Protect Your Assets–Know Your Risks
What steps are you taking to protect the assets of your medical practice against law suits? First, recognize your risks.
According to a 2010 AMA report, more than 61 percent of doctors older than fifty-five have been sued at least once. Let’s face it: the odds are not in your favor. Here you are, working hard, investing time and energy to grow and mature your practice, yet it could all be shaken or even destroyed in a lawsuit.
How can you protect yourself and your practice from lawsuits, creditors, and other potential legal threats?
Don’t Let This Happen to You
Consider what happened to a physician we’ll call Dr. Arneaux. In his late sixties, he was getting ready to retire after he’d put all of his children through private school. He had even worked a few more years than he’d intended to save for retirement.
What he hadn’t done, however, was take proper protective measures to plan for a worst-case event. He was facing a lawsuit from an angry patient and needed help. To make matters worse, several pages of the patient’s chart had gone missing, perhaps stolen by Dr. Arneaux’s former employee, a friend of the patient.
Worse still, the angry patient had hired a litigator known for aggressive tactics who had made a name for himself by suing doctors. He was said to browbeat physicians during their depositions, and he sometimes took lawsuits to trial just for the publicity.
After two painful years of litigation, Dr. Arneaux’s matter was finally settled. On top of the payment made by his malpractice-insurance carrier, Dr. Arneaux had to write a sizeable check. Beyond that, he lost a lot of sleep in those two years, and the ordeal drained a significant amount of the honor and pride of the more than thirty-five years he’d practiced medicine.
A Terrifying Situation
No one should have to go through that–at any age–and if you find this situation terrifying, you’re also not alone. The truth is that most doctors don’t seriously plan for this scenario; only about 40 percent take the right precautions to protect themselves. And yet planning makes an enormous, and even a life-changing, difference.
Once the patient had initiated legal action, Dr. Arneaux did everything in his power to protect himself from further harm. But his story would have had a different ending if only he had done a few key things ahead of time.
The good news is that, if you act proactively, you can reduce the likelihood ever being sued. What’s more, you can build legal protections around your practice and personal assets to diminish the risk of losing anything significant if a lawsuit occurs. But what are the risks?
First Recognize Your Risks
Once you’ve recognized the sources of risk, you can then take steps to adequately protect yourself. Girst, you want to concretely identify your legal threats.
Here are the top five legal risks you likely face as both a practicing physician and the owner of a medical practice:
Risk #1: Medical malpractice for acts and omissions as a practicing physicianMalpractice can take many forms. Among the most common is failing to see a test and make a diagnosis, or failing to notify a patient about an abnormal test result.
Risk #2: Medical malpractice for the acts and omissions of those who work for you
Remember, much of this liability falls to the practice entity and to you as the owner.
Risk #3: Medicare, Medicaid, and insurance carrier suits and infractions
These include suits and penalties related to billing and collections that are noncompliant with what are sometimes arcane and complex rules. Sadly, many of these suits are the result of employee whistle-blowers involved in the very violations they reported.
Risk #4: Liability for car, motorcycle, boat, or other accidents
While it may seem as though this type of liability is not unique to doctors, in fact, people are more likely to sue when they learn that the operator of the other vehicle is a doctor–that is, they see a dollar sign on your head. You’re also liable for the negligence of any driver operating a vehicle that has your name on the title.
Risk #5: Ordinary business exposures
These exposures could include the following:
- if someone slips and falls,
- if a patient or employee is mistreated or harassed by another employee,
- contract damage when a business dealing goes awry,
- liability from business or investment activities in your name or in the name of a company in which you serve as an officer or director, and
- liability for actions or inactions of a partner in a partnership that’s not incorporated (all partners in a general partnership are jointly liable).
Many types of liabilities cannot be expunged through bankruptcy and will stay with you forever. These include some kinds of Medicare payback obligations and penalties, certain taxes, penalties associated with environmental waste, and malpractice in which the doctor was found reckless or willful in his or her conduct.
Thankfully, by identifying the risks that threaten you and your practice, you’ve taken an important step toward safeguarding your livelihood. This prepares you for the next step–building the proper legal protections around you and your practice.
Looking for more tips on protecting your assets, access our free medical practice success toolkit.