What Private Practices Need to Know About Administrative Malpractice

Healthcare professionals know all too well that medical mistakes can happen at any time.

For this reason, physicians, nurses, and other medical professionals carry medical malpractice insurance for protection.

Yet, some health care providers don’t realize that malpractice claims often arise from clerical mistakes. These administrative errors can occur before or after the physician/patient interaction (e.g., at the front desk). Still, other mistakes can happen behind the scenes by staff members who may never even lay eyes on the patient.

Litigation from these mistakes may catch you off guard because medical malpractice insurance won’t cover administrative malpractice claims.

If you own a private practice or are a partner in a group practice, here’s what you need to know about administrative malpractice.


What Is Administrative Malpractice?

Administrative malpractice refers to a medical error caused by a member of your administrative staff instead of a physician, nurse, or other licensed health care provider.

These errors can come from any staff member, including front desk administrators, billing and coding techs, or even by transcribers that create records of a physician’s dictated notes.

According to the National Practitioner Data Bank, there were more than 12,400 medical malpractice cases every year for the decade spanning 2009 to 2018.

Common reasons why patients file malpractice claims include:

  • Misdiagnosis
  • Surgical errors
  • Anesthesia errors
  • Medication errors

It’s easy to see how all the above instances could potentially be affected by clerical staff at different points throughout a patient’s care.

No matter what kind of medical care or health care services you provide, practice owners need to take precautions to protect themselves (and their practices) from administrative malpractice claims.

Wondering what to expect from medical malpractice payouts? The majority of malpractice lawsuits settle outside of court. Learn more here.

Different Types of Administrative Malpractice

Person pouring pills out of bottle into hand

What type of specific errors could be cause for an administrative malpractice claim?

The following administrative mistakes can lead to claims of medical negligence or personal injury.

Clerical Errors at the Time of Patient Intake

At the time of patient intake, it is crucial that your front desk staff collects the pertinent information and a thorough medical record.

This includes obtaining:

  • Complete medical history
  • List of current medications that the patient is on
  • Any symptoms they’re experiencing
  • History of allergic reactions to medications

If a front desk administrator fails to collect all the relevant information — or inputs that information incorrectly — this could lead to serious injuries for the patient.

The physician takes this information into consideration during the decision making process and when ordering tests, providing medical treatment, and prescribing medications.

Physicians must adhere to a standard of care for every patient they see, and that starts with having the correct information about the patient.

Patient intake errors can be the root of medical malpractice claims and even lead to injuries or irreversible medical mistakes.

Mislabeled or Lost Test Results

Patients rely on their physicians to order tests when they need to diagnose a condition.

Physicians rely on those test results to decide on next steps and treatment options for their patients.

If those tests or results are lost or mislabeled, the patient may not get the follow-up care they need.

It may seem as though lost test results are easily correctable, as the patient can simply retake the test and wait to receive new results. But depending on the patient’s condition and circumstances, an extended waiting period can adversely affect their condition (e.g. starting a necessary treatment later when it could have begun sooner).

Mislabeled test results can be even more problematic.

Physicians will rely on the results from initial tests in order to determine the need for additional tests, treatments, and medical procedures.

If those test results are incorrect, the consequences can be lethal.

For these reasons, administrators and staff members who handle patient specimens and test results must do so with great attention to detail.

Medication Errors

Errors in medication are one of the leading causes of negligence claims and malpractice suits.

This could happen because a patient:

  • Was prescribed the wrong medication
  • Received medication that isn’t safe in combination with other medications they’re taking
  • Was told the wrong dosage and instructed to take too much or too little of a particular drug

Medication errors can easily happen at the prescribing level in private practices. But there can be errors in dispensing medications as well.

From busy pharmacies to crowded emergency rooms, doling out the wrong dosage or medication can happen if the proper precautions are not taken.

Incorrect Coding and Billing

Not sure how a billing error could lead to an administrative malpractice claim?

There are two ways in which a simple coding mistake can be detrimental to a patient’s health.

As all healthcare professionals know, every service rendered to a patient has a specific CPT code, so insurance companies, hospitals, and medical practices know how much to bill a patient for receiving that service.

Another thing most of us know?

Insurance companies aren’t in the business of paying for expensive medical treatments that they don’t deem necessary.

A simple error in billing and coding could cause an insurance company to reject a claim. And if a patient sees their claim denied, they might decide not to seek further treatment for fear that their insurance company won’t pay for it.

Coding errors can also cause patients to see billing charges for services that they did not receive.

Trying to get a billing error reversed by an insurance company can take hours of correspondence, documentation, and phone calls. If you put patients in a position to have to fight with their insurance company over a bill, they may hesitate to seek medical attention in the future.

