Risk Management Strategies for the Outpatient Setting: Legal and Regulatory Risks

Chapter 3 of 9



Definitions

A few basic definitions are provided to ensure a baseline understanding of the terminology utilized in the following sections.

Potential compensable event (PCE) is characterized by an unanticipated adverse event or medical error causing an injury or clinical sequelae. Indications of a formal claim may or may not be present. However, based upon the nature of the incident, injury and litigious patient/family communications, there is a likelihood that a claim will be initiated.

Incident typically refers to an event that is not in alignment with customary operations and/or policies and procedures of the outpatient healthcare setting and is reported through internal channels. The event may or may not be associated with a patient injury. An incident also may be associated with a medical board complaint, an unanticipated adverse event or a request for medical records.

Claim is a verbal or written demand for compensation based upon an alleged error or omission resulting in injury or damage and may be filed as a lawsuit or pre-suit notification. A demand may be made in writing, in person, or by telephone, facsimile or email. It may be asserted informally in the form of a letter or telephone call (often directly from the patient), or formally submitted as a filed legal action. Claims may be asserted by the patient, the patient’s guardian or a family member with appropriate legal authority.

A subpoena is a court order issued by attorneys, government agencies or courts requiring an individual to appear in court, or other legal and regulatory proceedings, and testify. A subpoena also may require document production.

lawsuit is a civil legal action initiated by filing a complaint within the judicial system. Lawsuits are governed by the rules of civil procedure. When a lawsuit is filed by a patient, a Summons and Complaint will be filed with the court and delivered by the designated authority to the named parties or the defense attorney, if one has already been assigned.
 

Professional Liability Claims: Prevention and Management

Not all unanticipated adverse events result in a claim or a lawsuit. Prompt, proactive management of these events enhances patient safety and may reduce the likelihood that a claim will be initiated. Providers and staff should collaborate with risk managers and become active participants in preventing claims, while simultaneously enhancing defensibility in the event a lawsuit is filed.

The role of the risk manager and clinical leaders in preventing and/or managing claims varies among outpatient healthcare settings. However, customary risk management activities relating to claim management include, but are not limited to, the following:
  • Reporting PCEs to regulatory bodies and insurers, as required.
  • Conducting the initial investigation following a PCE.
  • Documenting investigational activities and correspondence related to the event.
  • Ensuring the integrity of the patient healthcare information record and securing other pertinent documents, equipment and information associated with the event.
  • Organizing claim files and coordinating activities with insurers and the defense team.
  • Reporting potential and actual claim activity to professional liability insurers through appropriate channels.
  • Trending and analyzing the organization’s adverse event and claim data to support the development of risk management initiatives and prevent future occurrences.
  • Benchmarking and reviewing industry liability trends. CNA publishes claim reports that provide additional information and detail on professional liability claims and licensing board actions focusing on healthcare practitioners including dentists, pharmacists, nurses, nurse practitioners, physical therapists, and counselors.

Although we cannot predict with certainty when an adverse event or medical error will result in a claim, the following are often precipitating factors:
  • Diagnostic error coupled with serious harm and/or adverse financial impact.
  • Anger or distrust.
  • Retaliation for billing disputes and collection actions.
  • Lack of communication with provider(s) regarding outcome and future care.
  • Unrealistic expectations regarding treatment outcomes.
  • Inaccessibility of provider(s) after an adverse event.
  • Altruistic reasons, i.e., “I don’t want it to happen to someone else.”

Identification of the above risk factors, including proactive risk management techniques, may help to reduce the likelihood that a patient will pursue a claim. For example, training providers on how to effectively communicate with patients and families after an unanticipated adverse event may help to reduce a patient’s anger and distrust towards providers.

Occasionally, providers may become so distraught about a medical error or serious adverse event that they isolate themselves from the patient and family. This reaction results in emotional distress for the provider and also creates a chasm in the provider-patient relationship, often leading to the pursuit of legal action as a last resort. Peer support programs may help providers resist the instinctive “flight” response. In addition, coaching sessions may be offered to help providers navigate difficult disclosure conversations.
 

