Medical Product Reps in the OR

Medical sales representatives may feel like they have become an endangered species, what with heightened regulation and criticism of what they do. Physicians who allow medical sales reps into operating rooms may also be caught in the crossfire of litigation and liability that can result from sales rep presence and activities.

Despite concerns over having medical product sales reps in operating rooms, the practice persists. Sales reps are common where doctors must size and assemble an implant in the operating room. Often, in cases involving orthopedic implants and fixation devices, hospitals cannot afford to stock every possible size. Accordingly, the physician calls a sales rep to bring component parts to the operating room and to help pick the right size. Other physicians who are still learning the finer points of using a new device may feel the need for assistance and input from a product representative during a procedure.

Further, legitimate business reasons underpin the willingness of medical device firms to accommodate physician needs. Medical device firms often consider operating-room sales reps a plus and a marketing advantage. Surgeons ' especially those with less experience with a particular device ' value the advice and product support.

Legitimate Rationales

While it is easy to decry the practice, there are legitimate rationales behind having a sales rep in the OR. Medical product reps are knowledgeable about medical devices. In addition, they can provide a manufacturer with a witness who can give an honest assessment of what happened if a doctor or hospital employee later suffers from “selective memory syndrome.”

Perils lurk, though, when sales reps are the focus of later allegations. Doctors and medical device companies can face liability claims due to patient complications attributed to the sales rep's actions or advice. A discussion of the risk management issues that arise when sales reps enter the OR, and possible ways to address those challenges, might help.

Liability Exposures from the Presence of Sales Reps

Any procedure that results in an adverse patient outcome and during which a medical sales rep was present may be a “hot spot” for potential claims and litigation. Patients suffering adverse outcomes or outcomes that failed to meet their expectations may claim that their injuries were caused by, or contributed to, the negligence of a medical product sales rep.

In today's litigation, plaintiffs often sue in scattershot fashion, alleging that “everyone” did something wrong. This category of “everyone” can include medical sales reps. In many areas, the OR surgeon is still considered “the captain of the ship.” As such, all others in the OR ' even those not employed by the surgeon ' may have their negligence or carelessness imputed to the doctor.

True-life examples of allegations against sales reps have included:

• That the product rep told the surgeon to install a left-side orthopedic component on the patient's right side;
• That the device company representative contaminated the sterile surgical field;
• That the doctor negligently allowed a sales rep to step in and perform a professional medical procedure for which the rep had no credentials, licensing or training;
• That the sales rep gave technical/surgical (but flawed) advice to the doctor;
• That a non-medical salesperson was present during a procedure although the patient had not given his informed consent to her presence, invading the patient's privacy;
• That the sales rep failed to caution against a device's off-label use; or
• That the doctor used the product off-label despite the sales representative's warning against it.

Allegations such as these can present both risk management and insurance coverage conundrums for sales reps and for medical professionals. Many product liability policies for life-science companies exclude coverage for claims arising from medical malpractice or professional liability. (One reason: separate policies typically address medical malpractice and professional liability exposures.) If a claim or lawsuit alleges negligent activities on the sales rep's part, the manufacturer's product liability insurance company may decline coverage and refuse to defend. So how do doctors protect themselves financially?

Risk Management Strategies

Physicians looking to manage the risks of medical sales reps in the OR should consider four major risk-management techniques. These are:

• Avoidance;
• Retention;
• Loss control; and
• Contractual transfer.

“Avoidance” refers to not engaging in an activity that poses risk. When OB/GYNs drop the OB portion of their practices due to fears of getting sued, that represents a form of avoidance. In the realm we are discussing, avoidance would involve simply banning any medical sales reps from being present in the OR.

“Retention” means consciously setting aside funds to pay any claims arising from a liability peril. Companies that self-insure instead of buying insurance exemplify the technique of retention. However, while corporations may be able to self-insure, it may not be a financially realistic option for doctors. We have seen that, in response to the medical malpractice crisis, some doctors have opted to “go bare” and forego buying insurance cover. Many who do this believe that the existence of insurance only encourages patients to file lawsuits. If no insurance “deep pocket” exists, so the rationale goes, fewer lawsuits will result. On a practical level, this is often not the case. Further, doctors may lack the funds needed to safely insulate themselves against the potential costs of settlements, court judgments or legal defense fees.

“Loss control” aims to reduce the frequency and severity of loss. Think of it in terms of driving cars; in order to improve our chances of better outcomes in the event of a crash, we wear seatbelts and buy cars with anti-lock brakes, among other things. In the context of medical sales reps in the OR, doctors could adopt a number of loss-control measures. These might include insisting on credentials from such reps; instituting strict guidelines regarding which activities they can and cannot engage in while in the OR; and obtaining detailed and documented informed consent from patients concerning the presence and role of sales reps during their procedures.

