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Addressing Employee Liability Issues at Your Medical Practice


Here's part one of my 12-month medical practice makeover - a series to help make changes at your office. First, employee liability issues to examine this month.

Happy New Year and thanks for continuing into 2013 with us. In one of my last columns of 2012, I suggested that many of the complex issues we discussed together over the last few years in this forum can seem daunting when taken as a whole and that we would provide a series of guides to help you address major issues in a time- and cost-effective way. This article is the first in that series.

One of the greatest assets and largest liabilities any business faces is its employees. The average American business is five times more likely to face legal exposure by an employee than for another reason. And judgments for common complaints like sexual harassment routinely produce verdicts of $500,000. We continually see that many of the issues that arise and become adversarial or create significant legal and financial exposures for doctors result from a failure to plan and have adequate “risk management” measures in place. Risk management is the first line of defense as preventing harm or liability is almost always cheaper and easier than trying to correct it. This is also a great time to make some changes; employees expect that policies and procures are updated periodically, typically at the beginning of the year.

Issue One: Employment Manuals

A good employment policy manual, a.k.a. employee handbook, is one of the most basic and effective lines of defense and an indispensible management tool. The majority of medical practices out there have either no manual at all or worse, a form manual that is poorly drafted and fails for some reason. Many manuals in place are outdated in terms of compliance with current employment laws or have been borrowed from another doctor, sometimes in another state, and the laws around which they were drafted do not apply.

The common practice of borrowing another doctor’s manual of questionable value and simply cutting and pasting the name of your practice in to save a few dollars will almost always produce a bad result when it’s challenged. We’ve provided a specific resource and very specific tips from an expert in a previous article but a good manual will, as a minimum:

• Be drafted for your business and how it actually operates;

• Include a specific and legally enforceable conduct, confidentiality and discipline and termination policies; and

•Be specific to the current employment laws in your state.

Issue Two: EPLI Insurance

Employment Practices Liability Insurance (EPLI) is another “must have” tool. This very specific type of insurance is structured to help handle the cost of an employee lawsuit and may not only provide the costs of legal defense, which can easily be six figures on its own, but also provide some coverage in the event of a judgment. Like all insurance, its cost is based on underwriting and your past risks and exposures. The cost is very low and it will pay for itself the first time you have any need for an employment attorney in a controversy, based on my experience. In fact, in most cases a year of insurance can cost less than just a retainer required by a lawyer. Work with an insurance expert that can explain in detail the differences and gaps between different carriers and policies.

Issue Three: Workers Comp Coverage

This is another specialized area of insurance that requires professional guidance. Remember this policy is there to protect your employees from loss and injury incurred on the job, it’s also there to help avoid you and your practice for being help directly and personally liable for those losses and the financial and legal costs involved. I often see physicians trying to shop this on price alone. Don’t do that. This not only protects those who trust and work for you it also protects you by limiting their right to sue you for the harm in exchange for these benefits.

Issue Four: The Human Factor

As carefully as we plan, there is one exposure that’s very hard to prevent: the human factor. Always keep in mind that you are responsible for the workplace and the specific human interactions of the people in it, including employees, contractors, vendors, and even owners and partners. Intentional conduct or gross negligence are almost always going to cause you trouble and cost you money. Make this the year that you identify and fix specific behavior issues that create these liabilities or terminate those that cause exposure if they refuse to conform. Your business is at stake.

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