As an Employer, Am I Responsible for the Actions of My Licensed Workers?

When a worker commits an act of negligence, can the patient or client hold the practice responsible?

For any licensed healthcare professional in private practice, hiring workers brings challenges. In addition to completing all the necessary forms for taxes, benefits, and compensation, you’ll probably start thinking about liability. You may wonder: can a patient or client hold you responsible if your licensed worker commits malpractice?

Say you are a physical therapist in Illinois who owns an independent practice. You have three physical therapists working for you. One of the therapists directs a frail patient to perform a balance training exercise. Unfortunately, while the therapist isn’t watching, the patient falls and suffers an injury. If the patient accuses the physical therapist of malpractice, are you also potentially liable for negligence? Is your license in jeopardy? 

Vicarious Liability for the Practice

First, the bad news: the practice may be liable for the workers’ actions. Vicarious liability, or the doctrine of respondeat superior, may apply to employers who hire workers who commit malpractice. Such vicarious liability can be placed on employers who hire independent contractors as well as employees.

Of course, it matters whether the worker commits malpractice during the scope of their employment. In other words, did they commit the negligent act while on the job, doing their daily duties, and seeing patients? If so, the malpractice takes place within the scope of employment. In contrast, if the worker fails to pay child support and, in turn, the state revokes their professional license, your practice will likely not be held liable.

Impact on an Employer’s Professional License

So is your professional license also in jeopardy if a worker commits malpractice? Generally speaking, professional practice acts only impose disciplinary action on the person who commits the act, not the employer. Therefore, although your practice might be liable (i.e., responsible for payment to a plaintiff), your personal, professional license belongs to you and probably won’t be jeopardized by someone else’s negligent actions. Professional practice acts are both profession-specific and state specific. So if you have any concerns, consult an attorney to help you understand all the risks of hiring workers in your state.

How To Protect Yourself From Workers’ Actions

The first step to protecting yourself and your practice is to ensure that your workers have proper training. Ensuring your workers stay current with the standards of care will reduce the risk that they commit malpractice in the first place. 

The second step is to ensure that you have professional liability insurance. Thanks to the respondeat superior doctrine, your practice may ultimately owe damages for your worker’s negligent actions. However, with adequate professional liability insurance, you won’t have to pay a plaintiff from the practice’s funds.

Professional liability insurance generally covers negligent acts committed while performing professional services. In our physical therapy example, professional insurance would protect against your worker’s negligent act because the worker was providing professional physical therapy services to a patient of your practice. The patient’s injury arose through the worker’s negligence while providing those professional services.

You’ll also need commercial general liability insurance, which protects your practice against negligent acts performed outside of professional practice. For example, say that a staff member mops a treatment room and doesn’t dry or cordon off the area. If someone slips, your practice could be held liable. Without general liability insurance, you would have to foot the bill.

View our related video, “Types of Liability Insurance.”

Third, ensure that you are protected by the corporate veil. The corporate veil creates a separation between your business and you as a person. Such separation protects your personal assets if you face a lawsuit. Sole proprietors, for example, don’t have the protection of the corporate veil. If sued, a sole proprietor could be held personally liable and, thus, would likely have to pay damages from their personal bank account.

Forming a business entity such as a professional limited liability company (PLLC) or a professional corporation (PC) and maintaining the required corporate formalities creates the corporate veil.  If your PLLC or PC were to be sued, only your business entity’s assets would be used to pay damages, not your personal bank account.

An experienced healthcare lawyer, such as the attorneys at Jackson LLP, can guide you on how to protect your practice and your professional license. If you’re a healthcare professional, practice, or business owner in one of the states where we have licensed attorneys, book a free consultation to learn how we can help you.

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.