Entity Coverage

By Betsy Kelley OMIC VP, Product Management

Digest, Spring 2011

As the lead article illustrates, professional entities face a number of liability exposures. They have direct liability arising from administrative services the entity provides to the practice to facilitate the delivery of health care services. Such functions may include credentialing or supervisory activities, development of practice protocols, and maintenance of the premises. Under the doctrine of vicarious liability, liability for an injury may be assigned to a party who did not cause the injury but who has a legal relationship to the person who did act negligently. For entities, vicarious liability arises from the acts, errors, and omissions (“actions”) of the owners, employees, and other health care providers who render services to the practice’s patients. Ophthalmologist– owners of the professional entity may be held vicariously liable for direct patient treatment provided by others as well. To protect insureds from these exposures, OMIC extends coverage under two separate insuring agreements.

Coverage C—Professional Entities

Under Coverage Agreement C: Professional Liability Coverage for Professional Entities, coverage is extended to the professional entity for its direct liability arising from direct patient treatment provided by the entity and for its vicarious liability arising from direct patient treatment provided by any person for whose actions it is legally responsible, so long as that person was acting within the scope of his or her licensure, training, and professional liability coverage, if applicable. Coverage also applies under Coverage Agreement C to any person or entity affiliated with the insured professional entity in his, her, or its capacity as a member, officer, director, partner, or shareholder of the entity (“member”). This includes not only vicarious liability coverage for claims arising from direct patient treatment provided by others for whose actions they are legally responsible, but also coverage for claims resulting from professional committee activities the member performs for the insured entity. Professional committee activities include formal accreditation, utilization review, credentialing, quality assurance, peer review, and similar board or committee services. Coverage Agreement C does not cover members for direct liability arising from their own direct patient treatment or vicarious liability for the actions of others arising outside of that member’s role as an entity owner. (Ophthalmologists named in the declarations are covered under Coverage Agreement A for these liabilities.)

Vicarious liability coverage provided under Coverage C is conditional. If the claim results from a professional services incident involving direct patient treatment provided by a health care provider not insured under the entity’s policy, the provider must maintain professional liability insurance with a carrier acceptable to OMIC during the term of his or her employment, contractual relationship with, or utilization of the facility of, the insured entity. In the event the provider failed to maintain insurance as required, OMIC will not defend the entity or its members or pay damages or other payments resulting from their vicarious liability for the actions of the uninsured provider. This is why we ask you to provide certificates of insurance for all non- OMIC associates at each renewal. OMIC will defend an insured against allegations of vicarious liability for the actions of others based on an apparent partnership between the insured and another health care provider or professional entity, but supplementary payments and damages are excluded from coverage. If you share office space with health care providers who are not owners, employees, or formal independent contractors of your practice, please contact an underwriting representative to request a “Guide to Apparent Partnership.”

Coverage E—Premises

Limited office premises liability is insured under Coverage Agreement E. The entity and its members are insured for claims resulting from injury to a patient or property damage to a patient’s personal, tangible property caused by a professional services incident resulting solely from premises maintenance performed by the insured or anyone for whom the insured is legally responsible. Premises maintenance refers to the insured’s ownership, maintenance, or use of the office premises in which the insured provides direct patient treatment. Premises liability coverage is subject to a maximum limit of $50,000 per claim/$150,000 annual aggregate. Office misadventures that result from negligent supervision or are otherwise related to direct patient treatment are considered professional liability cases and are not subject to this sublimit. Coverage Agreement E does not constitute and is not meant to replace commercial general liability coverage or other fire and property coverage for the insured’s office premises.

Please note that no coverage will extend to an entity, its non-physician employees, or its members in their capacity as members unless the entity is named as an insured on the policy declarations. If your entity is not listed on your declarations and you would like to obtain entity coverage, contact your underwriter at (800) 562-6642, ext. 639, for an application. Similarly, if you form or acquire a new entity, change the name of your entity, or make any other change in your entity affiliation, please notify OMIC as soon as possible to minimize the risk of uninsured liability.

