Legal Issues in Medical Practice:
"Swimming with the Sharks"

(handout accompanying PowerPointÒ presentation)

CDR Dennis L. Hufford, MC, USN

Faculty Development Fellowship

Madigan Army Medical Center

27 January 1999

Objectives

• Discuss employment contracts
• Enhance awareness of regulatory requirements of individual providers
• Define medical malpractice
• Discuss malpractice insurance in terms of
• types of coverage
• acceptance of risk and ranges/limitations of coverage

Contract Law:

Any contract requires:

• at least two parties
• each party contributes some form of consideration
• Consideration is the thing, product, or service that a party brings to a contract that is of value or importance in the making of the deal.

(ex. Doctor provides service and HMO provides salary, benefits, etc.)

• There must be a verifiable agreement. (usually in writing but not always!)

Employment Agreements:

• There is no such thing as a standard contract!
• Many variations within and between MCO’s
• Almost all such agreements are customizable (negotiable) and modifiable.

(If not, beware!)

• Of course, it’s much easier to modify a contract before it’s signed than after.
• Use of an attorney to review and explain all the details of an employment agreement can save you headaches and lots of money in the long run.
• The lawyer need not be there for the interview/negotiation, they should just review the document to assure that it reflects the agreement you think you have!

Essentials of Employment Agreements:

1. Must stipulate how and how much you are to be paid:

• Salary
• Incentives
• Stop Loss (pay risk)
• Profit Sharing

2. Must define all benefits:

• Sick leave, vacation, and CME
• Coverage for absences
• Medical/Dental plan
• Practice buy-in/ profit share
• 401k or other retirement plan
• Family leave, sabbaticals, etc.

3. Must define all of your responsibilities:

• Inpatient and clinic duties- This includes scope of practice: OB? Geriatrics? Infants? Sports Medicine? Nursing Home? Which insurance plans?
• Any and all privileging requirements
• Supervisory duties
• PA’s, nurses, students, etc. And, what is your liability for their performance?
• Call (how often, scope, etc.) This is often omitted, but should reflect "not more than X" number of call nights per month, etc.
• Administrative duties- These are often a problem area, because you are rarely compensated for committee meetings, QA activities, etc. that might be thrust upon you by the practice.

4. Must address your commitment to the practice:

• Restrictive Covenants- These are legal restrictions on your ability to leave the practice and join or start another practice in the same area. They vary widely in terms of time restrictions, geographic boundaries, and enforceability, from state to state.
• How to get in, how to get out- The contract should stipulate if, when, and how you are to be able to buy equity in the practice.
• Terminations- The contract must define (precisely) what events, conditions, etc. constitute grounds by which your employer can fire you.

5. Must address malpractice coverage and any other insurance

• Who pays for it, how much coverage, and what type of coverage?

Regulatory Issues:

1. Licenses (all three levels of government represented)

• Medical (state)
• DEA (federal)
• Business (local)

A licenses is proof that you:

• Met the government’s requirements pertaining to your practice of medicine in that setting.
• Have agreed to whatever method(s) of oversight that the governmental agency deems necessary in the public interest.

2. Credentials and certifications

• Board certification- (no brainer, gotta have it eventually in most practice settings)
• Hospital privileges- Most hospitals are following the trend towards competency, rather than experience-based documentation. For instance, it would (theoretically) be more important to have your previous employer certify that you could do "X" procedure competently than to have documentation of having done "Y" number of the procedures (which all could have been done badly). But this is still variable.

3. Special regulations

• CLIA
• OSHA, etc.
• Many state and federal regulations

Malpractice:

• Is covered under civil, not criminal law. The difference is that criminal law pertains to a transgression against a state (or "society") such that the government seeks to penalize you by various means which may include imprisonment. Civil law, on the other hand, is based on a complaint by one person against another for a perceived wrong, with the intent of obtaining compensation for that wrong, not punishment of the wrongdoer. Thus malpractice, in and of itself, is not punishable by imprisonment. Rather, the "remedy" is by monetary compensation. Malpractice is covered under the broader legal term of Negligence Law.
• There are FOUR Essential Elements of Negligence, ALL of which must be proven for negligence to exist:
• Existence of a duty to provide care

-usually the existence of a doctor-patient relationship

• Breach of Standard of Care

-usually compared to the action expected by a "reasonable" person of similar professional standing

• Compensable injury

-No harm, no foul! There must have been a legally definable injury.

