Public Health Law Map - Beta 5 - Medical and Public Health Law Site

agreeing to reimburse the MCO for any costs related to the physician’s malpractice
to broad agreements to reimburse the MCO for any costs that result from any
behavior by the physician. Even narrowly drawn, indemnification agreements can
be troublesome. For example, many malpractice insurance policies will not cover a
physician’s indemnification agreement with an MCO. Even if the MCO does not
have to pay any damages for the physician’s negligence, it may have $500,000 in
attorney’s fees related to the case; for which the physician may be personally liable.
More broadly drawn agreements can impose open-ended liability, including liability
for administrative sanctions against the MCO for activities over which the physician
was nominally in charge.
Indemnification agreements should be avoided if possible. Physicians who are
forced to sign such an agreement should ensure that they have adequate umbrella
insurance coverage, and that the insurer will pay indemnification claims. This may
require a commercial insurance broker and a very high umbrella policy. It is
especially important that physicians review all of their contracts with MCOs to
identify any indemnification or other commercial risk clauses, and to do so when
each contract is renewed. In many practices, the practice manager deals with MCOs
and physicians just sign the papers placed in front of them. Many of these
physicians do not know that they may have assumed significant uninsured financial
risks.
3. Malpractice Insurance Considerations
Irrespective of whether they are independent contractors or employees, physicians
remain liable for any torts they personally commit while delivering medical care.
Physicians must ensure that they have adequate medical malpractice insurance and
that they control the policy of insurance. This is no different from the responsibilities
of a physician with medical staff privileges at a hospital. Physicians recognize that
they have different interests from those of the hospital. In some cases, these interests
are adverse, in that the physician may claim that it was the hospital’s personnel who
were negligent, or the hospital may claim that it was the physician’s negligence that
caused the injury.
As with hospitals, physicians must recognize that their interests and those of the
managed care plan often will be adverse. If the physician has negotiated for an MCO
to provide medical malpractice coverage, then the physician should ensure that he or
she is the primary insured on the policy. This gives the physician enhanced control
regarding whether or not a claim is defended or settled, and if settled, what the terms
will be. Ideally, coverage will be provided in the manner to which the physician is
accustomed, like independent private insurance, that is just paid for by the plan.
More likely, however, physicians will be insured through a self-insurance trust
funded by the plan. Again, referring to the experience with hospitals, some of these
plans are less than scrupulous about protecting the interests of the physician.
Hospitals have been known to treat the self-insurance fund like a piggybank from
which it may defend the physician as a favor. Although this may violate conditions
applicable to maintaining a self- insurance fund, there is little oversight of these
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