There is a trend that is growing nationwide for physicians to take back their practices and have direct contracts with their patients while eliminating the middleman called insurance. It has created a great model and standard of care for both the physician and patient while returning us to a simpler business model. Texas has become a hotbed of this activity for many reasons. As more physicians are moving this direction, they are discovering the need to contemplate what happens to them in a medical malpractice lawsuit. No one ever expects to find themselves in one, but proper risk planning from a business standpoint dictates that you must consider it and have a plan in place before a medical malpractice claim occurs.
Responsible physicians understand the importance of having medical malpractice insurance to protect your career and livelihood. When they consult an insurance agent or broker who specializes in medical malpractice, one of the biggest questions that arises is "how much coverage do I actually need". Sadly, there are some persistent myths circulating within the medical community that could potentially jeopardize your financial security and professional reputation. At Insurance For Texans, we believe it's important to address these misconceptions and provide you with the facts you need to make informed decisions about your malpractice coverage. Don't be misled by these three dangerous myths.
Myth 1: Tort Reform Caps Damages at $250,000 in Texas
The first, and biggest, common misconception among medical professionals is that tort reform in Texas limits damages awarded from a lawsuit to $250,000. Texas did pass tort reform a few years ago, and the resulting changes apply very specifically to non-economic damages. If you have never heard that term, it's important to understand its significance.
Noneconomic damages are what we often hear referred to as pain and suffering. But a good medical malpractice attorney will also pursue economic or monetary damages in conjunction. Economic damages can include lost wages due and any resulting costs of required medical care that arise from injuries that are deemed the result of the medical negligence in the suit. Those economic damages were not capped by the tort reform passed here in Texas. So while it is true that there are caps on non-monetary damages (such as pain and suffering), there's a significant distinction to be made. We remind you of our article about a recent case in Plano that resulted in a $5,000,000 judgement being awarded.
Given this myth, consider a scenario where a sole breadwinner in a family is injured due to your medical negligence, resulting in the need for long-term disability and an inability to work for 20 or 30 years. The lost wages and the cost of care are monetary damages that will far exceed the $250,000 cap on non-economic damages. Understanding this difference will help you understand why the medical malpractice lawyer isn't phased by tort reform when they begin asking about your assets.
Myth 2: Texas Has a Standard Insurance Coverage of $200,000/$600,000
Some insurance agents may mislead physicians by claiming that the state of Texas has a standard insurance coverage requirement of $200,000 per occurrence and $600,000 in aggregate. This line is commonly pushed by a specific set of agents who work for one large company. The reasoning behind this line of thinking is that it's easier to sell the policy and also limits the liability of the insurance company that they represent.
This notion of a state standard in Texas is entirely false. There is no such state standard anywhere in Texas Medical Malpractice Law. If you are a young, brand new doctor who owns nothing but debt, this can be a semi-defensible position. However, your path out of a large judgement from damages in malpractice cases would likely require bankruptcy to make it disappear.
Beware of agents offering low-cost policies based on this fictional standard. If you were to face a medical malpractice lawsuit that exceeds your policy limits, ask the agent who provided this information if they are going to cover the rest of the amount of the judgement for you.
Myth 3: Your Assets Cannot Be Seized in Texas
It's a common belief that assets in Texas are untouchable, protected from lawsuit judgment. This one has some threads of truth, but ultimately falls apart under scrutiny if a judgement is rendered in a medical malpractice claim.
Yes, your wages cannot be garnished in Texas for anything other than child support, taxes, and student loan payments in arrears. That fact cannot be ignored. And yes, qualified retirement assets like 401ks, IRAs, Simple Accounts, and other tax qualified retirement accounts cannot be liquidated to satisfy a judgement. But that tax qualified distinction is important.
If you have assets beyond those qualified retirement accounts, they can be seized and liquidated to satisfy a judgment. This could be investment accounts that are not shielded by tax status, rental properties that are deeded in your personal name, savings or money market accounts, or other assets with value. An experienced lawyer once told me that he loved it when a physician facing damages in malpractice cases had been through a divorce because it exposes all known assets to public court records during the division of assets. I think this makes the case pretty clearly.
Protect Your Future with Adequate Malpractice Insurance
The result of these myths we've encountered is the belief that physicians cannot be sued for more than the limits of their medical malpractice policy. This misconception can have severe consequences for physicians who may find themselves facing a lawsuit. Especially if they have acquired assets over time and don't want to lose them.
When you're confronted with a lawsuit, the opposing party, represented by an injury attorney, is primarily concerned with ensuring their client is made whole for what they are having to deal with in the present. You may have done everything in your power to provide the highest standard of care possible. But things simply happen in life that we can't truly prepare for. We all want the best for others and your noble profession is revered for a reason. But that attorney is not going to limit their claims based on your insurance policy limits or a mythical state standard. It's essential to understand that your policy limits do not provide immunity against substantial claims with respect to medical malpractice law and resulting economic damages.
It's vital for physicians to recognize and debunk these myths surrounding Texas medical malpractice insurance. Relying on inaccurate information can have dire consequences for your financial stability and professional future and you wouldn't put together a treatment plan with inaccurate information.
At Insurance For Texans, we urge you not to make the mistake of thinking you can't be sued for more than the limits on your policy. We've seen firsthand the devastating impact of such misconceptions. It's important to consult with professionals who have your long-term total cost of risk in mind when discussing your malpractice coverage.
Don't wait until it's too late. Ensure that you have the proper coverage to protect your career and assets. Click the button below for expert guidance and comprehensive malpractice insurance solutions. Your future and peace of mind are worth it.