Is Going Bare Your Solution To The Malpractice Crisis? Marc Singer, CFP & Scott Wells, CFP Currently, the Florida legislature is debating tort reform. We strongly support the efforts, especially the tireless work of FMA president Bob Cline, MD. Unfortunately, the various positions of the trial bar and insurance companies offer little short-term relief to unaffordable malpractice insurance coverage. The best physicians can hope for is that tort reform passed today may slowly stabilize or reduce premiums over the next 5 years. Who is going bare? In the past 3 months, we have seen the entire spectrum of specialties start to shift over to self-insurance. This includes traditionally low-risk specialties such as Family Practice and Pediatrics as well as hospital-based specialties such as Anesthesia and Radiology. Does going bare help? By going bare, doctors save on the premium cost and become their own risk managers. If physicians are sued, they can use a portion of those saved premiums to hire an attorney and offer a reasonable settlement. Many of our bare physician clients feel strongly that they are not sued as often as those who carry liability insurance. If bare physicians are sued, it is believed cases may be settled faster and cheaper. Conversely, high policy limits may be the bait that attracts plaintiff attorneys. It is more difficult for lawyers to try to collect on a judgement by attaching physician assets than it is to obtain a check from a malpractice insurer. Moreover, if physicians properly protect their assets, it is virtually impossible for attorneys to collect. Since plaintiff attorneys work on contingency, there is not much incentive to sue bare doctors. Going bare discourages lawsuits by lowering a physician's financial profile. Doctors have been reluctant to go bare because health insurers and hospitals require malpractice coverage for affiliation and privileges. This situation is changing. Most South Florida hospitals and plans have recently altered their bylaws and rules to allow doctors to go bare. In Tampa and Jacksonville, hospitals are still resistant to physicians taking these steps. However, if enough doctors demand it, the change will probably occur.   "If premiums rise to $40,000 or more, consider going bare!"   What is the breakeven point? Here's our rule of thumb. If premiums rise to $40,000 or more annually, consider going bare. If you are sued once every 6 years, you will have saved $240,000 in premiums. Most moderate-risk physicians do not sustain a serious suit every 6 years. In a group practice environment, if 10 doctors each pay $50,000/year for $250,000 coverage, they will be setting aside reserves of $500,000/year. In 10 years, they will have saved $5 million. It is improbable that the group would have to pay 20 claims of $250,000 during this period. In our anecdotal experience, doctors who have been bare since 1986 (17 years) have ended up financially better off self-insuring rather than paying premiums. This includes physicians who have had multiple lawsuits. A few months after self-insuring, a bare doctor will tell you it was absolutely the right decision. Ask them! Before going bare, it is critical to assure that all of your assets are protected. If plaintiff attorneys are convinced that they can not collect on a judgment because there is no insurance or available assets, they will often drop the case or settle for a modest sum. We suggest you meet with an expert Financial Planner or Attorney to review your situation. In our experience, many doctors can protect the majority of their assets during an hour consultation. Conclusion: We feel that if most doctors in Florida end up going bare, a dramatic change in our malpractice system would occur. By drying up the proverbial well, suing doctors for malpractice would no longer be a lucrative endeavor. Singer Xenos does not provide legal advice. Please consult with your own legal counsel.