Navigating a Lawsuit

Intro:
This is the White Coat Investor podcast, where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high-income professionals stop doing dumb things with their money since 2011.

Dr. Jim Dahle:
This is White Coat Investor podcast number 305 – Navigating a lawsuit.

Dr. Jim Dahle:
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Dr. Jim Dahle:
The quote of the day today comes from Abigail Johnson, who said, “Returns matter a lot. It's our capital.” I think there's a lot of truth to that.

Dr. Jim Dahle:
Okay. Our guest today on the podcast has been through a lawsuit. He spent about two and a half years being drugged through this lawsuit from the time he found out about it until it actually went to trial. And I think there's a lot of lessons to learn from it.

Dr. Jim Dahle:
And so, as I bring him on and ask him to tell his story, he tells it extensively. Not all the nitty-gritty details of the actual medical case, but certainly all the nitty-gritty details of the legal case. And you can just feel that you're right there with him in the case, feeling the angst that he felt, the desire to be done with it, the desire to get out of it no matter what. And understand that it's a little bit not so logical, right?

Dr. Jim Dahle:
We talk on the podcast, we talk on the blog all the time about what the statistics are of you actually losing personal assets in a lawsuit. And it's infinite testimony low. The odds of this happening are very low. But when you're in the lawsuit and that possibility is being floated out there, in a high-damage case, it doesn't necessarily feel like a logical experience. It's much more of an emotional and gut experience.

Dr. Jim Dahle:
It's a little bit like investing. Investing theory is one thing. We understand the stocks go up and stocks go down, and if you hold on, you'll probably be fine in the end. We all understand that intellectually. But when you lose 40% of a big chunk of money that used to be yours, that you put toward your retirement, instead of spending it on a house renovation or on a boat or on a cool Tesla, and 40% of that money disappears, that's not exactly a logical experience. It's much more of a behavioural, an emotional experience, and it's like that in a lawsuit as well. Let's bring him on and we'll talk about the case.

Dr. Jim Dahle:
Our guest on the White Coat Investor podcast today is a doc who has been through a lawsuit. Quite ways into a lawsuit. One of those lawsuits that scares all of us. And today we're going to talk a little bit about his experience as well as some of the concerns and risks and what can be done during a lawsuit, and really give you some insight into what it can be like going into a nasty long, drawn-out lawsuit process. Welcome to the White Coat Investor podcast.

Speaker:
Hey, thanks. I'm happy to be here and try to help others to learn what I was forced to learn during this process.

Dr. Jim Dahle:
Yeah. We're not going to talk about a lot of the specifics of the case. We're not even going to give this doc’s specialty, but we're going to talk about what happened during his interaction with the medical-legal system and talk about some of that, and how it can affect you in your life.

Dr. Jim Dahle:
So, just briefly, why don't you give us a brief overview of what happened with this particular case, and then we'll dive into some of the learning points associated with it.

Speaker:
Well, thanks. And I want to be able to tell everybody all the details, but unfortunately, there's all the confidentiality that goes into these cases. So, I want to respect the required privacy. But you should know that I'm a surgical specialist and I'm a partner in an independent private practice group. We mainly do office space procedures, and it's around five partners in our business.

Speaker:
But when you get served papers in the beginning of the lawsuit, it causes a lot of anxiety and a lot of questions. A lot of feelings of “This isn't just, and this isn't fair.” Because currently in our group of owners, I was the only one to ever have to deal with this situation fortunately. It's not something that happens to us in our specialty often.

Speaker:
So, there's so many phases and so much waiting along the line of this process. And I think it was remarkable, and I hope I can tell this story clearly, how in the beginning you have certain judgements and they completely change when you get closer to the end. And looking back now, I can see that this is valuable information for anybody who is still unfortunate to deal with this.

Dr. Jim Dahle:
Yeah. Unfortunately, that's an awful lot of docs. I think on average, a typical doctor gets sued about once in their career, but obviously in some specialties, we're talking about neurosurgery and OB-GYN and general surgery, it's generally much more frequent than that. Well, in other specialties such as pediatrics and family practice, it's much less frequent than that. And everybody else is somewhere in the middle.

Dr. Jim Dahle:
But it's something that many of us will face, some of us will face more than once during our career. And it's obviously something that we don't have a lot of preparation for. So, tell us about the beginning of the case and you got served, obviously, that was the first notice you had of it, I assume. How'd that feel?

Speaker:
Yeah. In the summer of 2020 is when this all began. And it was a Friday afternoon and my wife called me at work and said, “Somebody just came to the door and I'm home with the kids. We answered the door and they handed me an envelope and said, ‘Good luck' and walked away.” And that's how they served us the lawsuit.

Speaker:
They also sent to one of our main offices another same courier personal delivery of the lawsuit papers. So, everybody's kind of scrambling around, giving me a call, my family and my manager. And they say like, “Well, we have a lawsuit situation.” It kind of ruins the rest of your day. You know that it's there, but you can't read anything about it until you finish.

Speaker:
And I reviewed the case. We reviewed the care. It had happened three years prior in 2017. This is the timeline that's always surprising and maybe good information. But it involved a medically compromised patient who had needed an urgent surgical procedure in our outpatient clinic. Our documentation appeared good. The follow-up was normal. There was a post-op call on day one after surgery and it showed that the patient was doing well, normal recovery. And there was no sign that the patient ever contacted us with any questions or concerns or complications.

Speaker:
Initially we were relieved as a group of partners saying, “Well, this seems like an issue that involves you because you are the surgeon, but the practice is also named in this lawsuit. So, we have your support and we’ll work in this all together.”

