Under the National Practitioner Data Bank (NPDB), any “entity” that makes a settlement or verdict payment on behalf of a health care practitioner in a medical malpractice claim must report that payment and disclose the details to the NPDB. This means that if the practitioner’s insurance carrier or another entity pays a settlement or verdict on behalf of the practitioner, it must be reported. In some instances, however, there may be valid benefits for a practitioner to settle a matter without filing a report to the NPDB. In those cases, a few exceptions to the reporting requirements may apply. [Payments made on behalf of an entity such as a hospital or a dental practice do not generally have to be reported.]
Exceptions to the Rule
Payments made on behalf of an individual practitioner are required to be reported when the practitioner remained a party to the lawsuit at the time of the settlement. If the practitioner was dismissed from the case prior to any settlement, then the payment may not need to be reported on behalf of that practitioner. However, there are very specific requirements for this exception to apply: (1) the practitioner’s dismissal cannot be a condition of the settlement, and (2) the individual practitioner’s name cannot appear on the release, and the release cannot identify or describe the individual in any way in lieu of identification by name.
That second requirement can present great risk to the individual practitioner. Without a valid and proper release, there’s always a risk that a subsequent lawsuit could be brought against this now-unnamed individual practitioner. Thus, if this exception is employed, the terms and agreement of the parties to a dismissal with prejudice must be carefully worded to defeat the risk of later litigation. Equally important, the practitioner’s dismissal must be well prior to and completely separate and distinct from any dismissal related to the settlement of the case.
Another exception to the reporting requirement for an individual practitioner involves settlement paid out of the practitioner’s personal funds. Historically, the NPDB required that payments made by any “entity or person” be reported. Federal case law interpreting the NPDB requirements found that the reporting requirements for payments made by any individual person was inconsistent with the statute requiring reporting for payments made by “entities.” American Dental Association v. Shalala, 3 F.3d 445 (D.C. Cir. 1993). This finding established that there is no reporting requirement for an individual practitioner who makes a settlement payment from their personal funds.
However, this latter exception is very narrow: it only applies to settlements. Further, the funds paid on behalf of the practitioner cannot come from the practitioner’s personal private practice because the practice is considered an entity. This is the case even when the private practice is an entity owned by the sole practitioner for whom the payments are being made. However, when a practitioner pays personally out of pocket, there is no requirement that the individual not be named in the settlement release. Thus, the risk of subsequent suits is alleviated under these circumstances.
Even if a practitioner understands the risks, and the narrow requirements are met such that a report to the NPDB is not required, there is one final important consideration: just because an NPDB report isn’t required doesn’t mean the settlement information is confidential.
There are many instances of and reasons for requiring disclosure of settlements. For example, a practitioner may be asked by a governmental or disciplinary authority or agency, insurance company, or potential employer whether they have been party to a lawsuit and what the outcome of that suit was. Therefore, even if a practitioner is looking to avoid reporting to the NPDB, it’s not always a simple analysis.
It’s always in the best interests of a health care practitioner to consult legal counsel to explore all the potential risks and benefits when considering whether reporting the settlement of a claim or lawsuit to the NPDB is required—and whether any exceptions apply.