Medical professionals and their practices face many types of risk outside the strict scope of medical malpractice liability. One major recurring risk to doctors is employment-related lawsuits that can be mitigated by following some simple steps.
As I discussed last week, a good asset protection plan has many layers, including management of all reasonably anticipatable risks. The stakes here are high on two fronts; first, the awards themselves can be financially devastating, with sexual harassment verdicts, as one example, regularly reaching hundreds of thousands of dollars. Second, the costs of legal defense alone can drive a medical practice out of business, easily reaching six figures in short time - without including the potential dollar value of any award that may be obtained against the physician.
The risk is growing
According to a recent EEOC press release the agency collected nearly $400 million in fines in 2013 alone - the largest collections year in the history of the EEOC - and receives close to 100,000 complaints a year. The most common causes of these complaints, in order, are; retaliation under all the statutes (about 40 percent); followed by race discrimination (about 33 percent); sex discrimination, including sexual harassment and pregnancy discrimination (roughly 27 percent); and discrimination based on disability (about 25 percent). Both race and disability discrimination claims increased as a percentage of all charges.
Step one: Have a professionally drafted employment manual
We consistently find that medical practices have one of the three following bad scenarios at play with their employment policies and manuals, which should be formal, written, distributed to all employees and enforced:
1. We have NO formal manuals.
2. We have generic manuals of speculative value that are not specific to our business and how it operates (i.e., we got it free off the Internet or from a doctor buddy in another state.)
3. We have a custom manual but have NOT implemented it, distributed it to our staff in a formal way, or consistently enforced it.
So what? Why do I even need an employment manual and policy guide?
Any of the scenarios above is a danger to your practice. Your employment manual is your compliance bible for both management and employees, and prescribes the rules and procedures for the vast majority of employment-related issues at your practice. According to Paul Edwards, CEO of CEDR Solutions, an employment law resource that specializes in medical practices:
"Your employee handbook is also your first defensive tool in deterring and fighting employment lawsuits. Policies that are well-written and in compliance with all state and federal laws can prevent 90 percent of legal exposures because an employee or manager was not aware of or did not understand a rule or regulation. A strong handbook will also often deter aggressive contingency fee attorneys who know it is much more difficult to fight and win when a medical practice has implemented written, legally compliant policies."
Why does it have to be "custom"?
Edwards outlined some key legal areas that required custom drafting in an employment manual:
1. It should be specific to the laws of your state. Employment laws vary from state to state and some, like New York and California are more onerous for employers than others. Not citing the right laws can make your practice non-compliant or subject you to rules that are more onerous than they should be. If it's in your manual you are required to follow it.
2. It should be specific to the number of employees you have. Your compliance burdens change with staff size, so the difference between 49 employees vs. 50 employees or even 14 employees vs. 15 employees can be significant.
3. It should be specific to your industry. You have many additional, unique compliance burdens as a medical employer and significantly extended liability on issues like HIPPA compliance, credentialing, etc., - these should be specifically addressed.
4. It should be specific to the "culture" of your practice. Every practice and its needs and expectations are different, your manual and polices should match how your practice actually runs and mirror your expectations.
In my next installment on this issue I will cover the next step or layer required to protect your personal and business assets against the risk of employment-related lawsuits. Until then, think about your own practice and which of the areas above needs additional attention.