UM Health System pays record $4.3 million settlement in drug diversion case

The death of a nurse at the University of Michigan Health System and the overdose of an anesthesiology resident in 2013 has led to the Ann Arbor-based system agreeing to pay $4.3 million to settle allegations that it violated federal law in handling opioids, the U.S. Attorney's Office in Detroit said Thursday.

The health professionals' overdoses occurred in December 2013 and led to a U.S. Drug Enforcement Administration investigation that lasted several years. The settlement is the largest in the nation involving drug diversions at a hospital. Some 16,000 hydrocodone pills were stolen by one or more UMHS employees between May 2011 and January 2012.

"Every professional and every institution throughout our healthcare system has a responsibility to comply with the laws governing the regulation of controlled substances," U.S. Attorney Matthew Schneider said in a statement. "Even the University of Michigan Health System, which does great work every single day, has an obligation to its patients, to its employees, and to the public to responsibly control its drug inventory."

Both of the employees overdosed on opioids, including the synthetic drug fentanyl, midazolam and morphine. The nurse's overdose was fatal with narcotics intended for use on a patient. The anesthesiology resident suffered a cardiac arrest after using fentanyl and morphine that was taken from the resident's narcotics kit used to provide anesthesia care to patients.

In a statement, UMHS said: "At Michigan Medicine, we take these issues very seriously and are always in the business of improving what we do. We were not where we needed to be as a regulatory matter and, equally important, as measured against our own high standards. We've made multiple, substantial improvements to our pharmacy and controlled substance processes over the last several years and expect to continue those efforts in the future."

The DEA concluded that some of the hospital's practices concerning controlled substances violated federal law. For example, the agency said UMHS failed to secure DEA registrations for 15 off-site ambulatory care locations throughout Ann Arbor and Southeast Michigan, each of which received narcotics from the main hospital's pharmacy and dispensed them to patients. As a result, all of the narcotics distributions from the main hospital to the unregistered off-site locations were unlawful. DEA also determined that UMHS committed significant record-keeping violations. DEA said some narcotics were stolen, lost or could not be accounted for.

Other thefts of narcotics involved registered nurses who diverted controlled substances from UMHS for months and in some instances, years. Some of these nurses diverted vials of fentanyl, then refilled the vials with saline before returning them to the medication storage area for administration to patients for whom fentanyl had been prescribed.

"Through rigorous investigation, DEA diversion investigators uncovered system-wide violations within the University of Michigan Health System, highlighting the fact that anything short of full compliance can have grave public health consequences," DEA Special Agent in Charge Timothy Plancon said in a statement. "This case should alert all health systems — large or small — that complying with the Controlled Substance Act is not only their legal responsibility but also a matter of public trust."

The UMHS has entered into a three-year memorandum of agreement with DEA that mandates how the university will handle narcotics in the future. Many safeguards have been established to prevent a future incident.

"UM Health System pays record $4.3 million settlement in drug diversion case" originally appeared in Crain's Detroit Business.