Surgical Team Briefings Reduce Malpractice Risks

By Anne M. Menke, RN, PhD

OMIC Risk Manager

Digest, Fall 2011

Communication breakdowns are the primary cause of 70% of serious adverse events reported to The Joint Commission (TJC).1 Nowhere is clear and consistent communication more important than in the operating room. To facilitate the exchange of critical information among surgical team members, the World Health Organization (WHO) introduced a basic surgical checklist in 2008, proposing it as a method to “help ensure that teams consistently follow a few critical safety steps and thereby minimize the most common and avoidable risks endangering the lives and well-being of surgical patients.”2 The checklist divides surgical care into three phases: sign-in before anesthesia, time-out before incision, and sign-out before transfer from the OR to the post-anesthesia recovery room (PACU).

In addition to the elements of the universal protocol (identification of the patient, procedure, site, and side), the WHO time-out and sign-out include briefings from the surgeon, anesthesia provider, and nurse that—if consistently implemented—would prevent many malpractice claims reported to OMIC. The surgeon addresses critical or unexpected steps in the procedure, its planned duration, and the anticipated amount of blood loss. The anesthesia provider relates any patient-specific concerns such as cardiopulmonary diseases, arrhythmias, difficult airway, etc. The nurse confirms the sterility of the instruments and covers any equipment issues. This article discusses some ophthalmic-specific adaptations of the WHO surgical checklist prompted by OMIC’s claims experience. We were aided in our analysis of surgical team briefings by eye surgeons from Rush University Medical Center. OMIC Directors Steven V. L. Brown, MD, and Tamara R. Fountain, MD, along with their colleagues Jack Cohen, MD, Randy Epstein, MD, and Diany Morales, MD, presented their thoughts on critical steps in some ophthalmic surgeries to nurses and technicians who attended the 2010 ASORN annual meeting. With their permission and our thanks, some material from their talk is presented here, and supplemented with OMIC closed claims data and guidance from other resources.

Corneal Transplant Surgery

When all corneal transplantations involved performing a penetrating keratoplasty (PK) to place fullthickness grafts, there was less chance for confusion. In the early 2000s, ophthalmologists developed ways to remove and replace only the part of the cornea that was diseased or damaged. Dr. Randy Epstein explained that the corneal transplant surgeon now needs to verify the procedure and tissue type in the team briefing. The names for the surgical techniques can be confusing for team members unfamiliar with corneal anatomy but must be understood to ensure that the proper instruments and donor tissue are available. PK requires fullthickness donor tissue, while deep anterior lamellar keratoplasty (DALK), Descemet’s stripping automated endothelial keratoplasty (DSAEK), and Descemet’s membrane endothelial keratoplasty (DMEK) use only partialthickness corneal donor tissue. Some surgeons use a femtosecond laser rather than a metal trephine to create specially shaped overlapping edges in the patient and the graft that create a tighter fit and require fewer sutures, so laser safety measures must be implemented. To comply with tracking regulations and prevent mix-up and contamination, the surgeon also should discuss donor tissue accountability measures that need to be followed when human cells, tissues, and cellular and tissuebased products (HCT/P) are implanted; these apply to amniotic membrane grafts as well as to corneas. Careful discussion of these steps helps prevent corneal graft failure.3

Glaucoma Surgery with MMC

Dr. Steven Brown educated nurses on current medical and surgical treatments for glaucoma and complications of trabeculectomy. Nurses need to be prepared to help the surgeon manage intraoperative complications, which occur in 11% of trabeculectomy cases. The most serious ones are suprachoroidal hemorrhage, considered an emergency, and a conjunctiva buttonhole. The glaucoma surgical team needs to be aware of the use and risks of Mitomycin-C, a chemotherapeutic medication used off-label not only in glaucoma procedures but also in many other types of ophthalmic surgery to reduce inflammation, prevent scarring, and decrease the likelihood of recurrence of conditions such as pterygium. Small sponges are soaked in the MMC and then placed in or on the eye. MMC can cause significant ocular complications, so the number of sponges, as well as the dosage, location, and duration of MMC application, needs to be specified and verified in the standing orders, surgical briefing, sign-in, and sign-out. Medical malpractice lawsuits have been filed after pieces of sponge material were left in the eye, resulting in more exposure to MMC than intended. Depending upon the ASC or hospital policy, facilities may be obliged to report a retained sponge case to their accreditation agency as a sentinel event. Some facilities have been fined by state licensing boards for retained sponges. Prevention of retained MMC sponges has proved challenging due to their size and tendency to shred. See the Closed Claim Study for details of an OMIC case and risk management recommendations on ensuring safe removal of these sponges. Staff safety is also a concern when MMC is used, as it is a toxic and potentially hazardous drug. The American Society of Ophthalmic Registered Nurses (ASORN) has prepared a laminated card detailing the “top tips for safe handling, use, and disposal” of MMC. ASCs would be well-served to obtain a copy and post it in the medication preparation room.

