Your License, Your Money, Your Risk: A Nurse's Guide to Liability

Disclaimer

The information provided in this article is based on my nursing education, professional knowledge, and clinical experience as a nurse and nurse administrator. I am not an attorney; this content is for informational purposes only. It should not be construed as legal advice.

Understanding Legal Proceedings

The legal system addresses healthcare-related issues through three distinct types of proceedings. Understanding these differences is crucial for every nursing professional.

Criminal proceedings involve actions considered offenses against society. These cases typically result in penalties such as fines, probation, or imprisonment. The state brings these charges against individuals when they believe laws have been broken, and the burden of proof is "beyond a reasonable doubt." This high standard reflects the serious nature of criminal charges.

Civil proceedings address disputes between parties where one party seeks compensation for alleged damages or injuries. These cases typically involve monetary compensation, and the burden of proof is"preponderance of the evidence," meaning it is more likely than not that the claimed events occurred. Healthcare professionals most commonly encounter civil proceedings through medical malpractice lawsuits.

Administrative proceedings involve regulatory bodies, such as the Board of Nursing, reviewing professional conduct and determining whether disciplinary action is warranted. These proceedings focus on protecting public safety through professional oversight and can result in license suspension, revocation, or mandatory remediation.

The Doctrine of Vicarious Liability

Vicarious liability, also known as respondeat superior (Latin for "let the master answer"), is a fundamental legal doctrine that holds employers responsible for their employees' actions performed within the scope of employment. This principle emerged from the recognition that employers who benefit from their employees' work should also bear responsibility for work-related mistakes or negligence. The doctrine acknowledges the reality that employees serve as extensions of their employer's business operations.

For healthcare organizations, vicarious liability means assuming responsibility for their employees' professional actions and errors, provided these actions occur within the scope of employment. This "scope of employment" requirement is crucial and typically includes any actions that: 

     1.) Occur during authorized work hours 

     2.)Take place within normal work locations 

     3.) Serve the employer's interests 

     4.) Fall within the employee's job description and duties 

Consider a medical-surgical nurse who makes a medication error during a routine medication pass. If this nurse were working their scheduled shift when he/she made the unintentional error, vicarious liability would typically protect them from personal financial liability. The hospital, as the employer, would bear responsibility for any resulting damages.

However, important exceptions exist. The doctrine may not apply when a healthcare worker: 

     1.) Acts with criminal intent 

     2.) Performs duties while impaired 

     3.) Works outside their scheduled hours 

     4.) Provides care outside their scope of practice 

     5.) Engages in personal activities during work hours 

For example, if a nurse provides medical advice to a neighbor while off duty, any resulting issues would fall outside vicarious liability protection. Similarly, if a nurse deliberately falsifies documentation or diverts medications, these criminal actions would void the protection of vicarious liability.

Understanding these nuances becomes particularly important in modern healthcare environments where nurses often work in multiple facilities or through staffing agencies. The relationship between employer and employee must be clearly established. Independent contractors, traveling nurses, and per diem staff should pay particular attention to their employment agreements and liability coverage.

Criminal Proceedings and Nursing Practice

The nursing profession has witnessed an unsettling increase in criminal prosecutions. While many criminal cases involve intentional wrongdoing, recent years have seen nurses facing prosecution for unintentional medical errors occurring during routine practice. The RaDonda Vaught case brought national attention to this concerning trend, but it represents just one example of the growing criminalization of medical errors.

In response, one state has taken legislative action. Kentucky's HB159, developed with support from the Kentucky Nurses Association, provides immunity from criminal prosecution for unintentional medical errors made by unimpaired practitioners. This progressive legislation recognizes that other mechanisms, primarily civil and administrative proceedings, are more appropriate for addressing inadvertent mistakes.

Vicarious liability typically doesn't extend to criminal proceedings. In criminal cases, the individual is responsible for their actions. Healthcare organizations have no obligation to provide legal support or cover defense costs when nurses face criminal charges. Professional liability insurance also does not cover criminal proceedings. This reality leaves nurses personally responsible for mounting their defense, often at considerable expense. 

Civil Litigation and Vicarious Liability

Most nurses encountering legal proceedings face civil litigation seeking monetary damages. Civil cases aim to "make the injured whole again" through financial compensation. Here, vicarious liability becomes a crucial protection for employed nurses.

When nurses face lawsuits for actions occurring within their normal scope of employment, their organizations typically bear financial responsibility. Unless a nurse engages in criminal conduct or acts outside their employment scope, vicarious liability shields their personal assets from civil judgments.

