It is an unfortunate fact of life that all doctors and their practices are easy targets for lawsuits regardless of merit. It is also highly possible that during almost every doctor’s professional career they will at some point need to defend themselves against a lawsuit and, should they lose, may find that a judgment against them comes at a massive and devastating financial cost. Doctors are not powerless to defend themselves, as Dan McNeff, CEO of Legally Mine, a provider of personal and business lawsuit protection services and products based in Salt Lake City, Utah notes. It is possible for doctors to create the legal equivalent of a bullet proof vest that will help them reduce and minimize the impact and financial trauma of a legal attack on their business practice and personal assets. “It is important for a doctor to understand that all lawsuits have two critical elements,” said McNeff. “The first is cause and the second is motivation.”
According to McNeff, the cause of a lawsuit can vary in both its nature and who is at fault. Due to the laws of vicarious responsibility, fault can be extended from a medical assistant to the owner of the practice who may or may not have had any contact with a patient or other litigant. The motivation for lawsuits is always valuable assets that can be obtained through the lawsuit. In other words, when a patient sues a physician it is generally for money or other valuables. However, in order for a lawsuit to be successful and meet its intended desires, both the cause and motivation must be in place. The causes of lawsuits often fall out of the control of the people being sued, but the motivation (i.e., personal assets) can and must be controlled if you want to terminate the lawsuit. No trial attorney wants to work for free, so before filing a lawsuit they will check to make sure any legal action they take on another’s behalf will provide achievable cash awards in the end. Since the cause of a lawsuit cannot be controlled, the real key to lawsuit protection is making sure that personal assets are protected and can never be taken in a lawsuit. This can be achieved with the proper use of both a Family Limited Partnership, (FLP), and Limited Liability Companies (LLC’s). “It is essential to note that the strength of these entities varies from state to state, and the language used in the business entities themselves makes a tremendous difference in how the judge treats any ruling,” stated McNeff,. “If used and created correctly, these tools can stop a judge from taking any assets, regardless of the ruling.” McNeff further stated that once a trial attorney recognizes that there are no means of obtaining assets from a judgment, the lawsuit becomes worthless and most likely will not be pursued. All assets can be either safe or risky, with the risky asset being able to create a lawsuit on its own, whereas a safe asset could not. A car is a great example of a risky asset because mechanical failures within the car can create an accident. A bank account cannot create a lawsuit without manipulation from its controller. All risky assets need to be housed in their own asset protection entities to ensure that if it creates a lawsuit, unrelated assets will not be involved in the suit. Safe assets can all be housed in one properly written entity. In recent years in the state of Maryland there have been numerous lawsuits filed for Lead Paint Poisoning. A landmark judgment was rendered against a landlord for ten million dollars. In this case the defendant had an LLC to protect his assets, but it used the wrong language, was set up in the wrong state, and was organized incorrectly, and all of his assets were organized in one LLC. Because of these mistakes not only was the judgment rendered, all the properties owned by the defendant were seized in the lawsuit. At the same time other lawsuits were initiated against other landlords. These lawsuits were terminated within days because the prosecuting attorneys found that the LLC’s were owned in the right states, and were organized so the judge could not distribute assets out of the entities. The asset protection was organized so that no one asset could be held liable with another. “Most malpractice cases against surgeons are settled out of court by an insurance company, but a trial attorney may look at the personal assets owned by a surgeon and decide that pursuing a lawsuit will render more money than the insurance covers, or that the insurance company is offering,” stated McNeff. “ In these cases, the surgeon who has protected his or her assets in a properly organized LLC will find that they can force a settlement from the insurance company should the prosecuting attorney find that there will be no access to personal assets regardless of the judgment.” Simply placing assets in an LLC with no regard to language, or the state in which it is organized, will rarely result in successful asset protection. Simply placing your practice in a corporation is a guaranteed disaster waiting to happen because judges have the right to pierce most practice corporations and the result will almost always be the loss of personal assets. For most people, assets reflect a lifetime of effort and investment decisions, and you want to protect them from damage, loss of disgruntled patients. The key to any good lawsuit protection plan will include ways to maintain control of your assets without direct ownership, shielding you from legal attacks. Should you decide you wish to place your assets into an FLP, LLC or any other protected business entity, you must make sure that you are working with a highly reputable company that understands the laws in your home state. To learn more about how to protect your assets, Dan McNeff of Legally Mine, LLC will be presenting at the Ultimate Aesthetic Training Workshop at the Luxe Hotel in Beverly Hills on June 6, 2015. Look for the link under “Events” on Aesthetic MD Insider. You can also visit www.legallymineusa.com.
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