Physicians can lose private assets in a malpractice insurance!

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rodmichael82

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http://www.physicianspractice.com/finance/your-money-you-can-go-broke-malpractice-suit


This article scared the crap out of me. An OBGYN lost a law-suit for $ 4 million and the malpractice insurance only covered $2 million so obviously they were going to come after her personal assets.

How can a physician avoid this? are there malpractice insurances that are in the $5-10 million range or is there a way to protect personal assets?

I think it's extremely distasteful to go after someone's personal assets, I mean in the end we are all human beings and mistakes happen.
 
http://www.physicianspractice.com/finance/your-money-you-can-go-broke-malpractice-suit


This article scared the crap out of me. An OBGYN lost a law-suit for $ 4 million and the malpractice insurance only covered $2 million so obviously they were going to come after her personal assets.

How can a physician avoid this? are there malpractice insurances that are in the $5-10 million range or is there a way to protect personal assets?

I think it's extremely distasteful to go after someone's personal assets, I mean in the end we are all human beings and mistakes happen.

1. Don't go into OB/GYN
2. Live in a state with malpractice caps
 
Well if the assets aren't in your name, whose assets are they?

Do you put them in the "Dr.ObGyn Trust", an organization that only seems to have one member and seems to exist only for the benefit of one person, Dr.ObGyn?
 
You purchase a large ($ millions) of umbrella insurance coverage.
 
You purchase a large ($ millions) of umbrella insurance coverage.

most if not all personal umbrella insurance will not cover professional liability ... you may try to purchase a catestrophic (professional umbrella) but they are rare/expensive


Usually when judgement is larger than insurance coverage, even after the verdict, your attorney can still discuss settlement issues with the plaintiff and come to an agreed term that is lower than the judgement (and hopefully within your insurance limit)

Why would the plaintiff agree to settle post-verdict for a smaller amount that was won in court? Because 1. the plaintiff will get the money right away, instead of waiting for months/years as the appeal process proceed and 2. you can declare bankruptcy, which means any judgement that the courts attaches will have to go before a bankruptcy judge along with other creditors (and the plaintiff may get a fraction, if any at all).

Some states have a mutual catastrophic fund (that all physicians pay into) that pays out when the limit of their professional liability insurance hits its limit.

Also, plaintiffs will likely go after the hospital and health system since they typically have more money than the physician and his insurance policy. Most states operate under the joint and several liability concept so that regardless of your role in the malpractice (even if it is 10% as determined by a jury), if the hospital can't pay up, then you are responsible to the plaintiff for the entire amount (and not just 10% of the amount) - although usually it;s the other way round where physicians can't pay up so the hospital is on the hook (it doesn't relieve you of any future obligations though, since the hospital can go after you for your share of the award that you didn't pay)

There are various ways that you can shield some of your assets from the courts - but you really need to talk to a financial planner and lawyers since it will depend on local laws as well as federal laws. They may involve setting up trusts, or creating a business entity (with you as a sole employee), etc. But they can get very complicated ... I would recommend talking to a financial advisor as well as a lawyer that specializes in asset-management and protection. Be aware that there are shady advisors who will try to sell illegal tax shelters and illegally hide assets - not only does it not protect you, but exposes you to additional risk such as criminal charges, etc. Plus you don't want to deal with the IRS

This isn't just limited to medical malpractice. You are similarly liability for your personal activities as well, even if the damages exceed your assets. If you were to cause a multi-vehicle accidents (expensive cars, trauma patients, etc) your liability can easily exceed your policy limit. If not properly insured, your assets are at risk. And lawyers are more willing to go after a successful doctor (with bank accounts, cars, vacation houses, etc) than a poor convenient store clerk who only has $150 in his bank account. (they can also garnish future wages to satisfy judgements)
 
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Would LLC's protect personal assets?

Yes. LLC is the way to get around this. (I know this first hand.)

Properties (residences, investment props, offices) are all bought under and held under one LLC. Practice (solo or group) is registered under its own LLC.

This is all state-to-state variable.
 
The only issue I see with the "declare bankruptcy" threat is that the plaintiff is putting a lien on an asset like your house that you already own outright.

I suppose I don't know much about bankruptcy laws, but are they really designed to protect somebody with a large income and large positive assets from becoming somebody with an equally large income and a smaller (yet still positive) amount of assets?
 
The AAMC should make "protecting yourself from lawsuits" a mandatory part of medical training.

Maybe we can add it to the third year, when all those med students aren't actually doing anything [/sarcasm]



Or.... we could try lobbying congress to put a cap on how much people can sue for at one time. The problem here is that the Big Law Lobby is probably more powerful than any physicians lobby.
 