This protection often extends to settlement agreements. When healthcare organizations settle cases before trial, these agreements typically include clauses preventing separate lawsuits against individual nurses involved in the incident. This comprehensive protection helps ensure nurses' personal assets remain secure while performing their professional duties.

However, self-employed nurses and those working under 1099 tax arrangements may lack this protection. These professionals must prepare for potential civil judgments through business insurance and independent professional liability coverage.

Administrative Proceedings and Professional Protection

Administrative proceedings through the Board of Nursing represent one of the most misunderstood yet potentially devastating legal challenges nurses face. Unlike civil litigation, where vicarious liability often shields nurses from financial consequences, administrative proceedings leave nurses personally responsible for their defense. These proceedings can arise from various triggers: patient complaints, employer reports, documentation discrepancies, medication errors, or even personal conduct outside the workplace that comes to the Board's attention.

Many nurses make the critical mistake of believing Board of Nursing investigations are informal processes that one can handle alone. This misconception often stems from the Board's seemingly helpful approach. Board investigators may contact nurses directly, requesting statements or documentation, and might even suggest that legal representation isn't necessary. However, this overlooks a crucial fact: the Board's primary mission is protecting the public, not the nurse.

Every response, statement, or document provided to the Board can become part of the permanent investigation record and can significantly impact the outcome. What might seem like a simple explanation to a nurse could inadvertently admit to practice violations or raise additional concerns. Written statements, in particular, require careful consideration as they may be used as evidence in both administrative proceedings and, potentially, in civil litigation. 

The scope of Board authority is extensive. They can: 

• Issue private or public reprimands

• Mandate additional education or supervision

• Require drug testing or monitoring

• Restrict practice settings or procedures

• Suspend licenses temporarily or indefinitely

• Revoke licenses permanently

• Impose substantial fines

• Require regular reporting and compliance verification

  
  

These actions can have cascading effects on a nurse's career. Many employers screen for Board actions during hiring. Insurance companies may refuse to credential nurses with certain Board sanctions. Even travel nursing agencies often reject applications from nurses with active Board restrictions. 

Legal representation in administrative proceedings serves multiple crucial functions: 

     1.) Evaluating the initial complaint and potential consequences 

     2.) Managing communication with Board investigators 

     3.) Preparing appropriate written responses 

     4.) Ensuring due process rights are protected 

     5.) Negotiating potential settlements or consent agreements 

     6.) Representing the nurse in formal hearings 

     7.) Appealing adverse decisions when necessary 

The financial burden of legal representation in administrative proceedings can be substantial. Attorney fees for Board cases often range from several thousand dollars for simple matters to tens of thousands for complex cases requiring formal hearings. This reality underscores the vital importance of maintaining professional liability insurance with robust license protection coverage. When selecting professional liability insurance, nurses should carefully evaluate the license protection provisions: 

• Coverage limits for administrative proceedings

• Whether coverage includes investigation stages

• The process for selecting legal representation

• Any restrictions on covered incidents

• Deductible amounts and payment requirements

• Coverage for different practice settings

  
  

Some insurance policies only provide coverage for incidents that occur after the policy's effective date. Others may exclude certain types of complaints or limit coverage for specific practice settings. Understanding these details before an incident occurs is crucial.

Nurses should also understand that employer-provided liability coverage rarely extends to Board proceedings. Even when employers initially support a nurse during an incident investigation, their interests may diverge once Board involvement begins. Healthcare organizations often focus on protecting their institutional interests, which might not align with the individual nurse's best defense strategy.

Early legal representation often proves crucial in administrative proceedings. Many cases that escalate to formal disciplinary actions might have been resolved more favorably with proper legal guidance from the outset. Attempting to navigate the initial stages alone and only seeking representation after complications arise can significantly limit defense options and increase both costs and potential consequences.

Professional Liability Insurance

Professional liability insurance provides crucial protection, particularly for administrative proceedings. While no known insurers offer criminal coverage, and vicarious liability often eliminates the need for civil case coverage, license protection remains vitally important.

Nurses receiving investigative letters from their licensing board should immediately seek legal counsel. While boards of nursing serve to protect the public, nurses need their own advocates to protect their professional interests. These proceedings can significantly impact a nurse's career, making proper representation essential.

Professional liability insurance with license protection coverage helps ensure nurses can afford proper legal representation during administrative proceedings. This coverage becomes particularly crucial for self-employed nurses who lack organizational support. 

Moving Forward with Protection

Understanding these legal frameworks helps nurses protect themselves professionally and financially. Whether facing criminal charges, civil litigation, or administrative proceedings, knowledge of available protections and potential vulnerabilities enables better preparation and response.

For further information, or to request a PDF copy of this article, visit my website at www.garveyces.com or contact me directly at matthew.garvey@garveyces.com.