Excerpted from The Biggest Legal Mistakes Physicians Make: And How to Avoid Them
Edited by Steven Babitsky, Esq. and James J. Mangraviti, Esq. (©2005 SEAK, Inc.)

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Executive Summary

Unfortunately, many physicians facing disciplinary action before their respective state licensing boards fail to recognize that actual discipline is only one small step in the overall disciplinary process. Certain violations will be considered of such a nature as to result in immediate or long-term collateral effects on a physician’s health care provider status, staff privileges, other staff memberships, disciplinary status with other states, and practice. While certain violations may not cause the physician to suffer severe or long-term consequences, others can cause disruptions of the physician’s practice or changes in the nature and structure of the practice due to the collateral effects of the disciplinary event. Even the existence of an investigation may cause further action by these other entities. The key to surviving a disciplinary event is to know the full ramifications of license discipline and, where available, take proactive steps to minimize the effect of any discipline that might be imposed. A failure to recognize and appreciate the effect discipline can have on the physician’s practice can have severe repercussions for the physician and his or her livelihood.


Mistake 1        Maintaining Multiple State Licenses

Often, physicians retain a license to practice medicine in multiple jurisdictions or forget that at one time they held a license in another state or believe that it expired long ago through nonrenewal. Also, licenses in other states are often held in an inactive status or are simply still present despite years of nonrenewal. Many times physicians retain these multiple state licenses even though they have no intention to practice in these states.


When a disciplinary event occurs in one state, a physician with multiple licenses often finds that he or she will be disciplined not only by the state in which the event occurred, but also by one or more of the other states in which the physician holds or once held a license. This is true even if the license in the other state had not been renewed for several years.


Action Step     Physicians should check with all the states in which they have held a license and know the status of each license they have held. They should also know whether each state considers the license to have been permanently issued. Physicians should assess whether it is in their best interest to maintain multiple state licenses and where possible, they should consider whether it is in their best interest to relinquish unnecessary licenses before an investigation begins. If prompted to consider the issue by a pending proceeding in one state, they should consult with an attorney on whether relinquishment of other state licenses will be in their best interest.


Mistake 2        Failing to Report Discipline by State Licensing Boards

After a disciplinary event has occurred, physicians often forget that the disciplinary event may need to be reported to the various certification boards, entities, hospitals, insurance plans, and organizations to which they belong. They also fail to recognize that these entities and organizations often take additional adverse or corrective action for their having been disciplined by their respective state licensing boards.


Upon receiving an independent report of the disciplinary event from the state licensing board, these entities often seek to take adverse or corrective action against the physician for not only having been disciplined by his or her state licensing board, but also for failing to have reported the discipline or the earlier disciplinary investigation to the entity. In turn, the adverse action or corrective action taken against the physician by these entities may itself be a basis for additional state board action against the physician or additional action by the other entities and organizations to which the physician belongs.


Action Step     Physicians should know the membership and reporting requirements for all of the various entities to which they belong. If a physician finds himself or herself under investigation for possible disciplinary action, the physician should gather together all of the bylaws, contracts, and rules of the entities and organizations of which the physician is a member and determine what must be reported and when it must be reported.


If disciplinary action is possible or is initiated, the physician should seek counsel on how to handle the aftermath of the disciplinary event and should confer with counsel on the possible penalties or structure of any order imposing discipline to attempt to minimize the penalties and collateral consequences of the discipline taken by the other entities of which the physician is a member.

Mistake 3        Delegating Responsibility for Reporting of Disciplinary Events Without Proper Follow-up or Supervision

Often, a physician will delegate to his or her office staff or to the credentialing staff of the practice where the physician is employed the responsibility for reporting to other entities pending investigations and disciplinary events concerning the physician’s license and then put the whole matter out of his or her mind. Many times, the office staff or credentialing staff of the practice will overlook the requirements of other state licensing bodies, professional organizations, insurance providers, malpractice carriers, medical staff organizations, and other entities and fail to report pending investigations or disciplinary events or fail to timely do so in accordance with the bylaws and requirements of the various entities and organizations to which the physician belongs. Also, if any of these entities or organizations take an interest in the disciplinary event, the staff will fail to appreciate the need to update other entities or organizations of the action taken, which in turn causes a “snowball” effect.


