Minimising risk of litigation
THE letter “Caught in dilemma of medical defence insurance” ( The Star, Sept 4) is referred.
Medical Defence Malaysia Berhad (MDM) is the first local medical defence organisation (MDO) that offered occurrence-based indemnity to Malaysian doctors from 2002 till 2016. Effective January 2017, MDM ceased to offer occurrence-based indemnity in view of the increased litigation rate and the high and increasing court awards. MDM now offers claims-made indemnity.
Indemnity provided by MDM is strictly for the doctor as dictated by the concept that a medical practitioner practised under a contract of service in his capacity as an independent contractor with a private/semi-government hospital. The application of the principle of “vicarious liability” to medical practitioners practising under a contract of service was made on March 29 this year by the Court of Appeal. The decision is subject to appeal at the Federal Court and we eagerly await the outcome.
Nevertheless, this ruling has led to insurers of private hospitals seeking contribution and indemnity from the medical practitioners for any award made against them vicariously due to an act of a medical practitioner.
As this was not covered under the occurrence-based policy, MDM and insurance companies will be prepared to offer “vicarious liability” indemnity for an additional subscription or premium if the doctor wishes to have such indemnity.
The doctors and hospitals should jointly undertake risk management through the Medical and Dental Advisory Committee and Credentialling Committee to manage and minimise the risk of litigation.
The hospital industry is a business and practising doctors are treating it as a business and making it profit-orientated! Clear policies on quality healthcare ought to be drawn up by hospitals with consultation with the doctors.
Medical practitioners under indemnity cover are alerted to Lembaga Hasil Dalam Negeri Public Ruling No 3/2009, 7.1, which states that “when a professional has been allowed deduction for a professional indemnity insurance paid, any proceeds on the policy received in connection with P.I.I will be subjected to tax.
“Proceeds are taxed regardless of whether the insurance company makes payment to the professional or pays compensation directly to the claimant.”
Hence, court awards given to the plaintiff are taxable as benefits paid out in favour of the insured medical practitioner.
MDM and insurance companies are also ready to offer such indemnity for this risk at an additional subscription/ premium payment.
Ultimately, medical practitioners will get what they have paid for and ought to review their product and terms of the policy before signing up and paying the premium.
DR EDDIE SOO Executive director, MDM Berhad