Good risk management dictates that the emergency physician should evaluate his or her particular practice situation and list all activities that could result in exposure to financial liability. It is important to consider the fact that the term ‘financial liability’ applies to the payment of dollars related to a wide range of activities. It may be a malpractice settlement or judgment, the preparation of a legal defense in a civil rights action based upon taking custody in a case of alleged child abuse, and EMTALA transfer violation or an antitrust lawsuit related to participation on a hospital credentials committee.

Consider the following typical malpractice insurance contract language:

“We will pay all amounts up to our limit of liability which you become legally obligated to pay as a result of patient injury or damage. The injury or damage must be caused by a medical incident arising out of the supplying of or failure to supply professional services by you ...” Review the key words and consider those aspects of emergency practice that may not be covered. Review the following list of fact patterns that may result in legal action in considering the scope of a typical malpractice insurance policy.

Case # 1 Reading inpatient EKGs and X-Rays

An emergency physician was asked to read a chest x-ray on an elderly post-op patient for nasogastric tube placement. The patient had pulled out his NG tube, and the floor nurses had replaced it. The emergency physician observed that the end of the tube was in the lung and put a note to that effect in the patient’s chart, but took no further action.

The EP missed a pneumothorax, which was visible on the film. The patient died as a result of the pneumothorax. The estate sued the floor nurse, hospital and the EP. The suit was dismissed because the judge felt that reading the x-ray did not create a physician-patient relationship.

EPS often read inpatient EKGs and X-Rays. Since the activity is usual and customary in many emergency practices, and since it does relate to the provision of professional services, most insurance companies will cover the cost of related lawsuits. However, it is a good idea to ask about coverage, and request a letter specifically outlining coverage for this aspect of care.

Case # 2 Responding to In-House Codes

A 68 y.o. woman was an inpatient, and status post removal of a thyroid nodule. Twelve hours post-op she began bleeding and developed respiratory distress. The in-house doctor was called to assist at 0235. Soon afterward she had a respiratory arrest and a code was called. The respiratory therapist unsuccessfully attempted intubation. The nursing supervisor called the ED physician.

The ENT surgeon gave a phone order for the EP to do a tracheotomy. The EP attempted a needle cricothyrotomy, but was unsuccessful. The ENT arrived and did a tracheotomy. The patient was pronounced dead at 0400.

The estate sued the EP attempting a cricothyrotomy since the obstruction was obviously below that site, and for failure to perform a tracheotomy.

The parties settled for $800,000.

Case Commentary

Once again, since covering inpatient resuscitation is usual and customary in many emergency practices, and since it does relate to the provision of professional services, most insurance companies will cover the cost of related lawsuits. In some hospitals, the emergency physician is expected to respond to all in-house problems, including newborn deliveries, elective intubations and even emergencies in a nearby professional office building. This may be stretching insurance coverage a bit far. The emergency physician and/or group should be absolutely sure that coverage extends to all related in-house activities. If the insurance coverage does not extend to all in-house activities, the emergency physicians should look to the hospital for coverage of any related liability that may result.

Case # 3 Duty to Third Parties

A male patient was treated for a corneal abrasion with an eye patch. Following discharge, while driving home, he hit a driver on a motorcycle. The motorcycle driver (i.e. the third party) sued the emergency physician, not for medical malpractice, but for ordinary negligence, for failure to warn his patient not to drive with an eye patch.

This is a case involving the EP’s duty to a third party. It is not a medical malpractice action. The EPS insurance contract is not likely to mention this kind of legal action, and it is not clear if a malpractice insurance policy would cover this liability. It is related to professional services, but it isn’t a malpractice action, and isn’t even related to the physician’s patient. The insurance company would probably have to send this out for a legal opinion to determine if the malpractice policy was applicable. Duty to third party’ cases have become more common in recent years, and it is important to determine coverage with the insurer before a lawsuit occurs.

Case # 4 Malpractice does not cover liability resulting from wrongful termination.

An employee of a radiology group sued the group, claiming that her hospital staff privileges were wrongfully terminated and that she was falsely accused of numerous acts, including dancing nude and being a drug addict. A California appellate court ruled that the medical liability insurer had no duty to defend the radiology group against the suit for wrongful termination and slander.

The group settled with the radiologist for $150,000 without admitting liability. The group also spent over $90,000 in legal fees. Its liability insurer refused to defend the matter or to pay the settlement. The insurer alleged that the insurance policy did not cover claims for wrongful termination and that the claim did not arise from rendering professional services.

The group sued the insurer for breach of contract. The insurer moved for summary judgement on the ground that it had no contractual obligation to defend the suit because a decision to fire an employee did not constitute rendering professional services. The court entered judgement for the insurer.

On appeal, the court said the insurer was not obligated to pay for resolution of the wrongful termination suit. The court said that although a physician's expertise might be required for evaluating a physician's performance as an employee, the decision to end employment was a business decision. Thus the suit for wrongful termination was not covered by the policy. The court said that the alleged slanderous comments were made during the termination process and the character of the act was an administrative one.

Finding no potential for coverage, the court said the insurer had no duty to defend and affirmed the lower courts' judgement.

Physicians should be very clear on the nature of the language in insurance contracts. In this case, the insurance policy did not indemnify the physicians for any activities outside the rendering of professional services. There are a large number of lawsuits that may occur outside the realm of "rendering professional services". These would include all of the intentional torts, civil rights actions, wrongful termination, etc. Antitrust actions may also be excluded from insurance policies.

Physicians should be forewarned to carefully scrutinize policies and be aware of the specifics of coverage.

Case # 5 Insurer does not have to defend physician’s personal injury suit

A Florida appellate court ruled that an insurance company had no obligation to defend an action against a surgeon who allegedly assaulted an anesthesiologist.

The surgeon instructed a staff anesthesiologist to examine an intensive care patient in preparation for surgery. He cautioned the anesthesiologist not to inform the patient of surgical risks because of her highly emotional state. Unknown to the surgeon, another anesthesiologist substituted and proceeded to discuss the operation with the patient.

The surgeon arrived on the scene and found his patient emotionally distressed over the recently learned risks involved in the imminent surgical procedure. The surgeon confronted the anesthesiologist, allegedly grabbed the ends of a stethoscope draped around her neck, pulled and twisted them, and caused her to suffer a herniated cervical disc.

She filed a personal injury suit against the surgeon who filed a third party action against the hospital's insurance company for a declaration that it was obligated to provide a defense. A trial court held that the surgeon's acts were not excluded from coverage.

Reversing and remanding the decision, the appellate court said that the surgeon's acts were intentional and excluded under the policy's general liability insurance policy. Even if the injuries inflicted were unforeseeable, the surgeon's original conduct was not an accident for purposes of determining insurance coverage.

Thus, the court reversed the declaratory judgement, finding the insurance company had no duty to defend or provide coverage.

Case Commentary