For attorneys in Ohio, it is rare to encounter an uninsured physician who provides care in a hospital setting. This is rare because every Ohio hospital that I am familiar with requires staff physicians to obtain professional liability insurance as a condition of staff membership. However, on occasion, the staff physician will terminate his/her staff privileges and not obtain “tail” coverage for negligent acts occurring under color of those staff privileges. In such a situation, the doctor will be uninsured for medical malpractice claims that occur while he/she had staff privileges but are filed after his/her policy expired. In this situation, there are several well-established legal principles under Ohio law that should fix liability on the hospital.
Pursuant to R.C. 3701.351(A), Ohio hospitals owe a duty to set and apply standards for granting staff privileges. If a hospital sets such standards and procedures, but does not apply them, it is a violation of the hospital’s statutory duty. The duty to determine staff privileges is a “fiduciary power which must be exercised reasonably and for the public good.” Davidson v. Youngstown Hosp. Assn. (1969), 19 Ohio App.2d 246, syl. 1. When an Ohio hospital allows a claims-made policy to satisfy its insurance requirements, without more, it fails to comply with a medical staff bylaw that requires professional liability insurance to cover medical negligence claims arising pursuant to its grant of staff privileges. The hospital can easily comply with its bylaw by requiring the physician to obtain an occurrence policy or, upon termination of his/her staff privileges, tail coverage. The failure to do so is a violation of the hospital’s statutory duty to apply its own medical staff bylaws in a way that promotes the public good, and thereby constitutes negligence, negligent credentialing and/or breach of fiduciary duty.
In addition, contractual duties may impose liability. Professional services agreements often require staff physicians to obtain insurance coverage. Patients are third-party beneficiaries of such a contract. Under Ohio law, when a promisee intends for a contract to benefit a third party, the promisee assumes a duty toward the third party. Laurent v. Flood Data Serv., Inc. (2001), 146 Ohio App.3d 392 3. In breaching such a duty, the hospital is liable for damages caused.
Common law duties may also arise when a hospital undertakes the duty of requiring insurance coverage to protect its patients. “A voluntary act, gratuitously undertaken, must be … performed with the exercise of due care under the circumstances.” Briere v. Lathrop (1970), 22 Ohio St.2d 166, 172. This assumed duty may be breached by virtue of the fact that the hospital did not require an “occurrence”-type policy or “tail” coverage upon termination of staff privileges to cover a claim occurring during the pendency of the staff privileges.
Finally, Ohio hospitals owe their patients a fiduciary duty due to their special relationship. Douglass v. Salem Community Hospital (2003), 153 Ohio App.3d 350. A fiduciary has “a duty, created by his undertaking, to act primarily for the benefit of another in matters connected with his undertaking.” Strock v. Pressnell (1988), 38 Ohio St.3d 207, 216. By failing to ensure that its staff physician was covered for a patient’s claim before granting him staff privileges, the hospital arguably breached its fiduciary duty to the patient.
For attorneys who would like briefs or pleadings that pertain to this discussion, feel free to contact the lawyers at Mishkind Kulwicki Law. As dedicated advocates for healthcare consumers, we would be pleased to assist you.