Errors in Note Dictation

For physicians with a busy practice, it’s impossible to remember every patient and every patient interaction. When physicians dictate notes, those transcriptions become a guideline for the next time they see that patient.

If those notes are inaccurate, the patient may not get the follow-up care they deserve. This can have serious ramifications for the patient and put you in a prime position for a malpractice lawsuit.

Related reading: The Definitive Guide to wRVU Physician Compensation


How to Protect Your Practice (and Yourself) Against Administrative Malpractice

Hands typing on a laptop with a stethoscope next to the computer

The threat of administrative malpractice is real. Now that you know how many ways it can happen, let’s discuss the steps you can take to protect yourself and your practice.

Here are three ways you can reduce the likelihood of being sued for administrative malpractice and protect your assets in the event that a patient decides to file a claim.

Get Malpractice Insurance That Covers Your Business Entity

Malpractice insurance, or professional liability insurance, is available to all physicians, nurses, and other clinical healthcare workers.

But it is not available for administrators or members of your non-clinical staff.

To protect your private practice against administrative malpractice claims, you’ll need liability insurance that covers your business entity as a whole.

Different insurers have different names for this, such as:

  1. Business entity coverage
  2. Entity liability insurance
  3. Entity malpractice insurance

Some insurance companies allow you to add business entity coverage to your professional liability coverage, while others require that you purchase entity malpractice insurance as a separate policy.

Entity liability insurance covers your business entity as a whole. If your name is on the door, your practice could be named in a lawsuit. Yes — regardless of which physician, nurse, or administrator on staff made the malpractice mistake.

In some cases, malpractice suits may not name a specific physician, but rather the practice itself. Without business entity insurance, you could have to pay out of pocket for mistakes made by unlicensed personnel who are not eligible to carry a malpractice insurance policy.

The best way to think about this is to consider your practice a separate physician in itself. It needs its own malpractice coverage.

Like physician malpractice insurance policies, entity liability insurance also helps shoulder the costs of attorney’s fees.

At the very least, medical malpractice cases will require you to seek legal advice. Even if you settle and avoid medical malpractice litigation in court, you’ll still need an experienced law firm to prepare your defense and negotiate the terms of your settlement.

Without entity liability insurance, you’ll have to pay for those costs (as well as any damages that a jury awards) on your own.

Improve Practice Management

Protect against administrative malpractice lawsuits by having reliable practice management software. (Plus a staff that’s fully trained on how to create and maintain electronic health records.)

A practice management system can help your administrators streamline every aspect of how the practice operates. This includes everything from scheduling appointments to maintaining patient records to billing and reporting on accounts receivables and reimbursed claims.

But it’s the way your staff maintains electronic health records (EHRs) that can significantly impact patient malpractice claims.

Everyone on your staff that handles EHRs needs to do so with extreme attention to detail. Administrative assistants must enter the correct information for the right patient into the record at all times. If someone on your administrative staff records the wrong symptoms or medications on a patient’s EHR, it could have long-lasting consequences for the patient.

Be sure that your staff knows the importance of updating and maintaining patient EHRs, particularly when transferring data from paper records into an electronic records system.

Improve Training

What else can you do besides holding entity insurance and having a reliable practice management system in place?

It’s also crucial that you have a well-trained staff that understands how a simple clerical mistake can turn into a malpractice suit.

Your front desk receptionist or medical biller might not realize how a simple mistake on paper or in their computer system can lead to malpractice. Discuss the severity of this situation with everyone on your staff, and do so with every new employee you add to your team.

Even staff members who don’t have face-to-face contact with patients need to understand that their work can impact a patient’s health. Knowing this information can inspire administrators to be more conscientious of their work and significantly deter any clerical mistakes going forward.

Don’t stop there …

Provide your staff with ongoing training to use the best administrative practices and know what common errors not to make.

This is especially important for medical coders.

Why?

Because CPT codes can change from year to year.

Be sure that your medical billers have the most current codebooks. Or they can use the AMA website, which provides an up-to-date list of existing CPT codes and newly added codes.

See also: A Physician’s Guide to Protection from Medical Liabilities


Uterine ruptures during childbirth, wrong-site surgery, blood clots from too much anesthesia, and other such injuries will surely lead to a medical malpractice claim.

But you don’t need to make a major mistake to be sued for malpractice.

A simple error in billing or testing can be all the causation a good law firm needs to prove that you owe monetary damages to the claimant.

Protect your practice from administrative malpractice claims by having sound systems in place, a well-trained staff, and business entity insurance.

Should an administrative error occur, you can fall back on your insurance company to pay the damages rather than having to pay them out of pocket or run the risk of having to close your practice altogether.

For more information on business entity insurance for private practice physicians, contact Physicians Thrive now.

Subscribe to our email newsletter for expert tips about finances, insurance, employment contracts, and more!

About the Author