Physicians who take on medical director roles often assume legal and financial risks they don’t fully understand, according to an Oct. 15 Medscape report.
Here are eight things to know:
1. The title “medical director” has no legal definition, said Michael Byrd, JD, a healthcare attorney with Dallas-based ByrdAdatto. The role can be anything from clinical oversight within the chain of patient care to purely administrative work, or a mix of both. Mr. Byrd said many physicians sign medical director contracts without reading them.
2. Physicians often don’t see the liability that comes with the role, said Jeanne Varner Powell, director of risk management at Phoenix-based malpractice insurer Mutual Insurance Company of Arizona. She said many are surprised when lawsuits allege they were responsible for a facility’s policies and procedures and for making sure staff followed them.
3. The consequences can include losing the job, losing a medical license or facing criminal charges. In Texas, anesthesiologist Michael Gallagher, MD, was the medical director of a medical spa that offered IV infusions. In 2023, a 47-year-old patient died after the spa’s unlicensed owner gave her an infusion, and Dr. Gallagher was about 100 miles away at the time. He was charged with criminally negligent homicide, failure to supervise and alleged delivery of a dangerous drug. The owner was also charged, and both pleaded not guilty. The Texas Medical Board temporarily restricted Dr. Gallagher’s license in September, and pretrial hearings are set for later this month. The case led to House Bill 3749, known as Jenifer’s CQ Law, which regulates elective IV therapy.
4. Medical spas, wellness centers and IV clinics are especially risky because they rely on the medical director’s license to practice medicine, Mr. Byrd said. That leaves the physician ultimately responsible for anything that goes wrong, even without treating patients directly. Nursing homes and other long-term care facilities are different: they are heavily regulated and spell out medical director duties.
5. The administrative duties are mandatory. They include writing policies and procedures and making sure staff are trained to follow them, Ms. Varner Powell said. At facilities that serve Medicare patients, medical directors must also take part in the Quality Assessment and Assurance Committees and facility assessments that CMS requires. Physicians can be found negligent if they don’t carry out these duties.
6. Hospital medical director roles are usually leadership positions outside the chain of care, Mr. Byrd said. There, the main risk comes from federal laws that govern how physicians are paid. Medical directorships are one legal way hospitals can pay specialists, so physicians have to do the work and log the time they spend on it.
7. Standard malpractice policies often exclude administrative duties, Ms. Varner Powell said. She advises physicians to ask the facility whether it provides coverage, and if it doesn’t, to check with their own carrier. An errors and omissions policy may be needed to cover management mistakes, as opposed to patient care mistakes.
8. Before signing, physicians should:
- Confirm whether the role is owner, supervisor, collaborator or advisor, and find out exactly what any “supervisor” language covers.
- Have a healthcare attorney, not a general business attorney, review the contract. Mr. Byrd described a North Carolina physician who ended up under investigation for aiding and abetting the unauthorized practice of medicine. Neither she nor her business attorney knew that state law required the medical spa to be owned by a physician.
- Get a realistic estimate of the weekly time commitment. Some physicians hold several directorships and spend little time at each.
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