Speaker:
But I think everybody and myself, it felt like just a me issue as the provider named. I felt like I needed to do everything I could to protect not only my exposure as an individual but the practice as a whole. So, I knew I was the guy that I was going to have to go to work on this. And I think the other partners were like, “Oh, geez, that's really awful, but good thing it's not me.” Because it becomes just a headache.

Speaker:
And that's one thing that I wanted to mention is in the beginning I don't think we thought our company had any risk. If anything, it was just me, the provider named. But towards the end, we realized the company as a whole had a lot of risk potentially. We all reviewed that case and they all said, “Hey, we would've done everything the same doc. So don't worry about it. This looks like something that's going to be no big deal, it's probably going to go away.” Again, nobody's really gone through a lawsuit except some of the partners that had already retired. They had about one per career, like you said.

Speaker:
And you know what? You can interrupt me any time, but I don't know if it'll take 5 or 10 minutes, but I can kind of go through a timeline and then you might find it's a good time to stop and ask questions. But I'll go through step by step how this process looked. Is that okay, Dr. Dahle?

Dr. Jim Dahle:
Yeah, I think that's great. Let's have you walk through, give the summary and then we'll get to the learning points.

Speaker:
Okay. So, the first step is you talk to the insurance carrier's attorney representative, and we provide the entire chart to the patient or for the patient's encounter. So, they want everything that we ever interacted with, whether it's of course, the clinical charting, but also the financial side.

Speaker:
And the initial plans with the attorney that is from the malpractice carrier is saying, “Hey, I'm not going to defend your care, but we're going to appoint you a defense team.” So, they did that and then we had initial conversations with both the malpractice insurance carrier attorney and the defense attorney. And yeah, we've reviewed the chart, it's good care and we plan to defend it. It was very much supportive and we got your back and we're going to get through this and don't talk about it, not even with your partners if you can help it. It'll protect them, it'll protect the case.

Speaker:
And they basically said, “Do you agree? We're going to defend your good care.” And I said, “Yeah. I want to fight for what's just here. It's not like I want to settle for something that seems like it isn't negligence or it doesn't seem like anything was done wrong.” And it seemed like an easy case because it's how every partner would do it and everybody in my specialty would be somewhat routine for them as far as the care that was provided.

Speaker:
The other part of it is when you settle, the understanding was I would've to report to the National Provider Database. And I had a clean record to maintain. And that is actually when you're in that situation, it's a big deal to consider having to report to that database and maybe the extra paperwork that is required. Maybe you worry about reporting once and then having a second lawsuit and then what's that going to look like for being somebody who can be insured from a malpractice standpoint. So, a lot of concerns about reporting to the database.

Speaker:
As I started to digest the details of the lawsuit, and this was several months after being served the papers and being informed of the lawsuit, I learned that there was a general practice physician provider also named to the same lawsuit, and it became apparent what the injuries were. They were sustained later after the procedure, much later related to being, basically adjusting certain medications that affect surgery, which we do every day. And our request to modify those medications in a certain way.

Speaker:
We communicate in written form with the general practice providers. And we found out that that provider used an alternative method to adjust the medication, but nobody was really informed and it caused a cascade of medical issues starting about one to two weeks after surgery related to severe anemia. Resulted in a prolonged hospitalization and permanent organ failure requiring lifelong in-home and outpatient medical care with significant expense.

Speaker:
When we were discussing all this, everybody, as far as the attorneys I was dealing with, which were different than the attorneys that the co-defendants or the other provider. They were saying, “Hey, this seems to be more of the issue with the other defendant.” And another reassuring sign that “Hey, we don't know if you're really going to be involved like the other provider.” And that was again, reassuring.

Speaker:
So, a lot of months go by. In fact, my defense attorney took a new job somewhere else and I was onto a new defense team. Actually, the malpractice insurance attorney representative quits as well. So, I got another representative. It's almost like it started over.

Speaker:
And I continued to question, “What are we going to do next? Am I still in this lawsuit or is there a chance that they just dismissed me because this seems to be kind of going nowhere?”

Speaker:
And they said, “Well, this is very common to have to wait and I don't think you should expect that you're going to be dismissed and it's going to be really important that you and the co-defendant, the other provider and all the legal teams work together and support each other and have an aligned front they called it. Because if you start to throw another provider under the bus, it can just cause stones to be thrown at each other.”

Speaker:
And in a jury situation, they said, that can really turn off a jury when you are kind of undermining somebody else's care to defend what your position is in the lawsuit. Even though the other provider seemed to have caused more of the issues, I was kind of stuck being on the team with them, which I agreed and it seemed reasonable.

Speaker:
I was able to gradually read all the expert opinions that were coming in. This takes a lot of time and I was asked to find an expert to support my care and I was able to easily find one in the same specialty and they fully supported my care and they were queued up to help me. The plaintiff's expert opinion against my care or pertinent to my part of the case.

Speaker:
It was very difficult to read a non-surgeon expert that wasn't in my specialty, just basically criticize my care and accused me of gross negligence. That was hard. And it just makes you feel unsettled and it makes you feel like, hey, maybe this isn't a fair process really. And if it's not a fair process, then what's the outcome going to be?

Speaker:
Another thing that was revealed when you review all the experts on both sides of a case like this it's called life care estimate. And it was in the mid-eight figures. So, my policy limit being pretty normal, I think 2 million. This was a huge discrepancy. And you start to do some math in your head and you start to realize that the legal system is maybe not quite as cut and dry or black and white as medicine. And I'm basically out of my wheelhouse dealing with a profession I'm not used to. And you just have to put a lot of faith in your team.

