Risk Manager
Not Your (Legal) Problem?
Don't be so sure. You can be harmed by the wrongful actions of your associates. Take steps to protect yourself.

BY JEFFREY D. WEINSTOCK, ESQ.

When a physician in your practice group is sued, or has a judgment against him for a wrongful action, how does that affect you?

Depending on how well you plan, the effect could be minimal or serious. Your practice can be at risk for your colleagues' professional activities in actions such as medical malpractice or fraudulent billing, but also for their inappropriate or illegal actions away from patients, such as sexually harassing employees or defrauding the IRS.

This month, I'll tell you how you can protect yourself from the mistakes of your practice associates.

ILLUSTRATION: J.T. MORROW

CHOOSE COLLEAGUES WISELY

The first and most logical step in protecting yourself from lawsuits against other physicians in your practice is to choose the right physicians with whom to associate.

Before hiring a physician, conduct a comprehensive background check. The Internet is making such checks easier. Make sure to check for disciplinary actions in all states in which that physician lived and practiced. Look for holes on his resume and check the malpractice database.

Also, look to see that the physician has adequate training for the position you're offering, and determine whether he has life and practice goals that fit with the other doctors in your practice. If all physicians in a group share a similar outlook on life and the practice of medicine, the potential for problems is dramatically reduced.

ORGANIZE THE PRACTICE PROPERLY

Make sure your practice is incorporated as a professional corporation or other appropriate choice of entity, and in good standing with the state of incorporation. A written employment contract that requires each physician to indemnify (or reimburse) the practice for any losses caused by the negligent actions of that physician can also protect the rest of the group.

But note that these types of provisions are often heavily negotiated contract sections. Though a properly formed corporation provides protection from judgments, make sure you have your personal affairs in order. Consult with an estate planning specialist if necessary and pay special attention to the way that your assets are titled. For example, if you have a living trust and you buy a new house, ask your estate planner whether the house should be titled in the name of the trust.

TAKE EVERY POSSIBLE PRECAUTION

Bad things do happen, but the way you react to them can determine the penalty. If you learn that a physician in your practice has sexually harassed a staff member or billed improperly, take corrective action quickly and liability may be minimized. A sound compliance plan helps you avoid problems and provides a method for dealing with those problems that do arise. Conduct regular compliance meetings and make sure that all staff members are aware of the standards they're required to follow.

It's also important to conduct regular self-audits. Make sure all physicians code properly. And it's imperative that someone other than the office manager regularly reviews the financial records of the practice to ensure that all funds are accounted for properly.

Be sure to have adequate insurance coverage. In addition to professional liability insurance, employment-practices insurance protects you against claims such as wrongful termination, sexual harassment, and discrimination. Consult with your business advisor to learn if such policies make sense for you.

Jeffrey D. Weinstock, Esq., is the Assistant General Counsel of Cyber-Care, Inc. Based in Boynton Beach, Fla., Cyber-Care is a technology-assisted health management company. Risk Manager provides a general summary of legal issues and should not be construed as personal legal advice. Application of these principles varies according to individual situations.