Medical Malpractice

Malpractice is a type of negligence. It is often referred to “professional negligence.” Malpractice claims in the outpatient healthcare setting are often related to a failure or delay in diagnosis, improper management of test results and referrals or improper performance of a procedure. Communication issues and a lack of clear expectations regarding treatment outcomes also may influence a patient’s decision to file a claim or lawsuit.

Parties to a malpractice lawsuit involve the following:
  • Plaintiff(s) – parties who initiate a lawsuit in a court. Such parties may include a patient, family member or third party.
  • Defendant(s)–the parties against whom a claim or charge is brought in a court.
  • Witness(es)-individuals who provide additional information regarding the case and sequence of events, including experts, consultants, staff, and organizational leaders, among others.
In order to prevail in a medical malpractice lawsuit, all of the following 4 requirements are met:
  1. The provider owed a duty to the patient.
  2. There was a breach of duty (standard of care).
  3.  An injury was sustained.
  4. There was a direct causation between the breach and the injury sustained.
 

Establishment of the Provider-Patient Relationship

Determining if a provider owes a duty to the patient depends upon whether a provider-patient relationship exists. Providers may be held liable even if they believe no provider-patient relationship was established. It is incorrect to assume that an individual is not a “patient of record” if the patient was only seen on one or two occasions or never accepted a treatment plan. Irrespective of the circumstances under which it is created, including location of provider or duration of the contact, a provider-patient relationship may be deemed to have been formed. For example, a provider may offer professional information or opinion establishing a provider-patient relationship, even when the communication occurs outside of a professional practice setting. If the patient suffers an injury as a result, the provider may be held liable.

The legal existence of the relationship is a question of the facts specific to each individual case. Any of the following factors may indicate that a provider-patient relationship exists:
  • A contract is executed between the provider and patient.
  • A history is taken and/or physical examination is performed.
  • An entry is made into the patient healthcare information record.
  • A bill for services is sent.
  • A medical consultation was provided.
  • The patient receives care from the provider.
 

Standard of Care

A medical malpractice lawsuit is based upon allegations that a provider failed to properly fulfill the “standard of care.” Standard of care violations relate to the professional conduct of a reasonable provider in the same jurisdiction with similar credentials. This judgment will be based upon the standard that existed at the time the care was rendered.

In a malpractice lawsuit, the standard of care is articulated through the testimony of expert witnesses. Expert witnesses are professionals with background and training similar to the defendant, typically from the same practice community, who give their opinion to the court regarding the allegations in the complaint. Expert witnesses retained by the plaintiff opine as to why the defendant’s care failed to meet the standard, and that the failure was the direct cause of the injury. Defense attorneys also will retain expert witnesses to refute the plaintiff’s allegations.

Another factor to consider when determining the standard of care is educational curricula, including what is taught both in medical and other healthcare professional schools, as well as continuing education courses. If a provider uses unapproved procedures, materials, or techniques, whether the standard of care was fulfilled may be scrupulously analyzed.
 

Resolution of Claims and Lawsuits

Claims and lawsuits may be resolved, by a settlement between the parties, through mediation or arbitration, by a jury verdict at trial, or by the plaintiff’s voluntarily dismissal of the lawsuit against one or more defendants. It may take years before a malpractice suit reaches trial. Insurance policies vary with respect to the management of settlement decisions. There may be a consent to settle clause, which requires that an insurer obtain its insured’s consent before settling a claim. In non-consent to settle policies, the insurer collaborates with the involved provider(s), but ultimately has the final decision making authority regarding settlement determinations. An insurer’s decision to settle a claim or lawsuit is based upon several factors, including the assessment and apportionment of liability, estimated likelihood of prevailing at trial, as well as an assessment of how the witnesses will appear during testimony before a jury.
 

Managing Claims and Other Legal Notices

Diligent management of actual and anticipated claims and/or lawsuits can reduce the potential severity of the matter. Attempting to manage claims and other legal notices independently will be counterproductive to the defense. The professional liability insurer must be notified immediately, and defense counsel assigned, so that they may respond on behalf of the outpatient center and/or involved provider. Designation of a staff member of the outpatient setting to handle legal notices will ensure prompt notification to insurers and seamless coordination of required responses.

