With few exceptions, physicians who practice in the academic medical center setting are covered by institutional professional liability policies structured at either the institutional or the faculty group-practice level. What some physicians don't realize, however, is that there are myriad variations in how those policies are arranged and underwritten depending on the institution type, its ownership and the state in which it operates. That policy structure can affect everything from individual physicians' premium rates and claims-experience ratings to their compensation.

"One of the most important things physicians in academic practice can do, first and foremost, is to understand the structure of liability coverage at their institution because it does affect them," says Jane Schumaker, senior associate dean and CEO of the University of Florida Faculty Practice. "Everyone's actions affect the others' for the purposes of coverage, so it behooves faculty members to know how that coverage works." Physicians new to faculty practice, or community doctors who may be covered under the institution's policy by virtue of the academic center's purchase of their practice, should understand coverage structure issues even if they're not involved in paying the premiums.

For example, coverage may be structured differently and premium rates may be lower in states that have caps on non-economic (pain and suffering) damages or in those where medical schools enjoy sovereign-immunity status than in states without such protections or limits. Where premium rates are very high, that "drain" on the institution's budget may translate into lower compensation or reduced benefits for physicians, Schumaker notes.

In some institutions, a university medical center's coverage may be structured as part of the main university's liability policy, which effectively puts medical and non-medical personnel in the same pool for the purposes of underwriting. Typically, however, physicians are covered as either a large single multispecialty practice or as specialty-specific subsets of that large group. In the case of the single large faculty practice, the structure means that the premiums for high-risk specialists such as neurosurgeons or obstetricians might be "offset" by the lower premiums charged to family practice physicians.

Finally, while many institutions purchase their coverage from large national insurers, some elect to self-insure. That choice may affect how or whether lawsuits are settled or allowed to proceed to court, Schumaker explains, which in turn could affect the malpractice history, future premiums and possibly even the employability of physician(s) named in the suit.

In addition, there may be wide variation among institutions in the policies and procedures governing the reporting of adverse events or poor patient outcomes -- to patients and families and to department or institution personnel -- that could lead to a lawsuit. Failure to adhere to those policies and procedures could put the physician or the institution in a less-defensible position.

Many academic institutions provide a thorough explanation of malpractice liability and coverage issues to junior faculty and others joining the organization, as part of the orientation process. But that's not always the case. Following are several questions faculty members should ask and issues they should ensure they understand regarding professional liability coverage in their organizations:

• How does malpractice coverage work here? Is the medical center self-insured?
  
• Who covers the premium -- the center, the specialty practice or the physicians?
  
• Are premiums charged back to individual faculty members, and if so, how does the cost of coverage affect individual physicians' "profit-and-loss" statements?
  
• How are decisions made about lawsuit settlements or litigation? Is there a malpractice or risk management committee that makes the final decision, and how are my views on a case taken into account? (Most organizations at least consider the physician's wishes in the decision making process.)
  
• What should be reported when an adverse event occurs involving my patient or pending litigation is suspected, and to whom should it be reported? Should the department chair be informed first or the medical center's risk management department? How should the situation be communicated to affected patients or their family members?
  
• What happens with liability coverage when I leave the organization? Is tail coverage provided, for how long does it cover me, and who pays for that coverage?

Junior faculty members shouldn't spend an undue amount of time worrying about professional liability issues in the course of their work. But they should be aware that the privilege of working in a highly regarded academic institution entails greater potential scrutiny of their work from a liability standpoint, compared to their counterparts in the private practice setting. "What's unique about academic institutions is that they're probably more of a target than community hospitals if something goes wrong, because patients assume they have the ability to use a number of resources-they have faculty members to consult, and phenomenal libraries and data banks they can access," says Mark C. Levy, a partner in the life sciences practice group of the law firm Saul Ewing, LLP, in Philadelphia. "So patient expectations are higher because academic institutions generally are held to a higher standard of care."
 

What that means, practically speaking, is that a judge and jury in a malpractice lawsuit expect physicians in academic institutions to meet that community's standard of care -- which sets the bar higher for the purposes of defending actions or admitting supporting expert testimony.