In Good Company? How your practice set up can impact your medical indemnity cover

Incision Indemnity
Surgeons - Medical Professionals - Private Clinics -
22nd December 2020
4 mins read

While some surgeons and doctors work as truly self-employed individuals, many surgeons and doctors set up corporate entities for their private practice. Some set up a small limited liability company of which they are the sole director and sole employee (except perhaps for a medical secretary), to assist with matters such as tax-efficiency. There are also surgeons and doctors who have organised themselves into small groups and formed limited liability partnerships (LLPs) or limited liability companies. The set-up of such companies varies greatly, with some having no employees, and others having a variety of administrative and clinical employees in addition to the surgeons and doctors. The exact purpose of, and services provided by, those companies or partnerships also varies greatly.

Can such companies protect the individual surgeons and doctors from clinical negligence claims? The short answer is “not really”. It is difficult to influence in advance a patient’s decision about who precisely they sue. Also, even where a company is involved, the individual surgeon or doctor might still be the legally correct person to sue for compensation arising out of that advice or treatment, depending on the exact circumstances.

So, why can there be variation in whether the patients should sue the company or the individual surgeon/doctor or both? Incision members have access to a detailed guidance note which explains why the question of the ‘correct’ person or entity for the patient to sue is not legally straightforward. Because of this complexity, patients (whether legally represented or not) might make their decision based on a reasonable legal analysis, or alternatively based on a pure misunderstanding about who they should be suing in any given situation.

Regardless of whether the patient is represented or not, if the company or surgeon/doctor thinks that the patient has started a claim against the wrong party, it still costs some money to bring those incorrect proceedings to an end. This is because the defendant(s) might have to apply to the court for a summary judgment or strike-out and have a hearing in front of a judge before the incorrect claim can be ended and the patient required to re-start the claim against the correct defendant.

So, how does any of this affect the Medical Indemnity (and other) insurance you need for your private practice as a surgeon or doctor? The first key point is that even if you do all your private work via a company, you almost certainly still require Medical Indemnity insurance in your own name. It is almost impossible to avoid the risk of having at least some clinical negligence claims brought against you in your own name. Perhaps more importantly, your cover for regulatory proceedings by the General Medical Council will need to be in your name because such proceedings will always be against you personally. The second key point is that if you use a company to facilitate any part of your private work, you need to have a discussion with your insurers or indemnity providers about whether that company needs to be added to your insurance cover as an “Insured” in its own right, alongside you as a natural person. Otherwise you could find yourself with a ‘gap’ in your cover. If a patient sued your service company (rightly or wrongly) and the service company technically did not have Medical Indemnity insurance, then the company (and you as its director) might end up footing the bill for that claim despite the fact that you would have been covered by your insurance if sued in your own name.

Incision members have the benefit of assistance from both the Medico-Legal Advice line and the Membership Information line for guidance at any time about their particular situation.

*Article originally published in July 2019