The Physician and Small Practice Guide to Medical Malpractice Litigation
The only thing more damaging to a physician and their practice than a medical malpractice claim is a large verdict that exceeds their medical malpractice insurance coverage. Doctors can take precautions to avoid a crippling excess judgment before being sued, while in a suit, and after the verdict has been rendered against them. By understanding their options, the consequences of their actions, and the actions of other interested parties, physicians’ practices can best position themselves to avoid being responsible for millions of dollars in damages.
With a medical malpractice insurance policy, why do doctors need to worry about a lawsuit?
Having a policy is just the start. Physicians should read their policy closely and then ask these questions:
How much medical malpractice insurance coverage is needed?
To determine how much coverage is needed, a practice owner needs to consider the types of injuries that could be caused and the damage(s) they might be liable for as a result. If the practice is only capable of causing $250k in damages, a policy of that size may be suitable. However, if a jury deems that someone in the practice has caused an amputation or spinal cord injury, a $250k insurance policy will be woefully inadequate.
Some people recommend that, “You should have enough insurance coverage to match your assets.” Following that advice, a new practice with $500k in assets would purchase $500k in insurance coverage. However, if they are found to have caused $3 million in damages, a plaintiff could try to collect both the $500k policy and the $500k in available assets.
Does the medical malpractice insurance policy cover every potentially liable party?
In a medical malpractice claim, the plaintiff is likely to name every potentially liable medical provider. This is done for several important reasons. First, the plaintiff does not want the defendants to blame someone not named in the suit. Second, naming multiple parties allows the plaintiff access to additional means of recovery. Therefore, it is critical that each of the following entities are covered by the insurance policy:
- Each doctor individually.
- The corporate entity itself.
- Any professional association used by the doctor, whether to manage finances or associate with other organizations.
- Any specialty group within the practice which may be its own entity.
- Any third-party organization owned or partially owned by the doctor, which may provide direct services or support to the practice.
What exclusions apply to the insurance policy?
In addition to ensuring that they have adequate coverage and that it applies to every potentially liable party, the policyholder needs to review what exclusions apply to the policy. For example, if a patient alleges they were touched inappropriately, is that excluded from coverage? If so, is that circumstance covered by a general commercial insurance policy (assuming one exists)? What happens when new providers join or exit the practice? What notice is required? An insurance agent may offer to reduce the policy premium by including certain exclusions in the contract. Before agreeing to them it is critical to understand the risks.
How can doctors and practice managers avoid medical malpractice lawsuits?
“An ounce of prevention is worth a pound of cure.” This adage also applies to medical malpractice lawsuits. But what can doctors do to help protect themselves from getting sued?
- Effective Communication: Establish clear and open lines of communication with patients. Take the time to explain medical conditions, treatment options, and potential risks. Encourage patients to ask questions and address their concerns.
- Informed Consent: Obtain informed consent from patients before performing any procedures or treatments. Explain the purpose, potential benefits, risks, and alternatives of the proposed intervention. Document the consent process thoroughly.
- Documentation: Maintain accurate and detailed medical records. Document all patient interactions, including symptoms, examinations, diagnoses, treatment plans, discussions, and follow-ups. Ensure that records are organized, legible, and timely.
- Follow Standard Practices: Adhere to established medical guidelines, protocols, and standards of care. Stay updated with the latest evidence-based medicine and best practices in the field. Avoid experimental and unproven treatments outside of approved and regulated clinical trials.
- Continued Education: Engage in continuing medical education to stay current with advancements in the specialty. Attend conferences, seminars, and workshops, and participate in relevant professional development activities. This demonstrates a commitment to ongoing learning and improvement.
- Team Collaboration: Foster effective teamwork and collaboration within the healthcare team. Encourage open communication and mutual respect among healthcare professionals. Create an environment that promotes patient safety and quality care.
- Manage Expectations: Set realistic expectations with patients regarding treatment outcomes, recovery time, and potential complications. Ensure patients have a clear understanding of the limitations of medical interventions and the inherent risks involved.
- Promptly Address Concerns: Take patient complaints and concerns seriously. Respond promptly and compassionately to patient grievances, address their situation, and provide appropriate solutions when possible.
- Error Reporting and Analysis: Establish a culture of reporting and analyzing medical errors or near misses. Encourage healthcare providers to report adverse events and participate in root cause analysis to identify system failures and implement preventive measures.
While these measures cannot eliminate the possibility of a lawsuit entirely, they can help mitigate the risk and demonstrate a commitment to providing high-quality care. It is important to note that these measures should be complemented by consulting with legal professionals and becoming familiar with the regulations and requirements governing medical practice in the relevant jurisdiction.
