Any business with employees—including physicians—needs to be extra careful to protect against a myriad of employment practices claims. These include situations related to termination of employment, violation of employment discrimination laws, sexual harassment and invasion of privacy. Lawsuits relating to employment practices have been increasingly generating large awards, and the defense of these claims can be costly. Yet many medical practices are operating with no protection against this risk.

Read related: Medical professional liability market softening, changing

Front-office worker charges discrimination

An employee alleged that a medical practice had discriminated against her on the basis of gender, pregnancy and disability, and that she had suffered harassment and retaliation. These charges were detailed in a demand letter, which was followed by a Department of Fair Employment and Housing charge, and finally a lawsuit from the former employee. The litigation became more complicated when one of the medical practice’s partners appeared to be taking the side of the ex-employee. The matter was settled for $137,000 plus almost $80,000 in defense costs.

2. Medical practice administration

Medical practice administrators must comply with complex regulations and requirements involving proper billing, coding and documentation, the Stark and Anti-kickback Laws and HIPAA. Plus, regulatory audit contractors (RACs) are now auditing physicians to recover Medicare dollars for overpayments and/or “medically unnecessary” care, with the RACs receiving a percentage of any provider overpayments. All practices that submit claims to government programs are likely to be reviewed at some point by a RAC.

Read related: Flood of new patients could overwhelm doctors, hike claims

Hefty attorney’s fees though no over-utilization found

A physician who allegedly over-utilized certain procedure codes was requested to pay more than $750,000 in reimbursements by Medicare. This alleged over-utilization was discovered in the doctor’s routine post-payment review conducted by a fiscal agent of the Federal Medicare Program, which focused on the appropriateness of Medicare payments made to specific providers over a selected time period.

The physician retained an attorney to challenge the allegations, and 2 years later, Medicare recalculated the amount to about $636,000. After another 2 years of additional appeals and an appearance before an administrative law judge, the review findings were dismissed and Medicare was ordered to reimburse money to the doctor. Still, the physician wound up paying $75,000 in attorney’s fees plus the fees of an independent consultant to review the records.

3. Privacy and data security

With the proliferation of the Internet and transportable devices like laptops, flash drives and smart phones such as BlackBerrys and iPhones, the threat of confidential information winding up in the wrong places has skyrocketed. When a medical practice experiences a data breach, the physician owners are often required to notify their patient population and offer credit monitoring for each patient potentially impacted.

Unsecured web site costly

A provider contracted with a software vendor to develop and maintain an online system to capture demographic and other patient health information to help with scheduling appointments. However, the web site was not properly secured by the vendor, and anyone visiting the site could view patient information. One of the patients filed a regulatory complaint against the provider, after which the regulatory agency immediately contacted the provider about the proprietary information available to unauthorized users, requesting that the site be immediately shut down. The provider then contacted the software vendor, which promptly corrected the defects in the program—but wound up paying $25,000 in notification costs and $42,000 in attorney’s fees.

In an era of complex healthcare requirements and regulations—on top of our litigious society—physicians need guidance to protect against the business risks of running a practice. You can be their source to advise them on the best risk management practices and the right insurance protection. While standard insurance packages may be available for employment practices liability, additional coverages can be customized to a physician’s needs—often for a reasonable rate.

Seize the opportunity to become a trusted advisor for physicians. Help give them the security and peace of mind in running their practice. It may go a long way in helping you build new relationships and enhance existing ones.