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Seven Things To Know When You Receive A Notice Of Investigation From The Department Of Health

Medical Malpractice Settlement

(Note: This article was originally published in The Stethoscope, Summer 2004)

by George F. Indest III, J.D., M.P.A., LL.M.
and Jason L. Harr, J.D., M.P.A.

STOP! Before you agree to a settlement in your medical malpractice suit, read this article. During your professional career you may have already experienced the following scenario. A former patient who suffered an unfortunate, but known, complication following a surgical procedure brings a claim for medical malpractice against you. Pursuant to the terms of your professional liability insurance policy, you notify your insurance company of this claim and it assigns an attorney to defend your case.

During the litigation process you participate in a settlement conference or mediation with the claimant/plaintiff (your former patient) and the plaintiff’s attorney. Also present during the mediation is your attorney and often a representative from your insurance company. The representative from the insurance company has the ultimate authority to settle your case, with or without your approval (according to the wording of most insurance policies written in Florida). Both the attorney assigned to defend you and the insurance company representative recommend settling the case.

Despite having final authority to settle the malpractice claim, the insurance company representative asks your opinion regarding their desire to settle the claim. Since the settlement of a case eliminates all risk and brings the case to a close, you agree that the case should be settled. You then feel relieved that this ordeal is finally over. No longer are you or your insurance company concerned with the potential for a large jury verdict against you.

However, there are several significant potential legal ramifications of a settlement of which you may not be aware and which you should consider before agreeing to settle a medical mal-practice claim. Some of these ramifications may be overlooked during the litigation and mediation process. A settlement of a medical malpractice claim could possibly result in action that would lead to the revocation of or other disciplinary action against your medical license. Even though the insurance company may decide to settle the case despite your objections, most will at least listen to you and attempt to follow your request if it is reasonable.

Before you agree to settle a medical malpractice claim, however, consider the following.

National Practitioner Database

Title IV of Public Law 99-660, the Health Care Quality Improvement Act of 1986, esta-blished the National Practitioner Data Bank (NPDB). This law has been codified and can found in Title 42, United States Code (U.S.C.), Section 11101. The NPDB was a creation of the United States Congress so there would exist a national information clearinghouse for reports of professional actions taken against health care providers, predominantly physicians. Information reported to the NPDB includes reports of medical malpractice actions (settlements or judgments paid), clinical privilege actions, licensure actions and Medicaid/Medicare exclusions. The NPDB provides a resource to state licensing boards to use when investigating a health care provider seeking a new license or the renewal of an existing license. The NPDB is also checked by a hospital when you apply for clinical privileges or upon renewal of clinical privileges. HMOs, managed care plans, and insurance companies also routinely check the NPDB when you apply to be on their panel of approved providers. The NPDB was created, in part, to prevent incompetent physicians from crossing state lines and obtaining a license or hospital privileges in other states gaining without disclosing past adverse actions.

Many physicians are not familiar with the potential ramifications of a report to the NPDB. A medical malpractice settlement or judgment paid by an insurance company is reported to the NPDB regardless of whether the malpractice case against the physician was meritorious. In the case of a settlement, even if the terms of the settlement provide no admission of liability by the physician, the settlement is still reported to the NPDB. The monetary terms of the settlement as well as the facts of the case will be reported to the NPDB. The Federal Regulations on NPDB reporting require that the report of a settlement to the NPDB is simultaneously reported by the payer to the State Board of Medicine or other state licensing authority. These Federal Regulations can be located at Title 45 Code of Federal Regulations (C.F.R.), Part 60. Upon receipt of this information the Florida Department of Health will usually commence an investigation against the physician involved in the medical malpractice case.

Department of Health, Board of Medicine

The State of Florida Department of Health (of which the Board of Medicine is a part) conducts its own separate investigation of a physician following receipt of a report of the settlement of a medical malpractice case. The Board of Medicine has the statutory authority to discipline physicians. Section 458.331, of the Florida Statutes discusses grounds for disciplinary action by the Board of Medicine. According to section 458.331(1)(t) “repeated malpractice” represents grounds for disciplinary action against the medical license of a physician. The statute defines repeated malpractice as three or more claims for medical malpractice within the previous five year period resulting in indemnities being paid in excess of $50,000 each to the claimant as the result of a judgment or settlement which involved negligent conduct by the physician.

Consequently, the Board of Medicine can take action against your professional license merely on the basis that you have settled three medical malpractice cases within five years. As a physician you must consider this potentially harmful consequence before agreeing to settle a medical malpractice suit.

Another provision of Florida’s Medical Practice Act, Section 458.331(1)(v), Florida Statutes, would also allow disciplinary action to be taken in the event of a single case if, upon review of the report of settlement (or judgment) if the Board of Medicine determines the physician has practiced incompetently or breached prevailing standards of care. Of course, the report would be investigated, reviewed, and due process of law would have to be followed before this could happen.

Additionally, there are subsections of Section 456.072, Florida Statutes, a law which applies to all licensed health care professionals, which the Department of Health may decide you violated based upon its review of the report of even a single settlement or judgment. These may include, for example: practicing or performing professional responsibilities you are not competent to perform (456.072(1)(o)); leaving a foreign body in a patient (456.072(1)(bb)); or performing a procedure on the wrong patient or on the wrong site (456.072(1)(aa)). Any of these may also result in disciplinary action against your medical license.

