All or None Rule

Under general principles of law, partners may be held liable for the acts of one another within the context of their joint undertaking (in this case, “the practice of medicine”). This is true, of course, where a formal partnership agreement exists. It is also true where an “ostensible” partnership has been created by certain common actions of the physicians involved. Such actions could include using common billings and letterheads, sharing overhead expenses and profits, sharing professional employees such as a R.N. or a technician, seeing each other’s patients on a regular basis, and placing both names on an office door.

Likewise, under general principles of law, a corporation (and indirectly its shareholders, the other physicians) may be held liable for the acts of a physician employee acting within the scope of his authority as an employee of the corporation.

Because of the potential for shared liability in the above situations, preferred underwriters require that all physicians practicing in an ostensible or formal partnership or medical corporation be insured with a common carrier at the same limits of liability.