Healthcare Breaches of Contract: Examples & Remedies

Instructor: Patricia Jankowski

Patricia is an experienced registered nurse who has worked in various acute care areas as well as in legal nurse consulting. She also has a BSChE.

There are many types of agreements and contracts that are made in the healthcare industry between various involved parties. This lesson is about the kinds of contracts found in the industry, how they are breached, and how the breach is remedied.

I'd Like to See You in My Office

CLINICAL MANAGER: ''Jennifer, I'd like to see you in my office. Please come in, and shut the door behind you.''

JENNIFER: ''Okay. What is this about?''

CLINICAL MANAGER: ''Jennifer, we've had a complaint that you and a few of your co-workers posted a photo of a patient on Facebook the other day. Surely you're aware that this is against hospital policy.''

JENNIFER: ''Awww, we were just having some fun. My co-workers and I are Facebook friends and nobody else could see it anyhow! What's the big deal?''

CLINICAL MANAGER: ''The big deal is that we will no longer need your services. When you became an employee here, you signed a contract stating that you would not post any material on social media about patient care or other hospital business. Please give me your ID badge. Security will escort you out.''

This conversation between a hospital employee and her manager includes an example of a breach of contract. The healthcare industry is a highly regulated industry with many rules designed to protect those whom it serves. Agreements, or contracts, of many kinds are made in order to ensure that these rules and regulations are followed, and breaching these contracts can often lead to serious consequences.

Breach of contract may have serious consequences
Contract and pen

Types of Contracts in Healthcare

A legal dictionary defines the term contract as ''an agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration.'' In healthcare, contracts exist between various stakeholders, both individuals and organizations, in the industry. Let's look at some of these.

Employee and Facility

Contracts between employees who have been hired by a healthcare facility and the facility itself are common. The introductory example is about one of these, and is based on an incident that actually happened. A nursing assistant at a facility in Indiana once posted a photo of a paraplegic's buttocks on Facebook because she found it amusing. She was fired. Since the advent of social media, many hospitals and healthcare facilities have taken steps to protect their patients' privacy and to avoid litigation by training employees about the prudent use of social media and by having them sign a contract stating that they will not post photos or information about the facility or patients online.

Physician and Patient

Contracts are sometimes made by physicians and their patients to make the doctor-patient relationship go more smoothly. There are many practical reasons for this. For example, a patient may have a history of being disruptive or threatening to a doctor or facility staff where he practices. To make sure no one gets hurt, the doctor may have the patient sign a contract to behave appropriately while at the facility and to cooperate with staff. If the patient breaches this contract, he will no longer be treated there.

A physician may also make a mental health contract with a patient to prevent the patient from committing suicide. This contract may save a patient's life if it helps him find alternatives to suicide and gives him ways to reach out for help when he is feeling suicidal.

Health Care Facility and Staff Providers

In today's world of corporate health care management, there are many evolving types of agreements that are made between business entities. An example of this is the contract made between CaroMont Health in North Carolina and a company called Cogent Healthcare, which is a staffing firm that provided hospitalists, or doctors who care for patients in hospitals, for CaroMont Health. CaroMont sued Cogent Healthcare in 2013 because Cogent suddenly stopped supplying the facility with hospitalists in October of that year. This was not supposed to happen until December, when CaroMont's management had a new plan in place to manage the hospitalists. It's easy to see that a breach of contract like this one could create dire circumstances for a healthcare facility. Who's going to take care of the patients?

Health Insurance Companies and Patients

The relationship between health insurance companies and the patients they cover is sometimes a rather complicated one. Is it a contract? Is it a fiduciary relationship, one of trust in which one party cares for the assets of another? Everyone knows that patients want coverage of their claims, and the insurance companies sometimes don't want to pay. So what happens when a patient doesn't get his claim paid?

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