Oculofacial Surgery in the Setting of Anticoagulants

Dr. Tamara Fountain focused on what she termed “the art of managing the risk of perioperative systemic anticoagulation.” Patients presenting for oculofacial procedures, which have a higher risk for hemorrhage than other ophthalmic surgeries, are often taking medications prescribed by their primary care physician or cardiologist, such as aspirin, warfarin (Coumadin), and clopidogrel (Plavix). These drugs are intended to prevent heart attacks and strokes, and may need to be taken for as long as a year following procedures such as cardiac stents to prevent death. In addition to prescription drugs, many patients manage their aches and pains with non-steroidal anti-inflammatory medicines, some of which have blood-thinning properties. Finally, patients may supplement their diets with the three g’s (garlic, ginger, and ginkgo biloba) as well as feverfew and grape seed, all of which can increase bleeding. There is no clearcut consensus within the ophthalmic community on whether to stop or continue anticoagulants before ocular procedures. Dr. Fountain explained that rational decisions need to be made in each case by weighing the relative risks of each intervention. Perhaps the most important step in the risk management process is a candid discussion with the patient about the risks of continuing or stopping anticoagulation; the patient must understand and accept the increased risk of either approach. The surgical team should address the specific procedure’s risk of hemorrhage and the patient’s relative risk of a thromboembolic event during the sign-in before anesthesia and as part of the team briefing at both sign-in and sign-out. If the surgeon and physician who prescribed the anticoagulant decided to stop it, the team needs to ensure that the patient did indeed stop it, then check a preoperative INR blood test for patients on warfarin, monitor for signs of a thromboembolic event, and review with the patient when the medication should be restarted. If anticoagulants are continued during ocular surgery, bridge medication therapy may be indicated, pain and blood pressure need to be well controlled, and fibrotic agents must be available. Nurses in the OR and PACU, and the patient, need to be reminded to watch for signs and symptoms of hemorrhage, such as subcutaneous hematoma, increased and prolonged swelling, asymmetry, and orbital hemorrhage, which could lead to a compromised surgical result, vision loss, and exsanguination. OMIC has had claims involving both thrombolic events and hemorrhage that resulted in significant patient harm and large indemnity payments. Careful collaboration with the primary care physician or cardiologist about the decision to continue or stop medications and well-planned teamwork during the procedure could help prevent such claims.4

Retina Surgery with Gas

Surgery to treat retinal detachment, diabetic retinopathy, and proliferative vitreoretinopathy often involves the use of a gas to tamponade the retinal hole. The colorless, odorless gas is supplied at 100% in cylinders and must be diluted with filtered air to the percent ordered by the surgeon in order to achieve the therapeutic effect without causing serious harm to the patient’s eye. Dr. Jack Cohen explained that if the gas delivered is above a certain level, its volume can increase, leading to elevated intraocular pressure, possible central retinal artery occlusion, and loss of vision via many mechanisms. The surgical team needs to know the concentration and work together to ensure that the dilution process is correctly followed. Multiple steps are critical. Once the tubing from the gas cylinder to the syringe has been “rinsed” of air, the syringe is filled about half way with pure gas. The tubing connecting the syringe to the gas tank is now disconnected and the syringe stopcock is turned toward the syringe so none of the gas leaks out of the syringe. Next, the surgeon and nurse agree on the concentration of gas for the patient. The nurse repeats the concentration back to the physician so each can confirm the desired amount. The surgeon watches the scrub nurse push the pure gas from the syringe to the desired percentage labeled on the syringe. The physician then watches the nurse dilute the pure gas by pulling filtered air into the syringe to the labeled line. The syringe stopcock is now turned toward the syringe to prevent losing any of the diluted gas. At this point, the gas has been diluted correctly, and both the physician and nurse have witnessed and verified the dilution process. This communication is especially important when there is a new member of the team. OMIC settled a case where the ophthalmologist ordered a 15% concentration. His usual assistant was not available, so the hospital assigned another ophthalmic nurse, who did not tell the team that she was unfamiliar with the process of diluting gas. The surgeon did not watch the dilution process, but did ask for oral confirmation of the percentage, which the nurse stated was 15%. The patient developed a significant rise in intraocular pressure after the procedure, leading to damage to the optic nerve and NLP vision. The nurse informed the surgeon the next day that she had not diluted the gas at all. Defense experts supported the surgeon’s attempt to confirm the amount, but felt he could have prevented the nurse’s error from impacting the patient by watching her dilute the gas or preparing it himself. OMIC contributed 35% toward the settlement on behalf of the surgeon.

