Legal Question in Business Law in Pennsylvania
S Corporation liability
My partner and I currently own (50/50) and run a medical practice set up as an S-Corp 17 yrs ago. We have individual medical malpractice insurance (claims-made) and a corporate policy that covers our physician assistant(PA) and the ''corporation''. We are in the process of selling/dissolving the corporation. The purchasing party will cover the expense of our individual ''tails'' and the ''tail'' portion of the corporate policy that covers the medical actions of the PA. Can the ''corporation'' be held liable in any malpractice suits (e.g., suits made against the physicians individually or the PA for services rendered while still incorporated) even though it has been dissolved? Would it be prudent to pay the ''tail'' to cover the corporation beyond the medical actions of the PA? Is there any risk/liabilities upon the owners of the S-Corp once dissolved (i.e., PA is sued for an individual medical act)? Thanks in advance.
2 Answers from Attorneys
Re: S Corporation liability
As Dan has correctly stated, the issue is more complex than this forum is equipped to handle. That being said, however, the statute of limitations on med mal actions is two years. I believe that any claim being made would be against the individual, the corporation and anyone else a creative plaintiff's attorney could think of. How would the dissolution of the corportion and it failure during that two year period affect this? Well, one less pocket to look to.
Ask the attorney handling the sale of your practice.
Re: S Corporation liability
Responses to these detailed and complex questions are not appropriate in this forum; a careful review by an attorney is necessary.
Some due diligence would be needed to determine, among other things, the terms and indemnity of your malpractice policy, as well as the terms of the purchase agreement with the buyers of the practice. For example, part of the answer depends upon whether the transaction is an asset or stock sale (or a combination of both).
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