Hospital Liability For Doctor's Malpractice: Who Pays?

Medical malpractice insurance is a form of professional liability insurance that protects physicians and healthcare professionals from claims of malpractice or negligence. While federal law does not require physicians to have malpractice insurance, certain states do. In some cases, doctors may be required to purchase their own insurance policies, especially if they are considered independent contractors. However, hospitals often provide medical malpractice insurance for their employees, and it is important to ensure that this coverage is sufficient and extends to all relevant employees.

Doctors who are independent contractors must purchase their own insurance

Doctors who are independent contractors typically have more flexibility in their work arrangements, hours, and locations. However, they may not receive benefits like health insurance, retirement plans, or paid time off, which are commonly offered to traditional employees. As such, doctors who are independent contractors are responsible for purchasing their own malpractice insurance. This is because, as an independent contractor, the doctor is viewed by the IRS as different from an employee, and they will receive payment through a 1099-NEC form instead of a W-2 form at the end of each year. Consequently, they must manage their taxes and secure their insurance.

In the case of malpractice insurance, this can be a significant advantage for doctors who work in multiple facilities or on a freelance basis. Having their own malpractice insurance policy means they are covered regardless of where they work. This is particularly important because malpractice insurance is specific to the healthcare industry and applies when doctors or other caregivers cause harm to patients during the course of their services. For example, if a physician misdiagnoses a patient's illness by overlooking clear signs pointing to another condition, malpractice insurance can provide protection.

Additionally, doctors who are independent contractors may need to consider purchasing tail insurance. Claims-made coverage only insures malpractice claims that occur while the policy is active, so tail insurance can provide extended coverage even after the policy is cancelled. This is an important consideration because malpractice insurance policies can be expensive, and doctors who are independent contractors may need to balance the cost of insurance with other financial obligations.

While it is not a legal requirement for hospitals to provide malpractice insurance for independent contractor physicians, it is in their best interest to ensure that all medical professionals working in their facilities are adequately insured. Hospitals typically carry group hospitalist malpractice policies to protect their interests and those of their employees. However, these policies may not provide sufficient coverage for independent contractors, who are responsible for their own insurance. Therefore, doctors who are independent contractors must carefully review their insurance options and select the most suitable coverage for their practice.

Pros and cons of employer-provided insurance

There are several benefits and drawbacks to a doctor relying solely on employer-provided insurance.

Pros of Employer-Provided Insurance:

• Physicians do not need to worry about finding, securing, and maintaining coverage, as this is handled by the employer. This saves time and effort for the doctor.
• It is convenient and often offered as part of a group plan, making it easily accessible to individual providers.
• It provides basic protection against financial loss due to litigation, which can be costly.

Cons of Employer-Provided Insurance:

• It may not provide as much freedom or flexibility to work at other practices or take on extra work, such as moonlighting services.
• It may not be as extensive as a physician needs or wants, leaving them with a false sense of security.
• It may not cover all areas of a physician's work, especially if they work in multiple facilities or present specific risks.
• It may not extend to complaints filed with state medical boards, which can lead to license issues and other disciplinary actions.
• In the event of a lawsuit, the physician's interests may not be prioritized as the coverage tends to focus on the entity (hospital or clinic).

While employer-provided insurance offers some protection, doctors may benefit from having their own professional liability insurance policy to address the gaps and ensure their interests are adequately represented.

Doctors can lose income due to lawsuits, and malpractice insurance can reimburse lost wages

Doctors can face significant financial consequences as a result of malpractice lawsuits, which can include legal defence fees, forced asset liquidation, and increased malpractice insurance premiums. In addition, doctors may experience a loss of income due to time spent away from work during the legal proceedings. While malpractice insurance is not federally mandated, many states and medical facilities require doctors to be insured. This type of professional liability insurance protects healthcare providers from lawsuits arising from patient death or injury.

Malpractice insurance policies can provide coverage for legal fees, settlement costs, and medical expenses resulting from a malpractice claim. The cost of a malpractice payout can be substantial, with the average settlement in court reaching approximately $425,000, according to Medscape. Although rare, there have been instances where doctors have had to pay out of their own funds when the judgement exceeded their insurance coverage.

