The Top 5 most asked Questions About Medical Malpractice Liability

Medical malpractice claims aren’t an everyday occurrence for most healthcare organizations, but when they do arise, the financial and legal consequences can be significant.

For physicians across Canada, protection through the Canadian Medical Protective Association (CMPA) is an important part of managing that risk. But what protects the clinic or other healthcare organization where care is delivered?

Understanding how CMPA assistance works, and where gaps in protection may exist, can help healthcare organizations and their brokers better manage medical liability risk.

These are five of the most asked questions we receive from brokers and clients about CMPA assistance, organizational liability, and the medical malpractice exposures healthcare organizations need to consider.

What Is the CMPA and Who Does it Protect?

The CMPA is a mutual defence organization for Canadian physicians, not an insurance company. It primarily assists physician members with medical-legal issues stemming from their clinical practice, including legal defence for malpractice claims brought by patients or their families and assistance with judgments and settlements. CMPA’s assistance is discretionary and depends on the circumstances of the case.

Importantly, CMPA assistance is tied to individual physicians, not their employers. When a lawsuit names both a physician and a healthcare entity, the entity is a separate defendant and may face liability of its own.

CMPA may also provide discretionary assistance to certain physician-owned clinics and facilities that meet its eligibility principles. However, the organization urges members to arrange alternative commercial liability coverage for clinics that may not fall within its principles and to ensure that adequate professional liability protection is in place for independent healthcare workers.

How Can an Entity be Liable for the Actions of Its Employees?

The legal principle of “vicarious liability” is a major driver of entity liability. It means that employers can be held liable when employees commit wrongful acts or are negligent in their duties. In a healthcare setting, this means the organization can be held liable for the actions of an employee, even though it can’t “physically act” on its own.

Nurses, pharmacists, technicians, and other healthcare professionals can also create liability for their employers, particularly when they don’t have their own professional liability coverage.

Beyond Physician Malpractice, What Other Liabilities Can an Organization Face?

Organizations can also be held liable for their own actions or failures, separate from a claim arising from the professional negligence of a physician. These can include facility and equipment issues, infection control failures, misleading marketing claims, and hiring and credentialing negligence, which happens when employers fail to properly assess a practitioner’s qualifications and background.

How do Healthcare Organizations Protect Themselves?

As plaintiffs can name both the physician and the entity in malpractice claims, or sue the entity on its own, organizations need to consider coverage that addresses their own liability for the healthcare services they provide.

Commercial medical malpractice insurance—a type of professional liability insurance—is designed to address patients’ allegations that professional care caused them harm. Depending on the policy, coverage may include legal defence costs, as well as settlements and judgments. Medical malpractice coverage can extend to the organization itself, as well as to the healthcare professionals delivering care on its behalf. Coverage is generally required when physicians are employed or contracted, multiple providers deliver care, and the organization controls facilities, protocols, or patient flow.

Even when every physician has CMPA protection, organizations may still need coverage for their own liability, non-physician exposures, and situations where CMPA assistance does not extend to the organization.

What Should Brokers Consider When Reviewing a Healthcare Client’s Coverage Needs?

It is often assumed that because physicians receive assistance from CMPA in the event of a malpractice claim, their employers are protected, too. But the assistance provided by CMPA and the insurance coverage needs of the organization are not the same thing.

Most regulated health professionals are required by their college to carry professional liability coverage, and clinic owners need entity coverage regardless of the protections their practitioners have individually.

Brokers can help healthcare clients understand how CMPA assistance applies to individual physicians, the scope of that assistance, and why the clinic’s insurance coverage should be considered separately from the protection available to its individual practitioners. A careful review of the organization’s exposures and insurance needs can help identify any potential gaps in protection. 
 

The bottom line is that while CMPA assistance is helpful, it does not answer the question of who protects the healthcare organization itself. Entity medical malpractice coverage – like CNA’s med-mal liability solution – can help address exposures that CMPA protection was not designed to address.