Strabismus Surgery Briefing

There are a number of issues specific to strabismus surgery that warrant a team briefing. Dr. Diany Morales first pointed to the need to verify not only the correct patient and eye as in all surgeries but also the correct amount of surgery and the correct muscle. She advocates having the office record available in the OR and writing the operative plan on the white board so it is visible to the surgeon (“RMR recession 6 mm, RLR resection 8 mm”). Muscle confusion can be caused both by disorientation from sitting at the head of a patient as well as globe rotation from deep anesthesia. Safeguards include checking the distance of the insertion site to the limbus. Globe perforation is a known risk and clear two-way communication is vital. During the briefing, the surgeon reminds OR staff to check before making any adjustment to the bed, drapes, or IV, and states that she will announce the critical moment when she is about to pass scleral sutures. The final key issue to address is anesthesia risk, as many patients undergoing strabismus surgery are children with issues such as prematurity or comorbidities, and general anesthesia is often required. Patients undergoing strabismus surgery are at higher risk for two potential complications: bradycardia and malignant hyperthermia. The surgeon prepares the team to manage bradycardia by announcing when the rectus muscle will be under traction, as this can provoke the oculocardiac reflex, and asking the anesthesia provider to announce if the heart rate slows to an unsafe level so the surgeon can ease the amount of traction. Like untreated bradycardia, malignant hyperthermia is potentially fatal, even though better recognition and treatment has decreased the mortality from 70 to 10%. It is a metabolic disorder characterized by extreme heat production and muscle breakdown that is known to be more common in patients with strabismus. The team must have the appropriate equipment and be briefed on prompt recognition and management. Surgeons have a leadership role to play in briefing team members and preventing potential errors from reaching the patient. They can also model a commitment to patient safety by using surgical checklists and team briefings for all procedures, regardless of location.

1. “Improving Handoff Communications: Meeting National Patient Safety Goal 2E.” Joint Perspectives on Patient Safety. JCAHO, 2006; 6(8):9-15.

2. World Alliance for Patient Safety. “WHO Surgical Safety Checklist and Implementation Manual.” World Health Organization, 2008; www.who.org, accessed 10/31/11. This list was enhanced by the Assn of PeriOperative Registered Nurses (AORN) to include a pre-procedure check-in that helps facilities comply with TJC universal protocol requirements and national patient safety goals.

3. See“Current Good Tissue Practices for Human Cell, Tissue, and Cellular- and Tissue-Based Products” at www.fda.gov.

4. See “Hemorrhage Associated with Ophthalmic Procedures” at www.omic.com for a detailed discussion of anticoagulants and measures needed to address hemorrhage.

Patient’s Finances Alters Evaluation and Treatment of Penetrating Globe Injury

By Ryan Bucsi, OMIC Senior Litigation Analyst, Digest, Winter 2010

ALLEGATION:  Failure to diagnose intraocular foreign body.

DISPOSITION:  Case settled for $210,000.

Case Summary

An uninsured illegal immigrant was examined by the insured ophthalmologist after a nail struck his right eye while hammering. Visual acuity on presentation was 20/50 OD. The insured diagnosed hyphema and a full thickness corneal laceration with a selfsealing wound. An undocumented slit lamp examination “ruled out” the presence of a foreign body. The insured patched the patient’s right eye, prescribed Ciloxan, and asked the patient to return the following day. The next day, the patient’s visual acuity was 20/40 OD with a negative Siedel Test demonstrating no wound leakage. A hyphema and a small selfsealing corneal wound were present. A dilated fundus exam was not performed, so the retina was not visualized. The impression was a corneal scleral laceration with slightly improved vision with no mention of a foreign body. The patient was told to return in four days.

