Asset Protection, The Planby Scott Einiger, Esq.
As risk management counsel to one of the largest malpractice carriers in the US for over 15 years, and currently as general counsel to various medical societies, I have heard countless physicians express their fear of litigation and concern about rising verdicts in the malpractice arena. The potential for malpractice liability should be a concern for any licensed medical professionals in interested in protecting their practice and personal assets. Doctors of all types are targeted for litigation because they are seen as deep pockets by litigants in actions involving malpractice claims, employment disputes and even motor vehicle accidents. Sometimes having MD plates on your automobile can backfire as it can act as a big neon sign flashing “sue me!”
Most doctors are aware of their professional liability and purchase malpractice insurance for protection. However, traditional malpractice insurance is not nearly enough. Cases brought against doctors each year can result in awards that are above coverage limits or the risks experienced are not being covered by insurance. These “hidden” risks can pose equally as devastating an impact to the financial, physical and mental well-being of physician business owners because they are much more likely to result in large out of pocket expenditures.
Doctors can expend substantial amounts to pay for defense cost related to matters where no insurance coverage has been obtained. Common areas where every practice owner has significant risk include: work related employment disputes, licensure investigations and insurance carrier refund demands, among others. Last year, in New York alone, there were approximately 6,000 licensure investigations brought against physicians – many of whom did not have adequate insurance to cover the cost of the investigation and defense costs. Cumulatively, employment litigations have skyrocketed in this country to the point where 150,000 such suits were filed in this country over the past six years.
In the event you are targeted and go through the full investigatory process, including a licensure hearing or employment investigation, you could literally spend hundreds of thousands of dollars privately funding the legal costs to defend against such charges when adequate insurance is not purchased. If you choose not to defend yourself, this charge could affect your professional license and ability to earn income in the future. What choice do you really have?
Most providers do not have insurance coverage to defend against claims made by commercial insurance carriers who seek refunds relating to coding disputes for medical services rendered. Refunds sought can go back six years in most states and can accrue into hundreds of thousands of dollars as carriers allege the same mistake was made over and over through extrapolation. In both of these areas, clients may expend a significant portion of their savings simply because they didn’t anticipate such liability potential and purchase the requisite insurance.
The intent of this book is to raise the level of consciousness of the professional business owner who needs to be cognizant of the risks that can result in financial ruin – and to provide practical solutions to avoid financial setbacks so Doctors can achieve their goals of working less and building more wealth for themselves and their families to enjoy.
The team of experts that have contributed to the making of this book have cumulatively over a hundred years of focus in serving the health care community and provide a multi-disciplinary approach to helping physicians accomplish their financial and business goals. As you review the chapters of this book, you will gain practical insights and tried-and-true strategies that have been successful implemented for physicians nationwide.
Before you get into the practical lessons of maximizing wealth, protecting assets from lawsuits and other financial disasters, reducing taxes, investing,a nd estate planing, there is a simply acronym to help guide you through your PLAN(TM).
PLAN – P is for Proactive Planning
Being proactive and implementing a PLAN before trouble is on the horizon is the first step to implementing a successful strategy. In the case of asset protection, if you wait until a lawsuit arises to address your concerns, the civil courts have the power to unwind any planning as a fraudulent conveyance. In addition, if you try to rely on additional insurance once and event has taken place, the risk will be excluded as a pre-existing condition. In the cases of premature death or disability, you cant go back in time and secure the necessary insurances. In the cases of taxes, if you wait until April 14th, nearly all of your options will be unavailable. In the case of bad investments, you can’t go back in time and undo what you did wrong. Reactive individuals who wait to attempt to implement a planning strategy when the issue has already arisen will likely be frustrated in their attempts. Being Proactive in your planning is the critical first step to proper implementation of an effective comprehensive financial planning strategy.
PLAN – L is for Loss or Liability
Protecting against losses requires anticipating the most likely liability exposures that an individual or business may have. These can be exposures to lawsuits, taxes, lost income or divorce. The liability can involve business and personal assets. In assessing a person’s liability loss potential, one must give thought to both the personal as well as the business exposures. Evaluating the individual’s totality of assets accrued in the personal and business endeavors, as well as how those assets are currently being held is therefore critical. So the L in PLAN(TM) stands for Liability Loss potential. Once you know how you can lose assets, you are ready to review exactly what you have to lose and PLAN to prevent it from happening to you.
PLAN – A is for Asset Assessment
In your Proactive planning, you first look at all the ways you can lose assets. Then, you analyze all the assets that need to be protected from potential loss or liability. The complete list will include tangible personal assets like real estate, investment accounts, insurance policies, and bank accounts. The list will also include real estate, equipment, and accounts receivable. Non-tangible assets from future income, business overhead expense protection, disability protection, among other assets. Once you know what risks you face and what assets you must protect, you are ready to work through For Doctors Only and meet with your advisory team to consider practical strategies to help you reach your personal protection goals.
PLAN – N is for Nothing
If you don’t have a plan for success, you should prepare to fail. Doctors typically spend a great deal of time working to make money and acquire assets and very little time planing how to get the most out of their hard work and how to protect these valuable assets. When most doctors finally start to address these important issues, it is usually too late. In order to effectively create a comprehensive financial plan that will help you protect your assets and build greater wealth, you need to be proactive in your attempt to gain a firm understanding of your liability potential and assess your particular assets. With this understanding and motivation to address these issues, you can create and implement a plan that will help you protect and build assets. Otherwise, you are likely to encounter a series of financial and legal losses that could result in your being left with Nothing.
Obviously, your business and personal wealth PLAN is fundamental to attaining your long term financial goals. I encourage you to read this book and speak with the authors about putting your PLAN in place.
Scott Einiger Esq.,
General Counsel, NY County Medical Society
In house Counsel- Health Professionals NYC