Upon receipt of notification from a patient asserting a claim of injury, or when a summons and complaint or subpoena has been received, the following steps should be taken:
  • Immediately report the matter to the professional liability insurer of the outpatient facility and/or provider(s) involved in the situation.
  • Secure all medical records, equipment and evidence that may be important to the defense of the case.
  • Do not discuss the facts of the case with the patient or any party other than the professional liability insurer and the attorney representing the outpatient facility and/or involved provider(s).
  • Respond immediately to requests for information by the insurance carrier and attorney representing the outpatient facility or provider(s).
  • Refer all inquiries for information involving the case to the attorney representing the outpatient facility or provider(s).
  • Copy and retain the summons and complaint, subpoena and attorney letter(s) for your records.
  • Maintain signed and dated copies of all employment contracts.
 

Reporting to Your Professional Liability Insurance Carrier

Professional liability insurance policies include provisions to guide insureds on how and when to report potential compensable events (PCEs), claims and lawsuits in order to comply with the policy terms and conditions, and initiate a prompt investigation. Refer to your claim professional or broker for specific details regarding the protocol for claim reporting. In situations where a formal claim notice has not been received, but there is reason to believe that that a claim will be initiated, such as when an attorney’s request for records is received or the patient verbally indicates dissatisfaction with care or the plan to file a claim, the insurer or broker should be notified. The insurer will evaluate coverage, initiate an investigation and assign a defense attorney, if indicated.

Typically, a written summary is included in the initial report addressing details of the PCE, claim or lawsuit including, but not limited to, the following:
  • How, when and where the adverse event took place;
  • The names and addresses of any injured persons or witnesses; and
  • The nature and location of any injury or damage arising out of the occurrence.

In addition to the initial report of a claim, pertinent documents, including policies and healthcare information records, are typically included in the initial notification.
 

Subpoenas

In the context of a medical malpractice lawsuit, a plaintiff attorney may issue subpoenas to named defendants or other treating providers who are not named in the lawsuit, but may be utilized as witnesses. The subpoena is a court order requiring providers or the outpatient facility to submit evidence in court and/or to produce documents, such as paper copies of the electronic healthcare information record or policies in effect at the time that care was rendered.

Subpoenas are delivered in person or by certified mail. Deadlines for responding to subpoenas and penalties for non-compliance with the subpoena apply. It is imperative that you consult with legal counsel and your professional liability insurer immediately upon receipt of a subpoena so that they may respond on your behalf. Attempting to manage these requests on your own may be counterproductive in defending your case, if you are a named party, or may potentially result in you or your facility being named in the lawsuit.
 

State Licensing Board Matters

For state licensing board matters, such as licensure restrictions, disciplinary matters, or complaints filed by patients or others, consult your professional liability insurer and/or legal counsel to obtain guidance prior to initiating a response. Matters such as these often emanate from allegations of professional misconduct, fraudulent billing or scope of practice violations. It is important to emphasize the benefits of concise, objective documentation in the healthcare information record, as this may help to avoid a lengthy licensing board investigation. Insurance coverage for legal expenses related to state licensing board complaints varies depending upon the insurer, policy, exposures, and jurisdiction, among other factors. Many professional liability insurance policies will provide defense coverage related to these matters.
 

Managing the Risks of Vicarious Liability

Healthcare organizations or provider-owned outpatient facilities and practices may be held vicariously liable for the negligence of employees acting within their scope of practice. The following suggestions may help to minimize vicarious liability risks:
  • Review your professional liability insurance policy to determine whether it includes vicarious liability coverage.
  • Require a certificate of insurance from all independent contractors.
  • Ask independent contractors sharing space to sign a hold harmless/indemnification provision, which minimizes exposure against any losses arising from their activities. As these clauses are varied and complex, consult with legal counsel before initiating or signing any contracts.


Continue reading Chapter 3: Legal and Regulatory Risks



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