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Hospital Employer Controlling Right to Settle

April 18, 2013

Question:

Jennifer,

I think I may become embroiled in a malpractice matter and I believe my employment contract with [Redacted]  Hospital states I have waived my right to control a settlement.  Does this sound right?  Will I be impacted adversly?

Thanks,
Dr. C

Answer:

Dr. C, this sounds as though it could be right.  I have absolutely seen employment agreements dictating such terms as who has the right to settle a malpractice matter.  In fact, such language and shifting of consent is fairly common.  Why?  Well, first. because professional liability insurance is often cheaper when an employee waives his/her right to consent to a settlement, because the insurer has control over any potential proceeding, allowing the insurer to make a more cost-effective choice to resolve a matter.  Second, when waiving right to consent to an employer, the employer also may be in a position to benefit from a strategic decision without your consent, that may not be possible should you be required to consent.  Whether you will be adversely impacted depends on the result and whether a malpractice matter is resolved without your consent, unfavorably.  How that would happen is if the party in charge determined it was cheaper to settle than fight, despite your not having done anything wrong - which is fairly common when an insurer or employer is interested only in cost and their best interest.  The issue here is that settlement in a malpractice matter has a broad reaching impact on a physicians career, mainly as a result of any required reporting to the National Practitioner Data Bank.  Once a report is made to the National Practitioner Data Bank, that report is available for potential employers, hospitals, accrediting/credentialing process, and every time you fill out certain applications you are required to answer truthfully if any such report exists.  Failure to answer accurately may result in severe ramifications, including referral to licensure for review.  While answering truthfully in the affirmative could also land you in hot water, prompting additional review, depending on the circumstances. 

Bottom line - maintaining control of your right to consent to a settlement before it happens is important.  If you can avoid waiving same, do so. 

Have a question or comment for Jennifer?
Contact Jennifer at Jennifer@Kirschenbaumesq.com or  at (516) 747-6700 x. 302.

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