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2006-08-01

Thoughts about the "Bare" Movement

As the number of doctors in Florida practicing without malpractice insurance approaches unofficial estimates of 8,500 out of the approximately 32,000 total active Florida physicians, a number of observations can be made.

First is the obvious: the number of bare doctors is increasing dramatically.  The exact number is impossible to ascertain because many doctors practicing bare have chosen not to notify the state that their insurance was dropped. 

Second, with the recent changes in the bankruptcy laws, many asset protection experts are saying that the coin has flipped from the former strategy of doctors threatening claimants that they would declare bankruptcy if they were sued and an award was made by the courts.  The prediction is that under the new laws voluntary or involuntary bankruptcy will be avoided and may even possibly be used as an offensive weapon by the plaintiff bar to force bare doctors to pay awards against them over time. This, in essence, takes away one of the fundamental early negation strategies of a bare doctor and will certainly lead to more time, effort, and money for legal fees on a bare doctor's part to defend him or herself.

Third, doctors practicing bare seem to be split in two camps; those who are comfortable and may never purchase coverage again and those who would much rather be able to afford coverage and will purchase coverage as soon as they are able to do so.

Fourth, among bare doctors there seems to be a fairly prevalent belief that their lack of insurance coverage and implementation of asset protection strategies has reduced the frequency and severity of claims against them.  Time will tell if this remains the case as more bare doctors are sued.  Traditionally 60-75% of claims against insured doctors are dropped with no payment, but there are no statistics available to see if in fact bare doctors claims are dropped more often.

Fifth, the plaintiff bar surprisingly has not yet made examples of any high profile bare doctors by challenging their asset protection plans.  In fact, claims against all doctors in Florida are down, although many observers credit this to the passage of Amendment 3.

Sixth, many insured doctors are becoming more aware of and concerned about their peers going bare.  In some cases, insured doctors are changing their referral patterns because of their concern of becoming the "deep pockets" for bare doctors, although this has changed a bit since the recent repeal of the joint and several liability law in Florida.

Seventh, a bare doctor can purchase malpractice insurance on a first year claims-made basis, which is 65%-70% less than the fifth year and beyond "mature" rate.  Over the course of the first five years of coverage the rates increase to the "mature" rate on a formulated stair-step basis.  Some bare doctors are buying coverage again because of the low cost the first few years, with the belief that the later years' rates will become more affordable as the market changes.

Eighth, a few hospitals in Florida have now been forced to put up $250,000 for a bare doctor's liability since the hospital allowed the doctor to go bare.  Hospitals, their insurers, and reinsurers have become alarmed at the prospect of even more doctors going bare, financially exposing hospitals to more risk.  However, recent court cases have been more favorable to hospitals on this front and the consensus now seems to be that hospitals will only be held liable if they do not collect the copy of the financial responsibility form that the bare doctors are required to file with the Board of Medicine when the go bare.

Ninth, the managed care industry for the most part has been silent on the bare movement.  In only some isolated cases are bare doctors being dropped from their panels or not being allowed onto new panels.

Tenth, the attempt by chiropractors to force Florida doctors to carry malpractice insurance in this past legislative session was just a beginning of these movements.  As more stories appear in the press about unsuccessful claims by patients against uninsured doctors the more we can expect the public to protest.  Hospitals are predicted to remain silent on this subject, and the statewide medical community itself is not totally unified about allowing doctors to go bare. 

And finally, relatively few doctors have realized that they can purchase plans to reduce their legal fees.  We estimate that only 750 doctors out of the nearly 7,500 bare doctors have thus far reduced their legal fee exposure, which can be huge in complex, multi- defendant cases.  These options include Medical Defense Solutions, a PPO type plan for discounted legal fees, and legal defense-only insurance offered by three different sources.  Evanston Insurance Company is the sole legal defense-only coverage insurer that is even rated by A.M. Best.  The other two offering coverage in Florida are small start-ups, and thus financially much more fragile and potentially volatile.

The malpractice insurance marketplace has changed dramatically in Florida due to a number of factors, including a steep drop in frequency of claims, the limited tort reforms enacted, and the entry into the marketplace of a number of new malpractice insurance insurers.  I predict that malpractice coverage pricing will drop 25-40% in the next three years, if not sooner.  Once the prices are back within a range of affordability for most doctors it will be very interesting to see if doctors buy insurance again or are so comfortable being bare that they opt out of insurance coverage the remainder of their careers.


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