Address New Challenges to Your Future

Physician's Money DigestMarch31 2003
Volume 10
Issue 6

One of the most costly and immediate challengesfacing physicians now is the unavailabilityof reasonable medical malpracticeinsurance. Insurers are clamping down by either notwriting new policies or not renewing existing policies,and many jurisdictions have allowed insurers toincrease their premiums exponentially.

Recent examples

Policies can cost between $120,000 and $150,000 ayear, yet most insurers will not write policies of morethan $1 million per claim, despite the fact that juries arereturning close to 9-figure awards. : Aplaintiff was awarded $85 million against a doctor inNew York; a Las Vegas trauma center closed downbecause the doctors were unable to obtain coverage.

The second significant challenge comes from thefederal and state governments' crackdown onMedicare and Medicaid fraud. Unfortunately, honestbilling mistakes are being treated as acts of fraud,with steep penalties being doled out to the allegedviolators. The government can attack physicians' personalassets. However, there are steps you can take toprotect yourself and your assets.


To fend off the individual plaintiff, the best strategyis to discourage the lawsuit in the first place.Contingency lawyers tend to believe they're bringingan action against a deep-pocketed physician. Thesooner they learn that the defendant has no attachablepersonal assets, the sooner their strategy willchange, and the lawyers will take whatever they canget from an insurance settlement.

This process brings malpractice insurance back todoing what it's supposed to do—covering the doctorrather than inviting the lawsuit. A good domesticasset protection plan (eg, a family limited partnership)is 100% effective against all future claims, andshould serve to discourage future lawsuits. Caveat: Itis critical that you protect yourself before the commencementof a lawsuit.


However, domestic asset protection offers noguarantee against actions brought by the federalgovernment. Physicians who are concerned aboutunwarranted Medicare and Medicaid fraud investigationsshould look to offshore asset protection.This strategy entails physically moving your assetsout of the jurisdiction of US courts.

Innocent mistakes are often being pursued asfraud. For example, an individual who owned anambulance company was given a number of prescriptionsto transfer dialysis patients to a nearby treatmentcenter. Despite the fact that they were simplyfollowing instructions, the owner was prosecuted forMedicare fraud because the facility was not on anapproved list of treatment centers.

Doctors have a number of potential jurisdictionaloptions, including the Caribbean, the Isle of Jersey,Liechtenstein, and Mauritius, among others. Offshoreasset protection done in a tax-compliant manner is anextremely effective tool.


A key distinction between domestic and offshoreasset protection is who retains control of the assets.With domestic asset protection, the individual still controlsthe assets, although they must give up the title.With offshore asset protection, the individual is givingup all legal control, although it is possible to maintainde facto control. Typically, a trustee or corporation controlsthe assets. In all cases, physicians must be guidedby someone who can do the following:

  • Structure the vehicles in a tax-compliant manner;
  • Construct it in a way that ensures your protectionswon't be undone; and
  • Choose a geographic location with political, economic,and social stability.

Given the recent attacks on physicians from boththe government and individual plaintiffs, it is moreapparent than ever that doctors need to protect theirassets to the best of their abilities. The days of hugeinsurance policies serving as reliable umbrellas arelong gone, but there are viable alternatives availableto doctors who manage to plan ahead.

Ken Rubinstein, a practicing attorney, is aprincipal at Rubinstein & Rubinstein in NewYork City. He welcomes questions or commentsfrom readers at 212-888-6600 or

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