What Is the Importance of Physician Asset Protection
Is physician asset protection—shielding one’s practice and personal assets from future lawsuits—worth it?
Finding data on successful malpractice lawsuits payouts is not hard. An excellent study, the 2013 Medical Malpractice Payout Analysis by Diederich Healthcare, provides very relevant data, including that in 2012, there were 12,142 payouts totaling $3.6 billion. But how many of those cases turned into personal liability and losses for the physician—where prior asset protection planning could have helped them? Tracking how many physicians lose personal assets in malpractice actions (or ANY type of claim, such as employee liability or car accidents) is very difficult, if not impossible to obtain. That is because the legal system publishes filed cases and judgments rendered, but they do not publish the collections of those judgments.
Did the plaintiff, with a judgment in excess of coverage limits, simply settle for the amount of the medical malpractice insurance? Did the plaintiff and his attorney pursue the personal assets of the physician and his family to satisfy any excess judgments? These are questions for which there are no answers in the published materials.
Payments, Not Evictions
A common theme in speaking to physicians and their advisors around the country on this topic seems to be, “I have never personally heard of anyone losing their home to a lawsuit,” and therefore the conclusion is that it doesn’t happen. However, if one understands the goal of litigation and the plaintiffs, this certainly isn’t surprising. What does occur instead of eviction, is that the plaintiff with the judgment will file a lien on real estate, levy bank accounts, and essentially put levies or liens on any assets of the physicians to the amount of the judgment owed to them. The goal is not to kick the physician out of their home, but make the doctor take a loan against the home to pay off the excess judgment.
The Legal Obligation of the Plaintiff Attorney: Satisfy the Judgment
There seems to be an underlying assumption by attorneys who advise doctors that asset protection isn’t important that plaintiffs and their attorneys will not go after physicians’ personal assets because it is “distasteful” or for some other reason. But put yourself in the shoes of the plaintiff and the attorney. The plaintiff’s attorney has a professional and ethical obligation to represent his or her client with their best interest to the fullest extent of the law. If, as an attorney, I had represented a plaintiff who had a $4 million judgment and only $2 million was paid by insurance and I knew that the defendant had millions of dollars of assets that were unprotected that I could attack in order to get the client paid in full, I would have to do this. In fact, if we didn’t pursue those assets, I might be liable for malpractice to the client, and rightfully so.
Why Wouldn’t You Protect Assets?
I am not a “sky is falling” guy. Even with my comments here, I still tell most clients that it’s statistically unlikely that they will lose personal assets in a malpractice action. However, I believe asset protection planning can benefit you in many ways beyond lawsuit protection.
In fact, most of the asset protection we do for clients is relatively low cost and has numerous financial, tax, and estate planning benefits as well. So, the question is, “if asset protection planning can protect you in many ways and can cost relatively little, why wouldn’t you do it?”
Readers of the Getting Paid Blog can receive a free hardcopy of “For Doctors Only: A Guide to Working Less & Building More” by calling 877-656-4362, or visit www.ojmbookstore.com and enter promotional code KAREO15 for a free ebook download.
Disclosure: OJM Group, LLC. (“OJM”) is an SEC registered investment adviser with its principal place of business in the State of Ohio. OJM and its representatives are in compliance with the current notice filing and registration requirements imposed upon registered investment advisers by those states in which OJM maintains clients. OJM may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. For information pertaining to the registration status of OJM, please contact OJM or refer to the Investment Adviser Public Disclosure web site www.adviserinfo.sec.gov.
For additional information about OJM, including fees and services, send for our disclosure brochure as set forth on Form ADV using the contact information herein. Please read the disclosure statement carefully before you invest or send money.
This article contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized legal or tax advice. There is no guarantee that the views and opinions expressed in this article will be appropriate for your particular circumstances. Tax law changes frequently, accordingly information presented herein is subject to change without notice. You should seek professional tax and legal advice before implementing any strategy discussed herein.