Speaker:
The next step was the deposition. It was scheduled in late 2021. Again, the care was in 2017. I found out about the lawsuit in mid-2020. Deposition is finally happening in late 2021. So, I had a certain defense, my second defense team, because the first one took another job and we were planning on prepping the day before the deposition. So, I knew how to do a deposition and so I could do well. However, this attorney had an abrupt need to take a leave of absence so everything was cancelled and he was no longer defending me. He couldn't go to work for, I don't know what kind of leave, but he basically quit his job as well, it sounds like.

Speaker:
So now everything was cancelled and everything's delayed. Now I'm onto the third defense team, but this is the best compliment I can give to my carriers. This defense team was top-notch, very impressive. You could tell it was a whole different level of skill and competence. Very proactive, very confident. And they wanted to meet multiple times in person to discuss the lawsuit and thoroughly prep for the depositions, which was now planned for the spring of 2022.

Speaker:
And the deposition was four to five hours. It went well. You had to learn how to avoid giving little snippets that could be used against you in court. It was pretty tricky and pretty involved but with the right prep and the right team, it seems like the steps were now falling into place.

Speaker:
The plaintiff's attorney sent these demand letters demanding to settle. Very threatening. Threatened actually my personal wealth. They basically wanted my policy limit to avoid any personal risk and they were very interesting letters to read, but very, very hard to read. And at that time my policy limit was assumed to be $2 million. So that's basically what they wanted from just me and we had no idea what they were asking the co-defendant for.

Speaker:
And again, the downside to settling is reporting to that National Provider Database. They kind of asked me, “Well, we don't want to settle.” And I found out later that they can refuse to settle, the malpractice carrier can. But I at that time was like, “I agree, I'm not settling, I don't want to report. And this seems like fail threats, it's just the bluster and swordsmanship of the legal profession.” It was just kind of tough letters to read, but it didn't affect my decision.

Speaker:
Now, the co-provider or the co-defendant, the other provider did a deposition as well. I was told that did not go well and that co-defendant said a few things that hinted at my contribution to the issues, but that provider also admitted to doing several things wrong, kind of fell on the sword and I found out that co-defendant was retired and maybe didn't seem motivated to defend their care.

Speaker:
And this I thought was like, “Well, that's maybe good that the provider's admitting some fault, and that could help me.” But they said it's not necessarily a good thing because a jury might bring all of us to trial or if it goes to trial, a jury will be looking at both of us and it'll be obvious that the provider was negligent. And that huge award, that life care plan that could be mid-eight figures could be mostly to her, but what's left over for me could still be a huge amount above the policy limits.

Speaker:
That was another detail that I thought was interesting and wasn't good for the risk of this case. Of course, I did the surgical procedure that started the spiral. So, they're like, “I don't think you're going to get out of this. I think you're always going to be tagging along.”

Speaker:
And it was getting closer to the trial date, which was scheduled to be the end of 2022. And I was kind of stuck in this process, but my defense team, which I had all the confidence and supports, I was perceiving that they started to be managing my expectations like we do with difficult patients. And they said things like, it's never a sure thing with a jury or we may win this case the majority of the time, but there may be a 20% to 30% chance that we lose and then there's that excess risk.

Speaker:
So, I was getting really nervous, of course, it's right before trial and we were getting more and more communications from the plaintiff's attorney that suggested the damages, in this case, are the highest he's seen in a 40-year legal career. And even if I was only a portion of small amount of a jury award, it will be way above my limits and enough to wipe me out financially.

Speaker:
The insurance company was kind of quiet, they weren't really talking to me. I was talking to my defense team and I asked the defence team, “Do you think I should be considering a settlement with kind of these statements they're dropping that I'm perceiving to be managing expectations?” They did actually say, “Lawyer up.” And I said, “Lawyer up? I'm surrounded by lawyers here, there's one with the carrier and there's you guys. What do you mean?” And they said, they can defend me in trial and will do their best, but there's no guarantee. They're hired to be trial lawyers and that's it. And that was really enlightening.

Speaker:
They didn't want to say anything about the insurance company, but they said they have their process and we have ours and we're both fighting to defend you. But somebody else, another lawyer should be representing just you to tie it all together.

Speaker:
So, this is where a really big point of this whole process is the personal attorney. And I asked a couple of my attorney friends, I'm like, “Sort this out for me. What's going on here? I thought I had attorneys. I have two sets of them, so why would I need to hire my own with my own resources?”

Speaker:
And they said it's like this. The insurance company is in their lane. They need to protect their interests, which may not be my best interests, like forcing a settlement in one scenario and forcing me to report, or worse, forcing trial with a result end adverse excess verdict causing me financial ruin. And they'll only cover your limit and the rest is up to me basically.

Speaker:
And they may defend the case and take a trial just so they don't become a target for more lawsuits. In other words, if you're settling everything, the legal community knows and you become a target for just easy money to be handed out because they never are taking things to trial. There's a motivation to take things to the end and bluff as long as you can, even if it ends up hurting the provider involved.

Speaker:
So, the defense team is hired by the malpractice insurance carrier, so they're my people, but who's really paying them is the insurance company. So, they're very careful to stay in their lane and say, “Hey, we've only been hired to defend in trial.” Their hands are tied for all options for the provider involved. That's probably the biggest take-home point of this whole podcast interview.

Speaker:
But the last thing is now we're right before trial in the summer of 2022. Another surgical specialty had a huge excess verdict and it seemed to be something where the surgical provider really didn't do anything negligent, but it was over $100 million. That was in the neighborhood.

