As noted under the Medical Indemnity page, Medical indemnity in Australia is usually structured so that privately practising doctors hold their own medical indemnity cover. A second policy, often referred to as ‘practice indemnity’ may be required to cover a practice entity and employees. Whether this second policy is required depends on numerous factors.
Imagine Dr Jenny Smith. Dr Smith is a specialist in solo practice. Dr Smith holds her own medical indemnity with the “insured” on her policy noted as “Dr Jenny Smith”. Dr Smith has a practice entity called Jenny Smith Pty Ltd, which employs a nurse, a receptionist and a practice manager to assist Dr Smith in her treatment of her patients. Jenny Smith Pty Ltd is 50% owned by Jenny and 50% be per partner, David Smith. Assume the receptionist breaches patient privacy – the patient may bring a claim directly against the receptionist, against Jenny Smith Pty Ltd alleging it is vicariously liable, or against Dr Jenny Smith.
In the above scenario, Jenny Smith Pty Ltd and the receptionist may or may not be covered by Dr Smith’s personal medical indemnity. Each medical indemnity insurer adopts different definitions and coverage within their policies – so you need to carefully read your own policy (including all the fine print) to see whether your practice entity and practice staff are covered – or better still contact us and we will review your circumstances and guide you as to whether you need a practice indemnity.
Imagine another scenario of a multi doctor-owned GP clinic – a new patient arrives at reception and has never seen any of the doctors. They are complaining of chest pain and the receptionist asks them to wait in reception as all the doctors are busy. After waiting some time to see a doctor, they suffer a heart attack. Assuming this incident turns into a negligence claim (the lawyers may decide to sue the name on the front door) – which doctor’s policy should respond to the claim? No doctor has seen the patient – so which doctor should try to lodge the claim on their personal record? What if the five doctors who own the practice are insured with different insurers? Are the insurers to apply the claim across all five doctors’ policies – even Dr Jones was on the golf course at the time? Most doctor policies won’t cover this type of issue – so a separate practice indemnity is required.
The only structure where you can safely assume you do not need a practice indemnity – is where you are in solo practice, trade under your own name as a sole trader, and have no employees.
If on the other hand you own a practice entity and/or employ staff, then you need to carefully consider whether a practice indemnity is required (or if it is sensible to look at alternative insurers). Some potential questions to ask:
- Do I trade under any form of practice entity? – a Pty Ltd company , trust or any other structure
- Do I wholly own and control the entity?
- Do I employ any staff?
- Are the staff always under my supervision and directly assist me in my practice?
- Does any other doctor or health professional work in my practice, or do they rent sessional space from me?
- Do any of my employees provide cosmetic services to patients or directly bill patients in their own right?
Many practices we advise have been completely unaware of the need for practice indemnity and incorrectly assume the practice entity and staff would be covered by the doctor’s policy.
Below are Questions and Answers. Please contact us if you would like to discuss, or request a quote
Often a high risk specialist such as an obstetrician, is actually a low practice risk – as the risk largely relates to the surgery risk of the doctor in the hospital setting.
The policy should extend to cover all non-doctor staff (although some policies exclude certain types of staff such as nurses and other registered healthcare professionals). The better policies have broad definitions of ‘insured persons’ which extend to directors, employees, volunteers, members of ethics committees. Doctors are excluded from the policy while acting in their doctor capacity – as they hold their own medical indemnity.
A practice indemnity should cover a demand for compensation alleging a breach of professional duty by the practice as well as the legal costs to defend or settle the claim. Policy cover varies widely by insurer and some policies provide further bells and whistles extensions such as legal expenses cover for employment disputes.
Generally a room rental arrangement will include you providing management and admin services to the doctor (reception, nursing support, billings etc). You will likely need a ‘practice indemnity’ indemnity to cover your practice exposure (i.e. your staff breaching privacy of a patient of the room rental doctor) along with a range of other insurances.