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SO YOU WANT TO GO BARE
Considerations Before You Take the Plunge

Prepared by the THE LAW OFFICES OF CHRISTOPHER L. NULAND
For more information call 904-355-1555

With professional liability insurance becoming increasingly expensive or unavailable, many physicians are opting not to maintain such insurance, but rather to self-insure. Before relinquishing professional liability insurance, however, physicians should ensure that they have considered the following implications:

Have you fulfilled the legal requirements?

  • If the physician does not have staff privileges, he or she must agree to pay the first $100,00 of any judgment within 60 days after the date on which the judgment becomes final ($250,000 if staff privileges are maintained). This time period may be extended during an appeal. Those who fail to pay the above amounts in a timely fashion will have their licenses suspended.
  • The physician must post a sign prominently in the office to read:

    Under Florida law, physicians are generally required to carry malpractice insurance or otherwise demonstrate financial responsibility to cover potential claims for medical malpractice. YOUR DOCTOR HAS DECIDED NOT TO CARRY MEDICAL MALPRACTICE INSURANCE. This is permitted under Florida law subject to certain conditions. Florida law imposes penalties against non-insured physicians who fail to satisfy adverse judgments arising from claims of medical malpractice. This notice is provided pursuant to Florida law.
  • The physician must notify the Board of Medicine of his or her intention to go bare.

Have you protected your assets?

Even if a physician who receives an adverse judgment pays the required amount, the judgment may well be in excess of the statutory amount that must be paid in order to protect the physician's license. In such a case, the plaintiff will place a lien on the physician's remaining assets. A physician therefore must be willing to declare bankruptcy in such a situation, as bankruptcy allows the debtor (i.e., the physician) to protect certain assets from creditors, so long as the assets were converted from otherwise unprotected assets well in advance of the petition for bankruptcy protection. In order to prevent a plaintiff from seizing these assets, the physician must protect them by placing them into one or more protected classes, such as:

  • Tenancy by the Entirety. In most cases, the debts of one married partner do not become the debts of both spouses or "the marriage." Therefore, many physicians choose to have most, if not all, assets titled in the name of both spouses as "tenants by the entirety."
  • Home. Florida law forbids creditors to seize a debtor's homestead, regardless of the value of the property. Therefore, many citizens contemplating bankruptcy place a great deal of their wealth into their primary residence.
  • Life Insurance. Both the proceeds and cash surrender value of life insurance are exempt from the claims of creditors.
  • Retirement Plans. Any pensions from the United States and payments from a qualified retirement plan are exempt from the claims of creditors. Care must be taken to ensure that the physician's retirement plans are qualified under section 401(a), 403(a), 403(b), 408, 408A, or 409 of the Internal Revenue Code.

Physicians are encouraged to seek assistance from qualified attorneys and asset protection specialists prior to engaging in any asset protection plan. Should members have questions, they may contact General Counsel Christopher L. Nuland, Esq. at (904) 355-1555 or via e-mail at nulandlaw@aol.com.