Managing Medical Malpractice: The Documents, the Providers & the Lawyers

Michael J. Baxter


The resolution of medical malpractice claims is as much a part of the business of providing health care as utilization, credentialing or reimbursement. It impacts those and most other components of the delivery system. While preventing malpractice is a fundamental goal for all health care delivery systems, it can never be fully realized. Mistakes, bad results, or just plain poor patient relations continue to generate claims for compensation. Budgeted for and insured against, too frequently their cost is simply accepted as unalterable. To the contrary, malpractice is manageable. Proactive attention to liability issues when contracting with providers as well as realistic and taut investigation and claims adjusting can significantly reduce malpractice expense. Medical negligence may not be preventable, but the unpredictability of its fiscal impact surely is.


Every health care delivery system has non-employee providers, whether they are retained through an agency, provided via an exclusive contract for a particular department, or received as residents or fellows rotating from another institution. In each instance a contract is entered into which defines the terms of the engagement. Those contracts provide real opportunities to limit malpractice exposure and litigation expenses.

All contracts which address the relationship with outside medical providers should specify that the provider is not an employee, but is an independent contractor. In most states a hospital or health care organization (HCO) which employs providers is vicariously liable for their negligence under the doctrine of respondeat superior. See, e.g., Georgia Osteopathic Hosp. v. Hollingsworth, 250 S.E. 2d 433, 434 (Ga. 1978); Mehlman v. Powell, 281 Md. 269, 272 (1977). In other words, if the employee commits medical malpractice and causes injury resulting in a meritorious claim, his or her employer must pay that claim. However, there is no vicarious liability for independent contractors See, Vanaman v. Milford Memorial Hospital, 272 A. 2d 718, 720 (Del. 1970); Porter v. Sisters of St. Mary, 756 F. 2d 669 (8th Cir. 1985); Simmons v. St Clair Memorial Hosp., 481 A.2d 870, 874 (Pa. Supr. 1984). While such a contractual provision will not guarantee that a particular provider will be deemed to be an independent contractor, it will be an important indication of the parties' intent in establishing the relationship.

The primary consideration in determining whether an employee-employer or independent contractor relationship exists is the extent to which the employer or principal controls the actions of the provider. See, Sledziewski v. Cioffi, 137 A.D. 2d 186, 188 (N.Y.App.Div. 1988). When contracting for physician services in particular, the contract should address the manner in which the provider is expected to exercise independent professional judgement. Again, while such a provision will not necessarily be dispositive on the issue of agency, it will be another indicia of the independence of the provider, and therefore, another factor for the courts to rely upon when deciding whether vicarious liability exists.

Even if the provider is in fact an independent contractor, both by contract and in practice, many states have adopted some version of the doctrine of apparent agency. Under that legal theory vicarious liability may be imposed on the HCO irrespective of its actual relationship with the provider. Osborne v. Adams, 550 S.E.2d 319, 322-23 (S.C. 2001); Sword v. NKC Hospitals, Inc., 714 N.E.2d 142, 148 (Ind. 1999); Syracuse v. Diao, 272 A.D.2d 881, 882 (N.Y.App.Div. 2000). In essence, apparent agency holds that if a provider appears to the patient/claimant to be an agent or employee of the hospital or health care system, then the provider is deemed to be an apparent agent, and the health care system is vicariously liable for any negligence of that provider. However, in that setting an HCO can, in most jurisdictions, protect itself against that vicarious liability by filing a claim against the provider seeking indemnification. Under the common law of most states that type of claim will be upheld as a matter of course.

All contracts of this type should provide for indemnification of the HCO by the provider. Specifically, the provider should agree to indemnify the hospital or health care organization for any liability imposed on it for the provider's alleged negligence. In addition to covering verdicts and settlements, the promised indemnity should include all expenses incurred in investigating and defending claims or suits, including attorneys' and experts' fees, whether or not liability is established.

Of course a promise to indemnify is meaningful only if the provider has the means to carry it out; therefore an additional clause which sets out the malpractice insurance coverage that the provider must maintain should also be included. Given the volatility of the malpractice insurance industry, it is also advisable to specify the lowest acceptable grade of the provider's carrier. In addition, the HCO should have some discretion as to when it can require the provider to change carriers, such as when the provider's carrier goes into some sort of interim status likely to lead to liquidation.


