Can Losing a Malpractice Suit Cost You Your House?

Neil Chesanow

Disclosures

September 26, 2016

Can I Lose My House if I Get Sued?

Many doctors live in fear of being sued by a patient for malpractice, deservedly or not. A big part of that fear is what could happen if a doctor, even one who has malpractice insurance, loses a case in court. Many doctors think the worst: Not only will their reputations be tarnished, but they also could be personally ruined. They could lose their personal possessions. They could even lose their house.

But is this fear realistic? A recent Medscape article looked into the question. The author interviewed a number of malpractice attorneys and discovered that while it's not impossible that a doctor's home could be in jeopardy if a malpractice suit is lost, the chances of it happening are slim.

Still, readers who commented had strong feelings about the specter of being the target of a lawsuit.

"It's a myth that lives on, despite the fact that it happens so rarely," one defense attorney said. He pointed out that two thirds of malpractice claims are dropped or dismissed, and that physicians win 90% of the cases that go to trial.

"Generally, malpractice insurance is adequate to settle the case—but there are exceptions," another attorney, who works with malpractice insurers, explained. There have been instances, she said, when plaintiff's attorneys have filed liens on doctors' bank accounts and property to force them to take a loan against their homes to pay off an excess judgement, but, she added, anecdotally (there is no central repository of data on such matters) it's extremely unusual.

While each state has its own rules about which assets can be attached, many physician assets are exempt from collection efforts, the article stated. Laws around the country also provide substantial protection for primary residences. And if a doctor is married and the house is jointly held, it makes collection on it even more difficult, a plaintiff's attorney maintained.

Moreover, the fear of going to court and being at the mercy of a doctor-hating judge is also overblown, the article noted. Both plaintiff's and defense attorneys agree that there's strong incentive on both sides to settle the case within the doctor's policy limits, which are typically $1 million per incident. That's because malpractice cases are both expensive and lengthy to litigate.

"If the plaintiff's attorney succeeds—and that's a minority of the time—he wants a check and not an Easter egg hunt," a lawyer explained. "The attorney has fronted tens of thousands of dollars in expert witness fees and other expenses. The client needs money to pay for current medical expenses. The attorney wants his contingency fee. No one gets paid until the case is settled, and insurance coverage is almost always enough to do that. To go after a doctor's assets requires protracted litigation that just isn't worth the effort."

In other words, while a patient may feel wronged, rightly or not, and want to take it out on the doctor's hide, from an attorney's perspective it's not about seeking vengeance: It's just business. The sooner a case is settled, the sooner everyone can get on with their lives.

The article drew a variety of comments from doctors on plaintiff's attorneys, both pro and con; protecting one's home in the event of a malpractice suit; whether insurance coverage was even necessary; and the importance of the doctor-patient relationship in warding off potential legal action on the part of patients.

"When I was in medical school, I was in the locker room at the athletic center," a doctor recalled. "One of the law students looked at another law student and said that he was going into copyright law because 'there just aren't enough doctors to go around anymore.'"

"Quite possibly," another physician responded. "Your typical ambulance chaser cannot afford the upfront investment required in a medical malpractice case—not unless they farm it out to a medical malpractice firm for a cut of the attorney's fees.

"Most insurance brokers and agents advise doctors to 'buy as much insurance as you can afford; load up on extra coverage just in case,'" a family doctor wrote. "But what they fail to disclose is that doctors who have malpractice insurance are more likely to be named in a malpractice suit than doctors who have no insurance. Malpractice insurance serves as a 'deep pocket' and often an incentive for the attorneys to go after a physician. Malpractice insurance is the bread and butter that feeds the sharks."

"Most plaintiff attorneys are ambulance chasers," an orthopedic surgeon opined. "They desperately need rules and regulations. We get patients to sign informed consents, which are seemingly worthless. I had two claims, which were settled out of court—one involved sensory nerve damage, the other preexisting degenerative arthritis—in which there were inherent complications in both cases."

"Any physician who doesn't have his home in a trust—which is incredibly expensive to do—is actually signaling to others: 'Come take my house away,'" an ob/gyn opined.

"In some states, personal residences are 100% exempt from malpractice suits," a doctor commented. "That's why physicians may go without insurance coverage and put almost all of their income into their houses, and why some physicians have the most expensive houses in town. It's a place to put their assets without risk."

"This is the wrong country in which to be a doctor," an emergency physician maintained. "Everywhere else in the world, what we do matters. Here, lawyers see us as cash piñatas!"

To which an otolaryngologist replied, "It's not the lawyers. The lawyers are just doing their jobs. The problem is the patients. They are the ones we need to go after."

Yet some respondents felt that providing good care was the most powerful prevention against being sued.

"The best insurance is to come across to the patient as someone who truly cares about them, someone who is willing to listen to what the patient feels is important," a doctor asserted. "Give them a handshake, put your hand on their shoulder when you walk with them, sit level with them, and look them in the eye when you tell them the diagnosis, prognosis, risks, and available options. Be human, be honest, and do not come across as superior."

"The question posed by the article--'Can I lose my house if I get sued?'--was well answered," a psychiatrist believed. "But instead of worrying about being sued, we should worry more about what it means to provide good care in the context of a therapeutic relationship. The article says that the odds are against a doctor having to pay his own money in the unlikely event that a case is lost. That's reassuring. But how many times do difficult outcomes, such as suicide or bad medication reactions, not result in lawsuits because of the doctor-patient relationship? Good psychiatry is the best defense. It's also the best medicine."

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