel has not collected, reviewed, searched, or produced emails and other electronically
stored information in this case. In essence, Trinity has unilaterally refused to engage in
electronic discovery. Trinity has now agreed to conduct these searches, and the parties are
currently negotiating a protocol to address the process for doing so. To the extent this discovery
produces relevant information, ManorCare reserves the right to supplement or amend this brief.
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A. It was on-the-job training [. . .]
Q. What did they do, what did you do to pursue this what you’ve described as onthe-job training?
A. Well, and – I went with another phlebotomist and watched and we had to read
through a – we had a video thing we had to watch and – and then I guess
followed them for a couple days and then they had us start drawing [blood] and –
with somebody watching.
Q. Okay. Anything else that was included in your on-the-job training as a
phlebotomist at Trinity?
A. No [. . .]
Q. And then you were followed yourself while you drew blood from patients with
another phlebotomist –
A. I don’t want to say followed, but somebody was with – with me for a few days
and then – then I – I guess if they thought you were ready, then I was on my own
[. . .]
Q. Okay. And then this video that you watched, roughly how long was that video?
A. I don’t recall.
Q. I mean are we talking a period of an hour or are we talking days?
A. Well, it wasn’t days. I know that.
Employee A Dep. 42:4-25; 43:1, 11-17; 45:22-25; 46:1-2. It is no surprise that given her lack of
training, Employee A could not explain why it is essential that phlebotomists use a new needle
for every blood draw:
Q. And what’s your understanding of why you shouldn’t reuse needles on patients?
A. Well, we never do. We’ve always been – we never reuse it. You’re told not to or
whatever. That’s the way it’s always been.
Q. Okay. But do you know reasoning behind that, what the concern is if you would
reuse a needle?
A. I don’t have an answer for you.
Q. You don’t know?
A. No.
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Employee A Dep. 145:15-25.
Trinity did not require that Employee A have any qualifications, and it provided her
almost no training. Despite this, it allowed Employee A to operate at remote locations with no
supervision whatsoever. Employee A would pick up supplies from Trinity, and then travel to
various facilities in Minot – as well as patients’ homes – where she would draw blood
unsupervised. See Employee A Dep. 81:25-82:1; 100:3-11; 133:12-18; 296:7:16. Mike English
was Employee A’s direct supervisor. He testified at his deposition that he only went with
Employee A to observe her practices on one occasion: in 2011, he conducted a “ride along” after
he received complaints that she was reusing needles.
English Dep. 75:2-12; Employee A
235:21-236:2. Mr. English testified that he knew ManorCare relied on Trinity to supervise
Employee A. English Dep. 89:17-90:11 (“Q. You weren’t expecting anyone at ManorCare to
direct or oversee the phlebotomy work performed by the Trinity phlebotomist, were you? A.
No.”). But for the overwhelming majority of the thousands of blood draws that Employee A
performed each year, she was entirely without supervision. In particular, Employee A testified
that Trinity never bothered to observe or supervise the blood draws she was performing at
ManorCare. Employee A Dep. 133:12-18; 296:7:16.
Nor did Trinity do anything to inventory or log the phlebotomy supplies Employee A
used to draw blood. See English Dep. 97:20-98:9 (equipment provided exclusively by Trinity);
256:1-10 (no tracking or inventory). In general, Employee A used Trinity’s equipment, but
sometimes she used equipment supplied by the facility she was visiting. Id. 3 Trinity has no
records or other information to confirm what equipment Employee A used where – and more
importantly, no way of telling whether Employee A was checking out enough phlebotomy
3
At ManorCare, Employee A always used Trinity’s phlebotomy supplies, without exception.
Employee A Dep. 100:3-11.
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supplies to account for the number of blood draws she was performing. Id. 256:1-13 (“Q. So is
there any way for us to determine through Trinity records how many needles Employee A was
using per month [. . .] A. No. Not that I know of.”).
2.
Trinity Ignored and Concealed Complaints about Employee A Reusing Needles
and Breaching Trinity’s Infection Control Policies
Unbeknownst to ManorCare, Trinity permitted Employee A to continue drawing blood
even though Trinity knew of Employee A’s long and checkered history of serious lapses in
infection control practices. Documents produced and depositions taken during discovery have
presented clear evidence upon which the jury can find that Employee A reused needles while
performing blood draws – and that Trinity knew about this, yet concealed her conduct.
a)
Two Nurses Caught Employee A Reusing Needles
In 2011, Mike English – Employee A’s supervisor – received a call from Diane Freed,
the nurse in charge of the health clinic at Minot’s Job Corps facility. 4 Employee A performed
scores of blood draws at Job Corps, as all incoming students had blood tests for drugs and for
HIV and other communicable diseases (but not hepatitis C). Freed Dep. 43:7-19. Mr. English
has known Ms. Freed for years, and acknowledges that she is a “conscientious nurse.” English
Dep. 170:14-16.
Indeed, she is experienced and credible. Ms. Freed previously worked at
another hospital for 15 years as an ICU nurse and nurse manager. Freed Dep. 24:5-18. She
testified that she understood phlebotomy practices and equipment, and that she had performed a
number of venipuncture procedures (including blood draws) during her long nursing career. Id.
at 27:4-29:1. No one has offered any reason to doubt the veracity of Ms. Freed’s account.
4
The Burdick Job Corps in Minot is a residential vocational training program for teenagers and
young adults. See “Job Corps: About Us” (http://quentinnburdick.jobcorps.gov/about.aspx,
accessed September 29, 2015).
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During his deposition, Mr. English described the complaint he received from Nurse
Freed:
A. Well, she indicated that – that there were some students that complained that
[Employee A] was rough when putting on the tourniquet and that she was getting
calls on her cell phone and that she smelled heavily of smoke. And then she
went on to add that a couple students last month told her that [Employee A]
had used the same needle on them and didn’t change the needle. And she
observed an unsheathed needle on the tray and [Employee A] used it on the
student. Diane apparently confronted [Employee A], asking where the
needles were to be disposed. And her comment was she thought it made
[Employee A] nervous as [Employee A] – as she watched [Employee A]
perform phlebotomy.
Q. Okay. And let’s talk about the complaint by a couple of students that told Diane
that [Employee A] had used the same needle on them and didn’t change needles.
Is that a significant concern –
A. Yes [. . .]
Q. Is there anything you can think of that would be a more serious violation by a
phlebotomist?
A. Not that I can think of.
English Dep. 170:24-172:18 (emphasis added).
Once she received the complaints about Employee A reusing needles, Ms. Freed enlisted
the help of another nurse, Sheri Berglund. Together, they attempted to count the number of
needles and “needle hubs” 5 in the sharps disposal container after Employee A performed a series
of blood draws at Job Corps. Freed Dep. 104:10-105:1; 107:5-108:25. Each time a phlebotomist
attempts to draw blood, he or she must use a new needle and hub. Therefore, there should have
been at least as many used needles and hubs in the sharps container as there were patients – and
if any patient required more than one attempt to draw blood, there should have been more used
needles and hubs than patients. See Freed Dep. 109:8-10. But there were not: “[w]e could not
5
A hub is a plastic receiver that screws onto the top of the needle. It holds the vacuum tubes that
collect the blood sample. Like the needle itself, hubs are single-use and must not be reused
across patients. See English Dep. 113:1-11, 116:11-117:16.
