Can practice owners ever completely protect themselves from the risk of vicarious liability? We sought legal advice to find out.
If you’re reading this blog, then the chances are you’re already familiar with the recent court case in which a dental practice owner was found to be vicariously liable for the errors of his associate.
This outcome has increased anxiety and concern for practice owners everywhere. Clearly, the risks are significant. A court case loss could devastate the financial position of many owners. Our members have been calling us to express concern. Some have requested that we change our associate agreement so that it protects them from being liable for their associates' actions.
To reassure our members, we have taken advice from legal counsel to find out whether (and how) practice owners can protect themselves from litigation for another person’s acts and omissions.
Here is an overview of what we have found.
Complete protection is unlikely to be possible
With current models of working, complete protection is unlikely.
To have any reasonable chance at a defence, we believe the associate would need to:
- do private work only (at least in England and Wales)
- have their own patients which they can take with them when they move to another practice
- have their own set up (including CQC registration). This means that patients would need to be clear that the associate is their own dental practice (that happens to be situated in the main practice) who set and takes their own fees directly.
I stress that this is not a model we recommend. It would not be practicable in all but a handful of cases.
Changing agreements is not enough
“One of the main reasons that we developed BDA Indemnity is because we knew vicarious liability was going to be more of an issue.”
Changing the associate agreement in itself is not nearly enough.
The agreements need to reflect reality for the protection of both parties. Even if the agreement were drawn up to paint an artificial picture in an effort to avoid vicarious liability, the courts would see through it.
One of the greatest reasons that we developed
BDA Indemnity is because we knew vicarious liability was going to be more of an issue and we wanted to provide members with more protection.
There are ways to mitigate risk
You can mitigate these risks. You won’t stop every claim, but you can prevent the vast majority of them.
It is not entirely coincidental that these steps may also help improve the service that the practice provides to its patients.
Reference check associates carefully. References are not always the best indication of how good an associate is, or whether there are problems. But the reference will be an important piece of information that, taken with the application and your impressions from the interview, may help spot someone who is not a good fit for your practice. It is generally accepted that it is far better to wait for the right person than just recruit anyone.
Have a good, written associate agreement in place. That may help you and your defence organisation claim against the associate if there’s a problem. The associate agreement cannot solve every problem. Vicarious liability is usually only a problem if the associate is no longer contactable or has no assets. If that is the case, any breach of contract claim against the associate is unlikely to be helpful.
Check your associate has the appropriate indemnity insurance: Ensure that it covers them for the treatment they are doing in the practice. Don’t just take the associate's word for it – see the confirmation for yourself. Also, keep copies of their certificates. We believe that occurrence-based contractual cover is the gold standard.
Conduct regular clinical audits. This is important, not just to spot problems with an associate’s work, but also to ensure that your business is providing a good service to your patients. If you find an issue with an associate’s work, the associate should want to rectify the issue.
Quality control is an important element of many commercial agreements. There is no reason why it should be inconsistent with the self-employed status of associate dentists. That said, one would expect a self-employed dentist would take ownership of any problem and solve it. The practice owner need only set out consequences if the quality of work does not meet the required standards.
Deal with complaints brilliantly. Most patients will not want to sue if the practice deals well with their complaints quickly and efficiently. Use your indemnity provider for advice and help with drafting responses - that is what they are there for. If the associate who did the work has left, it may be tempting to say that it is not the practice’s problem and that the patient should try to contact the associate. Managing the patient’s problem early may prevent the problem from escalating.
Keep your contacts up to date. If your associate leaves, try to ensure you have a forwarding address and ways to contact them.
Take advice. If there is a claim, follow the advice of your defence organisation. If you do receive a claim from a patient of an associate, just be aware that fighting that claim could be the most expensive option.
We are looking carefully at this judgment and the advice from counsel to see whether we can make changes to our associate agreement to give any further protection to practice owners.
Any changes we are likely to make will simply allow a practice owner to make a claim against an associate. For those claims to be successful, it is vital to know where the associate is and for the associate to have assets. Typically, practice owners only find themselves paying out for vicarious liability claims where these conditions are not met.
Associate Director of Advisory Services, BDA