Action Step     Physicians should take a more active role in ensuring that disciplinary events are properly and promptly reported to other entities. If disciplined by one of their respective state licensing boards, physicians should personally review the reporting requirements for all entities or organizations to which they belong. If a physician delegates responsibility for reporting disciplinary events, he or she should follow up with the staff to be sure the reports were made timely. In addition, the physician should review all reports sent by the staff before they are forwarded to the various entities to which he or she belongs, correcting for any errors or inconsistencies in the reports. Once a report is made, the physician should use the same report for all other entities.

Mistake 4        Failing to Recognize That Disciplinary Events May Be Reported to National Data Banks

All public action taken against a physician may be reported to the Healthcare Integrity Protection Data Bank, one of the three main national data banks to which physician disciplinary actions are reported. The other two databanks are the Federation of State Medical Boards and the National Practitioner Data Bank (a separate component of the Healthcare Integrity Protection Data Bank). Each of these databanks has specific requirements for what action must be reported. In turn, these databanks are queried by many health care organizations, state licensing boards, malpractice insurance plans, and credentialing organizations.


If disciplinary action has been taken against a physician, he or she may fail to recognize that the action will be reported to the various databanks and from the databanks, reported to other state licensing boards or organizations to which the physician belongs.


Action Step     Physicians have the right to conduct a self-inquiry to determine what information has been reported to the various national databanks and should query the databanks periodically, once every six months, to determine whether derogatory information has been reported. If permitted to submit a statement of explanation to the databank, physicians should prepare a concise statement explaining the disciplinary event. When discipline is taken and notice is given to the physician of the report made to the national data bank, the physician should review the report for accuracy, challenge any inaccuracy in the report, and prepare a concise statement for inclusion with any report made to the data bank.


Mistake 5        Failing to Explore Alternate Penalties When Facing Disciplinary Action

Certain disciplinary penalties (e.g., suspension, revocation, probation, or any encumbrances placed on the physician’s ability to practice medicine) can result in exclusion, decertification, or sanction by certification boards, insurance plans, hospital staff organizations, federal- and state-funded programs, and the Drug Enforcement Administration. Some penalties may actually prevent the physician from supervising certain physician extenders or from working in certain capacities or for certain providers.


Action Step     Physicians facing disciplinary action should confer with counsel on exploring alternate penalties in any disciplinary event. They should obtain help in dealing with disciplinary events and seek to minimize the effect discipline can have on their membership in other organizations and their practices. If alternate penalties are not available, physicians should assess their practices and their professional memberships and make plans for possible additional action by certification boards, insurance plans, hospital staff organizations, federal and state programs, and the Drug Enforcement Administration.

Whenever possible, physicians should seek to be proactive in addressing the possible collateral action by the organizations to which they belong and seek specific guidance on dealing with each organization and the changes that might need to be made to their practice.


Mistake 6        Failing to Respond Truthfully When Questioned About Pending Disciplinary Actions

Regardless of the status of a physician’s disciplinary case (confidential or public), in today’s health care climate, many entities, insurance providers, and other organizations will ask physicians whether they have been the subject of an investigation or a disciplinary action by a licensing authority, board, or other regulatory body. Typical questions include “Are you the subject of an investigation in any jurisdiction, state, or county or have any disciplinary actions been initiated or are any pending against you?” “Have you ever been involved in any disciplinary action by any hospital, medical society, or state licensing agency?” and “Have you ever had any adverse action taken or is any adverse action pending with respect to … a state license?” These questions render any confidentiality afforded to the investigative process by the state licensing board essentially null and void. The entity making the request will expect truthful responses to its questions.