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find the number of hubs in any of the boxes that correlated with the number of students
that we would have drawn that day. There were less needle hubs identified.” Freed Dep.
108:1-4. According to Nurse Freed, Nurse Berglund agreed with her that “there were less hubs
and needles than there should have been for the number of students from which [Employee
A] had drawn blood.” Id. at 109:15-20.
Because Ms. Freed had difficulty seeing into the sharps containers, she repeated her
count of used needles on another day when Employee A drew blood. Before Employee A
arrived, Ms. Freed removed all of the sharps containers from the facility, save one that was
completely empty before Employee A arrived. Id. at 113:23-115:16. Employee A arrived with
no supplies, no sharps containers of her own, and no apparent way to remove used needles from
the facility. Id. 73:10-16; 274:14-21. After the draws, Ms. Freed and Ms. Berglund checked the
sole sharps container. There were fewer needles than patients. Id. at 115:17-119:24.
Ms. Freed immediately called Mr. English and reported her findings. Id. at 123:12125:15. She also shared a number of other concerns about Employee A’s practices. On another
occasion, Ms. Freed observed Employee A “had a student in the chair and was getting ready for
her venipuncture and there was an unsheathed [i.e., uncapped] needle on the tray.” Freed Dep.
126:9-15. Astoundingly, Mr. English and Trinity did not even record Nurse Freed’s complaints
– which Trinity admits were a “very serious accusation,” see Bossert Dep. 144:13-16 – in
Employee A’s personnel file:
Q. Did these notes in regards to the complaint that [Employee A] had been reusing
needles end up in her employment file?
A. I don’t think so. I don’t know.
Q. Why not?
A. I don’t have access to her employment file and I – no, I don’t believe so.
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English Dep. 176:15-21. Instead, Mr. English wrote Ms. Freed’s complaints on scrap paper, and
left the note in a drawer in his office.
Mr. English’s response to Nurse Freed’s complaint was to conduct a “ride along” where
he could observe Employee A’s practices. Unsurprisingly, Employee A denied reusing needles,
and followed the rules in the presence of her boss:
Q. I mean, did you just take her word for it when she said she wasn’t reusing
needles?
A. I did take her word for it.
Q. And you told me you didn’t report this to ManorCare or any of these other
outside facilities that were using [Employee A] for blood draws because you
didn’t think the complaint were credible or borne out about her reusing needles.
Is that what you’re saying?
A. Yes [. . .] I – I – we went to the facility and I observed her practices, and I just
don’t believe that she [reused] the needles [. . .]
Q. So you believed her?
A. Yes.
English Dep. 181:14-23; 182:14-20. Trinity did not attempt to interview or investigate the
students who lodged the complaint that Employee A was reusing needles. Freed Dep. 90:5-11;
91:22-92:14.
Shortly after Ms. Freed complained about Employee A, Trinity stopped sending
Employee A to Job Corps. Freed Dep. 29:6-10; 146:6-24. Mr. English testified that Employee
A “quit” drawing blood at Job Corps. English Dep. 60:14. “We had her concentrate on our
other facilities that we were getting too many requests from.” Id. 60:14-16. Likewise, Linda
Bossert (Trinity’s phlebotomy director) testified that the change was “just coincidental” and was
not in response to Ms. Freed’s complaint. Bossert Dep. 145:11-146:1.
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b)
Other Complaints about Employee A
The Job Corps complaints were the most serious in a long string of concerns about
Employee A from a number of facilities in the Minot area:
•
Home Health Care Facility: In 2005, Trinity received a complaint from a home health
worker regarding Employee A. The complaint alleged that Employee A did not wash her
hands or use gloves when drawing blood, did not use an alcohol swab to clean the
injection site, laid the phlebotomy needle on the floor before using it on a patient, pulled
a syringe cap off with her teeth, smelled like smoke, and questioned why the patient’s
doctor had ordered certain tests. English Dep. 155:22-162:16. Trinity did not take any
disciplinary action. Id. at 162:14-16.
•
Emerald Court: Emerald Court is a long-term care facility in Minot. English Dep.
141:11-146:4. In 2008, an Emerald Court employee complained that Employee A did not
wear gloves during a blood draw, “laid the needle on the carpet then drew the patient,”
and was unpleasant to the Emerald Court staff. Id. Trinity did not take any disciplinary
action. Id. at 162:6-16.
•
North Dakota State Fair: Trinity policy
requires that all phlebotomists wear gloves on
both hands when drawing blood. English Dep.
145:2-21. Employee A routinely flouted this
requirement, yet Trinity took no action. In fact,
the August 2008 edition of Trinity’s own
“Health Talk” newsletter featured a large color
picture (right) of Employee A drawing blood at
the North Dakota State Fair without wearing
gloves on both hands. Bakke Aff. Ex. 17.
Trinity did not take any disciplinary action. Id.
•
ManorCare: In late October 2013 – approximately one week before ManorCare decided
to terminate Trinity’s phlebotomy services – ManorCare’s administrator complained to
Trinity that Employee A had left a used phlebotomy needle sitting on a resident’s chest
after a blood draw. English Dep. 206:5-208:18. Employee A admitted this, and
explained that after leaving the room she looked down and realized the needle was not on
her tray. She offered no explanation for why she expected the needle would have
been on her tray, rather than in a sharps container. The jury could certainly infer
that she noticed the needle was missing when she went to use it on the next patient.
Trinity did not take any disciplinary action. Id.
•
Complaint from Tam Black: Tam Black – whose father Ernest Podolksi filed a lawsuit
against Trinity and ManorCare in state court – testified that while performing a blood
draw on her father, Employee A commented to Ms. Black that she was in a hurry to
complete the blood draw so she could go play bingo. Black Dep. 96:17-21.
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•
Somerset Court: Somerset Court is an assisted-living facility in Minot. Employee A
previously provided phlebotomy services to Somerset’s residents. Bakke Aff. Ex. 13, ¶
3. However, Somerset staff made multiple complaints to Trinity regarding Employee A’s
work. Id. ¶ 4. They complained that she was hurried, rough with patients, and generally
unprofessional. Id. In June 2014, Somerset terminated Trinity’s phlebotomy services at
its facility. Id. ¶ 5. At least five Somerset patients are infected with the outbreak strain of
hepatitis C. Id. ¶¶ 6-11.
•
Edgewood Vista: Edgewood Vista is a skilled-nursing facility in Minot. In November
2013, employees of Edgewood Vista complained to Trinity that they found used
phlebotomy needles in two patients’ rooms after Employee A drew blood from patients.
In response, Trinity finally issued a first written warning to Employee A. English Dep.
120:17-25.
