It’s not uncommon for a physician to be employed by a healthcare system. If he or she is sued, many parties will likely also be sued. Including the hospital employer. The hospital might be sued for indirect liability, such as negligent credentialing or negligent hiring. Or it may be sued for direct liability, for example, a nurse failed to timely notify the surgeon of an imminent problem.
If a settlement is paid by a single carrier for both the hospital and the physician, the plaintiff’s attorney will receive a single check. That attorney does not care how the dollars are divided up. He just wants the check. Generally, one check.
If a settlement is made on behalf of a provider, the carrier must report that settlement to the National Practitioner Data Bank (NPDB).
Here’s the guidance from the NPDB.
One Payment for More than One Practitioner In the case of a payment made for the benefit of multiple health care practitioners, if it is impossible to determine the amount paid for the benefit of each individual practitioner, the insurer must report, for each practitioner, the total (undivided) amount of the initial payment and the total number of practitioners on whose behalf the payment was made. If a payment was made for the benefit of multiple practitioners, and it is possible to apportion payment amounts to individual practitioners, the insurer must report, for each practitioner, the actual amount paid for the benefit of that practitioner.
Here’s how I’ve seen this play out in the real world, though every case is different.
If the physician and the hospital are both deemed liable (by the hospital and the carrier), the hospital and carrier will determine what the allocation of liability should be. This is often done with prodding by the physician’s attorney. Obviously, the physician would like to see the number attributed to him as low as possible. A $100k settlement does not look as bad as a $1M settlement.
There is no magic formula for making this happen. But fairness and a strong argument may help persuade the hospital and carrier to dial the number down for the physician.
The plaintiff is still only getting one check. But the allocation of liability is reported to the NPDB in the name of the physician only. The NPDB does not demand any allocation in the name of the hospital.
An example.
Let’s say a surgeon and the hospital were both sued. The surgeon is a W-2 employee and does not have a consent-to-settle policy. In fact, his policy is written by the same carrier as the hospital. The hospital decides to settle for both the surgeon and itself. It settles for $1M. The settlement and release agreement states that in exchange for $1M, the plaintiff will drop its lawsuit against the surgeon and the hospital. The matter is resolved. At this point, there is no allocation of liability. There’s no clear number of what will be reported to the NPDB in the name of the surgeon. It could be any number between $0 and $1M. A good defense attorney will make sure that a fair allocation is reported to the NPDB. The hospital and carrier are likely under no obligation to agree. But, often they will. So, the end result might be $300k for the surgeon (and $700k for the hospital—which is actually not reportable). And, as noted, $300k does not look as bad as $1M.
So, if the hospital and physician are in the same settlement and release agreement, make sure your defense attorney advocates for the lowest possible reasonable number attributable to the physician’s liability to be reported by the carrier. This is a conversation between the defense attorney, hospital, and carrier.
The job’s not done until such details are addressed.
Finally, a physician can submit a subject statement to the NPDB about “what happened.” He has 4k characters to write a response. It’s usually a good idea to submit such a statement so that a prospective employer, hospital credentialing committee, or licensing board has access to your thoughts as to what happened.
What do you think?