What should doctors do when faced with a medical malpractice case?
This is not the time for impulsive reactions, instead, take methodical steps. Most importantly, open the lines of communication with the insurance provider. Most insurance policies have a “notice requirement” which means the physician or practice is responsible for telling the carrier about any potential claims. Doing nothing and hoping the problem goes away will only cause more issues. Here are some steps to consider:
- Contact the medical malpractice insurance provider: Notify the insurance company about the situation immediately. The carrier will provide guidance and legal representation if necessary.
- Preserve records and evidence: Gather and preserve all relevant medical records, test results, treatment plans, and any other documentation related to the patient’s care. It is essential to maintain accurate and organized records to support the defense against the claim.
- Maintain confidentiality: Do not discuss the details of the case or any related information with anyone except the attorney representing the physician and the insurance company. Confidentiality is crucial to protect both the physician and the patient’s privacy.
- Stay professional and maintain empathy: While facing a medical malpractice lawsuit can be stressful, it is important to remain professional and empathetic. Continue providing quality care to the other patients and do not let the situation affect the overall practice.
Preparation is the key to success. Practice managers should write out a plan for what to do when facing a potential medical malpractice lawsuit. This plan should include detailed points of contact such as the practice’s insurance agent, the phone number to report claims, and internal contacts who should be alerted immediately. By creating a plan before facing a lawsuit, the entire healthcare team will be better prepared and less panicked if it is ever needed.
Doctors and practice managers must participate in the defense of a lawsuit.
After a medical malpractice lawsuit is filed, many doctors are surprised to learn that their insurance carrier controls the case. However, the doctor or practice manager being sued is still required to cooperate with the carrier by providing notice, sitting for depositions, and attending trial. Most medical malpractice insurance policies give the insurance carrier full control over whether to settle cases or allow them to go to trial. For those who are used to having a modicum of control, this lack of involvement can be unsettling. In what ways must the doctor cooperate with his or her medical malpractice insurance carrier?
- Notify the insurance carrier: This has been mentioned previously but is worth repeating, the doctor should promptly inform their insurance carrier about the lawsuit. Typically, there is a requirement to notify the carrier as soon as possible, or within a specified timeframe outlined in the insurance policy.
- Provide relevant information: The doctor needs to provide the insurance carrier with all relevant information regarding the lawsuit, including copies of legal documents, summons, complaints, and any other relevant correspondence. The carrier will need this information to assess the situation accurately.
- Cooperate in the investigation: The doctor should fully cooperate with the insurance carrier during the investigation process. This may involve providing detailed statements, answering questions, and providing any necessary medical records or documentation.
- Consult with defense counsel: The insurance carrier will usually appoint an attorney to defend the doctor in the lawsuit. It is important for the doctor to consult and cooperate with the defense counsel, as they will work together to develop a legal strategy and respond to the allegations.
- Attend depositions and court appearances: If required, the doctor may need to attend depositions, hearings, or court appearances as part of the legal process. It is crucial to cooperate with the defense counsel and attend these proceedings as scheduled.
- Follow guidance from the insurance carrier: The doctor should follow any instructions or recommendations provided by the insurance carrier and its defense counsel throughout the legal proceedings. This may include providing additional information, attending additional meetings, or taking certain actions as advised.
- Maintain open communication: It is important for the doctor to maintain open lines of communication with the insurance carrier and defense counsel. They should promptly respond to any requests for information, provide updates on the case, and address any concerns or questions that arise.
It is worth noting that the specific requirements and procedures may vary depending on the terms of the insurance policy. Therefore, it is crucial for the doctor to review their policy and consult with their insurance carrier and legal counsel to understand the exact steps they need to take in case of a lawsuit.
If the insurance company is paying for defense lawyers, should a doctor hire their own lawyer?
The insurance company will choose a defense lawyer, pay the defense lawyer, and direct how the case is handled. However, they may not be looking out for the doctor’s best interest or the best interests of the practice. If the insurance company does not appreciate the risk a lawsuit presents, or if they think there is a chance to beat the plaintiff, the carrier’s interests may diverge from those of the physician or practice manager. If, for instance, the patient was left catastrophically injured it may be in the doctor’s best interest to settle a claim rather than risk tens of millions of dollars, but the carrier may be willing to roll the dice in an effort to save money and maintain its reputation as tough negotiators. If the defense is successful, and the doctor is not found liable at all, it is a big relief. However, if the defense is unsuccessful and an individual doctor, practice, or other affiliated organization is found liable for millions of dollars, the doctor or practice may be left with a potentially practice-ending judgment.
