The Issues of Medical Malpractice

Because of an ongoing dispute between a physician and a liability insurance provider, an Ohio state court has issued an order requiring that the latter’s contract with the physician be reviewed. The issue before the court concerns the scope of the physician-placing agency’s fiduciary responsibility to its insured patients. We have previously noted that different states have different requirements when it comes to what amount of financial risk a physician must assume and/or maintain in dealing with patients.

This is a rather unique case, being the first of its kind in Ohio. Although this matter has already been addressed in several other states, this is essentially a case of initial impression for Ohio. To fairly determine this matter, the issues must be considered in terms of competing public policy concerns, the relative weight given to professional standards in private liability insurance, and the best advice offered by state case law.

At issue in this case is whether or not the insurance carrier, the independent physician or the board violated the law when it became involved in compensating the former for medical malpractice. We note that there is an ambiguity involved in determining whether or not the actions of the board breached the fiduciary duty owed to the individual under the law. Essentially, it boils down to resolving which party (board, insurer or physician) were least likely to subside from its effort to compensate the individual for the injury suffered. For purposes of this discussion, we believe that one of the most important factors in determining whether or not an actionable breach of fiduciary duty was taken is whether or not the party acted in good faith. That is, if the party failed to take measures to mitigate the potential harm to the individual, it is probably not a breach of fiduciary duty.

In this case, the Ohio State Court found that the board exceeded its powers. It also found that the individual defendant, Dr. Sam P. LaPorta, had failed to disclose information and had misused his position as a medical specialist in treating his patients with anesthesia without following appropriate protocol. The court found that the conduct of the Board created a “risky and uncertain business climate for insurance carriers, surgeons and patients.” While the panel did not specifically say that the board overstepped its bounds, noting that the case raised important issues about the relationships between doctors and insurance carriers and held the policy makers in the dark about what was not covered under their policies, the opinion implied that a breach of fiduciary duty had occurred. Further, the court found that the evidence showed that the Board’s actions tended to create a high level of uncertainty in the policy holders’ awareness of the risks that were inherent in various types of medical procedures.

Although the law does not require insurance carriers to compensate their patients, they are typically within their rights to do so when the risk of awarding damages is unclear. However, the Court has never upheld an attempt by an insurance carrier to force a patient against making a claim for pain and suffering or to avoid the opportunity to obtain the most favorable judgment in a case. In fact, most litigation against physicians has rested on precisely this argument. Many times, the plaintiff doctor will attempt to avoid issues of medical malpractice by threatening to report the claims to the state’s medical board, which could then pursue an investigation into the doctor’s activities.

Medical malpractice is one area of law in which it is particularly difficult to win, despite a mountain of evidence in its favor. This is because, unlike civil law, doctors generally retain the right not to be questioned during a case presentation. Consequently, there is little chance that a disinterested party will seek to question a medical expert at a deposition. Moreover, there is no right of cross examination in a criminal trial. Thus, in most civil cases doctors tend to have a very high degree of confidence in their ability to deliver strong testimony about their cases.

On the other hand, cases of medical malpractice are often won by the defendant (the physician or hospital) seeking to prevent recovery by denying liability or treating the claim as frivolous. In such cases, the burden of proof is with the defendant. Unlike civil law, there is no trial decedent, and there are no witnesses or prosecutors to challenge the claim. Such a situation often forces physicians to rely on depositions, which are not subject to adversarial rules of evidence or of hearsay. While this may ensure favorable outcomes for some cases, it presents significant challenges to doctors in providing persuasive testimony about a medical claim.

There is also an issue of payment when insurance carriers are disputing claims made against them. Insurance carriers are not disputing a case simply because they do not agree with the result. Rather, disputing a case means losing the right to recover the loss. Thus, physicians must carefully weigh their willingness to dispute legitimate cases versus their willingness to allow insurance carriers to deny coverage.