Speaker:
And that was making everybody really nervous like, “Hey, what's happening with the culture of the United States, especially in this area? Is this the way juries are now behaving and has it always been that way? Are things changing in a way that changes risks? And people are saying, I think things are evolving right now, and who knows what that means for your case.

Speaker:
So, I found a personal attorney and it ended up being critical to the outcome in this case. It was about four months before the trial date. It took three tries though. I had a recommendation for a good personal attorney for these issues. They did a database search for a conflict in their firm and found that something hit where they couldn't represent me. Could have been anybody involved in this case, hospital, co-defendants, could have been a male practice insurance carrier that they had been dealing with.

Speaker:
That's a conflict that means they can't represent me without a conflict of interest. They recommended another one. Had the same thing, they did the search and there was another conflict. So, then you wonder, these big players, they're kind of clogging up all the legal options for the little guy because it seems like if they're connected in any way to big firms, then they almost make it impossible for them to represent somebody who might need to represent themselves independently to these big malpractice insurers.

Speaker:
I finally found one and we discussed the case basically and my concerns for the risk of excess verdict. We discussed my goal, “Hey, if I can get out of this without reporting, I'm interested in that too. So, there's still these two things I'm weighing.”

Speaker:
Very interesting. That personal attorney felt it was important that they represented me as an individual and not my practice and my practice as a whole with all my partners. And she said if the practice wants to, they can get their own attorney, but it's for client privilege reasons and logistical reasons. And it was explained that partners are in this together with lawsuits until they're not.

Speaker:
So, it wasn't really on my radar but felt it was very unlikely because I had such great support from my group. But it was explained that even though a provider and the practice, their goals for risks appear the same, the lawsuits divide groups oftentimes.

Speaker:
And in theory, the other partners of a business or a clinic could use the lawsuit as a justification to terminate the named partner. And they could force settlement, potentially without consideration of reporting obligations for that named partner against the partner's wishes. They could isolate in theory the name provider to avoid financial risk for the company and try to isolate it so it's just on the individual. And none of these happened in my case, but just kind of things to think about.

Speaker:
Whereas the named provider doesn't easily hurt the whole company without also hurting themselves. In other words, from that standpoint, anything that's good for that individual name provider is usually good for the company. But you can think about a partner who maybe has no interest in putting in the work to defend the case, tanks at trial and creates an excess verdict.

Speaker:
I think that's a consideration that a group would look at depending on the individual that was named. Are they going to be able to do it? Are they going to be able to represent the case well and put in the time and put up the best defense and help with that?

Speaker:
It is interesting. I updated my fellow partners about hiring this personal attorney and it did cause a very minor conflict. And I think that was when everybody started to realize, hey, this is really real. It's right before trial, there's excess risk. And we started to realize that wasn't just the risk for the individual name, me, it was a risk for the whole company. And I think everybody just wanted to control that situation and that's just impossible to control all these risks and a lawsuit in general. That's the problem with providers is we're used to having control and when a lawsuit happens, there's a lot that's outside of your control.

Speaker:
I knew I needed to hire the personal attorney to navigate the minefield, so to speak. So, I tried to explain that “Hey, I'm doing this for myself, it should help the company. But ultimately, I said, if I have to pay for this with my own personal financial resources, I'm going to.” And everybody seemed, again, supportive and we just kind of went through.

Speaker:
At this time too, finally the insurance company sent us an excess letter. It's called a letter that says, hey, you have excess risk, we're acknowledging that and if you lose and there's an excess jury ward above your policy limits, that's your responsibility. So, it was very timely, kind of last minute, but all of the partners were now reading these letters, everybody's starting to realize it's really a real thing happening here, and potentially our whole company could become bankrupt if things don't land our way.

Speaker:
For two to three months, the personal attorney worked with me. We're trying to figure out a way to get me out of reporting but also not have the excess risk. At one point, the co-defendant was going to mediation, which suggested working towards settlement and it was asked if I would go along and join in the mediation, but we decided not to because at that point we didn't want to report to the database and just weren't quite ready to go down that settlement road even though the excess risk was there.

Speaker:
What my attorney did is worked with the insurance carrier to get a little more clarity on our policy. We actually found out we had a $2 million policy for me individually and another $2 million for the company. We had thought that it was $4 million per year total, but $2 million per lawsuit. But the personal attorney worked to figure out that actually we had $4 million, one was a $2 million company policy and one was a $2 million individual me policy. So that helped a little bit.

Speaker:
And before we had talked about settling and reporting, they said there's no way you can settle and not report. But my attorney worked with them and said, “Hey, what if you settled for a lower number and you used the policy? Wouldn't that allow the individual name provider not to report?” And they did come around on that. They said, “Yeah, that would be a way to not report.” It's because this medication miscommunication was more systemic and not directly related to my hands-on care, I think that's the real reason that that was possible.

Speaker:
We had conference calls with the attorneys, my partners, and at this point, it was really apparent that, “Hey, let's try to settle. Now that we have that reporting issue dealt with, let's try to settle, everybody wins. No out-of-pocket for the company or the individual and no reporting.” And the insurance company said, “No, we're not going to settle and we'll continue to defend the good care like we have planned all along.” We were told that they ran it up the chain of command and there's no way that they're going to settle. And we said, “Wait, we don't have the power to demand settlement?” And they said, “Nope, that power lies with us based on your contract.” The malpractice carrier has the ultimate beyond that.

Speaker:
So, we were stuck it seemed with a 20% to 30% risk of losing, with a reasonable expectation of that loss resulting in a large excess verdict that could really wipe us out as a company and me as an individual.

