Professional Liability Insurance Coverage for Medical Directors Georgia

PRESCRIPTION OF THE MONTH

Charles Malmquist,
CPCU, ARM, AAI

770.912.1201

Paul Tuggle, CPCU

770.913.1208

John Lowden

770.913.1209

Ron Cuen
770.912.1204
Kevin Chojnacki

770.913.1213

Directors and officers are responsible for leading and managing their organizations. Consequently, they are subject to a substantial risk of personal liability for costs of settlements, judgments, and defense associated with lawsuits and other legal proceedings brought against them. The directors are responsible for determining the business strategy and appointing and supervising officers to execute that strategy. Because they appoint and supervise the officers who carry out the day-to-day management of the hospital or practice, the directors serve as a link between the community, shareholders, employees, and management.

In supervising the management of a business, the directors are responsible for:

� establishing major policies and procedures
� evaluating management's performance
� reviewing the financial status of the business
� preparing and submitting information about the business and its financial condition to the community/ stockholders and government regulators
� monitoring and authorizing securities transactions (including public offerings)
� ensuring that the business is in compliance with the myriad of federal and state laws and regulations that govern various aspects of the hospitals activities.

Practices, hospitals, and other businesses are subject to extensive government regulation in their operation. Directors may be held personally liable for loss to the business caused by their failure to ensure that it is in compliance with applicable laws. Directors and officers are fiduciaries of the business they serve. As such, they have a duty to avoid conflicts of interest and to exercise care and diligence in managing the affairs of the business. If their disloyalty or failure to exercise due care causes a loss to the business or the community, the directors and officers may be held personally liable for such loss. (See page 2 for a list of possible allegations against Directors & Officers.)

There is a distinction between liability insurance for directors and officers, and liability insurance for professionals. Liability insurance for directors and officers only insures these people in their role in the corporation, and not as professionals. It is important to carry liability coverage for your professional activities as well as for your position as a director or officer. If you have any questions about your liability as a director or officer, please contact an agent at Potter-Holden at 770-399-6760.

Attention Directors & Officers:
Are you Properly Protected?

August 2007

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The information contained above is intended to be illustrative and discusses general insurance issues. It is not designed to give any specific legal advice pertaining to any specific circumstance. It is not intended as a policy of insurance, binder, or state of coverage or as an amendment, modification or waiver of the terms and conditions of any policy of insurance. In every instance, a policy is the only accepted statement of coverage, and it is important to read and understand your policy. Contact your agent if you have questions regarding your coverage.

All original content 2010 Potter-Holden & Company. No content may be copied, reproduced, published, and/or distributed without the express permission of Potter-Holden & Company.