Many Florida Doctors have surmised that going “bare” (without medical malpractice insurance) seems to be the only way a physician can limit his or her liability exposure to $250,000. Alarmingly, many more believe that by purchasing liability insurance they may actually increase liability exposure beyond $250,000 and make those doctors that are insured a more attractive target for lawsuits.

A misunderstanding such as this could have disastrous consequences for the bare doctor. According to David McKenney, Director of Claims, Healthcare Underwriters Group of Florida “Whether a doctor is bare or insured they have unlimited exposure to medical liability. The only limit (or cap) for medical liability is for non-economic damages commonly called “pain and suffering” awards.” According to McKenney, “The cap on non-economic damages against a single physician was limited to $500,000 through tort reform (SB-2D) in 2003, but the limitation has not been tested. Additionally, no cap exists for economic damages such as medical expenses and lost earnings.”

The state of Florida requires bare doctors to demonstrate financial responsibility by setting aside a minimum of $250,000 per claim and at least $750,000 for multiple claims in the same year for the payment of any future claims. The vast majority of Florida physicians meet this requirement by purchasing professional liability insurance. If a physician fails to pay a judgment and has not complied with the financial responsibility law, the Department of Health is required to suspend that physician’s license and keep it suspended until the judgment is paid. Moreover according to McKenney, “a doctor will always have to carry personal liability for the bare years even if no claim is made many years after treatment is rendered. It is unlikely that any responsible insurance company will offer tail insurance for those “bare” years.”

Florida doctors should be forewarned that the concept of going bare is becoming increasingly untenable. Any doctor who is currently bare or thinking of going bare should consider that trust, confidence and referrals from fellow physicians are key in any healthy practice. Many insured physicians avoid collaboration with bare doctors because they do not want to be named the “deep pocket” if pulled into the lawsuit with a bare physician. Often a hospital may become the deep pocket for a bare physician if the claim involves care in or at a hospital. This can, if there is a frequency of claims, damage the relationship a physician has with a hospital. Additionally, bare physicians must act as a “legal contractor” in their own defense. This could encompass the hiring and management of a legal team, which could end up being more costly than buying the insurance. Most importantly, bare physicians must take time away from the practice of medicine for every claim against them.

McKenney has defended many doctors against claims of medical malpractice, unfortunately he says he has also seen many heartbreaking cases where doctors have suffered financial ruin because they have gone bare and did not fully understand the implications. Doctors who do go bare should know that new federal bankruptcy laws make it harder than ever to declare Chapter 7 bankruptcy. More likely, doctors will be forced to file Chapter 13 which requires a minimum 5-year payment plan as established by the bankruptcy court for all debts and liabilities. The new bankruptcy laws also make it nearly impossible to protect assets by investing them into your home. Most importantly, no asset plan will protect the license of a physician who fails to comply with the financial responsibility law. It is rumored that the trial bar is looking for the perfect case to test the asset protection schemes. If that happens and they are able to pierce the asset protection plan, all may be exposed.

With the cost of buying $250,000/$750,000 medical malpractice insurance coming down and readily available from physician owned companies where the doctor insureds can receive dividends, the risk of going bare may out weigh the cost of buying coverage and an aggressive defense. Doctors, who choose to go bare, should do so with eyes wide open.