Auditor Sued for Damages, for Failure to Warn of Process Risk

M

MIREGMGR

#1
Putting this here because its potential effect on the audit/quality world could be broad, possibly extending across all industries in which third party auditors review systems and operations.

A melon farm changed their wash system, eliminating a chlorinated clean-water wash. A large number of consumers in 28 states were sickened, 147 were hospitalized and 33 died, from contaminated melons. The farm went bankrupt. The farm owners are under indictment, each facing six years in prison and 1.5 million dollars in fines, plus likely tens of millions of dollars of civil liability. The farm owners are sueing their prior food safety auditing firm for not determining that the change to the wash system was not safe, even though (I gather) the change was identified to the auditor, and instead giving them a "superior" audit report.

http://www.manufacturing.net/news/2013/10/farmers-tied-to-outbreak-sue-auditor?et_cid=3547207&et_rid=54684915&linkid=http%3a%2f%2fwww.manufacturing.net%2fnews%2f2013%2f10%2ffarmers-tied-to-outbreak-sue-auditor
 
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Ninja

Looking for Reality
Staff member
Super Moderator
#4
Was gonna ask the same question as Sidney...not surprised that Sidney beat me to it.

It will be interesting to see if the auditor is deemed culpable.

In my little fantasy world, the auditor will walk away clean...but never work in the field again.
IMO the responsibility to "do it right" was on the farm.

It is unclear to me if PrimusLabs was a regulatory compliance auditor, or an outside auditor that the Farms brought in.
- If as a regulatory compliance auditor...it should be the FDA suing the auditor, not the farm. (perhaps both?)
- If as an outside auditor brought in by the Farms for "internal audit", they should have brought in someone else who would find issues rather than accept a "superior" audit report. No operation does everything right every day.

...but then I don't work in the FDA world...
 
M

MIREGMGR

#5
I don't know if there's a nominally effective fourth-party supervision/qualification system in the food industries for third party auditors, and that system just failed in this instance; or there is no such system.

If the former, is this a repeated failure pattern? Is it endemic, or inherent to the nature of the system?

What are the parallels between the food industries and other quality-certified industries...in particular medical devices?

FDA relies on the quality of third party auditors for the VARS Program, under which device makers are excused from periodic surveillance (QSIT 1/2) audits (but not audits-for-cause). I think FDA would like to eliminate involvement of FDA personnel in such surveillance audits, and concentrate their badge-carrying resources on audits-for-cause. To eliminate the systemic risk to that strategic goal from unreliable third party auditors, should FDA create and operate a legally enforced supervision/qualification system for those third party auditors?
 

Sidney Vianna

Post Responsibly
Staff member
Admin
#6
IMO the responsibility to "do it right" was on the farm.
IMO, EVERYONE involved, including third-party auditors, have the responsibility to perform their jobs competently and professionally. When anyone relies on a conformity assessment result, it is paramount that nobody gets an undeserved "clean bill of health". The stakes are just too high.

To eliminate the systemic risk to that strategic goal from unreliable third party auditors, should FDA create and operate a legally enforced supervision/qualification system for those third party auditors?
That is what I proposed in the Should Regulatory Agencies require Accredited Certification in their Respective Areas thread.
 
M

MIREGMGR

#7
Not quite, as I read it.

You proposed that third party certification bodies should be required to be certified by fourth party certification bodies. The politico-regulatory question in that scenario would be, who would certify the fourth party certification bodies, and if no one, how would FDA legally justify their shifting of legally defined responsibility to those fourth parties?

My question pertained to an alternate scenario in which either FDA itself certifies the third party bodies, or FDA certifies the fourth parties. Then the legal responsibility chain would be clear, or at least more clear.
 
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R

Reg Morrison

#9
I am revising a Quality Auditing course that I teach at a local community college. This will be a great discussion board topic when we discuss due dilligence!
I agree this is a great topic, but be careful not to scare some potential (good) auditors from the process. In the Aerospace sector, the IAQG has already disqualified some rogue auditors out there who don't follow the process and bring auditing into disrepute.

If (professional, 3rd party) auditors start getting concerned with being sued, in case the system they audit is caught in a major legal case, there might lead to potential candidates shying away from the job.
 
M

MIREGMGR

#10
Registered Architects and Professional Engineers carry Errors and Omissions insurance. So do other categories of professionals that review complex systems and are legally empowered to sign off that what they've reviewed is acceptable in relation to appropriately defined requirements.

Maybe third party auditors should have E&O insurance, too.

Of course, insurance isn't free, so auditing costs would increase, which would increase the costs of products. But, perhaps those increased costs to the audit subject would just be a correction to the current system, in which harm resulting from risks not discovered by auditors is socialized.
 
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