Asset Protection for Physicians
One of the greatest challenges facing physicians today has nothing to do with their skills or competence as professionals. Increasingly, medical doctors have had to deal with protecting their assets from malpractice lawsuits and predatory claims. As society in general becomes more litigious, this unfortunate situation will only continue to escalate. Asset protection for physicians, dentists and other medical professionals becomes ever-important as the litigation risk increases with each patient you see.
How then do you, as an industrious, well-trained medical doctor or dentist, protect yourself? What do you do to you secure your hard-earned assets from unscrupulous patients? How do you shield yourself when heartless lawyers file frivolous claims?
- Make sure you have a comprehensive and current malpractice insurance in place. Insurance companies invest in some of the best legal minds to protect their clients from lawsuits.
- Set up an individualized asset protection plan as early as you can in your medical career. You will find that a well-crafted asset protection plan can be effective in covering gaps in your malpractice insurance. There are several instruments you can include in your asset protection plan. You may need to turn to a trusted professional to help you make the right decisions.
- Third, take advantage of government-protected tax shelters as much as possible. Most tax-deferred retirement plans enjoy 100 percent protection in all states. Moreover, they are exempt from malpractice and personal injury judgement. This means you’re free to practice what you love – medicine – without having to worry about nonsense lawsuits.
Is Malpractice Insurance Enough?
Some physicians think that a malpractice insurance policy is an effective line of defense potential lawsuits. Think again. As you will see below, there are many reasons why they won’t be there when you need them the most. Premium costs tend to increase much faster than the rate of inflation. They are especially high within the surgery and OB/GYN specialties. Then, with increasing pressure from health insurance to decrease patient fees, many physicians feel financially squeezed at both ends.
We are not saying that you should not have a policy. You should. And don’t let the high cost of malpractice insurance prevent you from getting one. A single successful claim, whether it is warranted or not, can wipe out your entire practice. The good news is that you may not need one with all the bells and whistles early in your career. But do make sure you have malpractice insurance in place well before you hang your shingle outside your office door.
Additionally, make sure you update your malpractice insurance regularly. You’re more likely to be a target of predatory claims as your practice expands and you get more clients. To begin with, physicians are already often viewed as ‘deep-pocket’ targets by greedy claimants. The more successful you are, the greater the odds of someone suing you. Your medical malpractice insurance coverage must grow with your practice.
Asset Protection Plan
That said, having malpractice insurance is just one step in protecting your assets from lawsuits. In fact, having only malpractice insurance, with no other asset protection in place, can put you at higher risk for lawsuits. Devious claimants know when they sue a doctor and win, it’s the insurance company that settles the claim. Of course, a lost claim ultimately results in higher premiums for the physician. But that is not their concern. They simply take their ‘winnings,’ pay off their contingent fee lawyer  and scout around for their next victim. This is why you must include targeted asset protection strategies in your defense against such plaintiffs.
You Cannot Rely on Malpractice Insurance
Here is why:
- Coverage limits. Someone can sue you for more than your coverage limits. This problem is commonplace. In fact, we just spoke with a prominent, tenured surgeon who was about to retire. One of his nurses made a serious mistake which resulted in permanent brain injury in one of his young patients. The patient had just sued him and he reportedly had $3 million of malpractice insurance. The problem? The lawsuit was for $28 million. With prudent investing over the course of his career, he had the asset base to cover the claim. Losing the lawsuit means he and his wife are penniless. A long 35 years of accumulated wealth and, “poof,” one claim and it disappears.
- With the competition among insurance companies to lower rates, there are tremendous exceptions written into today’s insurance policies. Insurance companies only make a profit if they take in more than they pay out. If there is a way out of an insurance company paying a claim, they will take it.
- Fraud claims. There is an ever-increasing number of fraud claims alleged against physicians in legal filings today. The reason is that the attorney and his or her client can collect more by winning a case that involves fraud than without. Plus, the plaintiff’s attorney can collect legal fees and court cost.
The fraud claim does not actually need to be valid. They just need to convince a judge and/or jury that it is. One common fraud claim is where a physician performs a procedure. Then an expert witness takes the stand claiming the procedure was not needed. They claim that the physician recommended it to line his own pockets. Insurance does not generally cover fraud.