Malpractice - Is going bare the only option? COVER STORY  - March 21, 2003 For a sizable number of Florida physicians, the answer is Yes. See how they're coping. By Deborah Borfitz Frustrated by skyrocketing medical malpractice premiums, more and more physicians across the country are threatening to go bare. In Florida, they've moved beyond threats. Last year, according to the state Department of Health, more than 1,600 of the state's physicians practiced without insurance. Other estimates put the number at just over 2,400, or 5 percent of the state's 48,200 physicians. Florida is one of 12 states labeled "in crisis" by the AMA. These states are marked by an exodus of insurers and a spike in the number of doctors limiting their practices or leaving medicine completely. Medical liability insurance is pricey, if it can be found at all. In Dade County, it's estimated that about 1,000 doctors, ncluding almost all ob/gyns, are without liability coverage. "When I came to Miami in 1996, there were no other viable options," says M. Victoria Lopez-Beecham, who practices with Femwell Group Health, a 70-doctor ob/gyn group. Going bare has been the norm for ob/gyns in the area since the mid 1980s, when annual premiums for high-risk specialists jumped to $125,000 for $250,000 of coverage. Unless a doctor is sued every year, going bare keeps him ahead of the game, says Femwell President Bob Boyett. In the current crisis, more doctors are feeling the pinch. Last year, some ob/gyns in Dade and neighboring Broward Counties saw premiums soar to more than $200,000 for $1 million in coverage. Even internists were paying as much as $56,000. This year, all physicians saw premium hikes of another 25 to 40 percent, says Marc Singer, a financial planner with Singer Xenos Wealth Management in Coral Gables, FL, who specializes in advising doctors who have gone bare. For those with prior claims, a jump of 100 to 200 percent was typical. Only three carriers are still writing malpractice insurance in Florida. Doctors unable to find or afford coverage, but still required to have it by their hospitals or health plans,are being shut out of surgical work or are simply leaving the state. Many OBs have stopped delivering babies. Emergency rooms face a shortage of specialists to take call. Some doctors have resorted to desperate means, such as excluding certain patients from treatment, or asking them to waive their right to sue. In response, hospitals across Florida have begun modifying their bylaws to permit physicians to self-insure, as allowed by state statute. Those who do must agree to be financially responsible for up to $250,000 of any judgment, and they must post a notice in their waiting rooms or provide a statement to patients saying they are uninsured. The terms "going bare" and "uninsured" are misnomers, in Florida, at least. State law gives doctors four coverage options. They can carry liability insurance of at least $250,000 per claim and $750,000 in the aggregate ($100,000/$300,000 if they don't have hospital staff privileges). They can obtain an irrevocable letter of credit in the amount of $250,000/$750,000, or establish an escrow account in the same amount. Or they can elect not to carry malpractice insurance but agree in writing to be financially responsible for up to $250,000 of a judgment. So, technically, no doctors in the state are "going bare," says Vero Beach health care attorney Robert Rappel. "The terminology does not exist." The very real perils of going bare The self-insurance trend is still largely a south Florida phenomenon. But "it will absolutely move north and beyond our state over the next two years," Singer predicts. Going bare may become a serious consideration for doctors in about half the states. In the rest, it's either forbidden (see " Where you can't go bare ") or officially discouraged. "Miami physicians are no longer viewed as 'crazy' doctors because they don't have malpractice insurance," says Lopez-Beecham. "With the malpractice crisis, there has been a swell of sympathy nationwide." Going bare is not a decision to be made lightly. Not only does it mean that a malpractice judgment is paid out of your personal bank account, but it could cost you your medical license. In Florida, the inability to pay on a judgment has cost seven doctors their licenses since 1997. (Others have successfully pleaded hardship and worked out a payment schedule with the Board of Medicine.) There's "no question" that the number of doctors who lose their licenses will grow as more doctors drop coverage, says Zachariah P. Zachariah, chairman of the state board. Other problems with going bare: Some attorneys argue that doctors who've dropped their coverage put insured ones with whom they cross-cover at greater risk of being named in a suit. Many self-insured doctors also open themselves to other areas of exposure when they drop malpractice policies that include coverage for legal expenses associated with government audits. But the bigger problem with doctors self-insuring is that hospitals and managed care organizations seldom permit it. The bottom line, though, is that going bare is still a bad economic gamble for the vast majority of doctors. "The break-even point is when premiums are at $40,000 per year for $250,000 of coverage," says Singer. "If premiums are less, self-insuring doesn't make sense, because the chance of a malpractice suit once every six years is reasonably limited." While ob/gyns and general surgeons in many parts of the country may well meet Singer's threshold, most primary care doctors probably will not. Outside of Miami and Detroit, internists and FPs are still paying well below $40,000 for $1 million/$3 million in coverage. Hospitals need convincing if attendings want to go bare Until recently, virtually every hospital outside of Dade County refused admitting privileges to doctors who carried no liability insurance. Then, Memorial Healthcare System, in south Broward County, decided to give its medical staff the option of going bare last July, less than four months after a group of ob/gyns threatened to take its business elsewhere. It also gave doctors the option to obtain coverage by forming a risk retention group. "But for high-risk specialties, there was nothing better about those rates," says Hallandale OB Aaron Elkin, who is now self-insured. "For us, self-insuring is the only thing that makes sense right now." As was the case with Memorial, most hospitals that allow attendings to self-insure had to be coerced into the decision because it's not in their own best interests, says Elkin. "Memorial believed, and still believes, that if there is no requirement for insurance, the quality of health care will suffer and will be perceived as