Speaker:
Right when we were trying to deal with that mentally, the co-defendant settled. After mediation failed, they settled like a week later and this was about a week before trial. Assumed to be a really large amount and the assumptions related to the hospital where they were employed, having a large excess insurance policy for these things, which smaller businesses like me don't have at this point. We might consider it in the future.

Speaker:
So now the situation is I was going to trial in a week alone without the co-defendant and I didn't know if that was a good or bad, but they said it maybe increases our risks related to damages being a portion to me only. And we weren't even clear if we could put that co-defendant on the portion of damages on the jury forms and we weren't sure if we could put the plaintiff for comparative fault to try to dilute these damages down in an adverse verdict so it wouldn't just land on us.

Speaker:
Because now all of a sudden that mid-eight-figure damage amount it's more like lining up to just land on me only. So, it became just right one week before trial. It's just a whole lot more stress and a whole lot more risk.

Speaker:
We hoped we'd be dropped from the case now that they kind of bagged their main target and got paid, but there were some back-channel communications going on. It seemed like this guy, the attorney for the plaintiff always would forge forward, almost emboldened or bolstered to try to get us to settle now that they seem to think their chances at trial were good and maybe had less to lose and more resources.

Speaker:
But it became apparent that trial was going to happen anyway. So, now it's time to write letters to demand settlements. And we wrote, I don't know, probably 10 letters from my company, from my personal attorney representing me saying, “Clearly there's risk. You can't do this to them. We can't go to trial, you have to settle. We don't care what you settle for, just settle, settle, settle.” And they just kept on saying, “No. No, we're not settling.”

Speaker:
Then there was a weird discussion about a high low agreement, which means trying to get the plaintiff's team to say, “All right, we'll go to trial and if you win, you get this high amount, which say is our policy limit, but if you lose, we'll still give you some money so you can cover your costs” thinking that if this guy doesn't think it's a slam dunk that he's going to win, which he almost couldn't, it seemed like. The chances were in my favor to win. That would be a good way to go to trial and not have the excess risk and potentially still avoid the reporting to the database.

Speaker:
But the plaintiff's team refused that deal. I thought it was a good plan, but it just wasn't practical I guess for them. But then as a follow-up, the plaintiff's team said, “All right, how about this? We will let you pay us half your policy limit” which was perfect because that was the amount that'll allow me to not report.

Speaker:
So finally, we get the plaintiff to come down on a settlement demand and I was thinking, “All right, let's just get this over with. Hopefully, we can get the insurance carrier to take the deal. And they wouldn't.” So just continually stuck in the game.

Speaker:
We felt very exposed and thanks to WCI, I was technically FI in my early 40s, at this time. And this should have been something like, “Hey, I prepared for this situation and I've saved and I should be able to handle the storm.” But the truth is, if this goes really bad, I wipe out all that work. Even to be FI, it's like they could take all that away too. And it was in such a dark place. I talked to my personal attorney about using my own savings to, can I go around a malpractice carrier and just pay. I want to go home, I want this done. I don't want this risk looming.

Speaker:
And in fact, the number I was talking about was in the seven figures to use of my own personal funds. Luckily everybody talked me out of that and I think I'd always be bitter about doing that. So, I didn't end up doing that.

Speaker:
But now, the day before trial, I got my personal attorney staying up at a hotel by the courthouse and it's all on my dime and my team's there and their team's there and there's a pretrial hearing and the judge ended up putting some constraints that limited our side of the case and kind of hurt us. It related to not using a lot of information from the co-defendant that may relate to more fault and damages to our side. So that kind of heightened the pressure on the malpractice team to settle last minute. More letters are being written, but we couldn't get them to budge on their plan to take it all the way.

Speaker:
So, on the morning of trial, the plaintiff team offered another even lower offer. That's kind of what I learned is there's a big number to start, but as you get closer and closer to trial, it's like a sliding scale and they don't really want to sit through trial either and fly in all their experts and spend all that money. So, the number gets lower and lower.

Speaker:
And the insurance company finally said, “Okay, we'll counteroffer that settlement.” But they used just a tiny amount that ended up being kind of insulting. It was almost like they used an amount that they knew wouldn't be taken seriously. Even though they offered to settle for a small amount, the plaintiff's team said, “No way, we're going to trial.”

Speaker:
And then first day of trial I had to sit on the stand and my testimony was stressful, but went well. It was about two hours day one that I sat up there and it was about one to two hours the next day. And it was just like you'd think. It was intense, just like a movie, TV drama, lot of objections, overruled, approach the bench, all that stuff.

Speaker:
It was amazing to watch my defense team though. They were just skilled litigators. You could tell they were some of the best around and they could just handle the courtroom. And compared to the plaintiff's team, which I don't think they were used to going to trial a lot, being in a courtroom, it was kind of like major league and little league.

Speaker:
But the personal attorney was kind of working on all sides during the breaks with emails and letters and phone calls, talking to the plaintiff team, talking to the defense team, talking to the malpractice team. My personal attorney also helped the defense team in several ways to help our case. So really neat to see them all collaborate like that.

Speaker:
But on day two of trial after I was done, the expert against me took the stand and my team basically was very surgical, so to speak. Discredited this expert really quickly, kind of made him go back on what he had written in his affidavit. There were certain things he said that were out of the scope of his practice, and a mistrial was threatened during the case. It was like I said, like a TV movie drama.

Speaker:
But ultimately, at the end of my team questioning him, he admitted that he couldn't say my care was a direct cause of the patient's injuries like he had written in his affidavit. So basically, fully undermined the entire case. And I could see the plaintiff's teams, they were just putting their heads down and their hands and shaking their heads and they basically lost right then. And the trial had a risk of being dismissed altogether.