ManorCare will present testimony to the jury from its expert witness, Dr. Mark
Sulkowski. Dr. Sulkowski is a Professor of Medicine at the Johns Hopkins University School of
Medicine with a joint appointment in the Divisions of Infectious Diseases and Gastroenterology /
Hepatology. Sulkowski Dec. ¶ 1. He also serves as the Medical Director of the Viral Hepatitis
Center in the Division of Infectious Diseases at Johns Hopkins.
Id.
Dr. Sulkowski has
significant experience in the epidemiology of hepatitis C, and has previously served as a
consultant with respect to the investigation of hepatitis C outbreaks. Id. With respect to
Trinity’s phlebotomy services, Dr. Sulkowski concludes that “the virus was likely spread from
some or all of the source patients to additional patients through improper phlebotomy practices
by Trinity’s phlebotomy service.” Id. ¶ 47. In making this determination, Dr. Sulkowski
emphasizes “Employee A’s history of violating infection control practices” as well as the fact
she drew blood from all of the infected patients. Id.
3.
Trinity Failed to Act on Credible and Repeated Complaints about Employee A
Mr. English – Employee A’s direct supervisor – acknowledges that he “had the authority
to reprimand her . . . .” English Dep. 119:11-23. Yet despite the litany of complaints and
violations described above, Mr. English reprimanded Employee A for the first time only in late
2013, in response to a complaint from Edgewood Vista that she had left used needles in two
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patients’ rooms. English Dep. 119:24-120:12; 130:11-132:21. Although they allowed her to
continue drawing blood, Trinity and Mr. English did nothing to retrain or educate Employee A
about proper phlebotomy practices in the wake of any of these complaints. As noted above, even
during her deposition in 2015, Employee A could not explain why it is essential to use a new,
sterile needle for every blood draw.
Indeed, despite Trinity’s written policies, Trinity failed to act on the credible and
repeated complaints it received about Employee A. A timely response – removing Employee A
from her phlebotomy role – would have prevented this outbreak. Yet during Trinity’s Rule
30(b)(6) deposition, Trinity’s representative insisted time after time that Trinity defers such
matters to a supervisor’s unchecked “discretion.” Trinity Dep. (Simonson) 44:8-48:20; 55:1657:25. Trinity disputed that Mike English had done anything wrong, and even disputed that the
allegations of needle reuse and other breaches of infection control described above could fairly
be called “complaints”:
A. Again, they are issues which have been identified over the course of employment.
I’m not sure that I’m in a position to say that they were classified as complaints.
They were issues that were addressed, things that someone felt that needed to
be addressed with her supervisor [. . .] They need to be - there needs to be some
re-education with an employee that something shouldn’t happen again. There
needs to be perhaps some additional education, some additional training so that
those issues which are identified don’t happen again if that indeed is what is
appropriate. You know, I guess that’s about the best way I can explain it.
Trinity Dep. (Simonson) (emphasis added) 17:23-18:3; 19:2-9. Ms. Bossert, Trinity’s lab
director took a similar tack:
Q. So unless you actually saw [Employee A] reusing needles, you weren’t going to
believe it happened; true?
A. That’s correct.
Bossert Dep. 172:17-20. Trinity’s “supervision” of Employee A amounted to nothing more than
willful blindness and denial – and total disregard for the safety of Trinity’s patients.
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4.
Trinity Concealed the Complaints about Employee A from ManorCare and the
Department of Health
Trinity admits that it did not inform ManorCare or its other customers about the myriad
complaints regarding Employee A. See English Dep. 181:17-23. ManorCare relied on Trinity to
supervise Employee A, but instead, Trinity suppressed the evidence of Employee A’s
malfeasance, even though needle reuse is widely known as a major cause of the spread of
hepatitis C. Likewise, Trinity failed to bring these complaints to the attention of the Department
of Health during the investigation of the outbreak:
Q. Did you report to DOH Ms. Freed’s complaints to you that [Employee A] had
been reusing needles?
A. No.
Q. Did you disclose to DOH the complaints regarding needles being found at
Edgewood Vista, ManorCare, and an unsheathed needle at Job Corps?
A. No.
Q. And why not?
A. Totally forgot about it. You know, I didn’t even think of them. Didn’t think
of it.
English Dep. 228:16-22 (emphasis added) (See also Kruger Dep. 278:2-23 (confirming that
Trinity did not inform the Department of Health of the Job Corps incident)).
5.
Trinity Banned Employee A from Drawing Blood at its own Nursing Home
Trinity’s failure to supervise or discipline Employee A, and its failure to inform
ManorCare or the Department of Health about the complaints it received is particularly
egregious given that Trinity has long prohibited Employee A from drawing blood at Trinity
Homes, its own nursing home.
In the fall of 2013, several ManorCare employees attended a meeting with the
Department of Health concerning the hepatitis C outbreak. Emmett Aff. ¶ 4. Representatives
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from Trinity were also present. Id. After the meeting, Rhonda Tanberg-Walters, the
Administrator of Trinity Homes, informed two ManorCare representatives that Employee A was
no longer permitted to draw blood at Trinity Homes. Id. As Mitch Leupp, former administrator
of ManorCare-Minot testified:
A. There was one point in discussion with Rhonda that she made the comment when
we were talking about the outreach draw and the phlebotomist, that Trinity’s
outreach lab phlebotomist, [Employee A] – as we were talking about that,
[Rhonda] indicated to me that she wouldn’t have [Employee A] do the draws
within Trinity Nursing Home.
Leupp Dep. 152:24-153:8. Likewise, Mr. English testified:
Q. And what did she tell you the reason was that Trinity Homes would not permit
[Employee A] to draw blood samples at Trinity Homes?
A. She didn’t elaborate as to why.
Q. Did you find that unusual?
A. Usually there’s personality conflicts with people. That’s what I typically see if
somebody doesn’t like a particular person, phlebotomist, they don’t want them to
be there.
English Dep. 239:6-14
B.
Trinity Ignored and Concealed Extensive Drug Diversion by its Employees
But Employee A’s repeated misconduct was not the only thing that Trinity concealed
from ManorCare, the Department of Health, and Trinity’s own patients. It also concealed
rampant drug diversion at its hospital. As discussed below, ManorCare’s expert has determined
that drug diversion by Trinity employees likely introduced the hepatitis C virus into the elderly
population at ManorCare and other facilities, where Employee A’s poor phlebotomy practices
spread the infection to additional patients.
1.
The Dangers of Drug Diversion
The threat of drug diversion – the theft or misuse of drugs in a medical setting – is
insidious and horrifying. When a doctor, nurse, or technician steals injectable drugs, he or she
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often injects himself with the same needle or from the same vial that will later be used on a
patient. Sometimes, the diverter will replace the missing fluid with inert saline to cover his or
her tracks. These actions expose patients to infectious diseases, while denying them the
medication they need, including drugs to cope with pain or to provide anesthesia. A recent
Newsweek article describes the scourge of drug diversion, including an incident where a traveling
medical technician – a man named David Kwiatkowski – infected almost four dozen patients
with hepatitis C while stealing drugs from the hospitals that employed him.