“Contractual transfer” most commonly occurs through the vehicle of insurance. However, although physicians typically buy medical malpractice insurance to address liability claims arising from their own alleged negligence, this type of contractual transfer may or may not address the perils of expanded liability due to the presence of medical sales reps in the OR. The existence of such coverage will hinge on the wording of the doctor's insurance policy and the facts presented by a specific claim. For example, if the medical malpractice insurance policy covers only claims of bodily injury, a claim for invasion of privacy from allowing a sales rep to enter the operating room may present possible “gaps” in financial protection. Doctors should not necessarily assume that their current medical malpractice insurance policy automatically insulates them from any and all claims that may arise due to the presence of sales reps in the OR.

Risk Management: Getting Insurance

Sales reps in the OR provide valuable services. However, physicians who interact with sales reps must safeguard their financial protection in case patients allege injury due to the rep “playing doctor.” Physicians need insurance protection for these types of claims. Specifically, they need to guard against allegations that they supervised the sales rep, or failed to supervise the rep when they should have. They also need coverage against claims that they erred in judgment by relying on the sales representative's advice.

How much coverage is enough? A million dollars may sound impressive, but when jury awards have seven or eight digits and legal fees are eye-popping, doctors may be left with inadequate coverage. There is always a possibility that a jury will return an aberrant award driven by its outrage or disgust at the role a sales rep played in a medical procedure or judgment. Finally, it is important that the physician's liability policy covers (or at least does not specifically exclude from coverage) allegations of agency relationships between the doctor and a sales rep. Doctors and their attorneys must read closely any policy put before them by a candidate insurance company offering a quote or bid. Check closely for any exclusion that would remove from coverage claims arising from “professional/medical/incidental” liability or from allegations against sales representatives. Any such exclusion should be removed prior to the acceptance of an insurance quote.

If you are unfamiliar with the nuances of insurance contracts, it may be wise to have an insurance broker compare and analyze competing coverage forms.

Kevin M. Quinley, CPCU, ARM, a member of this newsletter's Board of Editors, is Vice President – Risk Management Services, Berkley Life Sciences, Ewing, NJ. He can be contacted at [email protected]. Views expressed here do not constitute legal advice, are the author's own and do not necessarily reflect those of Berkley Life Sciences or its customers. Discussion of insurance policy language is descriptive only. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions.

Medical sales representatives may feel like they have become an endangered species, what with heightened regulation and criticism of what they do. Physicians who allow medical sales reps into operating rooms may also be caught in the crossfire of litigation and liability that can result from sales rep presence and activities.

Despite concerns over having medical product sales reps in operating rooms, the practice persists. Sales reps are common where doctors must size and assemble an implant in the operating room. Often, in cases involving orthopedic implants and fixation devices, hospitals cannot afford to stock every possible size. Accordingly, the physician calls a sales rep to bring component parts to the operating room and to help pick the right size. Other physicians who are still learning the finer points of using a new device may feel the need for assistance and input from a product representative during a procedure.

Further, legitimate business reasons underpin the willingness of medical device firms to accommodate physician needs. Medical device firms often consider operating-room sales reps a plus and a marketing advantage. Surgeons ' especially those with less experience with a particular device ' value the advice and product support.

Legitimate Rationales

While it is easy to decry the practice, there are legitimate rationales behind having a sales rep in the OR. Medical product reps are knowledgeable about medical devices. In addition, they can provide a manufacturer with a witness who can give an honest assessment of what happened if a doctor or hospital employee later suffers from “selective memory syndrome.”

Perils lurk, though, when sales reps are the focus of later allegations. Doctors and medical device companies can face liability claims due to patient complications attributed to the sales rep's actions or advice. A discussion of the risk management issues that arise when sales reps enter the OR, and possible ways to address those challenges, might help.

Liability Exposures from the Presence of Sales Reps

Any procedure that results in an adverse patient outcome and during which a medical sales rep was present may be a “hot spot” for potential claims and litigation. Patients suffering adverse outcomes or outcomes that failed to meet their expectations may claim that their injuries were caused by, or contributed to, the negligence of a medical product sales rep.

In today's litigation, plaintiffs often sue in scattershot fashion, alleging that “everyone” did something wrong. This category of “everyone” can include medical sales reps. In many areas, the OR surgeon is still considered “the captain of the ship.” As such, all others in the OR ' even those not employed by the surgeon ' may have their negligence or carelessness imputed to the doctor.

