Vicarious liability is a legal concept that extends responsibility for one person’s actions to another individual or entity. The insured does not have to be directly responsible for the incident — they only need to have a business connection to the person or entity who committed the act.
A significant exposure of vicarious liability in the healthcare setting is when a practice’s entity is named in a claim, but it is not named on the policy as an insured and/or does not have its own limit of liability. Typically practicing physicians must have individual limits of coverage on a Medical Professional Liability Policy to comply with health insurance or maintain hospital privileges.
But in some instances, the entity itself can be left without any coverage, putting the practice at financial risk. This is a growing risk for larger and mid-size practices as we’ve seen an increase in the number of times entities have been named in claims in recent years.
Why are entities named in claims?
Entities are culpable in the event of a claim because they are given the assumed right to control the actions of those they supervise; therefore, an entity can be held responsible for the medical services providers by any and all of its physicians or employees (O’Brien, 2022).
Entities have a legal duty to protect patients, and some of the grounds for naming them in a medical malpractice claim could be:
Negligent hiring of a physician
Lack of supervision of a provider during a procedure
Protecting yourself and your organization from vicarious liability exposure for entities
While you may be unable to control the actions of others fully, you can control how you protect your assets. First and foremost, when reviewing your medical professional liability insurance policy, you must familiarize yourself with your state or region’s laws and cap reforms to ensure you are following any statute requirements. An experienced agent or broker can help advise you on what regulations exist, if any, in your area.
If there are no legal requirements for carrying coverage for your entity, you should still assess your practice’s risks. A large to mid-size practice would likely be at greater risk of these incidents. Throughout the underwriting process of your medical professional liability policy, you will want to review the size and scope of your practice with your agent and underwriting team and the likelihood of an entity being involved in a claim (O’Brien, 2022).
If an entity would be named in the event of an incident, you can discuss getting a separate insurance limit for the entity itself. A separate limit protects your practice if a provider and the entity are named in a claim.
Sources
O’Brien, Brad. (June 24, 2022). Insuring a Medical Entity with Medical Professional Liability Insurance. Article [Website]. Retrieved from: Insuring a Medical Entity with Medical Professional Liability Insurance | The Doctors Insurance Agency (doctorsagency.com)