The Board of Medicine has access to the NPDB. In fact, even if your insurance company fails to report the payment of a judgment or settlement to the state licensing authority, in this case, the Florida Department of Health (acting for the Board of Medicine), the NPDB also reports the matter to the state licensing authority. As a result, the investigator for the Board of Medicine assigned to your case will be privy to information through the NPDB, regarding any previous adverse actions against your medical license. If you have two previous settlements in excess of $50,000 each in the past five years, a third settlement potentially jeopardizes your medical license. At the very least, you can expect to have an investigation which may result in disciplinary action. Ultimately, the Board of Medicine could decide based upon the facts surrounding the malpractice claims, to revoke your medical license.

One Possible Solution — Retain Your Own Attorney

As the insured, most physicians have no control over the attorney assigned to defend their malpractice case by their insurance company. While your professional liability insurance company will not usually pay for your own private counsel, nevertheless, you should consider retaining an attorney to act as your personal counsel who has experience dealing with health law issues to oversee the entire case and to protect your personal interests. A health care attorney will usually have experience dealing with investigators, the Department of Health, and the Board of Medicine, and will most likely understand the potential ramifications of settling a medical malpractice claim. In addition, a health care attorney will know the proper procedures for challenging a report to the NPDB if an incorrect or improper report is filed.

Hiring your own attorney to oversee the litigation process has several advantages. Most importantly, since you are the one hiring the attorney, that attorney represents your interests only, and not those of your professional liability carrier. He will not be as concerned with broader issues that the insurance company may feel threatens its interests or the interests of others of its insureds. This attorney will advise you of the potential ramifications to your professional license, which should involve discussion regarding possible reporting to the NPDB. Additionally, he may be able to assist in fashioning settlement remedies or other resolutions of the litigation which would be more favorable to you.

Settlement Considerations

Before agreeing to a settlement you should consider the following questions:

  • Exposure. Was there a deviation from an acceptable standard of care? If so, was that deviation the cause of the alleged injury?
  • Chances at Trial. In light of the facts of the case, what are your chances of prevailing at trial?
  • Previous Settlements. Have you settled any previous medical malpractice cases? If so, were any of those cases settled within the past five years?
  • Other Previous Actions. Have you been previously investigated by the Board of Medicine? If so, did it take any action against your professional license?
  • If a Settlement is Proposed. Will a report on you be made to the NPDB? Exactly what will it state? Can you and your attorney help fashion the wording? Are there other settlement options available? Will this be your third settlement / judgment over $50,000 in the past five years?

Your attorney should provide insight and information in response to these questions. A physician does not want to risk jeopardizing his or her license by agreeing that a medical malpractice case should be settled without fully understanding the potential ramifications of the settlement.



George F. Indest III, is the founder and managing partner of The Health Law Firm based in Altamonte Springs and Orlando, Florida. Mr. Indest is board certified by the Florida Bar in the legal speciality of Health Law. He is also board certified as a health care risk manager by the American Board of Risk Management, Inc. He is a member of the American Medical Association’s Doctor’s Advisory Network and serves as General Counsel for the Florida Chiropractic Physicians Association. His practice encompasses all aspects of business, corporate, transactional, regulatory and administrative health law practice, and he represents physicians, nurses, hospitals, home health agencies, long term care facilities and other health care providers. His practice also includes the litigation of professional licensing cases and business litigation, as well as Medicare and Medicaid audit and defense work. He was selected as the “Best Health Care Attorney in Orlando” by Florida Medical Business for 2000.

Mr. Indest served as in-house counsel at one of the Navy’s largest teaching hospitals and was also in charge of the legal and medical risk management programs in the Navy’s largest regional health care system which consisted of twenty-seven major hospitals and treatment facilities. He is on the Executive Council of the Health Law Section of the Florida Bar and has served as Chair of the Medical/Legal Committee of the Orange County Bar Association. Mr. Indest received his BA and JD degree, cum laude, from Tulane University and also was awarded an LL.M. degree, with highest honors, from the National Law Center, George Washington University, Washington, D.C., where his course emphasis was in health care law (legal medicine). He is a member of the state bars of Florida, Louisiana and the District of Columbia. Mr. Indest also serves on the Executive Council of the Health Law Section of the Florida Bar and is on the Board of Directors of a nonprofit charity nursing home and a number of other charitable organizations.

Mr. Indest lectures and writes frequently on health care legal issues having a number of publications to his credit. He is also an adjunct professor of health law for the St. Francis University Graduate School, Southern Adventist University Graduate School and for Barry University School of Law.


Jason L. Harr is an attorney whose practice encompasses all aspects of health law emphasizing health care litigation but including business, corporate, transactional work and medical malpractice defense.

Mr. Harr was born in Brussels, Belgium. He received his Bachelor of Arts degree from the Tulane University of Louisiana, in 1994. He earned his Masters Degree in Public Administration from the University of Miami, in 1996. He received his Juris Doctor from Nova Southeastern University, the Shepard Broad Law Center, in 1999. Mr. Harr is admitted to practice in all Florida state courts, as well as the United States District Courts for the Middle District and Northern District of Florida.

Mr. Harr began his legal career at a medical malpractice defense litigation law firm in Daytona Beach, Florida. He worked in all areas of insurance defense including both medical malpractice and workers compensation. Mr. Harr is a member of the American Bar Association, The Florida Bar, the Defense Research Institute, Volusia County Bar Association, The American Association of Nurse Attorneys (TAANA), and the American Health Lawyers Association (AHLA).