One of the most costly and immediate challenges OB/GYN physicians face is the unavailability of reasonable medical malpractice insurance. Insurers are either not writing new policies or not renewing existing policies, and many jurisdictions have allowed insurers to increase their premiums exponentially. Policies can cost between $120,000 and $150,000 a year, yet most insurers will not write policies of more than $1 million per claim, despite the fact that juries are returning close to 9-figure awards.
The second significant challenge comes from the federal and state governments’ crackdown on Medicare and Medicaid fraud. Honest billing mistakes are being treated as acts of fraud, with steep penalties being doled out to the alleged violators. The government can attack OB/GYN physicians’ personal assets. However, there are steps you can take to protect yourself.
To fend off the individual plaintiff, the best strategy is to discourage the lawsuit. Contingency lawyers tend to believe they’re bringing an action against a rich physician. The sooner they learn that the defendant has no attachable personal assets, the sooner their strategy will change, and the lawyers will take what they can get from an insurance settlement.
This process brings malpractice insurance back to doing what it’s supposed to do-covering the doctor. A good domestic asset protection plan is effective against all future claims, and should serve to discourage future lawsuits. Caveat: You must protect yourself before the start of a lawsuit.
However, domestic asset protection offers no guarantee against actions brought by the federal government. OB/GYN physicians who are concerned about unwarranted Medicare and Medicaid fraud investigations should look to offshore asset protection. This entails moving your assets out of the jurisdiction of US courts.
Doctors have a number of potential jurisdictional options, including the Caribbean, the Isle of Jersey, Liechtenstein, and Mauritius, among others. Offshore asset protection done in a tax-compliant manner is an extremely effective tool.
A key distinction between domestic and offshore asset protection is who retains control of the assets. With domestic asset protection, the individual still controls the assets, although they must give up title. With offshore asset protection, the individual is giving up all legal control, although it is possible to maintain de facto control. Typically a trustee or corporation controls the assets. In all cases, OB/GYN physicians must be guided by someone who can do the following:
- Structure the vehicles in a tax-compliant manner;
- Do it in such a way that the protections can’t be undone; and
- Choose an area with political, economic, and social stability.
Given the attacks on OB/GYN physicians from both the government and individual plaintiffs, it is more apparent than ever that doctors need to protect their assets to the best of their ability. The days of huge insurance policies serving as reliable umbrellas are long gone, but there are viable alternatives available to those who plan ahead.
Originally published in Physician’s Money Digest, OB/GYN Edition, March/April 2003.