Hospital in Florida not liable for uninsured doctor

Florida doctors worried hospitals would require liability coverage if the court held institutions responsible. Trial lawyers say the ruling gives physicians incentive to go bare.

By — Posted June 18, 2007

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Florida physicians are waiting to see if some hospitals will ease their medical liability insurance requirements for staff doctors in light of a recent ruling.

The Florida Supreme Court in May decided that hospitals cannot be held liable for negligence by staff doctors who eschew state financial requirements by not carrying insurance or having money accessible to pay a medical liability judgment.

Florida law does not require doctors to carry medical liability insurance. When physicians do not carry insurance it is known as "going bare." But a statute requires physicians who hold hospital privileges to prove they can pay a minimum of $250,000 to cover a claim, whether through an escrow account or bank letter of credit, or agreeing to personally pay a claim within 60 days. About a dozen other states require doctors to obtain minimum levels of coverage through traditional liability insurance or a separate account to practice in the state or to qualify for liability reforms, according to American Medical Association research.

However, when an uninsured staff doctor at Plantation General Hospital in southern Florida fled the country, leaving behind an $859,000 verdict against him, the plaintiff in the case sued the hospital for $250,000 of the judgment. The patient argued that the hospital was responsible for ensuring its staff doctors complied with state requirements.

The high court unanimously disagreed. Although state law requires doctors to establish financial responsibility as a condition of having privileges, it does not require hospitals to enforce the mandate, justices said.

The ruling overturned precedents in three of the state's five appellate districts that held hospitals liable under the statute. The high court decision now applies statewide.

Plagued by some of the highest insurance rates in the country, Florida doctors were concerned that hospitals would force them to carry medical liability coverage if the court shifted some of the liability onto hospitals, Florida Medical Assn. spokeswoman Lisette Gonzalez Mariner said.

Doctors are somewhat relieved because "if this had gone the other way, it definitely would have been a burden on physicians," she said. The FMA took no position on the lawsuit but kept an eye on it.

Keeping options open

The decision to self-insure is not one that doctors take lightly, but is sometimes necessary in areas like southern Florida where premiums are unaffordable, Gonzalez Mariner said. A 2006 Medical Liability Monitor rate survey showed internists and general surgeons in southern Florida paying an average of $74,855 and $299,420 respectively in annual premiums. In northern Florida, internists paid $44,145 on average, while general surgeons and ob-gyns paid $176,581.

While some hospitals in areas hardest hit by high premiums allow medical staff to go bare, it would be up to those in other parts of the state to give doctors that option, she said. Existing requirements in hospital bylaws would need to modified.

Bill Bell, Florida Hospital Assn. general counsel, said the court's decision has allayed hospitals' fears of liability for uninsured doctors. However, hospital policies vary across the state, he said, and it is too soon to predict whether the decision will effect any changes among those that require medical staff to carry traditional liability insurance or be able to come up with the $250,000 themselves.

The FHA filed a friend-of-the-court brief in the case saying it would be difficult for hospitals to police every single doctor.

Edward G. Guedes, an attorney for Plantation General, said, "Hospitals have no way of knowing" a doctor's financial status at any given point in time, even if a physician presents a letter of credit or other form of proof that meets the state's requirements.

He added that Florida has other mechanisms to make sure doctors comply with the law.

For example, the high court noted that it is doctors' responsibility to show compliance when they renew their licenses. If a physician doesn't, he or she faces state disciplinary action or possible license revocation. Additionally, liability insurance companies must notify the state when doctors cancel or fail to renew their policies, justices said.

Trial lawyers say that's not enough. They say hospitals' aid is needed to help enforce the statute that is intended to provide a minimum amount of financial protection to injured patients. The decision is now a "green light" for doctors to go bare, said Joel S. Perwin, a member of the Florida Justice Assn., which also filed a friend-of-the-court brief in the case.

"Now [doctors] know there's nobody looking over their shoulder to make sure they comply," he said. "The only entity who can really know is the hospital renewing their staff privileges. So it's kind of hollow to say there are all these penalties if there's nobody to monitor compliance."

Perwin said the court ignored what amounts to a "loophole" in the law allowing doctors to abide by the state requirements by agreeing to personally pay a judgment within 60 days.

Ultimately, patients are the real losers, said H. Mark Purdy, the plaintiff attorney in the case. "I don't foresee that this judgment is going to be collected in any way," he said. Plaintiff lawyers also may be reluctant to take medical liability suits, he added.

"Physicians are credentialed periodically, so why can't that process include in the package a copy of malpractice insurance?" he asked.

Because that duty does not fall on hospitals under the current law, however, the high court hinted that it would be up to lawmakers to change it.

"Although it may be sound public policy for the Legislature to impose an obligation on hospitals to monitor the financial responsibility of physicians who are granted staff privileges, it is outside this court's purview," the opinion states.

Trial lawyers say they hope someone will introduce legislation in the near future.

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Are you covered?

Some states mandate that doctors have minimum levels of medical liability insurance or other forms of coverage to practice in the state or to qualify for tort reform protections. Below is a snapshot of some state requirements.

Require medical liability insurance or other forms of coverage to practice in the state: Colorado, Connecticut, Florida, Kansas, Massachusetts, New Jersey, Pennsylvania, Wisconsin

Require medical liability insurance or other forms of coverage to qualify for tort reform protections: Indiana, Louisiana, Nebraska, New Mexico, Wyoming

Require medical liability insurance to have hospital privileges: Missouri

Source: American Medical Association

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