See Kurt
Eichenwald, When Drug Addicts Work in Hospitals, No One is Safe, Newsweek, June 18, 2015
(available at http://goo.gl/XLUh4b). He stole drugs from hospitals in Arizona, Pennsylvania,
Michigan, and Maryland, before being caught at a hospital in New Hampshire. Newsweek
describes Mr. Kwaitkowski’s conduct:
For more than a year, he had worked at Exeter Hospital in Exeter, New Hampshire,
using his favorite technique for stealing drugs: injecting himself with preloaded
syringes, washing them out, filling them with saline and putting them back. Just like
at almost every other hospital where he had worked, he knew other staff members
were stealing narcotics too, so he didn’t think what he was doing was so terrible. But
in May 2012, a patient there was diagnosed with hepatitis. Then a second. And a
third. And the hospital also discovered Kwiatkowski was infected with the virus.
Id. (emphasis added).
This was not an isolated incident: investigators have linked the theft and misuse of
injectable narcotic or anesthetic drugs to hepatitis C outbreaks affecting dozens of patients in a
number of states. See Bakke Aff. Ex. 17. The evidence in this case makes clear that like Exeter
Hospital in New Hampshire, Trinity has a rampant drug diversion problem – and like Exeter,
dozens of Trinity patients are now infected with hepatitis C. But unlike Exeter, no one has yet
identified the drug diverter or diverters responsible for spreading hepatitis C, because Trinity has
not, and indeed refuses to administer hepatitis C tests to the employees it has fired or suspects of
drug diversion. Trinity Dep. 202:15-203:4 (Simonson).
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2.
Trinity’s Drug Supply is Not Secure
The evidence shows that the drug storage and delivery system at Trinity Hospital is
compromised from top to bottom, and that Trinity doctors, nurses, and technicians have been
stealing drugs intended for Trinity’s patients.
At least twice, drugs – including injectable
fentanyl, a potent narcotic 80 to 100 times more powerful than morphine – have gone missing
from within Trinity’s “secure” narcotics vault. See Trinity Dep. (Seehafer) 209:14-210:15. This
vault is a purportedly “secure location and a pharmacist is there 99 percent of the time.” Id. If
Trinity drug diverters have access to Trinity’s vault to remove drugs, there is no way to ensure
that they have not tampered with and contaminated these drugs. Indeed, ManorCare’s expert
observes that a striking number of the infected patients had surgery and other procedures at
Trinity which involved these injectable drugs. See Sulkowski Dec. ¶ 7.
The problem gets worse as the drugs move from Trinity’s pharmacy, to its drug
dispensing machines, and to its patients. During the period of this outbreak, it was commonplace
to find broken vials of fentanyl in Trinity’s drug dispensing machines. See Physician Dep.
119:16-21; Trinity Dep. (Seehafer) 131:4-25. Since 2009, Trinity has fired at least 13 doctors,
nurses, paramedics, and technicians for drug diversion. We say “at least” because Trinity has
refused to disclose all such employees. The Department of Health has investigated seven Trinity
doctors and nurses whom Trinity fired for drug diversion between 2009 and 2013, Kruger Dep
83:2-13, but Trinity did not provide the Department with the whole story. Trinity now admits
that it fired two more nurses for drug diversion in 2014, and as many as four other employees
during the past six years. See Trinity Dep. (Seehafer) at 86:2-25; 103:19-106:4; 107:7-108:14;
202:22-204:13; 205:13-23; 206:8-207:11; 216:14-23; 217:1-4. There was even a problem with
drug diversion within Trinity’s ambulance service: Trinity caught a paramedic working on its
ambulance diverting drugs in 2013. Id. at 262:22-25; 264:13-14.
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ManorCare recently took the deposition of a former Trinity physician whom Trinity fired
for suspected drug diversion. While this physician denied that he stole drugs from the hospital,
he was unequivocal in describing Trinity’s serious problem with drug diversion, and the
administration’s failure to take steps to secure its supply of injectable drugs. As this doctor put
it, Trinity “has a tendency to attract . . . individuals with addiction problems.” Physician Dep.
197:22-198:1. Trinity’s drug diversion problems are so widespread that patients awaiting surgery
or other procedures would often comment “‘I hope I get the real meds or real drugs’ and things
like that.” Id. 199:9-12. In light of this, the “sheer hypocrisy that has been demonstrated by
[Trinity] in terminating me and at the same time allowing for this [. . .] hepatitis C pandemic
[. . .] to occur is – I have no words.” Physician Dep. 109:11-18.
Trinity also failed to secure its narcotics dispensing machines (known as “PYXIS
machines”) and this physician often found these machines unlocked with their drawers open. Id.
at 101:10-13. In light of this, it is no surprise that “medications were often understocked” in the
PYXIS machines. Id. In short, “the tracking, the storage, the quality assurance was lacking
. . . .” Id. 101:24-102:1. This physician promptly and repeatedly brought these concerns to
Trinity’s management, yet his warnings “fell[] on deaf ears.” Id. 112:9. He testified:
Q. So what were the issues and concerns in terms of wasting [i.e., disposing after
use] of anesthetics at Trinity Hospital while you were employed there?
A. The medications were often times not wasted and were still present after the case
would end – particularly operation[s] – and therefore had the potential of being
misused for another patient.
Q. Or those drugs could potentially be misused for drug diversion purposes if
someone was diverting drugs; correct?
A. I suppose that is possible.
Id. 116:5-15.
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Trinity fired another nurse for drug diversion in the spring of 2012.
After his
termination, this nurse left North Dakota and moved to Minnesota, where he began working at a
Veterans’ Affairs hospital.
Nurse Dep. 56:19-23.
diversion, and eventually prosecuted and jailed.
He was fired again for suspected drug
Id. 61:19-62:4; 63:10-12.
During the
investigation of this second incident, an FBI agent called Trinity to ask whether it had recently
experienced a hepatitis outbreak:
A. When I was interviewed by the FBI [. . .] [they asked] have we seen an increased
number of cases in [sic] hepatitis. And my response to the FBI agent was no.
Q. But that later changed; correct?
A. Yes.
Q. Did you follow up with the FBI agent?
A. No, I did not.
Trinity Dep. (Simonson) 221:18-222:3. Here once again, with another opportunity to avoid or at
least stop the spread of the outbreak, Trinity took no action. Id.
Dr. Sulkowski has determined that drug diversion likely played a role in spreading the
hepatitis C outbreak:
The Department of Health’s investigation as well as deposition testimony from
Trinity employees reveals that there was a striking level of illicit drug diversion
activity at Trinity Hospital between 2006 and 2014, and Trinity’s policies to prevent
the diversion of injectable narcotics was not robust during the time period in
question. I have reviewed a deposition transcript from Trinity’s pharmacy director,
which confirms that Trinity had serious problems with respect to the storage and
security of its drug supply. There were at least two incidents of drug tampering or
theft within Trinity’s pharmacy vault. Additionally, a number of Trinity employees
were caught tampering with and stealing injectable drugs from storage machines and
even patients’ IV infusion bags. Further, implicated employees worked in important
patient care units within the Trinity Hospital, including, but limited to, the emergency
department, operating rooms, Post-Anesthesia Care Unit, Intensive Care Unit,
medical and surgical wards as well as the Trinity owned ambulance system. This sort
of diversion of injectable narcotics poses a grave threat with respect to the
transmission of infectious diseases.
