Physician Asset Advisor, April 2006
By Marc Singer & Neil Sosler
On March 30th, the Florida Legislature repealed the 33-year-old law that allowed joint and several liability (House Bill 145). It is our belief that this will have a major impact on Florida doctors. In the past, joint and several liability made all parties of a lawsuit liable for the entire amount of a judgment, regardless of their percentage of actual guilt. For example, if a bare OB with a bad baby result was found 99% liable for $2 million and the hospital was found 1% liable, the hospital could be required to pay the entire judgment if the plaintiff was unable to collect from the doctor. Florida’s joint and several liability laws created the concept of the “deep pocket.”
With the law changing, we feel that there will be far-reaching reper-cussions in many areas of healthcare such as high-risk and low-risk specialties, and hospitals.
Impact on Bare and Under-Insured Higher Risk Specialties
Over the last few years, the main reason bare doctors were sued involved an attempt by plaintiff attorneys to collect from a “deep pocket”, i.e., the hospital. Without this avenue being available, we feel that either the lawsuit won’t be pursued or the settlement will occur faster. It doesn’t make economic sense to sue a bare doctor if there is no possibility of financial recovery.
As of our last estimate, we believe about 50% of South Florida doctors no longer carry coverage.
The contrary may be true for insured, high-risk doctors. Since their malpractice insurance would now be the sole source of funds for a lawsuit, the attorneys may more frequently seek the policy limits. This may actually cause premiums for high-risk doctors to increase even further. Depending on what happens to their premiums, higher risk specialties may continue the trend of going bare.
High-risk, bare doctors may be better off but high-risk,
insured physicians may see their premiums rise.
Impact on Lower Risk Physicians
The “deep pocket” concept impacted lower risk specialties such as internal medicine and family practice, leading to significant premium increases. These doctors were getting named in surgical cases simply because they still carried insurance.
Under the new law, it seems plausible that fewer low-risk doctors will be included in lawsuits. Their insurance premiums may decline due to the lower financial liability.
Hospitals
Hospitals are the big winners. Struggling for years after being named in most surgical lawsuits that involved their facility, they were the ultimate deep pocket. Hospitals should experience lower costs of insurance since they are now only insuring themselves, and not, in-directly, every doctor practicing on their staff. This will hopefully relax some of the tension that has developed between physicians and hospitals when it comes to malpractice coverage.
Conclusion
The repeal of the joint and several liability law is very positive news for physicians. It should lower premium costs for hospitals and lower risk specialties, and help higher risk, bare doctors settle cases more expeditiously. It may even prompt hospitals in parts of Florida to modify their position and to allow high-risk doctors to go bare where previously that had been difficult to do.
Upcoming Seminar Topics
Singer Xenos and The Broward County Medical Association will be presenting a seminar on the effects of the repeal of Joint and Several Liability. Call for details
Named by Worth Magazine and Medical Economics as one of the Top Financial Advisors nationally for physicians, Singer Xenos is an established wealth management firm managing over $700 million in assets such as retirement plans, annuities and personal accounts, with an emphasis on wealth building and protection from malpractice claims.
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