Speaker:
But my malpractice team was like, “Hey, just another week, week and a half in trial, we got this thing won, just stick it out.” And I was just like, “No, I want to go home if I can. I want to be back with my family. I want to get back to my patients. Please, please, please, just let's get out of this.”

Speaker:
So, what ended up happening is they offered another really small amount and the plaintiff's team took it and it was it. They dropped me from the lawsuit and that small settlement was under my company's policy. There's no reporting. So, a clean record, just ended up being about a two-and-a-half-year nightmare with a whole lot of work.

Speaker:
But the cost of the personal attorney were worth it. And looking back, the practice, my partners agreed that the personal attorney was critical to this outcome and getting me back to work and getting this all resolved with a good outcome. So, we just agreed to share the costs, which were significant, but that was really the only party in the whole thing that ended up paying any money was the malpractice carrier and our practice.

Dr. Jim Dahle:
And let's go back through a few of the details here. In the beginning, this is always terrible news to get. Over the course of two and a half years, how many sleepless nights do you think you had?

Speaker:
Well, I think it's a skill to sleep well. So, it was less sleep, but I always was able to sleep. But yeah, I think there were some lost hours, probably several days, especially towards the eve of the trial. I wasn't sleeping very well, that's for sure. So, several days of that.

Dr. Jim Dahle:
It was worse at the end than it was at the beginning, huh?

Speaker:
Yeah. At the beginning it was more like, “Oh, that's just like a punch.” I guess I believed that it wasn't really a real issue, but it was when we were going to trial with all those huge numbers floating around, it was stressful on the whole family. Yeah.

Dr. Jim Dahle:
And you had mentioned at one point, it sounded like there was almost three sets of attorneys here, and I was trying to figure out why there was three and not two. I understand that there are the malpractice company's attorneys, and then I understand you also hired your own personal counsel. Was there another set of attorneys there involved?

Speaker:
Yeah, I apologize. I didn't explain that well. You have the malpractice carriers attorney team, they're representatives. They're like coordinating all the people they hire, but who they really hire is a defense team, litigators. The courtroom attorneys are the defense lawyers that are hired by the malpractice carrier. Now, malpractice carrier is more of like an administrator of the case and they hire a defense team that I worked directly with more than I did the malpractice insurance administrator or representative.

Dr. Jim Dahle:
Got it. So, it was almost like they hired a specialist to go to court.

Speaker:
They always hire a courtroom specialist to defend doctors, is my understanding. Yes.

Dr. Jim Dahle:
Got it. Okay. And your practice ended up paying for… Well, you said you split it with the practice for the personal attorney.

Speaker:
Yeah. I'm a partner in the practice, so it's always a share of costs that we all share. But when I decided to hire that personal attorney, things were happening fast. A lot of new information, it's all new to me and I was being told, “Hey, you have to have your own attorney. You have to protect yourself from everybody, including your partners.”

Speaker:
I was very transparent and told them I hired this attorney, but they were basically like, “Well, who are they representing?” And I said, “Well, they're representing me, but it should be the same type of benefit to you guys.” So that's where there was a little confusion like, “Why are you hiring your own attorney?” And that's when I was like, “Hey, I know I need to do this to get through this case so when the dust settles, I'll pay for it if I have to.”

Speaker:
So, it was a decision I made knowing that I might have to be personally paying for that attorney because I'm the named provider. But when the end of the case was finally there and we were done, everybody looked back and said, “Hey, that personal attorney really helped everybody, the whole practice.” And I think we kind of have a better protocol on how to have perspective and approach that decision moving forward.

Speaker:
But what I've learned is I think you can be the unlucky provider that gets named in a case, even though all the other partners in your group would've done everything the same. Since you got the short straw, you have all these other risks. You have to spend a lot more time and the risks are there for you more than even everybody else. And you might consider a personal attorney to just help you navigate the minefield.

Dr. Jim Dahle:
Yeah. Was your impression that this particular lawsuit that named both you and the practice, was your impression that that was an unusual thing to happen? Or that that was pretty common?

Speaker:
No, it's really common. It's my understanding that as a partner owner, I'm employed by my partnership that I'm a shareholder in. And similarly, the co-defendant was named personally as a provider, but her hospital was too. So, then it's going to be provider and who is the entity that you're operating within. So, in your case, your ER group, if it's independent, would be named as well as your provider I suppose.

Dr. Jim Dahle:
Yeah. That's really rare in emergency medicine is why I ask. Was it that the practice owns the facility in which the procedure was done? Was that where that liability came in?

Speaker:
Well, I think that the plaintiff attorney is just wanting to capture every potential policy. So, they say, “Well, the provider did something that caused the damage but it's the corporation that they worked for that's also liable.” In my state, it seems like, that's my understanding, is they're always going to try to sue the provider and the corporation that they're working for.

Dr. Jim Dahle:
Does your state have a bad reputation for malpractice?

Speaker:
That I learned the hard way. Yeah. I wouldn't have really known but you can't depose the experts. There's no limits on awards. You don't have to have the same specialty experts. A lot of other states have a little more boundaries for these types of things.

Dr. Jim Dahle:
Yeah. When you look at the statistics, an above policy limits judgment that actually happens and isn't reduced on appeal is incredibly rare. I've calculated out for emergency medicine and it's about one in 10,000 per year of practice. But that doesn't mean that threat isn't there for a whole lot more of those people like it was in your case. Obviously, yours was settled for well below policy limits and you didn't even end up having to report.