The following day, the patient self-referred to another ophthalmologist with hand motion vision OD and complaints of sharp throbbing pain in the injured eye. The patient was diagnosed with a traumatic vitreous hemorrhage OD, resolving hyphema OD, and a partial thickness corneal laceration OD. An exam during an emergency retinal consult revealed a reflective foreign object in the vitreous space. A CT scan done at the local charity hospital confirmed an intraocular foreign body. Residents there performed lensectomy, vitrectomy, anterior chamber membrane removal, attempted foreign body removal, and administered an intraocular antibiotic for endophthalmitis. During surgery, the foreign body slipped into the membrane temporally and could not be located. Two days later, a pars plana vitrectomy with membrane peeling, retinectomy, and foreign body removal was done. One week later, the patient had an enucleation for uncontrolled endophthalmitis.

Analysis

Experts for both the defense and plaintiff agreed that the insured did not meet the standard of care. Specifically, the experts opined that the insured should have ordered an x-ray or CT scan of the right orbit to rule out the presence of a foreign body. The slit lamp exam that the insured said he performed but did not document was inadequate to rule out the presence of an intraocular foreign body. The experts believed that an immediate referral to a retinal surgeon was warranted. Regarding a potential causation defense, there was a question as to whether the injury may have been serious enough from the outset to require an enucleation. Defense counsel and our experts believed it would be extremely difficult to rebut the fact that the failure to locate the foreign body led to the infection and the eventual enucleation OD. There was also an issue regarding the surgeries performed by the residents at the local charity hospital. Some of the experts were critical of the technique used during these two surgeries. However, defense counsel and experts agreed that any potential criticism of the residents probably would not hold up in light of the severity of the endophthalmitis at the time of the first surgery.

Risk Management Principles

The insured explained that because of the patient’s limited financial resources, he hoped to minimize the cost to the patient by monitoring the situation instead of ordering expensive diagnostic tests. The insured felt justified in doing this because the patient had “good visual acuity and an intact ocular structure.” Due to the nature of the injury, however, the insured’s focus should have been on ruling out the presence of a foreign body. A simple x-ray could have accomplished this at much lower cost than CT imaging. Unfortunately, the patient’s illegal residency status and inability to pay allowed the insured to lose sight of what was best for the patient and altered his diagnostic workup. As a result, tests that would have led to an earlier and more definitive diagnosis were not ordered. Alternately, the insured could have made an immediate referral to the local charity hospital, where evaluation and treatment would have been provided at reduced or no cost to the patient.

Use an Unusual Event to Reduce Entity Liability

Anne M. Menke, RN, PhD, OMIC Risk Manager

Digest, Spring 2011

The malpractice claims presented in this issue of the Digest raise concerns about the policies and procedures in effect at solo corporations, group practices, and ambulatory surgery centers. Indeed, inadequacies were identified in coordination of care, follow up of noncompliant patients, credentialing, documentation, use of contact lens solutions, appointment scheduling, telephone screening of ophthalmic problems, and instrument sterilization. How can you take action to identify and rectify such problems? Conduct an “event analysis” as soon as you learn of unusual occurrences; focus your analysis on the impact on the patient and the systems or processes involved.

Q   The hospital on-call ophthalmologist just informed me that one of my cataract patients developed endophthalmitis. The patient told her he tried to contact our practice three times and finally went to the ER when no one called back. Should I call the patient?

A  Yes. This patient needs to know that you care about the complication and want to learn more about the problems he reported in contacting your office. “I’m so sorry to learn that you have a very serious infection in your eye. How are you feeling today?” When you can, move on to the phone issue. “Dr. Jones tells me that you weren’t able to reach our office despite calling three times. Do you feel well enough to tell me more about that?” Keep the focus on the patient: “I can only imagine how upset you must be about not being able to speak with us. Let me assure you that I am going to check with our answering service and find out what happened. May I call you again when I find out?” Notify your partners of the situation, get buy-in on the need to evaluate the system, and identify who will lead the analysis. When you contact the service, remain polite and limit the initial contact to beginning the fact-gathering process. “We’re reviewing our call experience this past weekend. Could you please send us a list with details on all the calls you handled for us?” Ask any physicians covering for the practice to provide you with information on calls they took from the service and/or patients. Review the call documentation for clarity, adequacy, response time, and follow up. Consider expanding the analysis: ask all physicians, office staff, and answering service staff for input on questions, problems, or concerns experienced with after-hours calls during the previous six months.