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Accordingly, it is probable that a number of the source patients were originally
infected as a result of diversion of injectable narcotic or anesthetic drugs, such as
benzodiazepines, at Trinity Hospital and/or its ambulance service. Among other
things, I observe that a large number of the infected ManorCare patients received care
at Trinity Hospital for broken bones and other serious conditions that require
anesthesia or pain management with injectable drugs in the emergency department or
other acute care hospital settings, including the operating rooms . . . .
Sulkowski Dec. ¶¶ 6-7 (emphasis added).
3.
Trinity Concealed Evidence of Drug Diversion and Failed to Report Drug Diverters
to the State as North Dakota Law Requires
Rather than addressing drug diversion, Trinity has suppressed and concealed the evidence
of this problem while refusing to test its employees for the hepatitis C virus. For example, on
June 10, 2015, Trinity sent a letter to the Court noting that ManorCare had requested copies of
“all documents and communications concerning any suspected, reported, or confirmed diversion
of injectable . . . drugs . . . at any Trinity facility from January 1, 2010.” Bakke Aff. Ex. 22
(p. 1). Trinity represented that it provided “all responsive and non-privileged documents along
with a detailed privilege log . . . .” – but it had not done so. Instead, Trinity withheld from
ManorCare and the Court the names of at least six other drug diverters. See Trinity Dep.
(Seehafer) at 86:2-25; 103:19-106:4; 107:7-108:14; 202:22-204:13; 205:13-23; 206:8-207:11;
216:14-23; 217:1-4. And during a deposition in the spring of 2015, more than a year and a half
after the Department of Health issued its preliminary report on the outbreak, the head of the
Department’s investigation team indicated he has just learned of another Trinity drug diverter
who was not included in the earlier investigation.
Kruger Dep. 111:12-18 (a criminal
investigation agent “stopped by to let me know that he thought that there was maybe one drug
diverter that wasn’t on the list that Trinity originally gave to us, and he wanted to make sure we
were aware of that and give us that information.”). Likewise, Trinity also failed to crossreference the entire list of infected Trinity patients against its list of drug diverters. Trinity Dep.
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156:5-8. (Seehafer) (“Q. So your work was never completed as to all the hepatitis C patients?
A. No, I guess not. I didn’t realize there were additional patients.”).
North Dakota law requires that when a hospital like Trinity has “any information that
indicates a probable violation” concerning drug diversion, the hospital must report this to the
North Dakota Board of Medicine. N.D.C.C. §§ 23-34-04 and 43-17-31. Failure to do so is a
Class B misdemeanor. Id. Trinity has ignored this requirement, and it now admits that it has
failed to report at least one drug diverter to the Board of Medicine as North Dakota law requires.
See Trinity Dep. (Seehafer) 149:17-151:16. Instead, Trinity routinely sends its employees to
rehabilitation, or allows them to leave quietly and obtain employment in other states. At least
one drug diverter, a nurse who stole large quantities of fentanyl and twice tested positive for the
drug, is still working at Trinity Hospital as a “nurse recruiter.” Id. 169:22-170:21; 190:8-16.
4.
Trinity Refused to Test the Drug Diverters for Hepatitis C
Despite knowing about the extensive drug diversion at its hospital, Trinity failed to test
its employees for hepatitis C. Trinity’s Rule 30(b)(6) designee confirmed that while Trinity
tested Employee A (she was apparently negative) 6 and the other phlebotomists at Trinity for
hepatitis C, Trinity did not test any of the employees and former employees accused of drug
diversion.
Trinity Dep. (Simonson) 202:24-203-4; 202:10-14. 7 Likewise, Trinity has not
conducted any wide-spread testing of other employees at its hospital or nursing home. Id. at
202:3-9.
In fact, Dr. Nwaigwe, Trinity’s infectious disease physician, determined that any
6
As Dr. Sulkowski explains, “[b]ecause this Trinity phlebotomist is apparently not a biological
carrier of the virus (i.e., she is negative for hepatitis C), it appears she spread the virus from
patient to patient rather than from provider to patient.” Sulkowski Dec. ¶ 8.
7
The individual about whom the FBI called Trinity provided the Department of Health with the
purported results of a hepatitis C test. However, as discussed in the Court’s previous order, these
results were handwritten and self-reported. See ECF No. 225 at p. 4. The Department of Health
had requested controlled testing protocol for this employee, Kruger Dep. 262:24-266:2, but it
was not followed.
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Trinity staff who provided care to or came in contact with the infected patients should be
“mandated” to be tested for hepatitis C. He informed John Kutch, Trinity’s CEO, of his opinion:
A. [. . . ] Anybody that could have or may have come in contact with any of
these patients at any time needs to be mandated to be tested and not – and I
– and I repeat, not voluntarily tested.
Q. Okay. And when you talked about anyone connected to care or treatment, you're
including with that any care or treatment provided by Trinity –
A. Yes.
Q. – to these patients?
A. Trinity, yes. Trinity and elsewhere, yes. [. . .]
Q. And you recommend that to [Trinity CEO] Mr. Kutch in the executive
committee?
A. Yes.
Id. 622:24-625:9; 624:9-11 (emphasis added). But consistent with its past conduct, Trinity and
its CEO refused to conduct the testing that their own doctor recommended.
In contrast,
ManorCare requested that the Department of Health conduct mandatory hepatitis C
testing for all current and former ManorCare employees. Emmett Aff. ¶ 8. All of the
employees and former employees whom the Department tested were negative for the outbreak
strain of hepatitis C. Id.
From the start, Trinity’s actions – its failure to test drug diverters for hepatitis C, failure
to report them to the state, failure to turn them over to the investigation team, and failure to
disclose them in this case – have been aimed at hiding the evidence of the drug diversion
problem that gave rise to the outbreak. Moreover, ManorCare has not yet been able to locate and
depose all of the known Trinity drug diverters, and this additional discovery will likely reveal
additional misconduct relating to drug diversion.
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C.
Trinity Told the Public and the Press that ManorCare was Responsible for the
Outbreak
Despite knowing about Employee A’s deplorable infection control practices and the
evidence she was reusing needles, and despite knowing that Trinity Hospital has a substantial
and ongoing problem with drug diversion, Trinity and its employees made repeated public
statements blaming ManorCare for the outbreak. Trinity’s false statements have inappropriately
directed public attention on ManorCare, and led to a sharp drop in admissions and census at
ManorCare’s facility in Minot. Emmet Aff. ¶ 9.
For example, Trinity’s infectious control physician, Dr. Casmiar Nwaigwe, gave multiple
interviews about the outbreak, all of which were coordinated by Trinity. Nwaigwe Dep. 72:173:8 (“I’ve never talked to the press . . . without somebody from marketing arranging for it.”).
