Public Citizen Files Lawsuit Seeking To Close Medical Malpractice Corporate Shield Loophole

162017_132140396847214_292624_nPublic Citizen, which self-describes as “serv[ing] as the people’s voice in the nation’s capital,” filed a federal lawsuit on July 26, 2016 in the U.S. District Court for the District of Columbia, requesting that the court compel the U.S. Department of Health and Human Services and the U.S. Health Resources and Services Administration to act on the petition filed by Public Citizen in May 2014 that seeks to close the “corporate shield loophole,” which allows physicians and other health care providers evade having medical malpractice payments that are made on their behalf reported to the National Practitioner Data Bank (“NPDB”).

Hospitals, health maintenance organizations, and state licensing boards throughout the United States that conduct background checks to determine whether a doctor or other health care provider has been sanctioned for misconduct by a hospital, had his license to practice curtailed, or had medical malpractice payments made on his behalf, rely on NPDB data in order to protect and promote patient health and safety. Incomplete or false data compiled by the NPDB represent a significant threat to public safety that bad doctors and other poorly performing health care providers will be allowed to continue to harm unwitting patients.

Public Citizen requested in its 2014 petition that the federal agency amend the NPDB regulations to require that all reports of medical malpractice payments be submitted to the NPDB in the name of any health care practitioners on whose behalf the medical malpractice payment is made, whether or not the practitioners are named in the claim or medical malpractice action. Public Citizen filed its recent federal lawsuit because there has been no action taken on Public Citizen’s petition since it was filed over two years ago.

The Corporate Shield Loophole

Public Citizen contends that current NPDB regulations are inconsistent with the federal statute that established the NPDB and allow a practitioner to avoid being reported to the NPDB if a medical malpractice victim agrees to dismiss the practitioner from a lawsuit or claim, leaving a hospital or some other corporate entity as the sole defendant, thereby allowing the practitioner who was alleged to have committed medical malpractice to avoid having a report of a medical malpractice payment made on his behalf submitted to the NPDB.

The corporate shield loophole is often used by medical malpractice defense lawyers representing self-insured hospitals or other corporate entities that employ the practitioners, who request that the plaintiffs’ medical malpractice lawyers dismiss the named individual medical malpractice defendants from their medical malpractice lawsuits in exchange for an agreement that the hospital or corporate entity will be responsible for the acts or omissions of the practitioners. Thus, even if a medical malpractice payment is made due to the negligent acts or omissions of a practitioner, the payment is not reported to the NPDB.

A Public Citizen official explained, “The corporate shield loophole makes the NPDB’s information less complete, less reliable and less useful.”


If you or a family member suffered harm as a result of medical malpractice in the United States, you should promptly find a medical malpractice lawyer in your state who may investigate your medical malpractice claim for you and represent you in a medical malpractice case, if appropriate.

Visit our website or call us toll-free in the United States at 800-295-3959 to find medical malpractice attorneys who may assist you.

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This entry was posted on Friday, August 5th, 2016 at 5:20 am. Both comments and pings are currently closed.


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