What Happened
The University of Michigan Health System (UMHS) agreed to pay the United States $4.3 million — the nation's largest hospital drug-diversion settlement at the time — after a DEA investigation triggered by two employee opioid overdoses found system-wide Controlled Substances Act violations.
DEA opened its investigation after two tragic incidents in December 2013 involving two UMHS employees, a nurse and an anesthesiology resident, who both overdosed on opioids, including fentanyl, at a UMHS facility; the nurse's overdose was fatal. The resulting years-long investigation found that 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 — rendering unlawful all of the narcotics distributions to those unregistered locations and their subsequent dispensing to patients.
DEA also found UMHS committed significant recordkeeping violations, including failing to maintain complete and accurate records of controlled substances it received, sold, delivered, or otherwise disposed of, and failing to notify DEA in a timely manner of certain thefts or significant losses. DEA concluded that these deficiencies negatively impacted UMHS's ability to guard against theft and diversion. UMHS entered into a three-year Memorandum of Agreement with DEA governing its drug-handling responsibilities going forward, and the settlement was announced August 30, 2018.
What Went Wrong
It took two employee overdoses, one fatal, to trigger the investigation that uncovered years of systemic compliance gaps. Key failures included:
- Fifteen off-site ambulatory care locations that received and dispensed narcotics from the main hospital pharmacy operated without their own required DEA registrations.
- Recordkeeping did not completely and accurately track controlled substances received, sold, delivered, or disposed of across the health system.
- Thefts or significant losses of controlled substances were not reported to DEA within the required timeframe, delaying regulatory visibility into an emerging problem.
- No system-wide surveillance caught two staff members diverting and using fentanyl and other opioids to the point of overdose before one death occurred.
How It Could Have Been Prevented
- Ensure every location that receives and dispenses controlled substances holds its own valid DEA registration before narcotics distribution begins, and audit registration status system-wide on a recurring basis.
- Maintain complete, accurate, centralized records of controlled substances across all sites in a health system, not just the main hospital pharmacy.
- Build a documented, time-bound process for reporting thefts or significant losses of controlled substances to DEA as required by the CSA.
- Extend diversion-monitoring analytics (unusual withdrawal patterns, peer-comparison outliers) to off-site ambulatory locations, not only the main hospital campus.
- Treat a staff overdose on hospital premises as a sentinel event requiring a system-wide controls review, not an isolated incident.
Related Guidance
- Hospital Diversion Prevention Checklist — Hospital self-assessment, 8 sections 63 items, including DEA registration, recordkeeping, and reporting controls.
- Controlled Substance Inventory Requirements — Biennial inventory requirements and recordkeeping practices that surface losses.
- Analytics Dashboard Guide — Analytics KPIs and benchmarks for surveillance across multi-site health systems.
- 15 Red Flags of Drug Diversion — Behavioral and transactional indicators, including unexplained overdoses among staff.