Does your hospital owe you a duty to ensure that practicing doctors maintain adequate malpractice insurance coverage? Maybe not…

Recently, the South Carolina Court of Appeals decided an appeal involving the question of whether a hospital owes a duty to its patients to ensure that a doctor practicing at the hospital maintains malpractice insurance coverage.  In McCord v. Laurens County Health Care System, Opinion No. 5705, the Court of Appeals held that, under the specific facts of the case, Laurens County Health Care System and its successor Greenville Health System (collectively, “Hospital”) did not owe such a duty to its patients.  

The two patients in the McCord case were female patients who suffered complications following surgeries performed at the Hospital by an OB/GYN between December 2008 and May 2009.  The Hospital subsidized the Doctor’s practice and its bylaws required medical staff to maintain valid professional liability insurance coverage.  At the time of the surgeries, the Doctor had a “claims-made” medical malpractice insurance policy with coverage limits of $200,000 per claim and $600,000 annual aggregate coverage, and excess coverage.  Two months after the second patient’s surgery, in July 2009, the Doctor switched his medical malpractice insurance to another company, but he declined to purchase either “prior acts” coverage from the new company or “tail” coverage from the previous company that would have covered claims based on his acts or omissions occurring before the effective date of the new policy. 

Concerns arose about the Doctor’s competency in October 2009 when another of his surgical patients was re-admitted to the Hospital with complications.  Medical staff at the Hospital reviewed the Doctor’s patient charts in early December 2009, and by December 15, 2009, he had relinquished some of his surgical privileges.  He was suspended by the Hospital in January 2010, and he ultimately relinquished all his privileges in May 2011.

The two patients and their spouses sued the Doctor for malpractice and loss of consortium and obtained default judgments in 2014.  One patient obtained a default judgment for $1,740,692.75, and the other obtained a default judgment for $1,468,580.  (Their spouses’ default judgments against the Doctor for loss of consortium were for $58,789.04 and for $50,000.)  However, the Hospital was not a party to the actions against the Doctor.  At that time, the Doctor had moved to New Zealand and there was no insurance covering the plaintiffs’ claims so they were unable to collect their judgments. 

The plaintiffs tried to sue and collect from the Hospital under a breach of contract theory and a negligence theory, but the trial court granted summary judgment to the Hospital and the Court of Appeals affirmed.  The Court of Appeals decided in favor of the Hospital on the breach of contract claim based on its interpretation of what it determined was unambiguous language in the Admission Contract.  And, the Court of Appeals rejected the negligence claim as well, concluding that the Hospital did not owe a duty of due care to the patients under the circumstances. 

In support of their negligence claim, the patients argued that the Hospital breached a duty of care by continuing to grant the Doctor hospital privileges when they knew or should have known he did not have adequate coverage for malpractice claims occurring before July 2009 and by failing to require him to purchase such coverage.  Although it expressed its sympathy for the patients, the Court of Appeals rejected this argument, noting as a threshold matter that South Carolina law does not require a physician to carry malpractice insurance. 

Additionally, the Court of Appeals declined at this time to recognize a theory of hospital corporate negligence, a doctrine “that imposes a duty of due care on hospitals based on the reality of their responsibility for patient safety and well-being, despite whatever intricate personnel structures and contractual barriers hospitals may have created.”  The Court of Appeals further explained that “[e]ven if we were inclined to agree with the hospital corporate negligence doctrine, such a declaration of public policy is the function of the legislature or perhaps our supreme court.”    

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Blog post by attorney Marghretta Shisko. Click here to learn more about Marghretta.