While discussing Ernest Podolski, a former ManorCare patient infected with the outbreak strain
of hepatitis C, Dr. Nwaigwe told KXNews:
How can somebody spend six days in a nursing home and come out with
hepatitis C? It just shouldn’t happen.
Bakke Aff. Ex. 16. Likewise, Dr. Nwaigwe told the same reporter:
No matter how you do the statistics, it is impossible for it to be an accident.
Id.
Trinity’s administration also made false statements about the outbreak.
A Trinity
spokesman told KUMV-TV that the Department of Health “found absolutely no link between
our phlebotomy service . . . in the spread of hepatitis C.” Id. This is categorically false – the
Department of Health’s Preliminary Report found a statistical link between Trinity’s phlebotomy
services and the patients infected by the outbreak strain of hepatitis C. Bakke Aff. Ex. 14 p.1
(“phlebotomy performed at [ManorCare by Trinity was] found to be statistically associated with
having hepatitis C.”). Likewise, in a press release, Trinity denied responsibility for the outbreak,
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and stated that its “phlebotomy and podiatry services are not the source of the hepatitis C
infection . . .” and even that Trinity “has demonstrated safe and effective infection prevention.”
Id. Ex. 18. Trinity made this statement despite the litany of complaints about Employee A dating
back to 2005, and despite its serious drug diversion problems – and it did so knowing full well
that it had concealed evidence of its infection control problems from the Department of Health.
IV.
A.
LEGAL ARGUMENT
Legal Standard
On July 14, 2015, the Court set a deadline of October 14, 2015 for motions to amend the
pleadings to state claims for punitive damages. ECF No. 222 at ¶ 2. ManorCare now seeks
leave to assert such a claim.
As this case is before the Court under diversity jurisdiction, this is a question of North
Dakota law. Ross Ericksmoen, Inc. v. Cont’l Res., Inc., No. 4:13-CV-107, 2014 WL 1410509, at
*2 (D.N.D. Apr. 10, 2014). North Dakota “prohibits a complaint from seeking punitive damages
upon commencement of an action.” Id. at *2, quoting N.D.C.C. § 32–03.2–11(1). The relevant
statute provides:
After filing the suit, a party may make a motion to amend the pleadings to claim
exemplary damages. The motion must allege an applicable legal basis for awarding
exemplary damages and must be accompanied by one or more affidavits or deposition
testimony showing the factual basis for the claim. The party opposing the motion
may respond with affidavit or deposition testimony. If the court finds, after
considering all submitted evidence, that there is sufficient evidence to support a
finding by the trier of fact that a preponderance of the evidence proves oppression,
fraud, or actual malice, the court shall grant the moving party permission to amend
the pleadings to claim exemplary damages. For purposes of tolling the statute of
limitations, pleadings amended under this section relate back to the time the action
was commenced
N.D.C.C. § 32–03.2–11(1). 8
8
ManorCare seeks to plead a claim for punitive damages with respect to Counts VI through X of
its complaint, and not with respect to Counts I through V. See A & R Fugleberg Farm, Inc. v.
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Accordingly, a party seeking to recover punitive damages must show evidence of
oppression, fraud, or actual malice. Id. The term “oppression” means “subjecting a person to
cruel and unjust hardship in conscious disregard of that person’s rights.” Atkinson v.
McLaughlin, No. 1:03-CV-091, 2007 WL 557024, at *7-8 (D.N.D. Feb. 15, 2007) citing North
Dakota Pattern Jury Instructions C–72.10. “It is an act of subjecting to cruel and unjust hardship,
or an act of domination.” Ingalls v. Paul Revere Life Ins. Group, 561 N.W.2d 273, 284–285
(N.D. 1997) (quoting trial court’s jury instructions). “The existence of oppression is a question of
fact.” Harwood State Bank v. Charon, 466 N.W.2d 601, 604-605 (N.D. 1991). (citing Bismarck
Realty Co. v. Folden, 354 N.W.2d 636 (N.D. 1984)).
Likewise, “actual malice”:
is defined as “an intent with ill will or wrongful motive to harass, annoy, or injure
another person.” Actual malice is the actual state or condition of the mind of the
person who did the act. Direct evidence of actual malice is not required. Rather, the
character of the act itself, with its surrounding facts and circumstances, may be
inquired into for the purpose of ascertaining the motive or purpose which
influenced the mind of the party in committing the act. Thus, upon the
consideration of these, if that motive is found to be improper and unjustifiable,
the law authorizes the jury to find it was malicious. “Actual malice” refers to the
actual state or condition of the mind of the person who did the act whereas “presumed
malice” refers to the “that state of mind which is reckless of law and of the legal
rights of the citizen in a person’s conduct toward that citizen.” Notably, direct
evidence of actual malice is not required to sustain an award of punitive damages.
Atkinson v. McLaughlin, No. 1:03-CV-091, 2007 WL 557024, at *7-8 (D.N.D. Feb. 15, 2007)
(citation omitted; emphasis added). The existence of actual malice is a question of fact. Dahlen
v. Landis, 314 N.W.2d 63, 69 (N.D. 1981).
Finally, “fraud” is: “(1) the suggestion as fact of that which is not true by one who does
not believe it to be true; (2) the assertion as a fact of that which is not true by one who has no
Triangle Ag, LLC, 828 F. Supp. 2d 1045, 1051 (D.N.D. 2011) (“The North Dakota Supreme
Court has allowed punitive damages in contract cases where an independent tort separate and
distinct from the contract breach is present.”) citing Pioneer Fuels, Inc. v. Montana–Dakota
Utilities Co., 474 N.W.2d 706, 710 (N.D.1991).
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reasonable ground for believing it to be true; (3) the suppression of a fact by one who is bound to
disclose it, or who gives information that is likely to mislead because that fact was not
communicated; or (4) a promise made without any intention of performing.” See North Dakota
Pattern Jury Instructions C–72.16; see also Olson v. Fraase, 421 N.W.2d 820 (N.D. 1988).
B.
Trinity’s Conduct Merits Punitive Damages
The Court must allow ManorCare’s motion for leave to seek punitive damages where
there is “sufficient evidence to support a finding by the trier of fact that a preponderance of the
evidence proves oppression, fraud, or actual malice.” N.D.C.C. § 32–03.2–11(1). As set forth
above, discovery in this case has revealed extensive evidence upon which the jury may find that
Trinity’s conduct – the actions of its employees who spread the outbreak, Trinity’s decision to
conceal them, and its false and misleading statements about ManorCare and the outbreak – was
oppressive, malicious, and fraudulent under North Dakota law. Accordingly, ManorCare is
entitled to request punitive damages.
1.
Phlebotomy
Reusing intravenous needles is a cardinal sin for a phlebotomist or any other medical
professional. In the only other recent case involving such conduct, a San Francisco phlebotomist
was sentenced to a year in prison after admitting she reused phlebotomy needles. See Bakke Aff.