The goal of the analysis is to determine if the problem was with this particular patient and whether the entire process is safe and reliable. You may identify issues such as a physician who yells at the answering service when contacted, lack of clarity on what to do when a physician does not respond, rapid turnover at the service, or malfunctioning equipment. Go back to the physicians in the group with what you have learned and develop an after-hours policy and procedure. Educate all involved parties, then analyze again. Finally, report back to the patient on your findings and your plan; patients appreciate knowing that their poor experience may lead to improved care for other patients.

Q  One of my patients was harmed when her contact lenses were cleaned with the wrong solution. Should I fire the assistant who made this mistake?

A  Termination would be indicated only in exceptional cases. Instead, start by providing comfort to the staff member. Inform her that you would like her help identifying what went wrong so it won’t happen again. Call a staff meeting, ask the staff member to explain the incident, and ask other staff to clarify all steps in the process, paying particular attention to ones that could lead to error or harm. Your written team analysis may uncover contributory causes, such as lack of labeling of solutions, similar looking containers, inadequate training, or pressures from an overbooked schedule. Develop a better process to address the causes, write it up, and test it. Modify the procedure as needed.

Q  My cataract patient experienced a refractive surprise. When I reviewed the medical record, I found a staff member had made a transcription error that led to implantation of the wrong IOL. Am I expected to review orders on each patient before surgery?

A  Not necessarily, but you and your practice need to develop some systematic review process to prevent office-based causes of “wrong IOL.” Use this opportunity to develop an office cataract surgery checklist and staff education program. Include the involved staff member, the technician who performs your A-scans, and your surgery scheduler. Have them map out the care process, and highlight steps that could lead to error or harm. Clarify points at which you will be involved, such as when you verify the results of the A-scan and IOL master. Pay particular attention to key information that needs to be transmitted to the ambulatory surgery center, such as allergies and medical and ocular comorbidities that could impact anesthesia or perioperative care. Eliminate as much transcription as possible by, for example, sending a copy of the A-scan and IOL master results along with the preoperative order. Ensure that the refractive target, type and power of IOL, and operative site are specified. Review and approve the final checklist and educational program before it is presented to the entire staff. Monitor outcomes, and adapt the checklist and process as needed. OMIC risk management staff are here to assist you. Call the confidential Hotline at (800) 562-6642, ext. 641.

Entities at Risk for Professional Liability Claims, Too

By Betsy Kelley OMIC Vice President of Product Management

Digest, Spring 2011

To view the table referred to in this article, go to http://www.omic.com/new/digest/Digest_2011Spring.pdf

Throughout OMIC’s history, the number of insured professional entities has steadily increased. Many new group practices have joined OMIC, and physicians who previously practiced alone have merged their practices with others. Groups now represent 55% of OMIC’s overall market share. Even physicians who remain in solo practice more often form limited liability corporations or similar professional entities in an effort to protect their personal assets, attain tax advantages, and achieve other benefits. With more physicians shifting from hospital-based surgery to outpatient procedures, outpatient surgical centers have flourished. As the number of insured entities has increased, so too has the number of reported claims. Between the company’s inception in 1987 and year-end 2000, 96 claims and suits were filed against medical entities (multi-shareholder corporations and partnerships), sole shareholder corporations, and surgery centers (outpatient surgical facilities or OSFs). During the next five years, an additional 208 entity-related claims were reported. Claim frequency increased even further between 2005 and 2010. By the end of 2010, a total of 449 entity claims had been reported during the decade. Cases against medical entities represented nearly 60% of all entity claims and 12% of all claims reported to OMIC between 2001 and 2010. For this same period, solo corporations accounted for 29% of all entity claims and 6% of claims altogether, and surgical centers accounted for 11% and 2%, respectively. (See graphs on page 4.) The increase in the number of insured entities, however, does not alone account for the large increase in entity claims. Simply put, entities are more frequently being named in claims. This article will explore the different causes of actions that expose entities to claims.

