HW Legal
Can a physician practising through a limited liability company still be held personally liable for harm caused to a patient?
A landmark decision of the Czech Supreme Court may significantly affect medical professionals who provide healthcare through their own companies.
A botched surgery: whom should the patient sue?
A patient underwent hand surgery. The procedure was performed by a physician who was both the sole shareholder and sole managing director of a limited liability company providing healthcare services. It was this company that had entered into the healthcare agreement with the patient.
During the surgery, the physician made a mistake, which ultimately resulted in the patient's little finger being amputated. The patient therefore sought compensation. But from whom?
She brought a claim both against the company and against the physician personally.
One could argue that one of the main reasons for establishing a limited liability company is to protect the shareholder's personal assets from the potential risks associated with the business. A shareholder is generally liable for the company's obligations only to the extent of any unpaid contribution to the registered capital. The company's assets are therefore legally separate from those of its shareholder.
In other words, if the company incurs a debt, that debt does not ordinarily become the personal liability of its shareholder.
The physician in this case relied precisely on that principle. Where a healthcare agreement is concluded by a medical limited liability company, the resulting rights and obligations arise for the company, not for the physician personally.
Liability of both the physician and the company
Recent case law has taken a different approach in situations where a physician negligently causes harm to a patient by acting non lege artis.
According to the Supreme Court, a physician who is also the statutory representative and shareholder of the healthcare provider acts as an auxiliary person of the provider. In such circumstances, it is artificial to speak of the physician being subordinate to the company. The physician personally performs professional medical services on behalf of their own legal entity.
As a result, the physician may be held jointly liable for the harm alongside the limited liability company.
The same conclusion applies even if the physician formally occupies the position of an employee of a single-member company. In reality, the physician simultaneously acts as both employee and employer. Consequently, they cannot benefit from the protections ordinarily afforded to employees whose conduct is directed by the instructions and organisational structure of an independent employer.
Does this apply only to physicians practising through single-member companies?
The Supreme Court noted that it would make little sense for some healthcare professionals to be personally liable for harm caused by treatment non lege artis—for example, physicians practising as sole traders—while those providing identical services through a limited liability company that they themselves control would escape such liability.
However, these conclusions do not apply to physicians who are genuine employees working within an organisational hierarchy, such as doctors employed by hospitals. Such physicians are subject to their employer's instructions, policies, equipment, and organisational decisions, all of which may affect the provision of healthcare services.
A significant decision for private medical practices
This decision represents a major development for healthcare professionals operating their own medical practices through corporate structures.
(Czech Supreme Court, Case No. 25 Cdo 2613/2022)
Could similar "piercing the corporate veil" principles apply to other professions?
Medical law is one of our areas of specialisation. We advise both healthcare professionals and patients on liability, regulatory matters, and compensation claims.
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