The state wants it this way. That is why you (and lawyers also) can't generally hide under limited liability corporations. Something about "professional responsibility." High-limit coverage is the way to go, just like for your car and your home/umbrella. Or work for the VA.
 
Having an LLC doesn't protect your personal assets as well as one might think. A plaintiff can list the company and you as separate defendants. In reality, the LLC does very little.
 
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No matter what the high limit insurance limit is, isn't there always a lawsuit that is limit + $2million, and therefore you lose your house?

Insure for $10m, get sued for $12m, and we are still right back where we started.

Is there a way to protect assets, besides simply not having any?
 
No matter what the high limit insurance limit is, isn't there always a lawsuit that is limit + $2million, and therefore you lose your house?

Insure for $10m, get sued for $12m, and we are still right back where we started.

Is there a way to protect assets, besides simply not having any?

Settle for 5 million (or realistically way less) is the most likely outcome.
 
If you trust your family, put it in their name. My construction friends (personal assets are on the line when bonding) have their sons/wives/daughters own all their non-business assets
 
Having an LLC doesn't protect your personal assets as well as one might think. A plaintiff can list the company and you as desperate defendants. In reality, the LLC does very little.

That's true, however, any properties under a seperately operating entity (LLC) would be much more difficult to go after. They belong to the LLC, not you. So as long as they are operating (i.e. finances are kept seperate), there shouldn't be an issue there.
 
I see. That seems like a good idea. So... To clarify... You are are referring to someone who creates an LLC separate from their med practice corporation or LLC to which he or she transfers ownership of personal assets. Is this how a lot of business owners set up ownership of assets? It seems like a good idea.
 
I see. That seems like a good idea. So... To clarify... You are are referring to someone who creates an LLC separate from their med practice corporation or LLC to which he or she transfers ownership of personal assets. Is this how a lot of business owners set up ownership of assets? It seems like a good idea.

Yes. Ill just give an example that I know personally.

Doctor has his practice which is an LLC.
Patient sues LLC & also the Doctor as an individual.
Doctors actual personal assets (investment properties, etc) are minimal, because they were all bought and separately maintained in ANOTHER LLC.

So here, the doctor is essentially an employee of two distinct LLCs. Only the medical practice one will be filed against. He only controls the other as an employee of a real estate investment holding company.

Assuming said doctor did their homework and the other LLC is/was handled from Day 1 as a separate entity (basically financially separate and not just a shelter/extension of ones self), then they are likely to be protected.

It's useful to keep them as separate entities for as long as the doctor is practicing. Once they retire, it makes no difference if the dissolve their second LLC or maintain it.

I'm no lawyer but thats the way I see it all working out. I think that's how doctors I know did it.
 
I know working for somewhere like the va protects you, what if your in academics or working for a state funded hospital? Do you get any sort of protection from them, or are you on your own if things go south?
 
If you trust your family, put it in their name. My construction friends (personal assets are on the line when bonding) have their sons/wives/daughters own all their non-business assets

If you have it under your wife's name, can't they still get it? Especially in states in which spouses have 50/50 possession of things?
 
Yes. Ill just give an example that I know personally.

Doctor has his practice which is an LLC.
Patient sues LLC & also the Doctor as an individual.
Doctors actual personal assets (investment properties, etc) are minimal, because they were all bought and separately maintained in ANOTHER LLC.

So here, the doctor is essentially an employee of two distinct LLCs. Only the medical practice one will be filed against. He only controls the other as an employee of a real estate investment holding company.

Assuming said doctor did their homework and the other LLC is/was handled from Day 1 as a separate entity (basically financially separate and not just a shelter/extension of ones self), then they are likely to be protected.

It's useful to keep them as separate entities for as long as the doctor is practicing. Once they retire, it makes no difference if the dissolve their second LLC or maintain it.

I'm no lawyer but thats the way I see it all working out. I think that's how doctors I know did it.

Yes, that's how its set up.

We have a "parent" company for the medical practice. All monies come into this corporation and the partners are shareholders.

Each physician partner has their own PLLC of which they are an employee, separate from the practice corporation.
 
Yes, that's how its set up.

We have a "parent" company for the medical practice. All monies come into this corporation and the partners are shareholders.

Each physician partner has their own PLLC of which they are an employee, separate from the practice corporation.

Yeah, I forgot to say there is a larger LLC, which is for purposes of administrative control and centralized billing, etc.
 
In my state, if you are married and title everything "tenants by the entirety", then a malpractice judgment cannot take any of your assets. This is 100% bullet-proof. Why?

