PowerPoint to accompany
Law & Ethics For Medical Careers
Fourth Edition
Judson · Harrison · Hicks
Chapter 3—Law, the Courts and
Contracts
Copyright © The McGraw-Hill Companies, Inc. Permission required for reproduction or display
Law, the Courts & Contracts
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Objectives
Discuss the primary sources of law
 Differentiate between criminal law and civil
law
 Define intentional and unintentional torts
 List and define the four elements of a
contract
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Law, the Courts & Contracts
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Objectives continued
Differentiate between expressed and
implied contracts
 Discuss contractual rights of both
physicians and patient
 Relate how the law of agency and the
doctrine of respondeat superior apply to
health
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Basis of Law
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Three branches of federal government
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Legislative branch
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Congress
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Executive Branch
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House of Representatives
Senate
The President
Judicial Branch
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Supreme Court and other federal courts
Basis for Law
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CHECKS & BALANCES
Congress initiates and passes legislation
that becomes law
 The President enforces the law, issues
Executive Orders, and makes foreign
treaties
 The Courts interprets the law and enforces
it if necessary
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Sources of Law
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Case Law
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Statutory Law
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Common law, originally oral traditions, now
previous court decisions that are precedent
Laws enacted by the state or federal
legislature
Administrative Law
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Statutes created to define the powers and
procedures of governmental agencies
Classifications of Law

Criminal
Crimes against the state
 Charges are brought forward by the
government
 Examples are murder, burglary, robbery,
rape and practicing medicine without a
license
 Are either felonies or misdemeanors
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Felonies=imprisonment of > one year
 Misdemeanors= fines or jail time of < one year
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Classification of Laws
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Civil Law
Crime against persons
 Family Law
 Tort liability
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Intentional
 Unintentional
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Contracts
Expressed
 Implied
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Torts
A tort is a civil wrong committed against
a person or property, excluding breach of
contract
 A tort can be intentional or unintentional
 A tortfeasor is the person guilty of
committing a tort

Intentional Torts
Assault
 Battery
 Defamation of character
 False imprisonment
 Fraud
 Invasion of privacy
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Unintentional Torts
The most common tort in the health care
system is negligence.
 Negligence occurs when the health care
provider fails to exercise ordinary care
and the patient is injured.
 Chapter 4 covers negligence in detail.
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The Court System
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Federal Courts
Federal crimes, antitrust, and bankruptcy
 Patents, copyrights and trademarks
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State Courts
State crimes, family court, contracts
 Local courts handle traffic court
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Elements of Contracts
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Agreement
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Consideration
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Something of value is exchanged
Legal subject matter
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One party makes offer, one party accepts
Must have legal purpose
Contractual capacity
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Parties to the agreement must be capable of
understanding
Types of Contracts
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Expressed
May be written or oral
 All terms are explicitly stated
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Implied
Not written
 Implied by the conduct of the parties
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Expressed Contracts
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Each state has a Statute of Frauds

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Defines which contracts must be in writing
Federal law controls most lending
agreements
Regulation Z (Truth in Lending)
 Fair Debt Collection Practices Act
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Implied Contracts

Many contracts in the medical office are implied,
but must meet four elements of a contract:
 Agreement—physician offers services, patient
sees physician
 Consideration—patient/insurance company is
charged for the service
 Legal subject matter—the services provided by
the physician are legal
 Contractual capacity—both parties are
competent, of legal age, and understand the offer
Physician’s Rights
Set up practice within the boundaries of
license, training, and specialization
 Set up an office where desired and to
establish office hours
 Decide what services will be provided
and how those services will be provided
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Physician’s Responsibilities in an
Implied Contract
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Use the best professional judgment in all
cases, performing to the best of his or her
ability
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Stay informed of new methods of diagnosis and
treatment
Provide instructions to patients and caregivers
Provide information about diagnosis, options, and
methods of treatments
Prevent the spread of contagious disease
Advise patients against needless or unwise
operations
Patient’s Rights

Patients have the right to:
Considerate and respectful care
 Complete current information
 Identity of all providers involved in their care
 Cost of treatment
 An advanced directive
 Be able to give informed consent
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Patient’s Rights
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continued
Patients also have the right to:
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Refuse treatment
Privacy
Confidentiality
Review their medical record
Know if treatment is experimental
Reasonable continuity of care
Information about business relationships, hospital
polices and practices that relate to their care
Information about resolving grievances
Examine and have bill explained
Patient’s Responsibilities
Follow instructions given by physician
and other providers
 Provide relevant information to help
physician reach a correct diagnosis
 Follow treatment orders
 Pay fees for services
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Termination of Contracts

Physicians may terminate contract if
Patient fails to pay for services
 Patient fails to keep appointments
 Patient fails to follow instructions
 Patient transfers to another physician


Managed care contracts may restrict
physician from terminating care without
approval from the managed care
company
Termination of Contracts

If the physician is terminating the
relationship, it is important to:
Send notice by certified mail, return receipt
requested
 Keep copy in the file
 Give patient adequate time to find another
provider

Law of Agency
Employees act as agents of the
employer when they perform their
workplace duties
 Respondeat Superior


“Let the master answer” is the doctrine
applied in court cases when physicians and
healthcare organizations are sued for the
errors of employees
Ethics Guide Discussion
You are working as the Billing Manager
for a small two physician practice. The
physicians decide that they are going to
start charging interest for unpaid
balances over $100. How would you
implement this new policy?
 What are the state laws in your state with
regard to minors seeking care for
sexually oriented problems?
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Ethics Guide Discussion continued
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You work in an OB-GYN practice. You
discover that one of your fellow
employees has been taking birth control
pill samples from the samples closet—
she is even bragging about “not having
to pay for birth control pills for the last six
months” and has given patients 6-12
months worth of birth control pills
because they are her friends. What are
you going to do?