Protect personal assets if you're sued for malpractice
If you are an emergency department physician and you are sued, your liability exposure depends on your status with the facility, says Bryan A. Liang, MD, PhD, JD, executive director of the Institute of Health Law Studies at California Western School of Law in San Diego, CA and co-director and adjunct associate professor of anesthesiology at University of California-San Diego School of Medicine.
If you are employed by the facility, it is likely that your facility will be the primary target for the lawsuit. "Of course, you personally can be sued as an individual physician as well, but since the facility is the 'deep pocket,' you will likely be secondary as the focus of the lawsuit," Liang explains.
However, if you are an independent contractor, you will likely be personally subject to the lawsuit, says Liang. Although the hospital will also likely be a target, their potential liability is less secure, depending on the state. Some states allow plaintiffs to sue the hospital for the negligence of independent contractors, while others limit the facility's exposure. "But no matter what, if you are an independent contractor, you will be subject to potential liability," says Liang.
Generally, malpractice judgments are to compensate the injured party if negligence is found, so depending on the situation, this can be a great deal of money or a limited amount. "It is essential that you have liability insurance and work with your liability insurer for your defense, and get them involved early for strategic purposes," Liang says. "You may want to hire your own attorney as well, to protect your interests beyond allowing the insurance company to control your defense."
There's really no way to avoid personal liability unless you are an employee of a facility, and even then you may be sued in your individual capacity, says Liang. "There have been efforts to try and shield assets, but these generally have not succeeded, and are sometimes looked upon as fraudulent conveyances to avoid payment," he says.
The only legal shield is bankruptcy in some states, which allow certain property exemptions, but this should not be relied upon. "Generally, the risk of suit and liability is a part of emergency department life," says Liang. "The best protection is appropriate care, a good relationship with the patient if possible, and consistent use of patient safety practices in your facility."
The personal risk for a physician if they are sued would be a verdict in an amount over the insurance coverage amount, says Linda M. Stimmel, a partner with the Dallas, TX-based law firm of Stewart Stimmel. However, it is rare for a plaintiff to not agree to take "policy limits only" in the event of a verdict over the amount of malpractice insurance coverage, she says.
"Most plaintiffs do not want to take a car, or have to sell a house of a physician. It is far more simple, for example, if a physician has $500,000 coverage and there is a $700,000 verdict, for the parties to reach a settlement and take the $500,000," says Stimmel. "The amount is paid quickly and efficiently."
The physician will usually have to agree to waive an appeal of the verdict and trial. This assures the plaintiff they get some money, whereas an appeal can go on for years with no monies being paid. "A plaintiff can go after a physician for personal liability with a verdict over the insurance amount, but it is uncommon," says Stimmel.
Therefore, one way to avoid personal liability is to have adequate malpractice coverage. Many physicians keep low coverage amounts to lessen their cost, and also under the belief that they will be a "minor target" if there is not much insurance coverage to go after. "That does happen many times, but it is a risk," says Stimmel.
Another way to protect your personal assets in a malpractice case is to seek advice from an asset protection financial counselor. "The physician can seek advice about putting assets in trust to protect the assets in a malpractice case. However, this must be done prior to any lawsuit or claim, since it could be considered fraud if done after being sued," says Stimmel.
Sources
For more information on protecting personal assets, contact:
- Bryan A. Liang, MD, PhD, JD, Executive Director and Professor, Institute of Health Law Studies, California Western School of Law, 350 Cedar St., San Diego, CA 92101. Telephone: (619) 515-1568. Fax: (619) 515-1599. E-mail: [email protected]
- Linda M. Stimmel, Stewart Stimmel, 1701 N. Market St., Suite 318, Dallas, TX 75202. Telephone: (214) 752-2648. E-mail: [email protected]
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