The role of medical records in malpractice cases is well known. In a case claiming that more should have been done, the absence of an entry will be assumed to mean that the critical test or examination did not occur. In a suit alleging that treatment described in the chart shouldn't have occurred, testimony suggesting that the records are mistaken will be viewed, at best, with skepticism. They are the end-all, be-all, the Bible, and the Holy Grail, all rolled into one. Ensuring their integrity is essential to successfully defending medical negligence claims.

A key to good medical records is repetitive risk management education and enforcement of by laws and regulations pertaining to them. Rapid personnel turnover and temporary staffing are commonplace at most health care systems. A record-keeping policy can not be effective if the record keepers aren't familiar with it. Only by offering some form of regular mandatory in-service education on medical charting and including it in every orientation, can the do's and don'ts of good record keeping be put into practice.

Temporary staff presents a greater challenge. A hospital or health care system's record-keeping policies should be supplied to agencies that provide the staff. Contracts with those agencies should specify that they have familiarized their staff with the policies and that the staff members will comply with them. In the case of rotating residents or fellows the policies should be included in their orientation packages. The individual staff members may be required to confirm in writing their familiarity with the policies. Certainly none of these measures will guarantee proper charting by temporary personnel, but they may impress upon them the high priority placed upon it.

Members of the standing medical staff presumably are well aware of their institution's policies, as well as the standard of care on medical record keeping. But awareness does not always translate into good charting. Medical staff by laws or rules and regulations normally call for some sanctions for incomplete or tardy record keeping. Enforcing them, even to the point of temporarily suspending admitting privileges, tends to improve the record keeping of the entire staff.

The greatest risk posed by medical records in malpractice suits is not the incomplete progress note or the discharge summary dictated a month after the patient's death. It is the altered record. A case with limited liability exposure can become indefensible if the records are changed without explanation. Unfortunately no amount of risk management education can prevent records alterations. They are intentional and, despite all precautions, they continue to occur. With advancing technology, they are quite easy to prove.

Understanding how most alterations are discovered, what happens when they are, and, more importantly, disseminating that information to employees and staff may deter a provider considering a change to the record. Most hand written alterations are detectable by forensic documents experts. If a chart entry has several colors of ink or apparent differences in the writing pressures used in making entries, or if part of an entry is written in the margins or between the normal spacing of lines, it will immediately attract suspicion in a malpractice case. A capable documents expert can determine the difference in ages of ink entries made at different times and can identify different writing pressures using sophisticated magnifying and photographic equipment.

A much simpler method of discovering record alterations is by comparing the original chart with one of many copies that may be made shortly after the care is provided. Staff members or other personnel may be unaware that copies of all or parts of patients' charts are often made for any number of reasons, such as reimbursement, utilization review, credentialing, subsequent treatment, or even for assessment by risk managers for liability exposure. Little is more devastating to the defense of a malpractice claim than discovering that the original hospital chart is different from the copy that was previously produced to the patient.

All health care systems utilize precautions to protect the integrity of their medical records. Careful screening of aberrant patient results with quick quarantining of the charts can limit opportunities for alteration. Maintenance of logs of anyone accessing certain charts may tend to discourage alterations. Also, clearly displaying on the charts when copies are made, and to whom they were sent, can serve as a deterrent.

Education as to the impact of a claimed records alteration in a medical negligence case may also discourage such behavior. If a provider is employed by a hospital or system that has commercial professional liability or if the provider is individually insured, most claims of alteration will not be covered. They may also cause the insurer to reserve its rights to not pay any judgement that might be entered against the provider. Institutional providers participating in self-insured trusts may have similar coverage limitations. Some states, in limited circumstances recognize a separate cause of action for alteration of medical records, see Henry v. Dean, 310 S.E.2d 326, 334-35 (N.C. 1984); Bond v. Gurvich, 473 So.2d 1307, 1313 (Fla. Dist. Ct. App. 1984), and a judgment entered under such a claim would almost certainly not be covered under any commercial policy or self-insurance trust. If the provider admits the alteration, the policy may be completely voided, including coverage for the medical negligence, depending on individual state law. In the instance of the individually insured provider, many insurers will refuse to renew liability coverage the next policy year for providers who are found to have altered medical records or on whose behalf a settlement is paid in a case involving alleged alterations. Presumably, state regulatory or licensing bodies will investigate any provider alleged to have altered medical records, as will health care systems providing privileges to the provider. If all providers knew the full impact of records alterations in medical malpractice cases, its incidence might very well markedly decrease.


