Physicians face many risks beyond medical malpractice. A shocking case in national headlines involved Hacienda Healthcare, a 50-year-old healthcare organization in Phoenix that administers multiple healthcare programs to some of Arizona’s most vulnerable patients. A lack of supervision that allegedly resulted in the sexual assault of a patient has resulted in the termination of multiple employees, including senior level executives, doctors, and staff. The Hacienda board has voted to close the facility at which the assault occurred— jeopardizing the care of many patients and the future employment of a large number of employees.
As reported in most major national news outlets, a woman in a persistent vegetative state who had been receiving care at the facility for over 26 years recently gave birth—to the surprise of facility staff and attending physicians who called 911 when the patient started moaning in pain and went into labor. As described by the Washington Post:
The birth — and the sexual assault of a vulnerable individual that must have preceded it — has cast a harsh glare on conditions at a nonprofit organization that bills itself as a leading provider of health care for Phoenix’s medically fragile.
The sexual assault (which is arguably criminal negligence) has thus far led to the arrest of the alleged rapist, the resignation of the CEO, and the suspension of one attending physician and resignation of another. Arizona Governor Doug Ducey has explicitly called for investigations and accountability from staff, executives, and Hacienda Healthcare’s board members. Patient admissions have been halted, and the organization has been ordered to pay a third-party management company to supervise operations and patient safety while the organization’s future is being determined.
Practical lessons to be learned
1. A culture of compliance, active management, and supervision is the best and most predictable line of defense for your organization and your assets.
2. High limits of specialty insurance coverage is vital in protecting healthcare professionals from traditional liability, employment liability, and director’s and officer’s liability (D&O insurance), among others.
In the Hacienda Healthcare case, the board members, CEO, other executives, and the attending physicians all arguably have significant personal liability for this patient’s assault and the resulting pregnancy. If they are covered for any liability that falls outside the coverage of any medical malpractice in place, it would most likely be through their D&O insurance, which would also help cover the very expensive cost of legal defense.
If you serve on any medical board (hospital, hospice, etc.), have an executive title in your practice (CMO, president, treasurer, etc.), or serve on the board of a non-healthcare related organization (school, church, bank, charity, etc.), make sure you are covered to a high six or ideally seven figure limit and get a copy of the in-force policy now—before you have a crisis. Most doctors don’t ask if the D&O insurance exists and what the limits are until the threat of a lawsuit is upon them, when it is too late to protect themselves with both insurance and legal tools.
3. Active personal asset protection planning is the required backstop to protect physicians from gaps and failures in compliance and insurance. There are inevitably human mistakes or issues that either aren’t covered by insurance (or aren’t covered enough), jeopardizing your personal assets.
4. Liquidity matters. Medical professionals, including physicians, staff, and executives, who have been employed by Hacienda Healthcarefor many years now find themselves without a job, and others face uncertain futures. You and your business must be able to withstand a significant disruption of your cashflow, have liquid savings, and access to credit lines that would keep you solvent in any such situation and meet your personal and business overhead.
5. Reputational damage is severe in the age of the internet. Many of those innocently employed by or associated with Hacienda Healthcaremay be tainted and reputationally damaged by these disturbing events. Having a reputation and being findable outside your role in any specific organization is important and takes time and effort.
Attorney Ike Devji has practiced in the areas of asset protection, risk management, and wealth preservation law exclusively for the last 15 years. He helps protect a national client base with over $5 billion in personal assets that includes several thousand physicians and is a contributing author to multiple books for physicians and a frequent medical conference speaker and CME presenter.