Text Size

A A A  

Medical Malpractice Payments and Sole Shareholder Employees

Must a medical malpractice payment be reported to the NPDB on behalf of a health care practitioner who owns a sole shareholder corporation (SSC) if the payment is made on behalf of the SSC alone and the claim was based solely on the acts of the SSC's staff, not the acts of the SSC's owner?

No. The NPDB Guidebook states that "[a] payment made for the benefit of a professional corporation or other business entity that consists of only a sole practitioner must be reported if the payment was made by the entity rather than by the sole practitioner out of personal funds." But a payment made by a SSC (or by a sole professional corporation) for the benefit of a practitioner employed by the SSC is reportable on behalf of the named or identified practitioner alone, not the SSC's owner.

In short, when an SSC makes a payment, whether the payment is reportable depends on whether the SSC makes the payment for the benefit of the SSC's owner or for the benefit of another practitioner employed by the SSC.

If a claim is brought against the SSC, and not the practitioner who owns the SSC, any resulting payment may be reportable if it is made for the benefit of an individual. When the SSC is named as the defendant, and not any individual practitioner, payments resulting from the claim may be reportable if:

  • The individual practitioner-owner of the SSC is named, identified, or sufficiently described in the body of the claim and in the settlement or final adjudication
  • An employee of the SSC, who meets the definition of a health care practitioner, is named, identified, or sufficiently described in the body of the claim and in the settlement or final adjudication, or
  • A practitioner (either the owner of the SSC or one of the SSC's employees) is named, identified, or otherwise described in the written complaint or claim and is dismissed from the suit as a condition of the settlement or release. In this instance, the practitioner need not be named or identified in the settlement for the payment to be reportable, so long as the release of the practitioner's name was a condition of the settlement.

Quick Links