• Causal connection

-The breach of standard of care must have caused the harm.

Malpractice in the Military:

• Federal Tort Claims Act

This is the statute (legislation) that provides the means for a dependent or retiree to make a claim against the government for harm caused by medical malpractice (among other things)

• Feres Doctrine

This legislation (often disputed) prohibits active duty members from making claims (lawsuits) against the government.

• UCMJ

Can and has been extrapolated in order to bring punishment upon doctors and other professionals in uniform for bad conduct. (This is how military doctors CAN be put in jail!)

In general, the federal government takes the risk as long as you are practicing within the scope of your military duties. Moonlighters beware: You are NOT covered!

Malpractice Insurance:

Basic Types:

• "Claims-made"

80% of new MCO employee coverage is this type. It bases coverage on when the claim was made (up to 2 year statute of limitations on most states). Thus, you must still be insured by the same insurer at the time the claim is made for them to cover you. This is a problem if you changed jobs/practices of changed your insurer in the interim.

• "Occurrence-made"

Covers you based on when the occurrence happened, not the claim. Therefore, you’re covered even if you’ve changed insurers or jobs in the interim between the occurrence and the claim. This tends to be a more expensive than claims-made insurance.

• "Tail coverage"

This is supplemental insurance to cover those intervals in which jobs and insurers change. It is usually a one-time charge costing roughly double the annual claims-made rate.

Widely varying levels of coverage:

• Based on type of practice, location, and your record.
• Exact figures are hard to come by, but in general, FP claims-made rates range from about $5000 to $22,000 per year, depending on above parameters.

Things to Ask about Your Malpractice Insurance:

Do I have the right type?

Do I have enough for what I’m doing?

Is coverage based on pure loss or ultimate net loss?

-Pure loss is the amount of the judgement or settlement against you. Ultimate net loss includes court costs and lawyer fees.

How quickly must I report a claim in order to be covered?

Most insurers require notification within 2 weeks of a claim, some sooner.

To what extend is the insurer obligated to defend me?

• compensation for lost time
• services provided in your defense

Am I covered when someone else fills in for me?

-such as while on sabbatical or vacation.

What is the insurer’s reputation?

Annotated Bibliography:

1. Miller, RL and GA Jentz. Fundamentals of Business Law. St. Paul: West Publishing Company, 1996, chapter 4.

Fairly easy read explaining tort law, including professional malpractice from the legal perspective.

2. Federal Tort Claims Act, 28 USC subsection 2671-2680, 1346(b) and (c), 2401-2.
3. Military Claims Act, 10 USC subsection 2733.
4. Army Regulations 40-68, 27-20, and 27-40.
5. Larimore, WL and BS Sapolsky. Maternity Care in Family Medicine: Economics and Malpractice. JFP 40(2), 1995, 153-9.

Interesting study with some surprising statistics on lawsuits according to practice scope. Yes, it’s the same Larimore who writes regularly for AFP.

6. Kalogredis, VJ, and Burke, MR. Permits, Licenses, and Regulatory Issues. AFP Monograph Series "From Residency to Reality", Series II, No. 4, Part 1, 1997, p. 2-5.

Concise summary of regulatory requirements.

7. Molloy, PJ. Planning Your Entry into Medical Practice. Manhasset NY: USPG Publishing, 1998, p. 31-54.

Informal overview of a wide range of entry-into-practice guidance. Includes 36 questions to answer before signing a contract. Quick to read. Copy in my office.

8. Gosfield, A. Legal Analysis of Managed Care Contracts. Family Practice 2000 AFP

Monograph, 1995.

Detailed analysis and explanation of typical MCO contract terms, including a sample

contract.

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