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Sometimes learning from true stories of physicians who lost assets due to poor planning is the best way to kick start your own asset protection plan.
We’ve shared more than 125 articles on asset protection for physicians in various forms here over the last three years. It is my experience that sharing specific, true stories helps medical practice owners and managers understand these complex risk and liability issues in a more tangible way and helps cure the risk-related myopia common to nearly every doctor; that your patients are your biggest (or worse, only) risk.
In one case, a practice owner faced a retaliatory lawsuit from an employee correctly terminated for cause. The employee found several other former employees (that she originally hired) willing to make false claims for a chance at a quick payoff and filed a complaint claiming nearly half a dozen labor law violations. Without so much as a hearing the Equal Employment Opportunity Commission offered to settle the complaint; they wanted $580,000 and the costs of legal defense were estimated to be over $250,000.
In other cases, the employees created the liabilities inadvertently. This has included loss of HIPAA-protected medical and financial data when laptops, tablets, and smartphones were lost and access to various EHR systems was possible or actually occurred through the devices. We’ve also seen recent exposures on issues like employee credentialing, where a practice’s billing going back as far as three years is now subject to an audit due to questions about credentialing of certain employees as required in their third-party payer contracts. In this case, the period and billing in question creates a seven-figure liability for the practice. Required defense specialists on this issue bill well over $700 per hour.
We seen a variety of issues related to practice owner’s family members. In some cases the exposures have been very general, like the surgeon whose 17-year-old daughter threw a party while he was out of town for 48 hours. A teen she’d never met brought his own drugs which caused him to have a fatal overdose at the doctor’s luxury home. The result was a $3 million wrongful death lawsuit.
In an even more common case, a fatal car accident involving the doctor’s spouse created a seven-figure liability for her practice. Why? Because both her vehicle and her husband’s vehicle were leased and paid for by the practice. We’ve consistently seen similar results when children and employees were allowed to use practice-owned vehicles. Not all have been successful, but all have inflicted costs including defense, reputational damage and crippling stress to the doctor involved.
In some cases hidden conditions like wet floors, uneven sidewalks, and even Americans with Disabilities Act compliance and accessibility issues have been the cause of substantial lawsuits against doctors. We’ve also seen patients contribute to an injury themselves and then pursue the doctor as the "deepest pocket." One practice owner had a woman with a child leave her office without issue and the child ran out from behind a parked car in the parking lot after slipping away from its mother. The child was struck and seriously injured by another patient’s vehicle. As the driver was an elderly lady on a fixed income with liability only insurance, the claim was quickly amended by the child’s lawyers to name the doctor and her practice and blame the conditions in her parking lot, which was legally compliant and recently re-striped.
Another case involved an employee who removed a bucket, warning signs, and red cones a contractor placed around a small hole in a hallway floor as work was continue the next day. The employee later claimed to have tripped on the hole that she herself exposed without permission and brought a substantial claim against the practice.
Real Estate Debt
We have seen countless doctors lose their life savings when they had business or personal real estate debt (or both) they could not continue to service given the economy. In one specific instance a doctor both personally guaranteed and had his practice guarantee a large loan for the acquisition of a new building with several partners. This was done without adequate legal counsel and the doctor signed as "jointly and severally liable" for several million dollars in debt. At the end of the day the doctor was the only collectible party involved, his partners were already broke, and the resulting judgment wiped out his personal and business savings of over $3 million.
OK, so you heard some scary stories, just a handful of literally hundreds I could share. Now what? Use this information and the index link provided above to learn more and act to "immunize" yourself against these risks today.