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Physician Asset Protection

By Mark Horgan, Esq, CRICO

Related to: Claims, Emergency Medicine, Primary Care, Obstetrics, Other Specialties, Surgery

Average payments for medical malpractice cases—including both settlements and jury awards—have been rising nationally over the past several years at a rate of about seven percent per year. The increasing frequency across the country of high jury awards in “med mal” cases has some physicians worried about the adequacy of their medical malpractice coverage. They worry that if they are sued, and the jury award exceeds the limits of their malpractice coverage, their personal assets are at risk. It’s a legitimate concern.

Physicians—not the hospital or practice group—are legally liable for claims that exceed the amount of their coverage. Some physicians consider purchasing additional insurance to provide financial protection in excess of their basic coverage—which for CRICO-covered physicians is $5 million per case with an annual aggregate of $10 million. CRICO is taking several steps to help providers better understand the true extent of their exposure and the practical steps they can take to mitigate or limit their fiscal risk.

Unfortunately, providers may be unaware of their true risk. An initial point that providers need to understand, is that the coverage provided by CRICO has proven adequate, and in fact, is among the highest provided in the country. The University of Massachusetts insurance program also provides $5 million of coverage, but that of other carriers in the commonwealth is much lower. Commercial carriers most commonly write policies for $1 million in coverage annually per physician.

CRICO’s coverage level has proved sufficient to pay for every case settled prior to trial over the insurer’s 30-year history. During that same time frame, only about a dozen cases have involved jury verdicts that exceeded CRICO coverage levels. In all of those cases, defense attorneys have negotiated post-trial terms such that no physician has ever had to relinquish personal assets.

Despite that track record, providers often believe that additional coverage is needed. Unfortunately, excess insurance cannot guarantee complete protection. At the initiation of any medical malpractice suit, defense attorneys are required to reveal to plaintiffs the extent of each defendant’s malpractice coverage. A higher total coverage level may lead the plaintiff’s attorney to demand a higher financial settlement during negotiations.

A more prudent approach for providers may be to fully understand the degree to which their personal assets are at risk and to take reasonable steps, as appropriate for their situation, to protect those assets before an event occurs. For example, they can work with a financial advisor to investigate asset structures, such as 401Ks and other federally insured retirement vehicles that are protected from seizure for legal awards. Occasionally, our claims managers recommend that insured physicians who have been sued retain personal counsel familiar with malpractice litigation to provide advice on handling the potential exposure of their personal assets.

As always, CRICO remains committed to supporting providers before and after serious events and claims.

April 1, 2010
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