Illinois hospital, staff go to court in fight over liability coverage

The case is one of several in the country asking courts to decide how much weight medical staff bylaws carry.

By Tanya Albert amednews correspondent — Posted Nov. 8, 2004

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Liability insurance woes and a disagreement over whether medical staff bylaws or hospital rules take precedence are clashing in one Illinois community where physicians are struggling to pay premiums.

The disagreement has forced doctors to turn to the court to try to stay in business.

Physicians in Danville, Ill., a community about two hours south of Chicago, say their medical staff bylaws at Provena United Samaritans Medical Center require that they carry medical liability insurance with limits of $200,000 per incident and $600,000 aggregate annually. The hospital about 10 years ago changed its policy to require doctors to carry a $1 million/$3 million policy.

Although hospital administrators asked medical staff members to amend their bylaws to the higher requirement, the medical staff never did.

"We didn't know what the future held," Danville cardiologist Joseph Fabrizio, MD, said.

The future is now, and carrying the lower limit, less expensive policy would be a way to keep about eight physicians on the 100-member medical staff in practice, doctors said.

A handful of doctors say they can afford the $200,000/$600,000 policy, but that the $1 million/$3 million would force them to cut back services, retire early or move out of state.

"It's sad that we're in this crazy predicament," Dr. Fabrizio said. "We'd all love to carry $2 million/$6 million policies, but it's just not affordable. This malpractice crisis is a financial burden and disruptive."

The only pulmonologist in the county of more than 83,000 people has headed to Indiana for more affordable rates. Several ob-gyns have left the county or given up delivering babies. Illinois is one of 20 states that the American Medical Association lists as being in a medical liability crisis.

Medical staff bylaws vs. hospital policy

Doctors argue that given the circumstances, those who need to stay in business should be allowed to carry the lower insurance limits. And, they say, it shouldn't be an issue with the hospital because it's what their medical staff bylaws require.

The hospital disagrees.

It argues that the limits it set in 1993 are hospital policy and that physicians can't carry lower limits and remain on the medical staff. In a December 2003 letter, the hospital informed physicians on the medical staff that they must carry the $1 million/$3 million policy or face an automatic suspension of hospital privileges, according to court records.

After talks between the two sides went nowhere, Dr. Fabrizio, on behalf of the medical staff, sued Provena United Samaritans Medical Center in September. The lawsuit, filed in Vermilion County Circuit Court, asks the court to declare that the hospital cannot unilaterally impose a professional liability insurance minimum on the doctors without the medical staff adopting the same changes.

"We are hoping the court will say it is OK for the doctors to follow their bylaws so we can stay in business and keep serving patients," said Danville family physician Joseph Karinattu, MD, secretary of the Vermilion County Medical Society.

Provena Health spokesman Clint Giese said the lawsuit is a symptom of the frustration that physicians are feeling over rising medical liability insurance premiums.

"We do not think the suit will stand on its merits," Giese said. "The $1 million/$3 million requirement has been in effect since 1993. It is consistent with statewide standards in Illinois."

On a larger scale, the lawsuit also could potentially set a precedent in Illinois and help answer the question of what happens when medical staff bylaws and hospital rules disagree.

It's a question that is being asked in courtrooms across the country as hospitals have tried to impose requirements that medical staffs don't agree should govern doctors who have privileges at the facilities.

"This is a straight contractual issue under Illinois law," said Thomas Pliura, MD, an emergency physician and lawyer from LeRoy, Ill., who is representing Dr. Fabrizio and the medical staff. "We are trying to get an appellate court in Illinois to say whether bylaws are a contract. If it is not a contract, then maybe doctors need to go back to the Legislature."

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