Whether a doctor sees the potential for a large judgment or believes the risk is minimal, it makes sense to seek counsel from an independent attorney before the medical malpractice case goes to trial. While the insurance carrier maintains the right to control all aspects of the litigation, an independent attorney can help the doctor understand the potential consequences of every action taken throughout the litigation and provide guidance with the best interest of the individual in mind. For instance, if the doctor is presented with a document providing authority to settle the claim, what should they do? If the doctor holds veto power over any settlement and exercises that right, what implications will that have in the future? The answer to these questions will be case specific, so understanding that the interests of the carrier, defense counsel, and doctor/practice manager will diverge, it becomes important to have independent counsel. In many circumstances, the best lawyer to talk with will be one who has expertise in insurance bad faith claims related to medical malpractice.
After a large verdict in the medical malpractice case has been rendered against the doctor or practice where the insurance coverage limits are not nearly enough, and now there is judgment of millions for the injured person. What should a doctor or practice manager do?
If they previously spoke with an attorney who specializes in insurance bad faith in medical malpractice claims, they can call them back and schedule a consultation. If they have not spoken to an expert, then this is the time to call them. Not next month, next week, or even tomorrow. The earlier they engage an expert who has only one goal, protecting the physician or practice, the better protected they will be.
Unlike the defense attorney, who was retained by the insurance company to defend the claim, an insurance bad faith attorney is retained by the doctor or practice with the sole purpose of protecting them from an excess judgment. They will look to determine whether the insurance carrier failed to settle the claim when they reasonably should have and could have had they acted with due regard for the insured. Here are a few ways a bad faith lawyer can help:
- Reviewing the Insurance Policy: The attorney will thoroughly examine the doctor’s insurance policy to determine the extent of coverage and any obligations the insurance company has towards the doctor. They will assess whether the insurance company acted in bad faith by failing to provide the expected coverage or protection. If it was provided, they will seek to determine whether the insurance company could have and should have settled the claim within the policy limits.
- Negotiating with the Insurance Company: In cases where the insurance company acted in bad faith, the attorney can negotiate with the insurer on the doctor’s behalf. They will seek to maximize the insurance coverage available and hold the insurance company accountable for any improper practices, such as refusing to provide a defense or failing to settle the claim.
- Pursuing a Bad Faith Claim: If the attorney determines that the insurance company has acted in bad faith, they can help the doctor pursue a separate legal claim against the insurer.
- Providing Legal Representation: Throughout the entire process, the attorney will provide legal representation and advocacy for the doctor. They will ensure that the doctor’s rights are protected, assist in navigating the complexities of the legal system, and work towards the best possible outcome.
If the doctor is successful in the claim against their own insurance company, the typical result is the insurance company becoming liable for the excess judgment rather than the doctor (or practice). Typically, the proceeds of a successful insurance bad faith claim go directly to the judgment holder in the underlying case. In some instances, however, the doctor may be compensated for losses attributed directly to the insurance carriers’ failure to settle the claim when they could and should have.
If the defense attorneys hired by the insurance carrier lose my case, can they be held responsible?
The short answer is yes, a defense lawyer can be sued for legal malpractice. The attorney investigating the insurance bad faith portion of the medical malpractice claim will explain the process of filing a legal malpractice claim against the defense lawyer(s). The specifics will vary by case, but the following elements must be established:
- Duty of care: It must be established that the defense lawyer owed the doctor a duty of care, meaning they had a professional obligation to represent the doctor’s interests competently and ethically.
- Breach of duty: The defense lawyer breached their duty of care by acting negligently, making errors, or failing to provide competent legal representation. This usually requires showing that their actions or omissions fell below the standard expected of a reasonably competent attorney.
- Causation: There must be a causal connection between the lawyer’s negligence and the harm suffered by the doctor claiming legal malpractice. In other words, had it not been for the defense lawyer’s negligence, the outcome of the medical malpractice case would have been different.
- Damages: There must be actual damages as a result of the defense lawyer’s negligence. This may include financial losses, such as the amount of the judgment against the physician or practice, as well as any other harm or negative consequences that resulted from the legal malpractice.
Once a verdict and judgment have been entered against the doctor or practice it is important to look at all potential avenues to move forward. This is why speaking with an independent attorney who specializes in insurance, bad faith, and malpractice of various forms before a verdict is important. Otherwise, a doctor or practice manager may inadvertently take action, or inaction that prevents them from protecting their interests after the verdict.
The risk of being sued for malpractice by a patient that a doctor tried to help is uncomfortable. Especially the risk that the doctor might lose personal assets. By understanding the process outlined above and implementing some of the strategies doctors can reduce the risk that a malpractice claim will result in economic catastrophe for themselves, their families, and their practice.