Becoming involved in a lawsuit can be a significant event for anyone, including a physician. It can require a great deal of the physician's time and effort, can be emotionally draining, and can serve a psychological blow to the physician's professional psyche.

When legal claims arise, physicians must trust their lawyers to address them, just as patients must trust their physicians to treat disease. As with the physician-patient relationship, the effectiveness of the lawyer-client relationship depends on the physician's absolute candidness about the events surrounding the legal claim. These communications between lawyer and client are protected as confidential to encourage this necessary candidness. And, just as patient compliance promotes effective treatment, a physician must heed the lawyer's advice and instructions to ensure an effective defense.

This guide is designed to give physicians a context for understanding the impact of a legal claim so that, if a claim does arise, the physician can react appropriately and know what to expect. It focuses on the 3 phases of a legal claim: the presuit notice period, the life of a lawsuit, and trial. And, because legal claims invoke the issue of insurance, this guide initially attempts to familiarize physicians with the nature of a medical malpractice insurance policy.

THE MEDICAL MALPRACTICE INSURANCE POLICY

Duties of the carrier

Defense and indemnity. The carrier has 2 primary obligations under a medical malpractice policy: the duty to defend and the duty to indemnify. The duty to defend requires the carrier to retain a lawyer to defend legal claims that are brought against the physician. This duty also requires the carrier to pay expenses relating to the defense. The duty to indemnify requires the carrier to pay an amount up to the policy limits for a settlement or judgment on any covered claim against the physician.

Assignment of counsel. An insurance carrier will generally retain counsel for a physician when a lawsuit is filed, although some will do so early on when the notice letter is received. Typically, the carrier will assign a lawyer who has been approved to work on its cases, and a carrier will often honor a physician's request for a specific attorney. The carrier pays the fees of the lawyer it ultimately retains. While the physician may obtain a personal lawyer in addition to counsel retained by the carrier, the carrier will not pay those fees.

Consent to settle. Some insurance policies have a “consent clause” that requires the insurance carrier to obtain the physician's consent in order to settle a case. By giving consent, the physician places the power of decision regarding settlement in the hands of the insurance company. Settlements, like adverse judgments, are reported to the National Practitioner Data Bank.

Duties of the insured physician

Prompt notice. To preserve coverage, the policy typically requires insureds to provide the carrier with prompt notice of any potential claims or lawsuits against them. An insured physician's failure to provide prompt notice could jeopardize the carrier's obligations both to defend and to indemnify. As such, with respect to coverage, it is in a physician's best interest to provide prompt notice.

Cooperation. A policy also typically contains a “cooperation clause,” which requires insured physicians to cooperate in the defense of a legal claim.

PHASE ONE: THE PRESUIT NOTICE PERIOD

The presuit notice period is perhaps the most critical to understand because a physician usually receives notice of a claim and must react to it before having the benefit of a lawyer's guidance. Understanding the significance of this notice can enable a physician to respond protectively and avoid potentially harmful conduct.

The notice letter

The legal process typically begins when a physician is served with a notice letter. This is a letter from a plaintiff's attorney advising the physician of an intent to bring suit. Article 4590i, the Texas statute governing medical malpractice law, requires this notice in order to encourage presuit negotiations and settlement. Though required by law, the notice letter is not a lawsuit, is not filed with the court, and simply places physicians on notice of potential claims against them.

Immediate notice to the carrier

Upon receipt of a notice letter, the physician must immediately notify the insurance carrier and forward it any relevant papers. Immediate notification can operate to institute insurance coverage; delaying notification can jeopardize coverage.

A physician should also notify the carrier upon service or notice of anything resembling a legal claim, whether or not the physician has first received a notice letter. These items could include a citation, petition, discovery request, or deposition notice. The carrier is in a much better position than the physician to evaluate the effect of any material received.

A physician should also provide notice if contacted by a plaintiff's lawyer who is “generally considering” a claim or pursuing a claim against another health care provider. Physicians who try on their own to convince the plaintiff's lawyer they don't belong in a lawsuit can unwittingly cause adverse consequences and guarantee their own involvement in the lawsuit. Not only can the delayed notification damage the physician's position with respect to coverage, but it prevents the opportunity for an experienced professional, either an attorney or an insurance adjuster, to evaluate this initial contact and take steps to protect the physician's interest. If contacted, the best strategy is to refrain from discussing the case and immediately call the carrier.

The patient's chart

The next immediate step the physician must take after receiving a notice letter is to pull the patient's chart and place it somewhere safe. It is imperative that no changes, alterations, or deletions be made in the chart. If a lawsuit does develop, even the appearance that an alteration has been made can have a devastating impact. The chart must remain in exactly the same condition it was in before the physician had notice of the claim.

Discussing the claim

Upon receiving a notice letter, a physician may be tempted to discuss the claim with colleagues to obtain their opinions. However, if a lawsuit does develop, the physician would likely be required to recount those conversations—even those unfavorable to the physician's position. Physicians should discuss claims only with their insurance carrier and their lawyer.