Have you decided to practice medicine as an employee rather than a business owner?
Have you decided to practice medicine as an employee rather than as a business owner?
You may find it appealing that such an arrangement allows you to focus on clinical issues rather than business-related minutiae, or perhaps the private practice model no longer was financially viable for you. For many, a big attraction of employment is that liability exposure will rest primarily with the employer. This observation is true, but employment still carries some potential hazards.
The fact that an employer can be held liable for acts of employees makes it fiscally reasonable for employers to buy insurance not just for the entity but for the employees as well. The arrangement may be that the employer pays for the insurance or that the employee pays. If the employer pays, it may purchase the insurance as a separate policy or as an endorsement to its policy.
A malpractice lawsuit can name an employed doctor, his or her employer, or both. If your employer is named in a suit and you are not, you're probably safe; your employer's insurance will cover all judgments against the entity and all of its officers, partners, and employees.
If you are an employee and are served with a summons and/or complaint naming you as a defendant in a malpractice suit, your employer should respond on your behalf. The employer's insurer will pay your defense costs.
If any liability is attributed to you, the insurer likely will pay the verdict or settlement amount. If the case is settled, there will be a determination of the percentage of the settlement attributed to you. If the case goes to trial, a jury determination could distribute percentages of liability. The amount that is attributed to you will be reported to the National Practitioner Data Bank and will become a part of your record for future applications for employment, licensure, and privileges.
Your employer may claim indemnification in an action against you. If the case results in a judgment or settlement, the employer-or its insurance carrier-pays. If the employer ends up paying out of pocket, however, it theoretically can recover that amount from you. Employers rarely exercise this legal right, however, unless an extenuating circumstance exists. Perhaps a physician's behavior in a case was grossly negligent, the action was determined to be outside the scope of employment, the doctor was uninsured, or the judgment exceeded policy limits, for instance.
The employment contract typically will address the responsibilities of the employee, the responsibilities of the employer, billing, coverage, compensation, benefits, and related matters. Problematic issues that particularly will affect you if you are an employed physician include the term of the contract, conditions for termination and notice requirements, shareholder or partnership qualifications, and noncompete clauses. Of special importance to the malpractice issues are the purchase of insurance and the purchase of tail coverage. The contract should specify who will pay the medical malpractice insurance and who will purchase the tail coverage. (See http://www.MedicalEconomics.com/tail for more information.)