Should a business trust have professional indemnity insurance for all employees?

Q: Our Medical Centre has a business trust that employs all staff, including nurses, with the doctors being associates who pay a monthly administration fee to the medical centre trust to cover wages and running costs.

The doctors are concerned that although their individual professional indemnity policies cover limited numbers of admin staff and nurses, given that these are employed by the business trust should the trust also have professional indemnity insurance for these employees? The doctors have a controlling interest in the business trust. Can you advise the cover of insurance that should be sort for the entity?

A: Increasingly, medical practitioners are delivering medical services via complex corporate, trusts and multipractitioner practice arrangements. This creates grey areas in relation to practice risk exposures, including:
• Whether practitioners require additional insurance cover to protect their practice.
• Who has liability for the conduct of employed or contracted doctors and other staff, particularly where direct control or supervision is not practicable?
• Whether individual practitioner policies respond to claims made against the business or is additional cover required?

Generally speaking, a practice entity might be named as a defendant in legal proceedings (as the sole defendant or in addition to the treating doctors) because:
• the patient saw various doctors within the practice
• the patient does not know or is unsure of identity of the doctor(s) involved
• the medical practice clearly trades under a practice name
• the alleged error or injury relates to the actions or advice of a practice staff member and the involvement on the part of an individual doctor is unclear or
• there may be divided responsibilities and obligations relating to provision of patient care and/or staff employment.

Insurance can be a complex issue and some multipractitioner practice arrangements may not have considered their potential risks and exposures in relation to indemnity needs. Factors such as the complexity of the practice structure, who has financial interests in the practice, how staff are managed and directed, and any existing insurance arrangements, are some of the relevant considerations when determining your insurance needs.

It is important to understand that individual policies cover you for your personal liability, arising from acts, errors or omissions in your treatment of patients. This individual cover does not extend to risks that you may be exposed to as a business owner, such as errors or risks by another practitioner in your shared practice.

A Practice Policy is designed to meet some of the additional risks faced by the owners of practice entities and is worth serious consideration. Information on this type of product and suitability for your practice should by sought from your insurance adviser, or you can call Avant’s Member Services on 1800 128 268 for detailed information.

This information is general information relating to legal issues within Australia. It is not intended to be legal advice, nor and should not be considered as a substitute for obtaining personal and specific legal and/or other professional advice. Avant Mutual Group Limited and its subsidiaries will not be liable for any loss or damage, however, caused (including through negligence) that may be directly or indirectly suffered by you or anyone else in connection with the use of information provided in this forum.

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