having suffered. Certainly in terms of credentialing physicians, it's easier for hospitals to require insurance." Having both physicians and the hospital covered also spreads the risk so that no one party is held totally responsible for a bad outcome. Persuading a hospital to allow its physicians to go bare requires the medical staff to speak "with a unified voice," says Singer. Ob/gyns, neurosurgeons, cardiovascular surgeons, and orthopedists would likely lead the fight, since they bear the most risk and are the major revenue-generators for hospitals. They can usually rally other doctors to vote for making the necessary changes to bylaws pertaining to liability coverage. In their dealings with the hospital, it's important that doctors utter only the politically correct term "self-insure," rather than the loaded "go bare." It can be a tough sell in "joint and several liability" states like Florida where a hospital can be held liable for all economic damages even if a physician shares a sizable portion of the blame. The only way to collect is for the hospital to sue the doctor—an unpalatable option, from a physician relations standpoint. It's also "quite likely" that malpractice liability carriers would financially penalize hospitals for allowing the medical staff to self-insure, says Carol Golin, editor and publisher of Medical Liability Monitor . One proven tactic for winning hospital concessions is for physicians to take their case to the media. "Hospitals are very sensitive to publicity that shows difficulty with the medical staff," says Singer. Doctors can score a victory even if a hospital agrees to allow doctors to go bare only "temporarily." The change will likely end up being permanent. "They'll have to do it. Physicians can't afford to be in practice otherwise. Hospitals don't want to shut their doors." Managed care plans are an even tougher sell Perhaps the single biggest obstacle to going bare is the fact that most managed care organizations forbid it. That's true even though "managed care organizations have virtually no liability anyway," says Singer. "It's really hard to sue a managed care company for treatment mishaps, and yet they're the most hard-nosed about it, because they can be." Currently, south Florida appears to be the only place where health plans allow physicians to self-insure. "Those same plans don't allow it five miles away in Palm Beach County—yet," says Singer. "Their fear is that litigating attorneys will target them if they start allowing contracted providers to go bare." "Plans need to be careful to limit their exposure, except where they otherwise won't have an adequate network," says Susan Pisano, spokesperson for the American Association of Health Plans. Even if a managed care organization relents and allows physicians to self-insure, the relationship may well be strained. In Dade County, HMOs tend to "use it as an excuse to lower reimbursements," says Francisco Leon, chief operating officer of Femwell Group Health. "It becomes part of the negotiating process. Insurers view us as more of a financial burden for them. They say we increase the liability premiums that they themselves have to carry." Aetna isn't allowing doctors anywhere, outside of a few in south Florida, to be on its panel without malpractice liability insurance. Several HMOs limit the number of Femwell physicians they'll work with. Protecting your assets if you do go bare Self-insuring doctors, in Florida at least, must agree to be financially responsible for up to $250,000, or run the risk of having their license suspended by the Board of Medicine if they don't pay a malpractice judgment, says Rappel. When a letter of intent to sue is filed, their best bet is to inform the plaintiff's attorney that they have $250,000 set aside, and the remainder of their assets has been protected. Then an offer to settle may be hard to refuse. However, doctors must protect their assets before they receive a letter of intent to sue or "the specter of fraudulent transfer raises its ugly head," he adds. Singer agrees that a strong asset protection plan can "starve out" attorneys, putting them in the mood to settle rather than try a case. Even for physicians who carry malpractice insurance, an asset protection plan is a good idea because of the sheer size of judgments juries are handing down (see " Protect your assets before you're sued ," Feb. 21, 2003). Many doctors can't afford more than $250,000 worth of coverage, and that may not pay even a fraction of the award reaped in an emotionally laden case. Even family practitioners have been hit with $5 million judgments, says Rappel. Ob/gyn Lopez-Beecham put an asset protection plan in place the day she went bare. Her philosophy is that it no longer matters if doctors are insured or not. "There was just an $80 million verdict in New York for a baby born prematurely. With those kinds of judgments, what difference does it make if you have a $1 million policy or a $3 million one?" The more disturbing reality is that, as malpractice coverage becomes unaffordable and unavailable to more and more physicians, access to care will further diminish. In south Broward, Elkin says he has noticed that self-insured physicians are "less likely to take high-risk patients." Family practitioners, fearful of being the only ones left holding insurance, are talking about quitting medicine entirely. That's why many doctors—self-insured or not—pin their hopes on tort reform. "You're never really comfortable being bare," says Femwell President Bob Boyett. "You always know that a bad suit can end your practice." Boyett has been self-insured for two decades now and has no asset protection plan. "I just try to practice good medicine and I say my prayers at night." The author is a freelance writer based in Vero Beach, FL.   Where you can’t go bare The following seven states require physicians to obtain professional liability insurance. Minimum insurance required (per claim/in the aggregate) Colorado 1 $500,000/$1.5 million Connecticut $500,000/$1.5 million Kansas $200,000/$600,000 Massachusetts 1 $100,000/$300,000 Missouri 2 $500,000/N.A. Pennsylvania $1 million/$3 million Wisconsin $1 million/$3 million N.A.: not applicable . 1 In place of insurance, physicians can maintain an equivalent cash deposit. 2Only in counties with a population of more than 75,000. Does not apply to physicians insured by a hospital. Source: American Medical Association, August 2002  Deborah Borfitz. Malpractice: Is going bare the only option?. Medical Economics 2003;6:97. Copyright © 2003 and published by Medical Economics Company at Montvale, NJ 07645-1742. All rights reserved. Singer Xenos does not provide legal advice. Please consult with your own legal counsel.