Ex. 19. The sentencing court noted that what this phlebotomist did was “as dangerous as holding
a loaded gun to the patients’ heads.” Id.
Despite her conduct, it does not appear that the San Francisco phlebotomist got anyone
sick. Here, Employee A’s actions have apparently spread hepatitis C to dozens of people,
including elderly patients at ManorCare’s skilled-nursing facility. Employee A’s motivations
remain unclear, but given the reports from two respected nurses at Job Corps, there is no
question that the jury has grounds to find by a preponderance of the evidence that Employee A
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reused needles. Trinity did not audit or keep an inventory of Employee A’s needle use, and has
no evidence – apart from Employee A’s denials – to the contrary. It will be the jury’s decision
whether to believe Nurses Freed and Berglund, or to believe Employee A. Likewise, there is no
question that reusing needles – which amounts to criminal conduct – involves “subjecting a
person to cruel and unjust hardship in conscious disregard of that person’s rights” and is
therefore oppressive. See Atkinson v. McLaughlin, No. 1:03-CV-091, 2007 WL 557024, at *7-8
(D.N.D. Feb. 15, 2007) citing North Dakota Pattern Jury Instructions C–72.10. For the same
reasons, reusing needles is malicious conduct committed with “an intent with ill will or wrongful
motive to harass, annoy, or injure another person.” See North Dakota Pattern Jury Instructions
C–72.16.
Similarly, Trinity’s actions in abetting and concealing Employee A’s conduct were also
malicious, oppressive, and fraudulent. Trinity promised to perform professional phlebotomy
services in compliance “with all applicable federal, state and local rules, regulations, and
standards . . .” Emmett Aff. Ex. 1 and 2, and it billed ManorCare for these services. It did so
despite the cavalcade of complaints about Employee A’s conduct – including a report from a
registered nurse that Employee A was reusing needles. Employee A’s manager “totally forgot”
to provide these complaints to the Department of Health, while Trinity’s administration and
infectious disease doctor were publicly blaming ManorCare and proclaiming that that there was
“absolutely no link” between Employee A and the hepatitis C outbreak.
Fraud includes “the suppression of a fact by one who is bound to disclose it, or who gives
information that is likely to mislead because that fact was not communicated.” See North Dakota
Pattern Jury Instructions C–72.16. There is more than enough evidence for the jury to conclude
that Trinity should have informed ManorCare of Employee A’s misconduct, and that in light of
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her actions Trinity’s ongoing representation that it was performing phlebotomy services in
compliance with the law and applicable standards was misleading – and accordingly, that
Trinity’s actions were fraudulent.
In fact, the preponderance of the evidence shows that if Trinity had responded properly to
complaints about Employee A – even the second, or the third, or the fourth complaint it received
– this outbreak would not have occurred. No one except Trinity could know of the magnitude of
Employee A’s misconduct, spread across nursing homes and assisted-living facilities in and
around Minot. Trinity’s conduct – its decision to ignore complaint after complaint, year after
year – put a loaded weapon in Employee A’s hands again and again until she caused harm to at
least 52 North Dakota citizens. Trinity put its own interests ahead of those of its patients and
customers like ManorCare, in violation of their rights, and causing them significant hardship. It
did so while representing to ManorCare that it would perform phlebotomy services in accordance
with all laws, regulations, and “quality of care.” See Emmett Aff. Ex. 1 (p. 5). Trinity’s actions
were therefore oppressive, malicious, and fraudulent.
2.
Drug Diversion
Trinity’s decision to tolerate and conceal drug diversion at its facility also merits an
award of punitive damages. At the outset, there is no question that drug diversion is criminal
conduct. As discussed above, in New Hampshire a healthcare worker diverted injectable drugs
from a cardiac catheritzation lab, and in doing so infected at least thirty patients with hepatitis
C. 9 A federal court sentenced him to nearly 40 years in prison. In Nevada, Dr. Dipak Desai was
convicted of misusing injectable narcotics by reusing drug vials across patients. Dr. Desai
9
The New Hampshire Department of Health’s June 2013 report on this incident is available at
http://goo.gl/BSO7px
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received a life sentence in state court, and a 71 month sentence on federal charges. 10 Certainly
conduct that warrants criminal charges merits an award of punitive damages in a civil case. See
e.g., Olmstead v. First Interstate Bank of Fargo, N.A., 449 N.W.2d 804, 809 (N.D. 1989) (“Like
a criminal sanction, the purpose of awarding exemplary damages is to punish the wrongdoing
defendant in order to deter him, and others, from repetition of the wrongful conduct.”); Dahlen v.
Landis, 314 N.W.2d 63, 69 (N.D. 1981) (upholding award of punitive damages in civil case for
underlying criminal conduct).
Similarly, Trinity bears legal responsibility for the drug diversion it tolerated at its
hospital.
The federal Controlled Substances Act, 21 U.S.C. § 801, and its implementing
regulations require hospitals (1) to maintain effective controls and procedures to guard against
drug diversion, and (2) to promptly report drug diversion when it is detected. See id. and 21
C.F.R. § 1301.71 (“All applicants and registrants shall provide effective controls and procedures
to guard against theft and diversion of controlled substances.”). Trinity violated both obligations
– and when hospitals fail to meet these requirements, they incur substantial liability.
For
example, on September 28, 2015, the United States Attorney’s Office for the District of
Massachusetts announced a $2.3 million settlement with the Massachusetts General Hospital
after the hospital failed to maintain robust narcotics controls and failed to timely report several
drug diverters. See Bakke Aff. Ex. 26 and Olmstead, 449 N.W.2d at 809 (“the extent of a
criminal penalty may be relevant in determining the reasonableness of the award of exemplary
damages”). As Massachusetts United States Attorney Carmen Ortiz emphasized, “[u]nder the
law, hospitals . . . have a special responsibility to ensure that controlled substances are used for
10
See Jeff German, Hepatitis C Outbreak Dr. Dipak Desai Sentenced to Federal Prison for
Fraud, Las Vegas Review-Journal, July 9, 2015 (available at http://goo.gl/dD3rTk).
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patient care and are not diverted for non-medical uses.” Id. Trinity has failed in this regard, and
its failure has harmed ManorCare’s patients and jeopardized the health of the Minot community.
Indeed, Trinity’s conduct here is substantially more serious than the conduct in
Massachusetts that led to a $2.3 million civil penalty. Testimony from the former physician
quoted earlier makes clear that Trinity was on notice of its extensive drug diversion problem, but
rather than fix the problem and report the wrongdoing to the government, it turned a “deaf ear” –
in the doctor’s words – to complaints about this issue. It waited over two years to implement a
more secure system for documenting the “wasting” of used injectable narcotics, and it
acknowledges that some drug diversion could have been prevented if it had done so sooner. See
Trinity Dep. (Seehafer) at 95:1-96:19. Trinity even allows employees who test positive for drug
diversion to keep their jobs if they agree to attend a “rehabilitation process.” Id. 99:24-100:1.