Dr. Jim Dahle:
So, essentially you had no bad outcome here for you personally other than two and a half years of your life being drugged through this and some of the expense of your personal attorney. But the threat was there. And I guess my question for you is, did you get any comfort at all knowing the likelihood of that happening was low or was the fact that it was even a possibility enough to ruin your year?

Speaker:
That's a great question. How I'd answer that is if they would've said, “Listen, it's a 1% to 5% chance that you're going to have a bad outcome.” But they didn't say that. They said about 30% chance. I think again, they're managing expectations, but when you look at potentially being wiped out financially and there's a 30% chance of that, it seemed like a huge number to me.

Speaker:
So, you would tell me on the podcast it's probably 1% of the people named would have above policy limits that sticks. And I had talked to a lot of people that said the same thing, but the people I was working closely with, the defense team, when they could only tell me 30%, I was hanging onto that information more than all the other.

Dr. Jim Dahle:
Yeah. Have you guys looked at your policy now that this is kind of over and looked into getting a policy that allows you the power to force settlement if you want to? I know those policies exist out there, clearly yours wasn't one of them. Have you considered changing the type of policy you have to have that benefit?

Speaker:
Yeah, that's the greatest learning of all. We're going to definitely look into that and those details that we weren't paying attention to before. There's contracts and they're so hard to read and that wasn't even on our radar, because we hadn't really gone through this. But now we are even going to consider some excess policies, even though we have to see how expensive they are. Because again, the odds are that that will never happen and it didn't in my case.

Speaker:
But I think there is some truth that jury climate is changing and we don't know how and juries maybe aren't as reliable and siding with the doctor as much as they historically have. So, that might not only change the limit we want, but just having some excess verdict policy add-ons and definitely having new language and new options where we can be in control of our destiny with settlement.

Dr. Jim Dahle:
Yeah. I'm interested in a ballpark figure, just round numbers of approximately what it cost you to have personal representation.

Speaker:
Yeah, it was between $50,000 and $75,000. And I think it could be more than that if you hired them earlier on, on the process. See, I was naive and I think it worked out hiring them about three to four months before a trial date. On my end of one, that's my recommendation because that's when stuff's starting to happen. There's not a whole lot happening up to that point. And then things really start moving those three or four months prior.

Dr. Jim Dahle:
What were your goals early on? It sounds, obviously, you didn't want an above-policy limits judgment and you didn't really want to be reported to the database. Did you have any other goals with the process from the beginning?

Speaker:
Well, I wanted it to be over quickly. I want a resolution. It's really hard to have years of that hanging in the background of your life. In fact, I think it caused more tension than I would even ever realize in all aspects. It was just a cloud hanging over. A goal was to “Let's just get this over with. One way or another.”

Speaker:
But early on, my goal was I definitely don't want to report. And I think a lot of people would say, “Well, what's the big deal doc? Who's looking at that anyway? It's not like patients can search and say that you're in that database.” I think only insurance companies have access to it and there's usually a reasonable write up why you're on it. And then people usually are understanding to it.

Speaker:
But when you're sitting in that seat, just reporting stings, especially if it's a case where you wouldn't have done anything differently. So, the goal was justice for defending normal good care and not letting the legal system hurt me in a way that didn't seem justified. Access was not even on my radar until towards the last months before trial. That was when things got really, really stressful.

Dr. Jim Dahle:
So, in the beginning, your priorities seemed to be not being reported more so than wrapping it up quickly or than concerned about excess judgments. And at the end, it sounds like your biggest priority was the excess judgment.

Speaker:
Yeah, I would settle with reporting. At the last minute I was like, “Fine, I'll report. I just want out of here.” But still, I was stuck.

Dr. Jim Dahle:
Yeah. Awesome. Well, what other lessons do you think people can take from your experience besides know what your policy really says about who has the power in the lawsuit and maybe consider hiring your own counsel? What other lessons do you think can be taken from your experience?

Speaker:
Yeah. I think that you could take some information from this and if you're in a group of partners, try to develop a plan ahead of time for step-by-step how you want to handle these things. And like you said, make sure you understand your policy and what kind of rights you have. I think every partner should talk about reporting and how that would affect them and be ready to think about that.

Speaker:
I agree though, excess risk is really low, but when you're named in a case with high damages, it's good to have a plan. And I didn't have a plan. We were all kind of figuring it out as we went. But now if this happened again, the plan would be, “All right, let's consider a personal attorney at some point. Let's make sure that we are addressing our goals of not reporting and not having excess risks. So, settlements and if that's possible and a way to avoid recording that would be definitely a top goal.

Speaker:
Otherwise, just communication with your partners. Realizing that the individual named is going to have to do a lot more work, spend a lot more time and they do have a little more risk as an individual, but that individual needs to recognize that the whole group may be sharing that risk. So, then it's a matter of, “Hey, let's communicate in a certain way that protects them from a privileged confidentiality but also allows everybody to share in the decisions as each step goes on because it's just kind of a ripple effect. It can affect everybody.”

Speaker:
And we wouldn't want it to divide a group. So, that's why it's good to have a plan ahead of time and make sure that people are supported and that we're not boxing people into outcomes that aren't good for the individual and the company as a whole.

Dr. Jim Dahle:
Awesome. One last question for you. This is an incredibly stressful event to go through. What sources of support did you seek out personally during this two-and-a-half-year process to help you to get through the process?

Speaker:
That's a good question and I think there are some serious risks to stress and anxiety and depression or whatever related to these things. The malpractice carrier offers a physician support line and they offered it multiple times to reach out to pure physician support resource where you can talk to this professional about the stress. They called me personally at one point and I said “no, thanks”, but I think that would be something that people should be open to. Because the weight of this whole process is unexpected but it's really heavy stuff.