Let the Superior Reply

Under the doctrine of respondeat superior, a professional entity may be held vicariously liable for the acts and omissions of those who provide services on its behalf. As the “master,” the entity is ultimately responsible for the actions of its agents (“servants”), including the entity’s owners, employees, and, in some cases, independent contractors. This is a common cause of action against insured entities. Increasingly, claims against physicians alleging medical negligence include their entity as a co-defendant, and on rare occasions, the case may be filed solely against the entity. A savvy plaintiff attorney may include the entity in an effort to find a deeper pocket or an additional limit of liability. Rather than serving as protection from liability, the entity may instead become an additional source of indemnity. While OMIC has often been successful in having the entity dropped or dismissed in court in the absence of negligence on the entity’s part, these cases may be costly to defend and indemnity payments are sometimes necessary.

Naming All Potential Plaintiffs

Plaintiff attorneys may start with a primary target but do not initially know all the facts at the beginning of a lawsuit. In the case of alleged negligent surgery, it is common to name the surgery center. An OMICinsured ophthalmologist performed Descemet’s stripping endothelial keratoplasty, without complication, on a patient with Fuchs’ dystrophy. When the DSEK failed, the patient underwent penetrating keratoplasty. Claiming complete loss of vision due to alleged negligent corneal transplant, he sued both the surgeon and the outpatient surgical facility. No contention that any OSF employee was negligent or otherwise contributed to the patient’s outcome surfaced during discovery. After nearly $15,000 in legal expenses, the OSF was dismissed from the suit. The case proceeded against only the surgeon.

Negligent Acts of Employed Optometrists and Physicians

Optometrists and ophthalmologists have an independent scope of practice regulated by state law and are directly liable for their own care. If they are employees of an entity, however, the entity is not only vicariously liable but also is expected to direct and supervise the care provided. In one practice, a patient with a 25-year history of diabetes was seen by a non- OMIC insured optometrist employed by an OMIC-insured entity. The patient complained of glare at night, problems driving, and a decrease in distance and near visual acuity over the previous several months. The optometrist diagnosed moderate to severe proliferative diabetic retinopathy, narrow angle glaucoma risk OU/neovascular glaucoma OU, and cataracts OU (no surgery indicated). The patient was instructed to return in two months for a visual field exam with an ophthalmologist. When she did not show for her scheduled appointment ten weeks later, staff consulted the ophthalmologist, who advised offering her the next open appointment, one month later. The patient returned as scheduled, complaining of constant pain and light sensitivity of one week’s duration. Her vision was HM OD and LP OS with IOPs of 19 and 76, respectively. The ophthalmologist diagnosed narrow angle glaucoma secondary to neovascular glaucoma, initiated treatment, and arranged for her to be seen emergently by a glaucoma specialist. The patient filed suit for delay in treatment and named the optometrist (direct liability) and his employer, the ophthalmologist’s sole shareholder corporation (vicarious liability for its employed OD and MD). Defense experts were critical of the OD for not arranging an immediate consultation with an ophthalmologist. They also criticized the ophthalmologist for not having the patient return immediately when she missed the appointment, but he was not named as a defendant. The entity was ultimately dismissed from the suit, and the optometrist reached a settlement of $250,000 with the patient. OMIC paid more than $23,000 defending the corporation.

Former Employed Physician with No Tail Coverage

Entities face increased exposure when health care providers have no direct coverage for their own liability, either because they have chosen to practice without insurance or because, when leaving the practice, they did not purchase “tail” or prior acts coverage for their previous activities. In these situations, the entity may be found legally liable for damages. (See Policy Issues for coverage limitations relating to uninsured providers.) Dr. A (not insured by OMIC), one of several ophthalmologists employed by an OMIC-insured group, saw a patient for complaints of a silver arc of three days’ duration. The dilated exam showed a posterior vitreous detachment (PVD). Dr. A advised the patient to return in three months. When she returned two months later, her dilated exam again showed PVD, and she was instructed to return in six months. Instead, she returned in two months. At this exam, Dr. A noted possible Sjogren’s. Although Dr. A later testified that he performed a dilated fundus exam at this visit, no fundus exam was documented. Optos images were ordered, which revealed a retinal detachment that Dr. A allegedly missed. When the patient returned a few weeks later complaining of hazy vision, there was questionable optic pallor and the cup-to-disc ratio was 0.1. There is no documentation of a retinal detachment or dilated exam at this visit. Dr. A recommended visual field testing, which was completed the following week and indicated a “possible visual field defect.” Plans for carotid Doppler and sedimentation rate were recommended. A few weeks later, the patient was seen at another facility, where the retinal detachment was diagnosed. Because Dr. A did not carry professional liability insurance, the patient also filed suit against the entity for vicarious liability, even though no criticisms of the entity were voiced. The case settled at mediation for $300,000 on behalf of the entity. The uninsured physician also contributed $50,000 towards settlement.

