Back to Blog

When AI Hallucinations Become Malpractice Risk

The scenario is terrifying: A patient mentions "one beer at a wedding last month." The AI scribe writes "Patient reports daily heroin use." The note goes into the medical record. The patient loses custody of their children. And nobody can prove what actually happened.

This isn't a hypothetical. Variations of this scenario are already occurring as ambient AI scribes proliferate across healthcare. The question isn't whether AI hallucinations happen—it's whether you can reconstruct what went wrong when they do.

The Anatomy of a Clinical AI Failure

To understand why these failures are so dangerous, you need to trace the full processing pipeline. A typical ambient scribe involves multiple stages:

The Failure Cascade

StageWhat HappenedEvidence Available
Spoken"I had one beer at a wedding last month."None retained
ASR Transcript"I had one beer... heroin last month"Possibly logged, not linked
LLM ProcessingInterpreted as substance use disclosureNo trace of reasoning
Generated Note"Patient reports daily heroin use..."Final output only
EHR WriteHallucinated diagnosis enteredTimestamp only

At every stage, information is lost. The original audio may not be retained. The ASR transcript may not be linked to the final output. The LLM's reasoning process leaves no trace. By the time an error surfaces, there's often nothing to reconstruct.

Why This Is a Liability Crisis

When something goes wrong—and it will—the legal questions cascade:

  • Was the error in speech recognition, LLM processing, or the prompt template?
  • Did the clinician review and approve the note, or was it auto-signed?
  • What guardrails were supposed to catch this? Did they execute?
  • What version of the model was running? What configuration?

Without evidence-grade documentation, these questions are unanswerable. And in litigation, unanswerable questions become catastrophic uncertainty.

The legal reality: "The AI did it" is not a defense. Clinicians who sign AI-generated notes are attesting to their accuracy. But if they can't verify the AI's work—and can't prove what actually happened—they're exposed to liability for decisions they didn't understand.

What the Vendor Usually Provides

When healthcare organizations investigate these incidents, vendors typically offer:

  • 40-page architecture diagrams
  • SOC 2 Type II attestation
  • API logs showing HTTPS transmission
  • PHI scanner configuration documentation

What They Usually Can't Provide

  • Per-encounter trace of the processing pipeline
  • Evidence of which guardrails actually executed
  • Model version digests with timestamps
  • Cryptographically verifiable receipt of what happened

The gap between what vendors have and what litigation requires is enormous. Architecture docs prove the system was designed correctly. They don't prove it operated correctly for a specific inference.

The Evidence Standard Healthcare Needs

For clinical AI to be defensible, organizations need the ability to reconstruct any AI decision after the fact. This requires:

1. Inference-Level Logging

Not aggregate metrics or daily summaries—a complete record of what went into each inference and what came out, tied together with immutable identifiers.

2. Guardrail Execution Traces

Proof that safety controls actually ran for a specific inference. Not "we have guardrails" but "guardrail X evaluated input Y at timestamp Z and returned result W."

3. Model Version Pinning

Cryptographic digests proving which model version processed a specific request. Models update constantly—without version attestation, you can't reproduce or explain behavior.

4. Third-Party Verifiability

Evidence that can be validated by external auditors, regulators, or courts—without requiring access to vendor internal systems.

The Full Analysis

Our white paper "The Proof Gap in Healthcare AI" details exactly what evidence infrastructure looks like—including the four pillars of inference-level documentation.

Read the White Paper

Why This Matters Now

The ambient scribe market is exploding. Every major EHR vendor either has one or is building one. Startups are proliferating. Adoption is accelerating.

But the evidence infrastructure isn't keeping pace. Organizations are deploying clinical AI without the ability to audit, explain, or defend its decisions. They're accumulating liability exposure with every inference.

The first major AI malpractice case is coming. When it arrives, the discovery process will expose which organizations built evidence infrastructure and which assumed the AI would just work.

The question for every healthcare AI buyer: When your AI hallucinates—and it will—can your vendor prove what actually happened? Can you?

What to Do About It

If you're deploying or procuring clinical AI:

  • Ask vendors about inference-level logging—not just that they log, but what they log and whether it's forensically sound
  • Require guardrail execution evidence—proof that safety controls ran, not just that they exist
  • Establish review workflows—clinicians need time and tools to verify AI outputs before signing
  • Build evidence retention policies—decide now what you'll need to reconstruct incidents

For a complete framework on what questions to ask, read the white paper. It includes a 10-question checklist for AI vendor security reviews.