Legal Report February 2014
U.S. JUDICIAL DECISIONS
DRUG TESTING. New York’s high court has ruled that a parolee can sue a third-party laboratory after the lab reported erroneous results on a drug test. The parolee accused the laboratory of negligent testing because it failed to conduct a backup test to correct for a known high false-positive rate.
In 2002, Eric Landon was convicted of second degree forgery (this is where the forgery is made but not delivered) and was sentenced to five years of probation. The terms of the probation included random drug testing. On December 17, 2007, officers with the Orange County (New York) Probation Department collected an oral fluid sample from Landon and then sent the sample for testing by Kroll Laboratory Specialists. The officers did not take a simultaneous urine test from Landon.
Later that same day, Landon had an independent blood test conducted to protect himself from potential false positive results. The blood test came back negative for controlled substances.
The sample submitted to Kroll, however, tested positive for the presence of THC. Kroll sent a written report to Landon’s probation officer indicating the positive result. The probation department then revoked Landon’s probation and ordered him incarcerated. Landon was accused of violating two terms of his parole—testing positive for drugs and lying to his parole officer about the use of those drugs.
Landon was arraigned on the parole violation one day before his probation was set to expire. At his arraignment, Landon provided the court with evidence of his negative blood test. The parole violation proceedings went forward, however. Landon made several more court appearances before the parole violation petition was withdrawn and the matter settled in Landon’s favor.
Landon then sued Kroll alleging that the company was negligent in issuing the incorrect test result. Landon also alleged that Kroll knew of the possible false positive results that could arise when testing oral fluid samples for THC and failed to collect a simultaneous urine sample to guard against false results. The New York Supreme Court dismissed the case, ruling that Landon had failed to state a cause of action against Kroll. The court ruled that Landon could not sue the laboratory because no contract existed between the two. The contract existed between the probation office and the laboratory, leaving Landon no standing to sue. Landon appealed the decision.
The New York Court of Appeals overturned the lower court’s decision, allowing Landon to pursue his case. The appeals court ruled that the laboratory owed Landon a duty of care outside of any contractual obligation.
The court ruled that if Kroll failed to adhere to professional standards and, consequently, released an inaccurate report, the laboratory could be found negligent. In the written opinion of the case, the court noted: “The alleged harm to the plaintiff was not remote or attenuated. Indeed, it was his own biological specimen that was the sole subject of this testing, and he was directly harmed by the positive test result causing the extension of his probation and the necessity of having to defend himself in the attendant court proceedings.”
Two judges issued dissents in the case. In his dissent, Judge Eugene Pigott noted that the case has far reaching implications that should be considered in the decision. The judge wrote: “The majority’s opinion opens the door for probationers, parolees, and others who are subject to mandatory drug testing in the criminal justice system, as well as job applicants and others who are subject to drug and alcohol testing, to bring tort actions against independent third-party drug laboratories based upon the results of such testing.” (Landon v. Kroll Laboratory Specialists, New York Court of Appeals, No. 142, 2013)
PRIVACY. To prevail under a California law requiring the protection of personal health information, a plaintiff must prove that the information was accessed by unauthorized individuals. Alleging that the information could have been accessed is insufficient.
In November 2011, an encrypted hard drive containing personally identifiable medical information was stolen from a physician’s home during a robbery. The password for the encrypted information was written on an index card and was located near the hard drive. The index card was also stolen. A public notice of the incident was published in The Los Angeles Times. Patients whose information was contained on the hard drive were also notified.
Nearly a year later, in October 2012, Melinda Platter filed a lawsuit against the physician’s employer, the University of California. Platter alleged that, even though she had not suffered any damage from the theft, the university failed to protect her medical information and was liable under California law.
Platter claimed that the university was liable under the part of the state law that prohibited “wrongful maintenance and storage of confidential information.” The university argued that the wrongful maintenance provision allows those who have suffered damage to collect further compensation if the information that was stolen was stored negligently. Thus, argued the university, the provision applies only to those whose information has been accessed by unauthorized individuals. In this case, it cannot be proven that the information was ever accessed.
The California Court of Appeal agreed with the university. In the written opinion of the case, the court wrote that “we believe the legislature intended…more than an allegation of loss of possession by the health care provider is necessary to state a cause of action for negligent maintenance or storage of confidential medical information.” (The Regents of the University of California v. The Superior Court of Los Angeles County, California Court of Appeal, No. B249148, 2013)
U.S. CONGRESSIONAL LEGISLATION
DISCRIMINATION. A bill (S. 815) that would make it illegal for employers to discriminate against employees based on actual or perceived sexual orientation has been approved by the Senate and is now pending in the House Judiciary Committee.
The bill would make it illegal for employers to fail to hire, to discharge, or to otherwise discriminate with respect to compensation, terms, conditions, or privileges of employment based on actual or perceived sexual orientation. The bill would not apply to religious organizations or the armed forces.
TRANSPORTATION SECURITY. A bill (H.R. 2719) that would require the Transportation Security Administration (TSA) to take steps to improve its acquisition process of security technology has been approved by the House of Representatives. The bill is now pending in the Senate Commerce, Science, and Transportation Committee.
According to comments released by the House Homeland Security Committee, the “TSA has repeatedly purchased and deployed equipment that was not properly tested or failed to meet performance objectives.” H.R. 2719 is designed to help remedy this situation by requiring the TSA to develop a multiyear strategic plan for purchasing security equipment. The TSA would also have to conduct a cost benefit analysis for purchases and create an inventory tracking system.
DRUG SAFETY. A new law (P.L. 113-54) signed by President Obama aims to improve communication between regulators and federal agencies during emergencies and strengthen the drug supply chain.
The bill has two components. The first provision of the bill will address the safety of compounding facilities. (Contamination at a compounding facility led to the deadly meningitis outbreak that started in September 2012 and killed more than 60 people across several states.) The law will clarify the role of the Food and Drug Administration (FDA) in ensuring the safety of compounding drugs.
The law will mandate communications between the FDA and state regulators in emergencies. Compounding facilities will now be required to register annually with the government and report any adverse events. Facilities will be subject to a risk-based inspection by federal agencies.
The second component of the new law will address supply chain security issues in the manufacture and distribution of drugs. The government will be required to establish standards for the licensing of distributors and third-party logistics providers. The law will also require that the government hold meetings to determine how to enhance the safety and security of the pharmaceutical supply chain.
SOCIAL MEDIA. A new law (formerly A.B. 2878) prohibits employers from requiring or requesting access to the social media accounts of employees or prospective employees. The law also makes it illegal for employers to retaliate against employees who report violations of the law. Companies that violate the law will face civil penalties levied through the state’s Department of Labor and Workforce Development.
Governor Chris Christie vetoed the original version of the law, which prohibited employers from asking employees or applicants if they had social media accounts. Christie said that these questions could be a legitimate query into an applicant’s technological expertise or knowledge about social media. Christie also objected to a provision in the original bill that allowed individuals to file private lawsuits against companies for violations.
NONCOMPETE AGREEMENTS. Connecticut Governor Dannel P. Malloy has vetoed a bill (H.B. 6658) that would have voided a company’s noncompete agreements made after a merger or acquisition unless affected employees were provided with seven calendar days to consider the merits of the noncompete agreements. In vetoing the bill, Malloy said that the bill leaves key terms undefined and would likely produce “legal uncertainty and ambiguity” resulting in “costly and time-consuming litigation.”
This column should not be construed as legal or legislative advice.