Role of Staff in Lawsuits

The previous cases relate to alleged errors committed by physicians and extended health providers, such as optometrists. Ancillary personnel, such as employed nurses and technicians, are another source of vicarious liability. Although OMIC’s policy extends coverage directly to non-physician personnel, such employees are rarely named in medical malpractice complaints. Instead, allegations of employee negligence are generally filed against the employing entity. A medical entity was sued after a patient suffered a chemical corneal burn caused by an enzyme cleaner. When the patient removed her contact lenses during a pre-surgery check-up, the technician placed them in cleaning solution rather than wetting solution. Upon placing the lens back in her eye, the patient experienced severe burning, swelling, and pain. This case settled for $40,000 against the entity. In another practice, an insured ophthalmologist discovered, while dictating the operative report for a cataract surgery in which cortex was retained, that the wrong IOL had been implanted. The ophthalmic assistant had incorrectly transcribed A-scan data from another patient’s record. The surgeon called the patient the next day and informed him of the error. The patient self-referred to another ophthalmologist, who treated him for complications relating to the retained cortical material. The patient filed a claim against the surgeon and his solo corporation alleging pain, light sensitivity, chronic redness, and the need for additional surgeries. Although these complaints resulted from complications of the initial surgery and were unrelated to the wrong-power IOL, the technical error compromised the case’s defensibility. Accordingly, a settlement of $42,500 was made on behalf of the entity.

Slips, Trips, and Other Mishaps

Another area of potential liability is the insured premises. While it may seem that slips, falls, and other office mishaps should be covered under the practice’s commercial general liability (CGL) or business owner’s policy (BOP), such cases often fall instead under professional liability. Many of these cases center on patient supervision or are related to medical care provided rather than premise defects. An elderly patient with multiple medical issues was escorted to an uncarpeted exam room and placed on a stool with rollers and no back. While alone in the exam room, she fell off the stool and hit her tailbone. As a precaution, she was sent to a local hospital for examination. X-rays showed no visible damage, but a bone scan taken three months later noted subtle findings of a possible hairline fracture. The patient filed a claim against the ophthalmic entity, which reported the claim to its CGL carrier. That carrier denied coverage, classifying the case as professional liability due to negligent supervision. OMIC settled the case on the entity’s behalf for $60,000.

Protocols and Pitfalls

In some instances, the practice’s policies and procedures themselves— or the failure of staff to follow them—contribute to liability claims. Breakdown in the phone message system resulted in a $140,000 settlement on behalf of an insured medical entity. A patient with a history of ECCE, laser iridotomy, and pars plana vitrectomy underwent a corneal transplant by Dr. X. The bandage contact lens was removed two months later, and the epithelium was healing. Two weeks later, the patient called the medical exchange on a Saturday morning, complaining of pain and redness in the operated eye. When the call was not returned, he called again that evening and three more times on Sunday. He was finally seen by the on-call physician, who diagnosed endophthalmitis, prescribed Quixin and Cosopt, and advised the patient to return to his corneal specialist the next day. The patient returned as instructed and was referred by Dr. X to the hospital, where the eye was eviscerated. The patient filed suit against the entity only; no physicians were named. Failure to follow protocols to prevent wrong-eye/wrong-site surgery resulted in a $75,000 payment on behalf of an OSF and $240,000 on behalf of a non-OMIC surgeon. A patient was scheduled for strabismus surgery OD. Preoperatively, the nurse and patient identified the right eye, and all documentation indicated the right eye. In spite of this, the left eye was draped, no “time out” was called, and surgery proceeded on the left eye. As these cases demonstrate, professional entities face a number of professional liability exposures. This issue’s Risk Management Hotline discusses ways to reduce some of them.