1. Who Is The Physicians Advocate, LLC?
The Physicians Advocate, LLC is a brokerage firm staffed by professionals with decades of experience representing physicians, healthcare facilities and managed care companies. We specialize in malpractice and general liability insurance, HMO reinsurance and stop loss and the other property and casualty needs of the healthcare industry. As a broker, we work with many insurance companies for each market segment and product niche within our areas of specialization. (Top)
2. Why is it ill-advised to go bare?
Going “bare” is a strategy that makes much less sense today than it did previously. There have been three (3) major events that have taken place recently which greatly reduces your chance to walk away from a judgment without repercussions if you have gone “bare.”
When so-called medical malpractice tort-reform was pushed through the legislature in September, 2003, one provision was passed that can lead to the suspension of your medical license and “steal” away your ability to make a living in medicine. The measure states if you have a judgment against you, you must pay up to $250,000 per claim or have a payment plan in place within thirty (30) days or you will have your license suspended. Remember, the financial responsibility law is such that it is not just $250,000 per year, but $250,000 per claim and $750,000 per year. If you have three claims in one year, then your exposure is actually $750,000 for the year and you will be responsible for that amount out of your “pocket.” This potential cost is before you even incur legal costs.
The New Federal Bankruptcy Laws
The historical process for going “bare” was that in the event you had a malpractice judgment against you, then you declared bankruptcy through “Chapter 7.” By going Chapter 7, the debt was discharged and while it may have hurt your credit, you were no longer responsible for that debt of your malpractice judgement. With the new bankruptcy laws, the process no longer works that way. There is a financial integrity “test” with the new law that most every physician will pass. The test states simply that if you have a substantial income (most every physician I know) and a substantial debt (a malpractice judgment), you can no longer file for Chapter 7. Instead, you must file for Chapter 13 which means you have to establish a payment plan over five (5) to ten (10) years and part of that plan can include garnishment of your wages.
Three Strike Rule
Since the recent state referendum, you know also run the risk of losing your license if you have three strikes against you. I think the general consensus, as this subject is not fully clarified yet, if you have a judgment or settlement against you are an independent (of a malpractice claim) ACHA claim, each of these would count as a strike against you. Thus, you will want representation by an attorney who is experienced in your specialty and the insurers know the best representative for that task.
And Don’t forget When you go “bare,” you have this issue also: Legal defense
Legal Defense can be very expensive. The average cost for a suit to take it to settlement through an insurer is $150,000. If you are “bare,” this cost will come out of your pocket. Some asset protection specialists will argue that the cost is substantially less when you have no insurance. With the many markets again offering affordable coverage, is it really worth taking a chance that this cost might become your obligation even if you won a judgment against a plaintiff?
3. What is the best way to protect your assets?
Please read our MedWealth article entitled, “The Intelligence of Integrated Asset Protection Planning”.
4. What are the factors to consider when selecting your insurer?
There are a number of new markets; Admitted Insurance companies, Physician-Owned Reciprocal Insurance Companies, Surplus Lines companies and Risk Retention Groups. Some are well capitalized and have nominal liabilities at this early stage. The traditional insurers are active again, but to a limited extent. We will find the company that best fits your circumstances. Things you need to know about your insurer include:
- Admitted or Non-Admitted Status
- Guaranty Fund Protection
- Underwriting Perspective
- Defense Costs
- Claims Philosophy
- “Tail” Provisions
- Strength of Management
- Financial Strength
- Capacity Limitations
- Retroactive Coverage
- A.M. Best Rating
5. What factors should be considered regarding Claims Management?
- Will the physician be aggressively defended, including the Catch 22?
- Early reporting of potential claims – incident vs. demand triggers
- Coordinated defense among Physician Defendants
- Pursuit of alternative dispute resolutions, including mediation, when appropriate