In the early days of medical malpractice litigation there were just witness statements and the lawyer's file. The work product and attorney client privileges fended off any efforts to discover them. Then came incident reports. Initially secure, they gradually became discoverable in many states. Now there are Sentinel Event Root Cause Analyses, JCAHO patient disclosure requirements, and Food & Drug Administration reports. When an incident occurs a variety of voluntary and mandatory reports are prepared. If produced in discovery in a resulting medical malpractice suit they can complicate the defense of the claim.


Incident reports, although helpful in the early identification and investigation of potential malpractice claims, can no longer be considered confidential or privileged. Some institutions will print on the report that it is confidential and that a copy is being sent to their counsel, identifying the attorney on the printed form. Others will cite the state peer review statute on the form, claiming that privilege. Despite these efforts many courts have found the reports to be part of the regularly kept business records of the hospital or health system and ordered them produced in discovery. Kay Laboratories, Inc. v. Dist. Ct. of Pueblo County, 653 P.2d 721, 722 (Colo. 1982); State ex rel. Faith Hospital v. Enright, 706 S.W.2d 852, 856 (Mo. 1986).

Nonetheless, incident reports are still frequently used, and, with a few precautions, they can still be useful. If an institution is commercially insured, the insurer typically has a form they provide. Although not always successful, the form can be modified to attempt to rely on the work product, attorney client, or local peer review privilege, by citing that on its face. Additionally the form can be titled as being prepared in anticipation of litigation. Using a different form than normally used for non-malpractice events, i.e., a slip and fall on the sidewalk or a leaking pipe, may distinguish it from the regular records of the facility.

Because these measures may protect the reports but certainly don't ensure their confidentiality, attention needs to be paid to the content. Incident reports should be purely factual. They should identify witnesses, give times and locations, and describe in objective and brief terms what occurred. Subjective assessments and suggestions for improvements should be saved for another forum. The litmus test for what should be included in an incident report is whether the author and his or her employer would be comfortable with the information being presented in open court should a claim be pursued. Repetitive in-service and orientation education is critical since the providers who write the reports rarely consult risk management personnel beforehand.

Lastly, even if the reports are privileged, that privilege can be waived. For example, some institutions have (or had) a policy of providing copies of incident reports to medical staff members who are involved in incidents. Many of those physicians simply place the reports in their office charts, which are in turn copied for patients and others. If the reports end up in the patients' possession after having been provided to third parties, any privileges that once attached have probably been waived.


Obtaining signed witness statements is risky business. Although they certainly refresh witnesses' recollections years later, they also lock in the witnesses to positions that may prove incorrect or simply unhelpful. In addition, they are vulnerable to disclosure in discovery and in most jurisdictions, the witness is entitled to receive a copy, which can result in inadvertent disclosure. A safer practice is for the risk manager's file to include his or her summaries as to the information garnered from witnesses. Memories can be indirectly refreshed from those records and the risk of discovery is much less.


With the promulgation by JCAHO of its Sentinel Event Policy the entire concept of preserving the confidentiality of investigations of potential medical malpractice claims has been turned on its head. The Policy essentially requires any organization accredited by JCAHO to conduct defined investigations ("root cause analyses") of all unexpected injuries and deaths, and it encourages organizations to voluntarily self-report the incidents to JCAHO. If an organization does not report the sentinel event to JCAHO, and JCAHO discovers it, the organization must then mail the documentation of its root cause analysis to JCAHO or pay to have JCAHO perform an on-site assessment of the root cause analysis. Failure to do so will result in the organization being placed on Accreditation Watch, which may lead to loss of accreditation.

When the Policy was first promulgated in 1998 an immediate uproar ensued. Accredited health care organizations felt that insufficient attention had been paid to confidentiality concerns and related liability exposure. JCAHO's response was to establish a Task Force to study those and other issues. In its report the Task Force noted an American Hospital Association survey of state hospital associations in which 84% of the responding states indicated that sending sentinel event documents to JCAHO may make them discoverable. After receiving the Task Force's report the Commission pledged to "vigorously defend the legal confidentiality" of sentinel event information in the courts, to return all sentinel event documents submitted to it after completing their analysis, to include language in its contracts with accredited organizations recognizing it as a participant in the organizations' peer and quality processes, and to pursue federal and model state legislation preserving or creating confidentiality for sentinel event documents. See, JCAHO Sentinel Event Policy Reference Manual. In addition, JCAHO created an alternative to the requirement that the sentinel event documents had to be physically delivered to it. Instead, a reporting organization might request, at its own expense, an on site survey of its root cause analysis, including disclosure of its documentation to the visiting JCAHO investigators. Interestingly, the survey noted by the Task Force found that in 45% of the responding states the sentinel event documents would still be discoverable even if the on site option was used.