As discussed above on page 28, Trinity failed to report some of the diverters to the state Board of
Medicine as required by state law.
Even once the outbreak came to light, Trinity suppressed evidence of the extent of its
drug diversion from the state and federal investigators seeking to identify the cause of the
hepatitis C outbreak. Trinity’s intransigence in failing to timely disclose its drug diversion
problems speaks to its culpability and state of mind. Trinity failed to provide the names of all
the drug diverters to the Department of Health investigators, to ManorCare, or to the Court. See
Trinity Dep. 88:11-17 (Seehafer). Had Trinity done so, the course of the investigation would
likely have been much different. Instead, relying on the limited and incomplete information
Trinity provided, the Department’s investigators pursued different avenues. Trinity’s conduct
also discouraged the investigators from testing a wider scope of patients in the Minot
community. To date, the Department of Health has not conducted wide-scale testing of Minot
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residents. See Kruger Dep. 169:3-17. Rather, as a result of Trinity’s decision to conceal
evidence of drug diversion, the Department focused on ManorCare and elderly patients at nearby
facilities. There may well be scores of other Minot residents who acquired the outbreak
strain of the hepatitis C virus at Trinity Hospital, but do not know they are infected.
Trinity further concealed the nature of the outbreak by refusing to test its employees for
hepatitis C – particularly those fired for stealing injectable drugs. Here again, the “character of
[this] act” suggests Trinity’s “improper and unjustifiable” motive, and therefore that its conduct
was malicious. See North Dakota Pattern Jury Instructions C-72. Again, fraud includes “the
suppression of a fact by one who is bound to disclose it, or who gives information that is likely to
mislead because that fact was not communicated.” See North Dakota Pattern Jury Instructions C–
72.16. Had Trinity informed ManorCare of its drug diversion problem, ManorCare would not
have sent its patients to Trinity.
As discussed above, Dr. Sulkowski had determined that drug diversion likely played a
role in spreading the hepatitis C outbreak to patients at ManorCare and elsewhere. Trinity’s
decision to conceal rather than report drug diversion therefore caused harm to ManorCare, and
Trinity’s decision was made in conscious disregard to ManorCare’s rights and the public’s
safety. This merits punitive damages to punish Trinity’s oppressive conduct and deter other
hospitals from acting similarly in the future. Time and again, Trinity’s response to the problems
at its hospital has been to conceal rather than disclose and address them. Trinity’s actions may
have served to protect Trinity’s reputation, but they came at the expense of public health and
patient safety. Again, this merits punitive damages.
3.
Trinity’s Public Statements
Finally, Trinity’s public statements concerning the outbreak – such as the assertion that
the outbreak took place at ManorCare’s nursing home, that “it is impossible for it to be an
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accident,” and the false statements that the Department of Health found no link to Trinity’s
phlebotomy services and that Trinity has “demonstrated safe and effective infection prevention”
– have improperly directed negative attention on ManorCare and harmed ManorCare’s business
operations.
For the purposes of punitive damages, fraud is: “(1) the suggestion as fact of that
which is not true by one who does not believe it to be true; (2) the assertion as a fact of that
which is not true by one who has no reasonable ground for believing it to be true; (3) the
suppression of a fact by one who is bound to disclose it, or who gives information that is likely to
mislead because that fact was not communicated; or (4) a promise made without any intention of
performing.” See North Dakota Pattern Jury Instructions C–72.16. The first three aspects of this
standard apply directly to Trinity’s public comments about ManorCare’s role in the outbreak and
its false claim about its infection prevention regime.
Trinity now admits that Employee A violated its infection control rules, yet it publicly
denied the same while laying blame on ManorCare. Trinity fraudulently blamed ManorCare
despite its knowledge regarding Employee A and drug diversion. Here again, there is more than
enough evidence for a jury to award punitive damages.
V.
CONCLUSION
For the reasons above, ManorCare requests leave to amend its Third-Party Complaint to
assert a claim for punitive damages with respect to Counts VI through X.
Dated: October 9, 2015
SMITH BAKKE PORSBORG
SCHWEIGERT & ARMSTRONG
By:
/s/ Randall J. Bakke
Randall J. Bakke (#03898)
Bradley N. Wiederholt (#06354)
39
Case 4:14-cv-00036-RRE-ARS Document 274 Filed 10/09/15 Page 47 of 49
122 East Broadway Avenue
P.O. Box 460
Bismarck, ND 58502-0460
(701) 258-0630
[email protected]
[email protected]
Michael Kendall (BBO# 544866)
(admitted pro hac vice)
Matthew Knowles (BBO# 678935)
(admitted pro hac vice)
MCDERMOTT WILL & EMERY LLP
28 State Street
Boston, MA 02109
Telephone: +1 617 535 4000
Fax: +1 617 321 4608
Email: [email protected]
[email protected]
Paul M. Thompson (DC #973977)
(admitted pro hac vice)
MCDERMOTT WILL & EMERY LLP
500 North Capitol Street, N.W.
Washington, DC 20001
Telephone: +1 202 756 8000
Fax: +1 202 756 8087
Email: [email protected]
Attorneys for Defendants ManorCare of
Minot, ND, LLC, and HCR ManorCare
Medical Services of Florida
40
Case 4:14-cv-00036-RRE-ARS Document 274 Filed 10/09/15 Page 48 of 49
CERTIFICATE OF SERVICE
I hereby certify that on October 9, 2015, a true and correct copy of the foregoing
document was sent to the following via the Court’s ECF filing system:
ATTORNEY FOR PLAINTIFFS:
Mike Miller (ND # 03419)
Todd Miller (ND # 06625)
Solberg Stewart Miller
1123 Fifth Avenue South
Fargo, ND 58103
[email protected]
[email protected]
Charles Zimmerman (MN # 120054)
J. Gordon Rudd, Jr. (MN # 222082)
Zimmerman Reed, P.L.L.P.
1100 IDS Center 80 South 8th Street
Minneapolis, MN 55402
[email protected]
[email protected]
Terry Quinn
David Barari
Goodsell Quinn
246 Founders Park Drive, Suite 201
P.O. Box 9249
Rapid City, SD 57709-9249
[email protected]
[email protected]
ATTORNEY FOR THIRD-PARTY DEFENDANTS:
Randall Shane Hanson (#04876)
Shannon Rogers
Camrud, Maddock, Olson & Larson, Ltd.
401 DeMers Ave., Ste. 500
P.O. Box 5849
Grand Forks, ND 58206-5849
[email protected]
[email protected]
Mark T. Berhow
Hinshaw & Culbertson, LLP
333 South Seventh Street, Suite 2000
Minneapolis, MN 55402
41
Case 4:14-cv-00036-RRE-ARS Document 274 Filed 10/09/15 Page 49 of 49
[email protected]
Geoffrey M. Coan
Kathleen E. Kelly
Hinshaw & Culbertson, LLP
28 State Street
24th Floor
Boston, MA 02109
[email protected]
[email protected]
By: /s/ Randall J. Bakke
DM_US 64215029-4.076326.0048
42