You're a part-owner in an ASC. Can you be held liable if the facility is sued for malpractice? Whether you're a hospital representative in a joint-venture, a corporate partner or a physician-owner with a separate private practice, you need to know the answer.
Research of case law here in Illinois reveals only a few malpractice cases against ASCs. The most salient ruling comes out of a case that involves Loyola University's outpatient clinic. In the ruling for Malanowski v. Jabamoni, the court specifically emphasizes that the negligent conduct of a physician need not occur "within the four walls of the hospital" in order to find liability on the part of the hospital. In addition, the court noted that the clinic bore the Loyola name and that that fact could link the care provided by the clinic and its physicians with the greater institution. Loyola's direct liability was dismissed, but the point was made.
A search of jury verdict reports in Illinois reveals only one court case in which a verdict was returned against an ASC. In the 1994 case Patton v. Hedd Surgicenter, Inc., a $200,000 verdict was returned against the ASC and the physician as a result of negligence on the part of the physician. In other recent cases naming the ASC as a defendant - Zosky v. Banno, MD (2002) and Silverman v. Gerstein, MD (1996) - juries found in favor of the ASC. But that doesn't mean the ASC's owners didn't have to spend time and money on legal counsel and court dates.
Means of protection
Here are several steps you can take to reduce potential malpractice liability if you're a partner in an ASC venture.
- Hold your facility out to the public as a distinct business entity, separate from the hospital and management company. For example, your signs, logos and all other marketing material should contain only the name of the facility and not those of the partners.
- Structure the center as a limited liability corporation (LLC). While this doesn't necessarily insulate an owner from liability resulting from his own negligence (or from liabilities for which he's contractually agreed to be responsible for), it does generally protect the owner against liability resulting from the LLC's negligence.
- Contract with an anesthesia-provider group instead of hiring providers directly. Why? So you can present the providers as independent contractors. Thoroughly review the quality and background of providers with whom you contract. In addition, the anesthesia providers shouldn't advertise themselves as employees, affiliates or agents of a partner to the center.
- Don't include the owners' names on patient consent and disclosure forms. You don't want a third party to potentially confuse their affiliation with liability.
- In a hospital-ASC joint venture, give the hospital the opportunity to approve the amount of malpractice insurance the ASC obtains. This will help ensure the ASC has an adequate amount of insurance separate from the hospital's.
- If you're on the board, get occurrence-basis (instead of claims-made) malpractice insurance if you can afford it. With occurrence-basis insurance, coverage is seamless, regardless of job or location change; the insurance company will cover any malpractice incident as long as it was the carrier at the time of the event - even if it is no longer the carrier when the suit is filed. Claims-made insurance, on the other hand, protects you only if your insurance carrier is the same at the time of the malpractice event and the filing. In other words, you could be hung out to dry if you don't have supplemental insurance, also known as tail insurance.
- Write medical staff bylaws, policies and procedures for the ASC that are separate and distinct from those of the hospital investor. Follow the same rule of thumb regarding physician credentialing.
- The ASC should maintain its own risk management program, and its own directors' and officers' liability insurance. Separating such matters makes it less likely that the hospital's risk management will be found at fault for a mistake, and that its directors and officers will be sued.
- If you sign documents as a representative of the ASC, indicate on them that you're doing so as a manger or other officer of the facility, not the hospital, so that the third party doesn't confuse your affiliation.
- Sign guarantees that hold you out to the public or a particular vendor for liability only if you know what you're signing and have explicitly agreed to do so.
- And finally, carefully consider whether to allow certain procedures that are particularly susceptible to malpractice claims at the facility (See "Malpractice Stats at a Glance") and whom you will allow to perform them.
These measures are only a guide for helping you delineate facility responsibility. Whether you're structuring a venture or up and running, it might be a good idea to make them part of your policies, soliciting the help of a healthcare lawyer for the details of instituting them. When it comes to malpractice issues, the last thing you want to chance is confusion if a claim is filed against your facility.