Background checks have always been a huge issue in the world of healthcare, with many state-specific statutes requiring how background checks are conducted, as well as the other more complex national issues regarding credentialing and the National Practitioner Data Bank. “Ban the Box” and other similar efforts in human resources to avoid or postpone background checks rarely apply to healthcare entities. However, when it comes to the issue of background checks, state processes and statutes have not consistently kept pace with changes in technology or the expectations of other agencies, such as the Joint Commission on Accreditation of Health Organizations (JHACO). 

Iowa overview 

In Iowa, various statutes and regulations, including Iowa Code 135C.33, require that employees undergo background checks for criminal convictions or abuse issues. This includes a check of the Sex Offender Registry, Child Abuse Registry, and Dependent Adult Abuse Registry as well as criminal history, which must be done through the SING system (Single Contact Repository). However, problems may occur because SING only looks to the state of Iowa and does not look at other states. This can be particularly problematic in a highly fluid employment environment where employees are coming from multiple states or when the facility has clinics cross-border with employees who may travel to clinics on both sides of the state line.

Further, various entities including JHACO, now are requiring that hospitals do more comprehensive multi-state background checks. In order to do these checks, as well as multi-state licensure checks, many facilities are required to contract with a third-party vendor. Third-party vendors are generally a consumer reporting agency as defined by the Fair Credit Reporting Act (FCRA).

Healthcare provider overview

Healthcare employers have significant additional responsibilities and obligations in relationship to the process than they would have under SING. Federal law defines a consumer reporting agency as: “Any person which, for monetary fees, dues, or on a cooperative non-profit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties…”

One error that is sometimes made is the idea that a consumer report exclusively means credit reporting. In fact, consumer reports are broadly defined by the statute and include information on, “character, general reputation, personal characteristics, …” and also is data used to determine eligibility for “employment purposes.” Essentially everything the background checks statutes ignore.

To fulfill their obligations for broader-based reports, health entities typically are going to need a few reports: 

1. SING - in order to meet the statutory requirements and deadlines
2. A broader report which in all likelihood will come under the requirements of FCRA
3. State and federal

Potential employers are required to do a number of things when a background check is covered by the FCRA. This includes, but is not limited to:

• In a clear and conspicuous manner and stand-alone format: inform the applicant that their consumer report may be used by the employer for decisions related to employment
• Obtain the applicant’s written permission to use such information in a clear and conspicuous way
• Certify to consumer reporting agencies that it has properly complied with disclosure requirements and will comply with conditions for use

If adverse action is taken, typically when someone is not hired for the job based on the report, the FCRA further requires the employer must:

• Give the applicant a copy of the consumer report the employer relied on to make its decision
• Provide a copy of “a summary of your rights under the Fair Credit Reporting Act” to the applicant
• Give the applicant notice of the adverse action

Note that the name, address, and phone number of the consumer reporting agency must be supplied on any report provided to the applicant in the event of an adverse action as well as a statement that the negative action taken was exclusively done by the employer and was not based on the applicants where a negative action occurs also must receive notice of a right to request a copy of the consumer report within 60 days from the agency and their ability to dispute accuracy or completeness.

Bottom line

There is a significant amount of litigation involving various issues under the Fair Credit Reporting Act and failure to meet any component of compliance can result in potential liability if adverse action is taken.