While defendant EPs might be alarmed over threats to seize property and other assets, such threats might be legally problematic for a plaintiff’s attorney to actually carry out.
“But it’s a very effective negotiating tool,” says John Tafuri, MD, FAAEM, regional director of TeamHealth Cleveland (OH) Clinic and chief of staff at Fairview Hospital, also in Cleveland.
Losing Assets ‘Exceedingly Rare’
Tafuri recommends that EPs protect as many assets as possible. However, the primary reason isn’t because they’re likely to lose those assets in the event of a high-dollar plaintiff verdict.
“Actually, losing personal assets in a malpractice case is exceedingly rare,” Tafuri says.
With assets protected to the greatest extent possible, however, the EP won’t be tempted to settle an otherwise defensible case out of fear personal assets will be seized.
“The EP might say, ‘I didn’t do anything wrong, and my documentation is good. I’m not going to settle. If I do lose, and a jury verdict goes over the policy limit, I’m not scared you’ll try to take my personal assets, because you’re not going to get anything,’” Tafuri explains.
Asset protection should be in place prior to the date on which the EP saw the patient who is the plaintiff in a malpractice suit.
“Otherwise, it will be viewed as a fraudulent conveyance, and be undone by the court,” Tafuri warns.
The general perception among EPs who find themselves defendants in a malpractice lawsuit, says Tafuri, “is, ‘They can take everything.’ This is theoretically true, but from a practical standpoint, it is very rare.”
Retirement plans, for example, are generally fully protected against seizure.
“A plaintiff attorney got a civil judgment against O.J. Simpson for $30 million,” Tafuri notes. “I’m sure he was one of the best plaintiff attorneys in California, but he still could not attach his retirement fund.”
EPs who are secure in this knowl-edge have a stronger negotiating position, regardless of the facts of the particular case.
“If the attorney sees you are not scared of him or her, it can be very powerful,” Tafuri says. “They may say, ‘I don’t really have a good case from a medical standpoint,’ and agree to settle for a lower amount than they otherwise would have.”
Unscrupulous Insurers
Many EPs switched to lower policy limits when medical malpractice rates spiked in the early 2000s.
“The majority of doctors in Florida are now at $250,000,” reports Jonathan Katz, president of Oros Risk Solutions, an Orlando, FL-based insurance and consulting agency specializing in selling medical professional liability insurance.
Due to the shift to lower limits, EPs were understandably concerned about the possibility of excess judgments. Some unscrupulous individuals sought to capitalize on these fears.
“Every town had lawyers adver- tising asset protection seminars, but most of the guys had no background in it,” Katz says. “They were just out to make a buck; some were crooks.”
Katz strongly recommends EPs consult with a qualified attorney specializing in asset protection, and to seek a similar level of expertise when shopping for malpractice insurance.
“I’ve seen cases where insurers wrote low-priced policies but lacked the proper staffing, and did a really poor job on claims,” he says.
Some defendant EPs paid a heavy price for choosing a poorly capitalized startup company.
“They grew market share pretty good, but there was not a lot of intellectual capital in house,” Katz says. “They were contracting claims out to third-party companies and yielded very poor results.”
“I want a $250,000 limit because I don’t want to be a target.” This is a common misconception held by EPs, according to Katz.
“I’ve never seen a plaintiff’s attorney say, ‘I’m not going to sue Dr. X because he only has a $250,000 limit,’” he says. “If you touch the patient and they can bring you into the lawsuit, they will.”
Katz often advises EPs to err on the side of too high of a limit rather than not enough.
“Nobody wants to see a doctor with a judgment over the limit. It’s not a good result, but sometimes it’s unavoidable,” he says.
EPs with a low policy limit are often reluctant to go to court because of the risk of an excess judgment, even if the case is very defensible.
“If you want to defend yourself, you might be hesitant to do so because you are worried about your assets being exposed,” Katz says. With a $1 million limit, he says, “everybody’s more comfortable going to court — the insurer, the physician, and the defense attorney.”
Could EPs with a higher policy limit be apportioned more liability than they otherwise would have received?
“That has probably happened,” Katz acknowledges. “But when I weigh the issue, I’d rather have that happen once in a blue moon than be not adequately insured from a catastrophic judgment.”
Michael G. Merlo, Esq., managing director of Casualty Legal and Claims Practice at Aon Broking in Chicago, sees high policy limits causing the plaintiff to view the EP as a “deep pocket” as a legitimate concern.
“If insurance is discovered in the litigation process, it can certainly have an impact on the way the plaintiff or attorney views what a reasonable settlement may be,” he says.
With a higher limit, however, “it’s the insurance company’s pocket,” Merlo says. “Most EPs would rather not have the deep pocket be their own.”
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Jonathan Katz, President, Oros Risk Solutions, Orlando, FL. Phone: (407) 745-2892. E-mail: [email protected].
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Michael G. Merlo, Esq., Managing Director, Casualty Legal and Claims Practice, Aon Broking, Chicago. Phone: (312) 381-5169. E-mail: [email protected].
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John Tafuri, MD, FAAEM, Regional Director, TeamHealth Cleveland (OH) Clinic. Phone: (216) 476-7312. Fax: (440) 835-3412. E-mail: [email protected].
