Court’s Ruling On Missouri Medical Liability Law Increases Health Care Costs

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Court’s Ruling On Missouri Medical Liability Law Increases Health Care Costs

The men and women who serve on the frontlines of health care do heroic work. They deliver lifesaving care with compassion and dedication. And, they serve under immense pressure.

Health care workers are at risk.

A 2014 court decision requires hospitals to extend their liability insurance coverage to protect themselves from lawsuits filed against nonemployees working in the hospital. These are funds that could otherwise be used for quality improvement and patient safety.  This upending of the commonly understood intent of the law was based entirely on a legislative drafting error – a single missing word in the law. 

The court ruling has led to dramatic increases in hospitals’ liability exposure and medical malpractice insurance premiums.  Those increased premiums drive up health care costs. These costs are passed along to patients and businesses that buy employee health insurance coverage for workers and their families.

Understanding the Issue

Consider this situation. You purchase something from a vendor who rents space in an antique mall. The item you purchase turns out to be a fake and the vendor won’t make it right. You can sue the vendor, but should you also be able to sue the owner of the antique mall?  In essence, that is what the court said when deciding on whether hospitals were responsible when there is a nonemployed physician error. 

In the Jefferson v. Missouri Baptist court decision, the Eastern District Court of Appeals used a single-word discrepancy in legislative language to justify applying a significantly broader standard for imposing liability for the actions of nonemployees. 

This court ruling makes a hospital liable for the actions of physicians that provide care in the hospital even if they are not employed by the hospital. These doctors already carry their own liability insurance resulting in duplicative coverage.

Intent and Redefining the Law

After years of having a law protecting hospitals from being sued over the actions of nonemployees, a court allowed such lawsuits based on a legislative drafting error.

When the General Assembly enacted medical liability reform legislation in 2005, it revised the law to specify that providers would not be held liable for the actions of those who are not their employees.  However, the enactment defined the term “physician employee” but did not use that term elsewhere in the law.  Instead, the law used the term “employee.”

The court’s decision reinterprets the law resulting in the exact opposite intention of the lawmakers who supported the legislation. This unfortunate technicality expands hospitals’ liability for the actions of individuals who are not employed by the hospital. It’s a decision that has dramatically increased hospitals’ liability insurance expenses, which in turn is passed on to patients.

The Solution

In its 2017 session, the Missouri General Assembly has the power to reinstate the liability restriction to restore what their legislative counterparts in 2005 intended to do before their work was misinterpreted by the courts.