A failure to truthfully respond to the questions could result in further discipline by state licensing boards or other sanctions (e.g., exclusion from participation in insurance plans, delay in admission to an entity, delay in issuance of a new license, or a delay in the renewal of a license with a state licensing board).


Action Step     If in doubt about how to approach answering a question posed about pending investigations or disciplinary events, physicians should consult with legal counsel on the best way to approach answering the question. Physicians should always ensure that their answers to questions about pending investigations or disciplinary events are considered truthful.


If an event is considered confidential, physicians should ensure that any disclosure of the event in response to a question contains a statement that they are not waiving their right to confidentiality by making the disclosure to the entity asking the question.


Mistake 7        Approaching License Discipline Without the Benefit of Counsel

Many physicians have never faced a disciplinary event and may not understand the nuances of a disciplinary proceeding. They may not fully appreciate the ramifications of the disciplinary event. Many physicians believe they can respond to a notice of investigation without the benefit of the assistance of competent counsel. Often, they believe that the event can be explained, that the physicians on the state licensing board will understand their point, and that they will not face adverse consequences as a result of the notice of investigation or the disciplinary event if they respond rather than having competent counsel assist them.

Action Step     Whenever a physician faces disciplinary action, whether by a state licensing board or other entity, the physician should obtain the advice of competent counsel and the physician should always evaluate the effect of the disciplinary event on his or her practice and membership in other organizations.


Mistake 8        Not Obtaining Coverage for the Practice When a Disciplinary Event Disqualifies the Physician From Supervising Physician Extenders

Under the requirements of some state licensing boards, the placement of a physician on probation or suspension will affect the ability of that physician to supervise physician extenders, such as physician assistants or nurse practitioners. Often, as the investigation is progressing, physicians will not make plans for the possibility that they may be disqualified from supervising physician extenders during the period of discipline or will continue to supervise physician extenders during the period of discipline in violation of their state’s requirements.


Action Step     Physicians who are facing possible disciplinary action should evaluate their practice to determine whether coverage may be necessary to ensure that physician extenders are properly supervised during the period of discipline and that the physicians are acting in conformity with state requirements during the period of discipline.


Mistake 9        Failing to Know the Requirements of Employment

Having had discipline imposed against a physician’s license may also exclude a physician from service as a medical director for a clinic or other entity during the period that disciplinary conditions were imposed or subsequently. Some states require a free and unencumbered license as a precondition for the physician to serve as a medical director and/or to be employed by a medical clinic.


Action Step     Physicians should be aware of any preconditions for their continued employment in various settings. They should seek counsel if they become the subject of discipline, including planning for the effect of any discipline on their employment status.


Mistake 10      Failing to Appreciate the Importance of Maintaining Board Certification

As with other professional organizations, many certification boards make routine inquiries as to a physician’s license status. Many also require that physicians self-report any problems or discipline. Physicians could see discipline, exclusion, or other sanction by their certification boards as a result of the state disciplinary action. Often, if the action taken by the state board results in impairment of the physician’s ability to practice free and unencumbered, the certification boards may act to decertify the physician’s status with their organizations. This typically happens where the action is one of suspension or restriction of the license or a privilege associated with the license, such as the ability to prescribe controlled substances, but it can also be based on other considerations.


Loss of board certification can affect medical staff memberships and status in participating insurance plans or cause increases in malpractice insurance premiums or termination of coverage.


Action Step     Physicians should know the requirements of their certification boards and be proactive whenever they face discipline by a state licensing board. 


Physicians should always consider the potential effect of a disciplinary proceeding on their professional license and practice. They should seek ways to minimize that effect and be aware of the interrelationship of discipline to employment, malpractice insurance premiums, staff and other professional memberships, and insurance provider status.

Written by:

Jon M. Pellett, Esq.

Peer reviewed by:

Michael Blazicek, Esq.

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