If you are a compliance officer at a Florida bank that has a number of clients who are physicians, and medical groups composed of physicians, you need to be aware of the fact that the statutory cap on non-economic damages, in cases where there is loss of life in a medical malpractice claim, was declared unconstitutional earlier this year, by the Florida Supreme Court*. Furthermore, a decision in that same high court is pending, on a case which will probably result in a similar ruling, eliminating the cap on how much can be recovered, on all other types of medical malpractice claims. Attorneys for the Florida Medical Association, in a published opinion, have stated that this is the likely outcome of that second case.
This means that medical malpractice judgments against doctors will now be permitted, without limitation. Those judgments that greatly exceed malpractice insurance coverage then expose all the assets and holdings of Florida physicians, and their professional associations. Physicians, and their corporate or professional entities, could become insolvent, as the result of multi-million dollar judgments, where plaintiffs' attorneys seek to levy on all their assets. Some may be forced into early retirement, under greatly reduced economic circumstances.
Some doctors might be forced to consider bankruptcy, with all the resultant negative consequences to their lives, as well as their practices. Others may be forced to close their doors, and move to another state, where they may still be faced with unsatisfied judgments.
Given that the earliest that plaintiff's attorneys could most likely obtain these new substantial judgments would be early 2015, Florida financial institutions that have financial exposure to physicians practicing medicine in the state would be well advised to take a hard look at their clients' lines of credit, secured and unsecured obligations, including investments where the bank was the lender, and all other personal and professional debts of the clients, that are presently owed to the bank. Have all the relevant assignments and mortgages been executed ? Are there personal guarantees of clients' spouses in the files ? Is there any exposure secured by out-of-state assets ?
Proper risk management means assuming the worst case scenario, especially for affluent professional clients whose debt service depends on a continuation of their cash flow. If, as some experts warn, we are now going to see an explosion of medical malpractice suits, with large verdicts, now is the time to
minimize your bank's risk levels for your physician clients, long before the new, unlimited MedMal judgments come down the road, and hit your clients hard.