Medical Malpractice
Insurance Options

T he medical malpractice insurance crisis may have subsided a bit for dermatology, but the problem hasn’t been “fixed” for good yet. Lawsuits are still on the rise, jury awards are out of control, malpractice premiums are still escalating, and the practice of medicine as we know it is severely threatened. The purpose of this article is to help you better understand what you can do so that you can make an intelligent decision, take action, stop worrying and get back to the practice of medicine. There are alternatives and solutions. Here’s a look at what some of them are, including the pros and cons, as well as the costs and benefits, of each alternative. Pay Up The easiest alternative is to just pay the premiums on the table from your malpractice carrier. We recently attended a conference in San Diego that was devoted solely to the “hard-to-place” medical malpractice market. As dermatologists, you’re probably not faced with having your malpractice insurer cancel or not renew your malpractice coverage. However, if this were an issue, there are options. One of the organizations we met actually has the capability to help doctors in 30 states. The key point is that, even if you think you aren’t insurable, there might be a carrier out there willing to write a policy for you — thus preserving your privileges at the hospital and your relationships with your insurance payors. Self Insure Many large groups are considering self insurance. You can join an existing Risk Retention Group (RRG) or set up your own Captive Insurance Company (CIC). We have assisted hundreds of medical groups analyze the benefits of CICs over the years. Though most medical groups find alternative means of protecting themselves from medical malpractice, a growing number of medical practices are utilizing the risk management, asset protection, and tax-favored benefits of self insuring with CICs. Typically, medical groups use CICs to self insure for risks other than traditional medical malpractice. These risks might include: legal defense (medical malpractice), HIPAA violations, Medicare fraud, insurance fraud, loss of medical license, and other similar risks. Recent changes in the law on captives make it important for a physician to find someone with a great deal of experience in captive insurance and with the healthcare industry. Quit Medicine Not necessarily your first option, but it may be something you’ve contemplated. When the time is right, go see a financial planner who can help you comfortably plan your well-deserved retirement. You might be surprised how close you actually are. Go Bare Although many doctors are considering this (especially in Florida and other high-risk states), there are many pitfalls to going bare. However, the main benefit of going bare is that you will be a less-attractive lawsuit target if you don’t have insurance. This is true if and only if you have implemented a comprehensive asset protection plan prior to any action that could potentially result in a lawsuit. Placing assets in a spouse’s name or into a living trust do not provide asset protection. Although some states offer tenancy by the entirety, some homestead protection, and some protection of insurance or annuities, it is imperative that you have an attorney research the recent case law in your state as the statutes often do not match the actual results in the courtroom. Furthermore, your brokerage accounts and rental real estate are not protected in any state! Lastly, your practice assets (such as equipment, real estate and accounts receivable) may be at risk to lawsuits from the actions of you or any of your partners. Searching for More Options A full-scale discussion of asset protection is beyond the scope of this article, but we hope the potential alternatives we’ve mentioned might be useful.