True-life examples of allegations against sales reps have included:

• That the product rep told the surgeon to install a left-side orthopedic component on the patient's right side;
• That the device company representative contaminated the sterile surgical field;
• That the doctor negligently allowed a sales rep to step in and perform a professional medical procedure for which the rep had no credentials, licensing or training;
• That the sales rep gave technical/surgical (but flawed) advice to the doctor;
• That a non-medical salesperson was present during a procedure although the patient had not given his informed consent to her presence, invading the patient's privacy;
• That the sales rep failed to caution against a device's off-label use; or
• That the doctor used the product off-label despite the sales representative's warning against it.

Allegations such as these can present both risk management and insurance coverage conundrums for sales reps and for medical professionals. Many product liability policies for life-science companies exclude coverage for claims arising from medical malpractice or professional liability. (One reason: separate policies typically address medical malpractice and professional liability exposures.) If a claim or lawsuit alleges negligent activities on the sales rep's part, the manufacturer's product liability insurance company may decline coverage and refuse to defend. So how do doctors protect themselves financially?

Risk Management Strategies

Physicians looking to manage the risks of medical sales reps in the OR should consider four major risk-management techniques. These are:

• Avoidance;
• Retention;
• Loss control; and
• Contractual transfer.

“Avoidance” refers to not engaging in an activity that poses risk. When OB/GYNs drop the OB portion of their practices due to fears of getting sued, that represents a form of avoidance. In the realm we are discussing, avoidance would involve simply banning any medical sales reps from being present in the OR.

“Retention” means consciously setting aside funds to pay any claims arising from a liability peril. Companies that self-insure instead of buying insurance exemplify the technique of retention. However, while corporations may be able to self-insure, it may not be a financially realistic option for doctors. We have seen that, in response to the medical malpractice crisis, some doctors have opted to “go bare” and forego buying insurance cover. Many who do this believe that the existence of insurance only encourages patients to file lawsuits. If no insurance “deep pocket” exists, so the rationale goes, fewer lawsuits will result. On a practical level, this is often not the case. Further, doctors may lack the funds needed to safely insulate themselves against the potential costs of settlements, court judgments or legal defense fees.

“Loss control” aims to reduce the frequency and severity of loss. Think of it in terms of driving cars; in order to improve our chances of better outcomes in the event of a crash, we wear seatbelts and buy cars with anti-lock brakes, among other things. In the context of medical sales reps in the OR, doctors could adopt a number of loss-control measures. These might include insisting on credentials from such reps; instituting strict guidelines regarding which activities they can and cannot engage in while in the OR; and obtaining detailed and documented informed consent from patients concerning the presence and role of sales reps during their procedures.

“Contractual transfer” most commonly occurs through the vehicle of insurance. However, although physicians typically buy medical malpractice insurance to address liability claims arising from their own alleged negligence, this type of contractual transfer may or may not address the perils of expanded liability due to the presence of medical sales reps in the OR. The existence of such coverage will hinge on the wording of the doctor's insurance policy and the facts presented by a specific claim. For example, if the medical malpractice insurance policy covers only claims of bodily injury, a claim for invasion of privacy from allowing a sales rep to enter the operating room may present possible “gaps” in financial protection. Doctors should not necessarily assume that their current medical malpractice insurance policy automatically insulates them from any and all claims that may arise due to the presence of sales reps in the OR.

Risk Management: Getting Insurance

Sales reps in the OR provide valuable services. However, physicians who interact with sales reps must safeguard their financial protection in case patients allege injury due to the rep “playing doctor.” Physicians need insurance protection for these types of claims. Specifically, they need to guard against allegations that they supervised the sales rep, or failed to supervise the rep when they should have. They also need coverage against claims that they erred in judgment by relying on the sales representative's advice.

How much coverage is enough? A million dollars may sound impressive, but when jury awards have seven or eight digits and legal fees are eye-popping, doctors may be left with inadequate coverage. There is always a possibility that a jury will return an aberrant award driven by its outrage or disgust at the role a sales rep played in a medical procedure or judgment. Finally, it is important that the physician's liability policy covers (or at least does not specifically exclude from coverage) allegations of agency relationships between the doctor and a sales rep. Doctors and their attorneys must read closely any policy put before them by a candidate insurance company offering a quote or bid. Check closely for any exclusion that would remove from coverage claims arising from “professional/medical/incidental” liability or from allegations against sales representatives. Any such exclusion should be removed prior to the acceptance of an insurance quote.

If you are unfamiliar with the nuances of insurance contracts, it may be wise to have an insurance broker compare and analyze competing coverage forms.

Kevin M. Quinley, CPCU, ARM, a member of this newsletter's Board of Editors, is Vice President – Risk Management Services, Berkley Life Sciences, Ewing, NJ. He can be contacted at [email protected]. Views expressed here do not constitute legal advice, are the author's own and do not necessarily reflect those of Berkley Life Sciences or its customers. Discussion of insurance policy language is descriptive only. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions.