Medical Center May Have Coverage for Suit Alleging Treatment from Unlicensed Physicians
March 1, 2023
By Damian D. Capozzola, Esq.
The Law Offices of Damian D. Capozzola
Los Angeles
Jamie Terrence, RN
President and Founder, Healthcare Risk Services
Former Director of Risk Management Services
(2004-2013)
California Hospital Medical Center
Los Angeles
Kristin Kyle de Bautista, Esq.
Los Angeles
News: On Jan. 17, 2023, a U.S. District Judge denied an insurer’s motion for partial summary judgment, leaving alive the possibility of coverage for a medical center and two of the three physicians named in the insurer’s lawsuit. The judge rejected the insurer’s argument a policy exclusion applied, holding it is possible the practitioners were not acting as physicians while performing the procedure in question. Thus, it is unclear licensure was necessary.
Background: In April 2021, a patient filed a malpractice lawsuit in a state court for injuries sustained after receiving treatment at a medical center’s urgent care facility. The patient received an injection for her knee pain from a physician who was supervised by another physician at the facility.
In the underlying suit, the patient accused the physician who administered the injection of inadequate and unlicensed practice of medicine and breaching a physician’s required standard of care. She also alleged the facility director’s medical license was not in good standing.
The policy at issue is a miscellaneous healthcare facilities policy issued to the medical center in 2020 and extended to December 2021. The insurer filed a declaratory judgment action seeking to avoid coverage of the medical center and all three physicians named in the underlying suit. The insurer followed up with the instant motion for partial summary judgment, arguing the policy’s exclusion for claims arising from providing professional services with a suspended or revoked medical license should apply to the underlying suit from a patient who alleged the licenses of the two facility physicians involved in her treatment were suspended.
However, the district judge ruled it is possible the practitioners were not acting as physicians while performing the procedure in question, so it is unclear if licensure was required. The judge noted it is possible the physician was acting as a “medical assistant” and not a physician at the time of injection. In California, medical assistants may administer the type of injection the patient received without a license. It also is unclear whether the director was required to maintain an active license to serve as the facility’s director, the judge said.
“If [the physician] was working as a medical assistant at the time he treated [the patient], and [the facility director] was acting as a director or officer of [the medical center], it is not clear whether the licensure [exclusion] would apply,” the judge wrote. “The policy is silent on whether the licensure [exclusion] applies when the insured is operating in a capacity for which the suspended license would not be required.”
The judge granted the insurer’s bid for a summary judgment that it did not have to cover a third supervising physician named in the underlying action, who was licensed at the time of the injection. The policy does not insure individuals who were acting as “physicians” during a “medical incident,” the judge explained.
The judge declined to rule on the insurer’s argument the policy’s criminal acts exclusion also should apply to bar coverage since the Los Angeles city attorney is prosecuting the two physicians for the unauthorized practice of medicine. Since the criminal cases against the two doctors are pending, the judge said it would be premature to rule on the applicability of that exclusion.
The judge granted the patient’s motion to stay the case until the underlying civil and criminal allegations against the two physicians are resolved. That is the “most efficient and prudent course” of action, the judge said, since there is a risk the coverage suit could interfere with those cases.
What this means to you: There are two lessons from this case. First, while it is incumbent upon each physician to regularly secure, maintain, and update appropriate medical licensure, it also is important healthcare companies employing physicians maintain their own checks and balances to ensure that all licensure for its working physicians is up to date. As noted in this case, the nature of the work performed by the physician also may control whether specific licensure must be maintained. Healthcare facilities also must regularly and consistently review insurance policies, coverages, and the exclusions under each policy to ensure employee actions are always covered. These practices apply equally to employees providing patient care as well as to more senior employees, such as the facility director. Most healthcare facilities delegate this oversight to their established medical board. All physicians working at these facilities must be credentialed by fellow members of this board. This credentialing includes verification and validation of their members’ licenses and compliance with minimal coverage requirements for their malpractice insurance policies.
Larger medical boards employ a full staff to perform the clerical procedures to assure compliance. Smaller boards must assure the same level of compliance but are challenged by the expansive amount of ground these regulations and requirements include, such as rules of practice and bylaws for the medical board and each practice and specialty level for the physicians.
Second, should a facility elect to employ unlicensed physicians and/or other non-physician practitioners, it should do so with its eyes wide open. There are numerous benefits to a practice or a healthcare system employing unlicensed doctors and/or other non-physician medical care staff:
- physicians free their time by delegating services;
- the healthcare facility reduces salary overhead;
- cost structure is improved;
- patient loads are lightened, and productivity improves;
- licensed physicians can focus on more complex cases;
- physicians can spend more time with patients, improving patient satisfaction — and, perhaps, outcomes. Generally, a practitioner administering a remedy, diagnostic procedure, or advice directed by a physician is not practicing medicine.
However, if a physician directs non-physicians to provide the services, the non-physician is held to the same standard of care as the physician. A physician may be liable for negligent supervision, credentialing, or hiring. When delegating to non-physician practitioners, the supervising physician and the employer should:
- ensure personnel are qualified to perform the delegated services;
- ensure appropriate supervision, which includes availability to respond promptly to questions or problems that may occur;
- create written protocols for the basic principles of planned procedures and treatments. These protocols also must stress non-physician personnel do not exercise independent judgment, provide assessment interpretations or diagnoses, and do not perform invasive procedures;
- authenticate all orders recommended by the non-physician practitioners;
- ensure medical personnel respect patient confidentiality.
Physicians who practice as unlicensed staff due to their failure to maintain financial or practice requirements may not necessarily be willing to give up their independence to oversight by their peers. Extra caution must be taken to ensure patient safety and regulatory compliance.
REFERENCE
- Decided Jan. 19, 2023, in the United States District Court for the Central District of California, Case Number 2:22-cv-02233.
There are two lessons from this case. First, while it is incumbent upon each physician to regularly secure, maintain, and update appropriate medical licensure, it also is important healthcare companies employing physicians maintain their own checks and balances to ensure that all licensure for its working physicians is up to date.
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