Corporate Criminal Liability of Healthcare Providers and Hospitals

When considering corporate liability, two aspects come into play: the liability of corporate hospitals for negligence and the liability of pharmaceutical companies for product-related issues. In both cases, the liability can be strict or vicarious. However, there is no specific law to assign criminal liability to private hospitals for their misdemeanours and the broad scope of the existing statutes makes it easy for companies to wriggle out of any potential prosecutions.

Pharmaceutical companies, specifically, can be held strictly liable for defective products, rather than vicariously liable as seen in the case of Digital Vision V. The State of Himachal Pradesh wherein a pharma company was found guilty of manufacturing a cough syrup that contained high concentrations of DEG (Diethylene Glycol). This compound is used in antifreeze, brake fluids, cosmetics, lubricants, and other commercially available products and can cause kidney toxicity if ingested. This cough syrup resulted in the death of 11 patients but even after conclusive evidence and an FIR filed by the Government of Himachal Pradesh, no criminal charges have been brought.

Corporate hospitals can be held responsible under vicarious liability for various reasons, as the scope of imposing liability on them is quite extensive. Several High Courts have established that hospitals can be held liable for the negligent actions of doctors, medical staff, and others involved in patient care. In the case of Aparna Dutta v. Apollo Hospitals Enterprises Ltd where the hospital itself provides medical services, the terms of employment between the hospital and the doctors or surgeons cannot grant immunity from liability by denying a direct relationship with the patients. Simply employing the doctors does not absolve the hospital from responsibility. In the case of Smt. Rekha Gupta v. Bombay Hospital Trust & Anr, if a consultant doctor’s negligent act occurs, the hospital cannot evade liability by claiming that it only provides infrastructure facilities, nursing services, supporting staff, and does not independently perform or recommend any operations (3^✔ ✔Trusted Source
A Conflicting Regime Over Companies Liability With Respect to Medical Health

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The Need for a Comprehensive Legislation

In India, although the provisions of various statutes that consider corporations as legal persons apply to hospital corporations and hence make them liable for prosecution as well, there is no subject-specific law governing how crimes such as death by medical negligence or death due to consumption of adulterated drugs exist. It has been almost 30 years since the Supreme Court established in Indian Medical Association v VP Shantha that the patient and the healthcare provider have a contractual relationship and that the Consumer Protection Act can be availed as a remedy in case of medical negligence. What was then a landmark judgment is now a stagnant precedent that needs evolution.

In the United Kingdom, the Corporate Manslaughter and Corporate Homicide Act 2007 has provisions holding corporations liable for manslaughter in case someone dies due to management failures amounting to a gross breach of the duty of care. The National Health Service (NHS) of the United Kingdom and private hospitals can be prosecuted under this statute for medical negligence. Such a statute removes the need for establishing Responsible Corporate Officers, as laid down in American legislation, or Key Managerial Personnel, as laid down in Indian legislation, by holding the entire company liable instead of applying the “directing mind and will” doctrine (1^✔ ✔Trusted Source
New law puts NHS trusts at risk of charges of corporate manslaughter

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Cases such as Daljit Singh Gujral v. Jagjit Singh Arora where the negligent policies of private hospitals have directly resulted in the death of patients must be taken into consideration and legislation must be passed that hold hospital companies accountable for their illegal actions which directly goes against the public policy of India.

References :

1. New law puts NHS trusts at risk of charges of corporate manslaughter – (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2287208/)
2. Medical negligence: Criminal prosecution of medical professionals, importance of medical evidence: Some guidelines for medical practitioners – (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2779964/)
3. A Conflicting Regime Over Companies Liability With Respect to Medical Health – (https://articles.manupatra.com/article-details/A-CONFLICTING-REGIME-OVER-COMPANIES-LIABILITY-WITH-RESPECT-TO-MEDICAL-HEALTH)

Source: Medindia