To ensure adequate protection, doctors should carefully review their policy's coverage limits, deductibles, and exclusions. In some cases, purchasing additional policies or increasing coverage limits may be necessary to fill any gaps in coverage. It is also important to be aware of the time limits for filing a malpractice case, as these vary by state, and failure to file within the specified timeframe may result in a loss of the chance to recover damages.

Lost wages are considered economic damages and can be recovered through a medical malpractice lawsuit. These damages are calculated based on the income lost due to the inability to work as a result of the injury caused by medical malpractice. There are generally no caps on economic damages, as they represent a specific financial loss incurred by the victim. On the other hand, non-economic damages, such as pain and suffering, may be subject to caps, depending on the state.

While malpractice insurance can provide financial protection for doctors facing lawsuits, it is important to note that the insurance coverage may not always be sufficient to cover all the costs associated with the claim. In such cases, doctors may still experience financial losses, even with proper insurance coverage. Therefore, it is crucial for doctors to have adequate insurance coverage and to consult with legal professionals to ensure they understand their rights and options.

Malpractice insurance costs: on average, $7,500 per year

The cost of malpractice insurance varies depending on a variety of factors, with the average cost being around $7,500 per year. However, surgeons may pay between $30,000 and $50,000 in annual premiums, while other medical professionals typically pay between $4,000 and $12,000 per year. Obstetricians tend to pay the highest rates, with OB/GYNs in Miami-Dade County, Florida, paying as much as $226,224 per year, and those in New York paying around $215,000 in 2017.

The cost of malpractice insurance is influenced by factors such as industry, specialty, location, coverage type, and insurer claim limits. For example, doctors in New York can expect to pay roughly six times more for their malpractice insurance premiums than doctors in California. This is because New York is one of many states that have not enacted tort reform, resulting in no caps on economic or non-economic damages. In contrast, North Dakota has favourable tort laws, including caps on non-economic damages, which help to keep insurance costs lower.

The type of coverage also affects the cost, with claims-made coverage only insuring claims that occur while the policy is active, and occurrence coverage extending to claims filed after the policy has lapsed. Additionally, the declining rate of medical malpractice claims has been linked to lower premiums.

While federal law does not require physicians to have malpractice insurance, certain states, hospitals, or health insurance carriers may mandate it. Hospitals typically pay malpractice insurance premiums for doctors who are their employees, while doctors who operate their own practices usually pay for their own coverage.

Doctors with their own coverage plans have more flexibility

Doctors can choose to have their own malpractice insurance coverage, and this decision offers them more flexibility in several ways. Firstly, individual coverage plans are tailored to the physician's unique needs and often provide peace of mind. This means that doctors can ensure they have adequate coverage in the event of an accident or malpractice incident, allowing them to focus on providing high-quality patient care.

Secondly, doctors with their own coverage plans have the flexibility to work at multiple facilities or locations. This freedom to work across different sites is particularly beneficial for physicians who want to provide moonlighting services or collaborate with various healthcare institutions. This flexibility is not usually offered by employer-provided group plans, which are often limited to specific facilities or networks.

Additionally, individual coverage plans allow doctors to switch insurance providers more easily. When a physician's plan is up for renewal, they can choose to change carriers while still maintaining their retroactive dates and ensuring that prior acts remain covered. This flexibility is advantageous for doctors who want to explore different insurance options or negotiate better policy terms.

Furthermore, doctors with their own coverage plans have the responsibility of maintaining their insurance and ensuring it meets their specific needs. This includes deciding on the type and amount of insurance required, based on factors such as their state's minimum requirements, their specialty, and the level of protection needed for their medical practice. By taking ownership of their coverage, physicians can proactively manage their risks and ensure they have the necessary protection against potential lawsuits or litigation.

While employer-provided insurance can be beneficial, it may not always provide sufficient coverage for all physicians' needs. By having their own coverage plans, doctors can address any gaps in protection and ensure they have the necessary financial and legal safeguards in place. This flexibility empowers physicians to make informed decisions about their insurance choices and protect their professional interests effectively.

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