THE EFFECTS OF AMENDMENT 8 Physician Asset Advisor, November 2004 On November 3rd, Amendment 8, also known as the ‘3 strikes’ amendment, was passed by 70% of the voters. Unfortunately, this law is a potential disaster for Florida’s already beleaguered physicians. The new law states that after three judgments or actions, a doctor automatically loses their license. Loosely interpreted, an action might even include a Board of Health disciplinary action, such as failure to complete CME credits. It is very important to note that settlements do not count as a strike. We have also been informed that prior judgments would not count either. Why did it pass? Amendment 8 received over-whelming support because of its clever wording. Who wouldn’t want to get rid of bad doctors? With little advertising spent on either side of this proposed amendment, it sounded like a good idea to the non-informed public. The problems of ‘3 strikes’ This amendment adds one more thing for doctors to worry about. While it seems very ominous, there are actually very few Florida doctors who have lost three judgments to date. In reality, it might take many years before the first doctor loses their license under this new law. Originally, it was thought that the trial bar created Amendment 8 as a revenge tactic in retaliation for the doctor-sponsored Amendment 3. The real intent was much more insidious; to force doctors to settle cases early using the threat of a potential “strike”. This gives plaintiff attorneys increased leverage in forcing doctors to settle malpractice cases. Insurance companies may worry that doctors could seek bad-faith damages against them by failing to settle nuisance lawsuits. One immediate ramification of ‘3 strikes’ is that insurance companies potentially face increased bad-faith claims. An example would be a doctor who already has 2 strikes and is facing a third malpractice suit (which is a nuisance suit). The doctor instructs their insurance company to settle the case for the policy limits of $250,000, even though the lawsuit is completely without merit; the doctor does not want to risk losing their license. Rather than settle, the insurance company chooses to defend. After trial, a jury awards $10,000 to the plaintiff and the doctor loses their license. The doctor could then potentially sue the insurance company for refusing to settle the claim in good faith. Can the doctor recover damages for all future lost wages since their license was revoked due to the insurance company’s refusal to settle? It is clear that these issues will concern insurance companies. We do know that risk uncertainty for an insurance company usually translates to higher premiums. With this law on the books, Florida becomes the least desirable state for doctors out of training to seek employment. Imagine the sales pitch - Come to Florida, where after working hard for 10-15 years to build up your practice, you then risk losing your license. We are already experiencing difficulty in attracting high-risk specialists. This will only make it harder. What can be done? Fortunately, Amendment 8 was not self-enacting; the next step is that the legislature needs to pass a body of law on how ‘3 strikes’ will work. Hopefully, through intensive lobbying, the impact of this problematic amendment on physicians can be reduced considerably. Upcoming Seminar Topics Sponsored by the BCMA Case Histories of Bare Doctors Impact of the Amendments To schedule at your hospital call Cynthia Peterson 954-714-9477 Singer Xenos is an established wealth management firm specializing in physicians with $500,000-plus in investments. We manage over $450 million in assets such as retirement plans, annuities and personal accounts, with an emphasis on wealth building and protection from malpractice claims. Both Worth Magazine and Medical Economics named Singer Xenos one of the Top Financial Advisors nationally for physicians. Singer Xenos does not provide legal advice. Please consult with your own legal counsel.