So, You’ve Been Asked to be a Medical Director?

When calling CAP’s Hotline, a question some physicians ask is, “Will I have additional liability if I accept a position as a medical director?” The short answer is "yes." Here are several examples:

Dr. A became involved in Mrs. B’s care as the medical director and wound care consultant of a nursing home facility. Dr. A made recommendations but did not write orders; that was left to the patient’s attending physician. Dr. A made no notes in the medical record. When Mrs. B died, Dr. A’s name was included in the professional liability lawsuit that alleged elder abuse.

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Dr. C accepted a financially beneficial position as medical director of a medical spa near her practice. She was responsible for supervising the registered nurse (RN) who was employed by the medical spa. After the RN performed laser hair removal, the patient was left with hyperpigmented areas. As medical director, Dr. C was named in the subsequent lawsuit filed by a patient she had never seen. The claim alleged failure to properly train and supervise the nurse who had improperly managed the treatment.

While the physicians in the above situations were eventually dismissed, each case took almost two years to conclude. That meant many months of uncertainty for the physicians involved.

Another consideration is if you are asked to serve on a utilization review committee to determine decisions of medical necessity. The Medical Board of California policy is that utilization review decisions constitute the practice of medicine and promulgated the following resolutions on May 9, 1998:

"(a) The making of a decision regarding the medical necessity or appropriateness, for an individual patient, of any treatment or other medical service, constitutes the practice of medicine.…” — CMA Health Law Library, Document # 7156, Medical Directors: Utilization Review and the Practice of Medicine, CMA Legal Counsel, January 2020

When contemplating a position as a medical director, make sure you discuss the issue with CAP Membership Services as well as CAP Risk Management and Patient Safety. Here are some questions you will be asked and some you may want to consider before saying “yes” to such a position.

Will the position be “medical director” of the entity/organization?

Coverage of medical directors (except for those serving their own medical group) is excluded under the Mutual Protection Trust Agreement. If you accept the position, consider investigating coverage for Medical Directorships through CAP Insurance Services Agency, Inc. Call 800-819-0061 for information.

Will your oversight involve any care, or healthcare providers, outside of the state of California?

CAP members enjoy coverage only within the state of California unless out-of-state coverage is specifically granted for specific reasons. You will likely need to secure professional liability coverage and, possibly, a medical license, in the states served.

Will your job description involve “supervision” of a physician assistant (PA), nurse practitioner (NP), registered nurse (RN), or any other California licensed healthcare professional?

PAs and NPs in California work only under defined protocols enacted by each entity and signed by the medical director. These required protocols are specific to each organization and define the scope of practice for each individual based on his or her training and expertise. Also, laws govern the supervision of other licensed personnel, e.g., a physician may not “supervise” a physical therapy technician. As a result, if a patient is injured by the actions of any of these caregivers, the medical director may be held responsible for the appropriateness of the scope of care permitted.

If you will supervise healthcare professionals or other caregivers who are not your employees, will you have hiring, firing, and disciplinary authority?

If you will not have authority over maintaining qualified, credentialed, and experienced employees, you are putting yourself at risk. As medical director, you may be held responsible for the quality and standard of care provided by the healthcare organization. Without authority over employees, it will be difficult for you to assure that quality. MPT should be notified in order to make a determination regarding coverage in this setting.

As medical director, who will be your employer?

The Medical Board of California notes,  “No one who cannot legally practice medicine can offer or provide medical services. A physician contracting with or acting as an employee of a lay owned business would be aiding and abetting the unlicensed practice of medicine. To offer or provide these services, the business must be a physician-owned medical practice or a professional medical corporation with a physician being the majority stockholder.” (Business and Professional Code, Sections 2052, 2264, 2286 and 2400), Medical Board of California, Action Report, July 2006.

Are the risks decreased if you entirely own the medical spa or medical organization and you serve as its medical director?

When you are the owner, you have control of employees and the development and implementation of all organizational policies and protocols. In that arrangement, you are in a better position to ensure the quality of care provided.

Has the employing company assured you that the medical director (or “consultant”) has little or no liability, is an “advisor” only, or that “your name will not even appear on the medical record”?

CAP physicians report they have been told this by organizations soliciting them for medical director and consultant positions. However, unless the contract with the organization indemnifies the physician, this may not be true. Since both titles convey the impression of expertise, the “advice” will carry increased weight even if not documented as a formal order in the medical record. If a patient injury occurs as a result of practitioners following the advice, they will not hesitate to point the finger toward the medical director or consultant.

The bottom line is this:

Ask a lot of questions before you place your reputation and potential liability in someone else’s hands! And, as always, when you're considering new practice opportunities, call the CAP Hotline at 800-252-0555 to discuss coverage and liability issues.   


Dona Constantine is a CAP Senior Risk and Patient Safety Specialist. Questions or comments related to this article should be directed to