Headlines Put Asset Protection in Context
Without real life context, asset protection for doctors can seem theoretical and narrow in scope. We continue our look at real exposures physicians are facing, taken from today’s headlines.
In our last discussion, we examined the litigation risks faced by residents of a gated community including by board members and what can happen to employed physicians when their employer lets malpractice coverage lapse. Those stories, like the others we will examine through the year, help illustrate the value of multi-layer defensive planning that includes compliance, all the right kinds of insurance and protective legal tools. They also show us that the scope of risk physicians face goes far beyond traditional “hands-on” medical malpractice.
Telemedicine, What Could Go Wrong?
Telemedicine has steadily grown in use and I regularly talk to doctors that are involved in it in various capacities including as investors, managers, and providers. All of those that deliver patient care this way have talked through their concerns with malpractice liability and how they felt the limited scope of their care, patient disclosure agreements, and their status as employed physicians protected them to some degree.
So far, their luck has largely held out and traditional medical malpractice claims against telemedicine have been low in both frequency and awards. That said, telemedicine is not without legal risk in other areas outlined in detail in a recent article in the National Law Review and as Judy Klein outlined in her recent article Physicians Practice article, Managing the Risks of Telemedicine. Headlines have provided other specific examples including a class action against one telemedicine company for privacy violations, several Medicaid insurance fraud lawsuits, and lawsuits involving both the sale of non-FDA approved diagnostic tests for various conditions and a lack of competent supervision over the prescribing and results of the tests.
Executive and Managerial Malpractice Lead to Medical Malpractice Claims
Fertility medicine has some interesting unique risks, not the least of which is the accurate and safe storage of fragile and irreplaceable human embryos. A recent case from Ohio at a single facility has resulted in over 200 lawsuits resulting from the failure of a refrigeration system at a cryogenic storage facility in a fertility clinic that rendered 4,000 embryos and eggs of more than a staggering 900 families nonviable, according to recent news reports.
The damages that could be claimed by a family that has lost their only chance to conceive a biological child because of this failure could be devastating and the plaintiffs’ claims include both traditional medical malpractice claims and negligence, breach of contract, and intentional infliction of emotional distress claims that could implicate executive liability of the sort we have covered in previous discussions of the need for doctors to consider directors and officers insurance in the context of healthcare.
Act Early, Have Legitimate Business Purpose When Using Retirement Plans for Asset Protection
My friend attorney Jay Adkisson is well known in both asset protection and creditor law circles. His recent article (that stems from a business dispute and lawsuits between physician business partners) on the use California Private Retirement Plans in Forbes should interest those outside California as well, as it is a stern reminder of some very basic asset protection rules. First, timing is everything and any action you take as a reaction to a specific crisis will always be viewed in the harshest terms by courts, including up to the level of fraud. Second, actions you take that protect assets like exemption planning and the use of qualified plans, even if legal on their own, must still meet legitimate business purpose tests both to avoid being fraudulent for tax purposes and to provide the statutory protection many physicians seek. This test, outlined in the article, could apply to nearly any such plan:
To determine whether a plan was primarily or principally to be used for retirement purposes, a court is to look at the totality of the surrounding facts and circumstances, including five important but non-exclusive facts:
- The debtor’s own subjective intent in creating the plan;
- The timing of the plan in relation to other ongoing events (read: litigation against the debtor);
- The debtor’s ability to control and access the plan funds;
- Whether the plan complied in its design and use with applicable IRS rules, and
- Whether the debtor actually used the funds for retirement instead of for some other purpose.
This article was written by Ike Devji, J.D, and was originally published on the Physicians Practice website.
Ike Devji, JD, has practiced law exclusively in the areas of asset protection, risk management and wealth preservation for the last 16 years. He helps protect a national client base with more than $5 billion in personal assets, including several thousand physicians. He is a contributing author to multiple books for physicians and a frequent medical conference speaker and CME presenter. Learn more at www.ProAssetProtection.com.
Securities and advisory services offered through Cetera Advisors LLC, Member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor. Cetera is under separate ownership from any other named entity.