Do You Dare Go Bare?

Practicing without Malpractice Coverage

By Kent Forney
You thought it could never happen to you. A registered letter arrives bearing the initials Esq. after the name on the return address. Suddenly alert, you open the envelope to find a letter that begins: "This is to advise you that I have been retained by Mr. Jones to pursue a claim for damages against you that relate to injuries he sustained during the course of your treatment. Please forward this letter to your insurance carrier."

"What am I going to do now?" is indeed the first question doctors of chiropractic numbingly ask themselves when faced with a lawsuit. And it is the same question DCs find themselves asking many times over if they do not have malpractice insurance. In today's tight economic climate, letting coverage lapse, or not signing up for malpractice insurance, is one way DCs try to cut expenses. But as consequences attest, going bare (practicing without liability insurance) is an ill-fated method for managing finances. It also is inconsistent with the ethics of a profession that is committed to a patient's total well-being.

The majority of DCs may never have to face the trauma of a malpractice suit, but in today's litigious society there is no such thing as practicing defensively. The truth is that many claims against chiropractors are unfair; many DCs painfully learn they don't have to do anything wrong to be hit with a lawsuit. That is why DCs should be aware of what's involved in a malpractice claim and what could happen if they are inadequately covered. It should make anyone think twice about going bare.

DCs are usually extremely shocked upon discovering they are being sued. Often a claim appears out of the blue, sometimes even a number of months or years after the alleged incident. A patient may simply stop coming in for no apparent reason, but the claim sat in the lawyer's office for several months before it was sent, or the DC is being sued for a lesion on the lungs that went unnoticed three years ago and has since turned into cancer. In some cases, upon reflection, a claim may arise after a pattern of difficult behavior by a patient. For example the DC may recall that the patient often canceled appointments, didn't pay bills on time, and complained frequently.

Obtaining Counsel

Whatever the situation, the first thing the DC will need to do is obtain a lawyer experienced in defending chiropractic malpractice claims. If the DC is covered by NCMIC, for example, the DC can rest assured that the insurance company will provide the best team of counsel possible, with years of successful malpractice claim experience. But the DC needs to be aware of an important distinction between the two kinds of liability coverage available. Claims-made coverage will only provide protection for the incident if it was reported during the term of the policy. Occurrence policies however provide coverage for any treatment provided during the life of the policy, regardless of when the claim is filed, and usually offers greater peace of mind.

But what if a DC is not covered? The DC will have to spend precious time and emotional resources trying to locate a good lawyer who is knowledgeable about chiropractic and defending malpractice claims. This can be difficult to do while still coping with the initial shock of being sued. And the DC will have to be able to assure the attorney that all legal fees can be paid.

Legal fees for a malpractice defense can easily run into the six figure range, sometimes even exceeding the amount of the verdict. The DC cannot resort to a public defender because malpractice claims are civil cases, not criminal. A DC's compensation also will likely prohibit him or her from qualifying for legal aid. The doctor will need to pay all costs out-of-pocket. The lawyer may require a payment up-front or agree to a retainer, which the DC must continually replenish so the lawyer can bill against it.

Hidden Costs

Expenses however don't end there. Uninsured DCs also must cover the fees charged by any expert witnesses who are called. These can range from $2,500 upwards to $15,000, depending on the amount of preparation required. In addition, the uninsured DC must pay deposition costs (court reporters charge by the page). When the testimony is extensive, this cost can turn into hundreds of dollars.

Is Bankruptcy an Option?

If the doctor is uninsured and the patient wins the case, the DC is then responsible for the settlement, or judgment, in addition to all the legal costs. If the DC is unable to pay this, the patient (known as a judgment creditor) can begin levying the DC's property with the proceeds from any sales applying toward satisfying the judgment. State law, which varies widely across the country, dictates what property can be taken from the doctor and what is protected or exempt. While a doctor's home may or may not be protected, depending on the state, an investment portfolio of stocks and bonds or the building that houses the DC's practice, if owned, is fair game.

At this point the uninsured DC must decide whether to declare bankruptcy. Putting aside any of the professional or emotional repercussions of such a decision, filing bankruptcy does not guarantee that the doctor will be relieved of his financial responsibilities in a malpractice case. This is when the real tragedy of not carrying professional liability insurance becomes painfully evident.

Under the Federal Bankruptcy Act, a residence is only exempt up to $15,000. If a DC who filed bankruptcy owned a $300,000 home, it still would be subject to execution and sale; only $15,000 of that sale would accrue to the doctor; the balance would be made available to creditors. States however are free to opt out of the federal act's exemptions and apply their own laws, which the majority have done. What can be held exempt under bankruptcy really ends up being a question of local law. Exemptions may include part or all of a car, household furnishings, jewelry (up to a certain amount), as well as tools of the trade, such as an adjusting table. But what a DC can hold exempt is mostly not of any great value.

In an attempt to protect themselves, DCs may attempt to transfer property, possessions, or investments to their spouses, children, or relatives. This tactic rarely holds up in court. Any transfer done with an intent to defraud creditors or within a certain time prior to the filing of bankruptcy is typically voided or "set aside."

Another little known fact about bankruptcy is that the law states that settlements for willful or intentional injuries cannot be discharged in bankruptcy. In addition, the court has the right to review any prior judgment to determine whether it was truly dischargeable in bankruptcy. Even though a patient's case might not clearly represent the claim as an intentional or willful injury, it is not unheard of for the bankruptcy judge to review the case again and change the decision negatively for the doctor, depending on how the facts are interpreted.

In a malpractice suit, a DC's professional judgment and skills have been challenged. The emotional ramifications and impact on reputation can be devastating, but having to face the situation without proper liability coverage only magnifies the trauma.

Your Responsibility to Your Patients

Aside from potential financial ruin, it is important for the DC to think about the patient. As caring for the well-being of patients is every DCs responsibility, what do you say to your patient who has been truly injured, but will not receive any financial remuneration? How do we defend the DC's choice to practice without making sure patients and their families will be provided for in the event that an accident occurs? How can any DC successfully resurrect a practice after a malpractice suit knowing that a patient is suffering needlessly because the doctor refused to provide for all outcomes? It is simply irresponsible. My advice is to not open yourself to this possibility.

Kent Forney, Esq.
NCMIC General Counsel
Des Moines, Iowa

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