End-run lawsuits can blindside physicians

A column analyzing the impact of recent court decisions on physicians

By — Posted Oct. 22, 2012.

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Most physicians know about the medical liability risks they face, so they take necessary steps to prevent such lawsuits. But unconventional claims that doctors often don’t anticipate pose some of the greatest legal dangers, legal experts say.

The “scary thing is physicians feel like if they have professional liability coverage, that they should be fine,” said attorney Michael J. Sacopulos, chief executive officer for the Medical Risk Institute in Terre Haute, Ind. The institute counsels health care professionals on understanding and reducing litigation risks. “Little do they know there are attorneys out there who have designed an end run around that. [In some of these cases], you’re not going to be covered under traditional medical malpractice coverage.”

Sacopulos wrote a September report in Connexion magazine about unexpected ways to be sued. The publication is put out by MGMA-ACMPE, the entity formed by the merger of the Medical Group Management Assn. and the American College of Medical Practice Executives.

Outside the doctor-patient relationship

One unusual way that physicians can be sued is for administrative negligence. The claim can refer to a supervisor’s failure to review, develop or refine certain health care policies and procedures.

For example, in Deya v. Hiawatha Community Hospital et. al., a family sued Kansas-based Hiawatha Community Hospital and several staff members for medical negligence. Sandra and Edwin Deya alleged that their newborn son sustained a preventable brain injury as a consequence of untreated jaundice.

The Deyas also sued a physician medical director who was responsible for developing and initiating policies and protocols for newborn care at the hospital, according to court documents. They said the physician did not adopt procedures for the proper evaluation, testing and treatment of jaundice. The hospital asked that the medical director be dismissed from the suit because she provided no care to the child nor did she have a physician-patient relationship.

In a ruling issued May 4, 2011, the U.S. District Court for the District of Kansas allowed the administrative negligence claim to proceed. The medical director had a duty to develop and maintain procedures for the hospital, the court said. The case was settled for $4.3 million.

Health reform could increase lawsuits

The Kansas ruling raises insurance coverage concerns for doctors, Sacopulos said.

“The twist is that this is a patient you have never seen before receiving services from the area you are administratively in charge of,” he said. “The claim gets outside of the traditional medical malpractice arena.”

Administrative claims against doctors are likely to rise as the Affordable Care Act increases regulatory and compliance requirements for health professionals, said Catherine J. Flynn, a New Jersey-based medical liability defense attorney.

“The more regulatory mandates there are, you will see more of these claims kicking in if people are not organized the way they’re supposed to be,” she said.

Lack of proper employee supervision is another unique way physicians can be sued, Flynn said. For instance, if a physician assistant changes a patient’s medication regimen but fails to obtain necessary approval from a physician supervisor, the supervisor could be sued if the patient is injured, she said.

Physician administrators should have strong policies to train new employees adequately, said Michael A. Moroney, a health law attorney based in New Jersey. Such procedures should include the proper credentialing of all allied health professionals, he said.

Doctors also should review their professional liability policies to check if medical decisions made outside the scope of the traditional physician-patient relationship are covered, Sacopulos said. If not, they may want to consider buying an additional policy.

Writing letters of recommendation

Another case highlights the little-discussed dangers of providing references for peers and employees. In 2011, a Louisiana anesthesiologist was forced to pay a medical center $8.2 million for negligent misrepresentation after he penned a positive letter about a former colleague.

The colleague was terminated because of suspected drug use, but the letter did not disclose the possible drug abuse or his termination, according to court records. The fired doctor was hired at Kadlec Medical Center in Richland, Wash.

A year later, he allegedly failed to administer anesthesia to a patient properly because he was under the influence of drugs. The patient’s family sued the medical center, which settled with the plaintiffs for $7.5 million, court records said. The medical center then sued the doctor who wrote the reference.

A jury ordered the anesthesiologist to pay the medical center’s settlement and legal costs, which totaled $8.2 million. The physician’s medical liability insurer refused to cover the claim because the physician had not committed a “bodily injury.”

The case reminds physicians to be honest when writing letters of recommendation or, at the very least, stick to the facts, Sacopulos said. A letter that lists dates of employment, compensation and whether the person is eligible for rehire is the safest reference, he said.

“We all feel badly when someone gets fired, and oftentimes we would like to help them,” he said. “But what we don’t want to do is transfer that problem person to someone else at our own peril.”

Physicians should familiarize themselves with state shield laws and review what they can safely say when referring a peer or employee. Some jurisdictions impose stricter rules than others, experts said.

Doctors also should think twice about providing online recommendations for employees, said David Goldstein, a Minnesota-based employment law attorney. Members of the professional networking site LinkedIn frequently request online references or endorsements from supervisors.

Because LinkedIn is somewhat informal and giving references takes only a few keyboard strokes, medical professionals are less inclined to consider their actions, Goldstein said. But online recommendations are not immune to lawsuits, he said.

“As a general rule, I would not give references to employees on LinkedIn,” he said. “The risks of a manager giving a reference to an employee is no different on LinkedIn then if you do it anywhere else.”

Preventing unexpected lawsuits starts with being proactive and considering the risks that can happen, Moroney said.

“For most of these unexpected claims, the key is having the proper procedures in place and being preventative. It’s much easier to deal with the problem before it occurs than trying to clean it up afterward.”

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External links

Sandra H. Deya and Edwin Deya v. Hiawatha Hospital Assn. Inc. et al., U.S. District Court for the District of Kansas, May 4, 2011 (link)

William J. Preau III v. St. Paul Fire & Marine Insurance Company, 5th U.S. Circuit Court of Appeals, June 23, 2011 (link)

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