Notwithstanding these ameliorative measures, sentinel event documents continue to be at risk of discovery in medical malpractice litigation. There have already been several reported cases where sentinel event documents have been ordered produced; but none of those holdings were based on a waiver of privilege due to sharing of the documents with JCAHO. Nonetheless, given the absence of protective federal legislation and the patchwork nature of state peer review laws, it seems probable that this will eventually occur. None of the measures adopted by JCAHO to protect the documents cure the fundamental problem. Production to a third party of documents pertaining to the investigation of a patient death or injury, whether the documents are later returned or destroyed, or are analyzed on site, will be regarded by many courts as a waiver of any privilege that had attached to them. Fortunately, to date most patients pursuing malpractice claims have shown little interest in the issue. However, as sentinel event reporting becomes more commonplace (as of December, 2001 JCAHO was reported to have reviewed approximately 1500 events), and as plaintiffs' attorneys becomes more familiar with it, successful challenges to its confidentiality can be expected.


At the same time that JCAHO has been laboring to prevent disclosure of sentinel event documents, it has issued a new standard that essentially requires accredited organizations to disclose the same information directly to patients. On July 1, 2001, JCAHO issued a number of Patient Safety Standards. One of the more controversial was RI.1.2.2, which states:

"Patients, and when appropriate, their families are informed about the outcomes of care, including unanticipated outcomes."

The intent provision relating to that standard explains that:

"The responsible licensed independent practitioner or his or her designee clearly explain the outcome of any treatments or procedures to the patient, and when appropriate the family, whenever those outcomes differ significantly from the anticipated outcomes."

It has been reported that JCAHO believes that the type of "unanticipated outcome" they expect to be disclosed would be similar to sentinel events, i.e., unexpected occurrences involving serious injury or death.

Presumably the patient disclosure process mandated by JCAHO's Patient Safety Standards will be documented in some fashion so as to enable accredited institutions to establish their compliance with RI.1.2.2. The format used to document such disclosures is being left up to the accredited institutions. Appropriate labeling of the documents as peer review materials may be of some value in resisting their production in discovery in medical negligence cases. Yet some courts may not accept the categorization of the documents as peer review materials given that the underlying disclosure is not primarily directed at improving medical care. By its own terms it is primarily intended to enhance patients' rights and medical ethics. (The standard is contained in the JCAHO manual chapter entitled "Patient Rights and Organization Ethics").

At this early point in the evolution of JCAHO's Patient Safety Standards the best advice seems to be similar to that offered with regard to incident reports. Keep the detailed patient disclosure documents out of the medical records; keep the content factual and free of conclusions of fault; and label and treat the documents as part of the peer review process. Hopefully these patient disclosure documents will not meet the same fate at the hands of the courts as have incident reports.


The reporting requirements pertaining to incidents involving medical devices are relatively straightforward and leave little discretion as to what is to be reported or how it is to be reported. Under regulations issued by the Food and Drug Administration pursuant to the Federal Food, Drug and Cosmetic Act (21 U.S.C.A. 301 et seq.) "user facilities" (which includes hospitals) must report patient deaths and serious injuries that may have been caused or contributed to by medical devices. In certain circumstances the report must go to both the manufacturer and the FDA. The report must include a basic description of the malfunction. Under 21 C.F.R. 803.9, the report is available for public disclosure after deletion of certain information, including in most instances, the identity of the user facility. That same CFR section authorizes disclosure to a patient who requests a report, including all of the information in the report concerning that patient.


The most problematic aspect of medical malpractice litigation for health care institutions is unpredictability. Cases thought to be defensible and reserved accordingly are found, sometimes on the eve of trial, to involve substantial liability exposure. Relatively modest claims generate huge loss adjustment expenses (read attorneys fees). High-level hospital personnel must devote large amounts of time and resources to suits of little or no risk to the hospital, or that are destined for eventual settlement. The vagaries of litigation will persist, but an organized approach, agreed to in advance by all participants, can limit their disruptive impact.

Basic litigation guidelines, provided to outside counsel at the outset of a case, can make for much smoother resolution of malpractice claims. If a HCO is commercially insured, the insurer has probably already issued them. Even in that setting a hospital or health care system may want to provide counsel with some form of its own guidelines, setting forth what it expects in the litigation process. Those kind of guidelines will need to be coordinated with the insurer as most policies reserve the right to direct and control the litigation to the insurance company. Nevertheless, an insured hospital should be involved in such things as selecting expert witnesses and preparing its employees for deposition and trial. Spelling out those expectations to counsel, especially if the counsel is selected by the insurer and has not represented the hospital in the past, can only improve the litigation experience.

