Colorado court allows suit against physician corporation

Some say the decision is another example of state courts eroding tort reform efforts.

By Tanya Albert, AMNews staff. May 27, 2002.

For decades, physician-owned professional medical corporations in Colorado argued that as a corporation they should not be held liable in medical malpractice lawsuits, and the courts agreed.

But in May, the Colorado Supreme Court rejected the traditional argument that corporations can't be sued because they don't practice medicine. Instead, the court said corporations that Colorado physicians form can be sued for employees' actions.

The ruling subjects Colorado physician corporations to the same rules that have applied to such entities in many other states. And law, accounting and other professional firms always have been held responsible for their employees' actions.

"We don't think people should panic," said George Dikeou, executive vice president and general counsel for Copic Insurance, which represents more than 75% of Colorado's physicians. "We are looking at it and will have a letter going out."

Plaintiffs lawyers say the decision is positive for doctors because it gives them an extra layer of insurance protection in medical malpractice cases.

If an individual physician's insurance limit doesn't cover a medical malpractice award, his or her personal assets could be taken. But if the corporation is also sued, its insurance could cover the additional amount, keeping the doctor's assets safe, said Natalie Brown, one of the attorneys who represented the family that sued Pediatric Neurosurgery, P.C., in Denver. Two physicians, both now retired, owned the corporation.

"I've never understood why a physician would put up with paying for coverage and not get anything in return," she said. "An insurance company could collect premiums and move to dismiss the corporation, denying an extra layer of coverage." [...]