A doctor’s worst fear is a lawsuit. But with almost two-thirds of respondents to Medscape’s 2019 malpractice survey having been sued, it’s a reality many of us may face at some point.
With this in mind, we need to think about physician asset protection strategies before a lawsuit is on our plate. Although rare, a runaway verdict can put your personal assets in jeopardy. In his lecture “Asset Protection: A Health Care Provider’s Perspective,” now available for CME credit through AudioDigest, Dr. Justin Rountree walks us through “the game” of litigation and strategies to protect ourselves financially.
Putting Lawsuits in Perspective
During his fellowship, Dr. Rountree was sued. After a heated deposition, he noticed that the opposing lawyers began making plans together for that weekend. Surprised by how friendly they were, he realized a few things about lawsuits:
- They aren’t a personal attack, so don’t take them that way.
- It helps to know the rules of the game, including how lawsuits proceed.
- It can be hard to predict outcomes.
In addition, it’s important to understand how lawyers are paid. As Dr. Rountree explains, the plaintiff lawyer is paid a percentage of the settlement, whereas defense attorneys are paid by the hour. In essence, then, plaintiffs hold all the cards because they have relatively little risk and can drop the case if they want. However, the defendant has to pay no matter what, and their only options are to go to court or settle. Plaintiff attorneys then have to decide if it’s worth their time to take a case, and their decision may be based on what assets are involved. Before taking a case, they may access information about you through an information broker, which is why physician asset protection strategies are essential.
Why Do Physicians Need Asset Protection Strategies?
Everybody believes they practice good medicine, and most physicians believe if they practice good medicine they shouldn’t have to worry about lawsuits. But you need to account for unpredictable outcomes.
Dr. Rountree discusses the case of a psychiatrist at the University of North Carolina who was treating a law student for schizophrenia. While in treatment, the patient was managing very well. At some point, the patient believed he didn’t need treatment anymore, stopped his medications and became lost to follow-up. Tragically, in a psychotic episode, he killed two people. At trial, he was considered mentally unstable and committed to a psychiatric hospital. While in the hospital, he sued the psychiatrist.
Dr. Rountree talks about the outcome and repercussions of the experience. The bottom line: Despite practicing the best medicine, sometimes bad outcomes do happen.
Principles for Physician Asset Protection
Dr. Rountree offers physician asset protection strategies with the caveat that laws change frequently, so it’s helpful to consult a lawyer or accountant as well. Ultimately, you want to make your personal assets hard to obtain. To protect yourself:
- Have ample insurance. This means not just malpractice insurance but also car insurance and home insurance. Umbrella insurance is one of the best ways to protect your assets for very little money.
- Take advantage of employer-sponsored retirement accounts. These accounts are completely protected. Personal IRAs can vary in terms of protection, though, and some aren’t protected at all.
- Invest in annuities. Annuities also can vary in terms of protection, but the advantage is that the money isn’t available until retirement. Lawyers may be deterred by not wanting to wait.
- Second-guess trusts. Offshore accounts are what people first think of when they want to “hide” money, but do they really work? Probably not. With a trust, you have to give complete control to your trustee, which is probably someone you don’t know. This can lead to embezzlement issues. In addition, if the client is under duress (which a physician in the midst of a lawsuit is considered to be), the trustee doesn’t have to listen to what the client wants. Trust funds are a tool to give away assets in a controlled manner, not necessarily a protective vehicle.
Finally, remember that insurance companies are businesses. If they settle a case, they’ll lose money; but if they go to court, they could potentially lose less, which is why many may push you. Dr. Rountree recommends hiring your own lawyer so you have someone who is looking out for you.
His last piece of advice? This too shall pass. You will survive this, but planning ahead by protecting your assets is a way to help relieve some of the stress.