Because the plaintiff would have to sue both you AND your spouse to take any of the assets. The assets are owned by both spouses in their entirety.

The only exception would be if your spouse was also a physician and also happened to take care of the same patient and also happened to commit malpractice on that patient. Then the plaintiff could sue both you and your spouse for malpractice and have access to your assets.
 
Is this sort of thing a pretty standard process that you can just easily meet up with a lawyer/accountant in the state your planning on practicing in and figure out what is the best way to do things for your situation?
 
Yeah, I forgot to say there is a larger LLC, which is for purposes of administrative control and centralized billing, etc.

SO MANY LLC'S!!!! 😱
 
Is this sort of thing a pretty standard process that you can just easily meet up with a lawyer/accountant in the state your planning on practicing in and figure out what is the best way to do things for your situation?

Yes...but look around for one that really knows what they're doing.
 
I think it is pretty sad and funny that we have to go through all of this trouble to just protect our livelihood. Why not just close the loop holes and not have the ****ty bureaucratic laws in the first place. This world could be so much simpler than it is now if people weren't so infatuated with ****ing each other over.
 
I think it is pretty sad and funny that we have to go through all of this trouble to just protect our livelihood. Why not just close the loop holes and not have the ****ty bureaucratic laws in the first place. This world could be so much simpler than it is now if people weren't so infatuated with ****ing each other over.

Defensive medicine...
 
I think it is pretty sad and funny that we have to go through all of this trouble to just protect our livelihood. Why not just close the loop holes and not have the ****ty bureaucratic laws in the first place. This world could be so much simpler than it is now if people weren't so infatuated with ****ing each other over.

Two problems with this post come to mind:

1. You assume people are naturally kind. (some definitely are...)
2. You assume our government is capable of accomplishing something of value.
 
Putting your assets in your spouses name may protect you but the odds of getting divorced are much greater then the odds of losing a case that exceeds your malpractice coverage.So one would be advised to think carefully about this. Some states have excess coverage that can cover you for several million more than the basic coverage.Individuals in high risk specialties should consider this additional coverage.Certain states are much riskier for doctors to practice in than than others in terms of high verdicts.Example Iowa vs Florida
Its very unusual for a malpractice judgement to exceed the limits of insurance.Most of the time cases are dropped or settled.The trend even when it goes to court is a high/low agreement in which the parties put limits on the potential award.
If you practice a risky specialty and you find you have assets that exceed your policy limits then consult with an experienced asset protection lawyer.
 
There's no way in hell I would feel comfortable putting all my assets under anyone even if it's my wife.
 
http://www.physicianspractice.com/finance/your-money-you-can-go-broke-malpractice-suit


This article scared the crap out of me. An OBGYN lost a law-suit for $ 4 million and the malpractice insurance only covered $2 million so obviously they were going to come after her personal assets.

How can a physician avoid this? are there malpractice insurances that are in the $5-10 million range or is there a way to protect personal assets?

I think it's extremely distasteful to go after someone's personal assets, I mean in the end we are all human beings and mistakes happen.



This is generally avoided by agreeing to settle out of court for what the limit is on your malpractice coverage.

Keep in mind that a lot of doctors who are sued settle out of court even if they think they did nothing wrong and even if they think they have a defensible case. They just don't want to take the chance of it going before a jury of 12 idiots who have sympathy with the plaintiff and don't understand anything about real medicine. Taking it to a jury risks being found liable way beyond what your malpractice will cover and puts you at risk of losing your assets.
 
3. Don't have any assets. Or at least any in your name.
This is something I have heard of before but haven't really investigated how it works. Basically I am aware that you can legally assign your personal wealth and assets to legal entities like LLCs and whatnot such that you personally have very very little from a legal standpoint. But from what I understand there are limits to this and ways they can get around it.
 
I think it is pretty sad and funny that we have to go through all of this trouble to just protect our livelihood. Why not just close the loop holes and not have the ****ty bureaucratic laws in the first place. This world could be so much simpler than it is now if people weren't so infatuated with ****ing each other over.

Unfortunately, an infatuation with suing the pants off one another and legally "fuc king each other over" so to speak is a phenomenon largely unique to the US.
 
Vote Republican, since they're the only ones interested in tort reform.

/thread
 
My lawyer suggested we form a partnership controlled by an LLC so we are one removed from the partnership. This is a way to protect assets. An LLC, by itself, will not protect you from a malpractice lawsuit.

He did say, it's not easy to get your personal assets... you just want to make it even more difficult.

This is why most (at least in TX) malpractice suits are only to the limits of your malpractice insurance.
 
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