Self-insured HCO's may consider having more detailed guidelines. A key to effective litigation guidelines is to focus on the significant recurring parts of the litigation process. Too much detail can be counter-productive. Among the primary issues that can be effectively managed with litigation guidelines are the following:

CASE STAFFING: Most significant medical malpractice cases should be staffed by a partner, an associate, and a paralegal. Defining approved tasks for each is rarely workable but the guidelines should contain a general statement to the effect that it is expected that the partner assigned to the case will delegate specific case activities based on the complexity of the task and the experience of the associate. Effective guidelines should also specify that the partner will handle critical parts of the litigation, i.e., depositions of important witnesses, significant motions hearings, etc. The guidelines should state that most tasks will be performed by a single attorney or paralegal. Reassigning attorneys should be permitted, but charging for a new attorney familiarizing him or herself with the case should not.

INITIAL ACTIVITIES: An initial written report to be submitted shortly after case assignment should be required. The report should provide an initial assessment of the anticipated issues, a listing of providers that need to be identified and/or interviewed, additional medical records that the lawyer or HCO representative should obtain, and the specialties of consulting experts needed to evaluate and defend the case. Advance approval should be required for retaining expert witnesses. In person interviews of the significantly involved providers should occur within a defined time frame, preferably early in the case. Responsibility for reporting to excess insurers should be set forth. When assigned counsel is representing multiple HCO employees, a conflicts assessment should be documented at the beginning of the case.

DISCOVERY, SCHEDULING & REPORTING: Litigation guidelines should specify the level of involvement that the HCO representative wants to have in the discovery. For example, a hospital risk manager may want to have his or her assistant attend some or all interviews, depositions and hearings, or, may simply want advance notice of them. The risk manager may want copies of all scheduling orders, summary reports of all depositions and interviews, and copies of all pleadings filed the case. Interim reporting at defined intervals should be mandatory. A full written case evaluation should be required within six to twelve months after the case has begun and 30 to 60 days before the scheduled trial date. Guidelines should specify what should be addressed in those reports, including whether an evaluation as to the HCO's chances of success at trial and settlement value and verdict range is desired.

SETTLEMENT/TRIAL: Litigation guidelines should delineate responsibility and authority for settlement negotiations. They should also address the attorney's authority to incur trial preparation expenses, enter into trial stipulations, or agree to postponements. If a hospital or health care system doesn't want more than one attorney attending trials the guidelines should address that. Any reporting requirements during and after trial should also be included.

BILLING: Most litigation guidelines include a detailed description of acceptable billing practices. Specification of non-reimbursable overhead charges and limits on photocopying, faxing and delivery charges, computer research, and travel and meal expenses should be included. Required billing frequency and format should be provided. Some guidelines include a provision reserving the HCO's right to audit bills and requiring the lawyer to retain original billing information. Careful attorney selection may make that unnecessary.

The Defense Research Institute (which can be contacted at has issued recommended case handling guidelines for law firms and for insurers. Although not designed specifically for the defense of medical malpractice claims, they do provide a framework for an HCO which wants to create its own guidelines.



For the commercially insured hospital the amount of input it has in the settlement decision is completely controlled by the insurance policy. Most medical malpractice insurance policies give insureds little or no role in deciding whether to settle. The only meaningful leverage afforded a commercially insured hospital is its renewal option. In the event of a significant disagreement, the hospital's insurance broker can sometimes be prevailed upon to lobby the insurer.

Self-insured HCO's decide their own fate, for the most part. Because they don't have the claims evaluation experience of an insurance company they may consider contracting with a claims adjusting company for assistance. They generally establish claims committees to manage their malpractice litigation. The committee should be multi-disciplinary, including representatives of risk management, finance, clinical, legal, and quality improvement. Involving an outside attorney experienced in medical malpractice defense and familiar with the local jurisdiction is helpful. A sound claims philosophy should be agreed upon and followed to avoid having decisions too heavily influenced by the most recent good or bad experience.

Early evaluation and realistic reserving of claims is essential. The clear liability cases, i.e., wrong limb surgeries or medication errors, should be settled before they get to litigation. The chief of the involved clinical department should be consulted before a decision to settle or try a case is made, but should not make the decision. If a case appears headed to trial the lead trial attorney should appear before the committee and present his or her recommendations. When a medical malpractice claim has been properly investigated and the litigation well managed, making the decision to settle or try the case should not be difficult.