Speaker:
The support that I had was my partners and my family, but I have two best friends that are attorneys in different areas of the country and they happen to have quite a bit of medical malpractice experience in their practice. One actually is the plaintiff's side which is a really good perspective.

Speaker:
But these are close friends and I'd call them and we have privilege when we talked to one another too because they're attorneys and however they manage that. I could then offload some of the stuff and bounce it off as somebody who actually knew the details of the legal side because I got the medicine side covered but I'm a big fish out of water in the legal side. So, that was the best. I didn't need the physician support group because I had those friends that happened to be in the legal profession and I could talk to them and just bond stuff off and it was very helpful.

Dr. Jim Dahle:
It's interesting you mentioned that the care was in 2017 and you didn't get served until 2020. Did you know this was out there? Did you even know about this bad outcome for those three years? Did you think about maybe I've got some liability out there and the statute of limitations is ticking or was this just a complete surprise in 2020?

Speaker:
Yeah, it was a complete surprise. Like I said, nobody informed us that this guy was in the hospital. There was not one doctor that called and said, “Hey, just so you know, we know you did a surgery not that long ago. There are some issues here.” It was zero information. We had our charts, we had the follow-up call that we do. This was a pretty minor outpatient procedure that doesn't require a formal follow-up. We just call and expect the patient would call us with issues. And we had no calls from anybody. So, a complete surprise, it was not on our radar and that's why we were so ready to defend this when the initial lawsuit happened. Because we reviewed the chart and we were like, “Hey, this is no big deal. I don't see any red flags.”

Dr. Jim Dahle:
Yeah. Do you think if somebody had called you and you'd gone to the hospital and seen the patient while the patient was in the hospital, that maybe the patient would have decided not to sue you or do you think that probably would've had no effect at all?

Speaker:
I do believe that could help. When you're made aware of complications as a surgeon, it can usually help. And just following up and making sure they're doing okay I think really makes a huge difference. We've already talked about over the years that wasn't necessarily related to this lawsuit.

Speaker:
We're always improving, of course, like all medical practices, but maybe on some bigger cases, we have more of a recall. You don't just call the next day, maybe three weeks later you call and just say, “Hey, is everything still going okay?” And the delayed follow-up call might be something that is proven to prevent these types of issues. Just keeping the patient on the radar a little longer to make sure, “Hey, is there anything that you're experiencing that's adverse? Because we'd be happy to help you.”

Dr. Jim Dahle:
Yeah. It's a tough situation and I'm glad it had a relatively positive outcome for you in the end. I appreciate you coming on the podcast and sharing what details you could. I hope it was somewhat cathartic to you now that you kind of have this in the rear-view mirror, but also that it helps somebody else that as we know, there's somebody listening to this podcast this month will probably be served and helps them as they go through the process as well. So, thank you very much for being willing to share your story.

Speaker:
Yeah. I really appreciate it. And again, it's important to acknowledge the topic has come up on your podcasts and it has been helpful to know the risks being low. And I appreciate you letting me tell the whole story because I do think it's exactly that. I'm still dealing with the trauma of the event and it is cathartic to talk about it, trying to get something good, some information out there because I think it's a real hush-hush topic that nobody's naturally talking about.

Speaker:
So, if I can do it in a general way that's respecting the confidentiality of the case and help some people to navigate this in maybe an easier way than the way that we went through it. But yeah, I’m so happy that was a good outcome and happy to share all the details. Hopefully, it wasn't too long-winded.

Dr. Jim Dahle:
Thank you very much for sharing it.

Speaker:
Thanks.

Dr. Jim Dahle:
All right. I hope that was helpful to you. I know it was a little bit longer than most of our podcasts, but you could feel as he was talking about it, that it was almost cathartic for him to be the end of this thing and finally be able to tell somebody about it, because you're bottled up inside and told not to talk to anybody about it for years while you're stuck in this lawsuit.

Dr. Jim Dahle:
And you could tell by the end how sick of it he was and how willing he was to do whatever to get out of it. He's trying to get the insurance company to settle. He's willing to pony up, he said seven figures of his own money just to be done with this thing and to eliminate that top-side risk no matter how low that might have been.

Dr. Jim Dahle:
But it just gives you a sense of what it feels like to be in a malpractice lawsuit. And I think that's probably more valuable than any of the tips that were shared about looking into your policy and what it really says and maybe considering some independent counsel on the side as well. Those are good tips, but to understand that this is a painful emotional experience to go through, even if the likelihood of you actually losing personal assets is very, very low, it still hurts all the same. So, I hope that was helpful to you.

Dr. Jim Dahle:
As a reminder, don't forget to sign up for that Leverage & Growth Summit if you have interest in entrepreneurship. That's going to be March 15th through 19th. You can sign up at Passive Income MD. They've got a lot of sweet benefits if you want to sign up for the VIP All Access Pass as well. But the main summit is totally free. So, check that out.

Dr. Jim Dahle:
Our Champions program is going to be over March 17th. If you want your first-year medical or dental school class to get White Coat Investor books, you got to sign up this week, whitecoatinvestor.com/champion.

Dr. Jim Dahle:
Thanks for those of you who are telling your friends about the podcast. It really does help spread the word. It also helps if you leave us a five-star review. Our most recent one came from Lollipoploverlulu. And that one says, “I have learned a lot from this podcast. Beyond expectations. In addition to all the good information I get on this podcast, I am always 100% confident that I can reach out to Jim for questions. No one screens their speakers and sponsors better than him. Thank you, Jim, for all you do.” It's very kind of you. I appreciate the five-star review.

Dr. Jim Dahle:
Keep your head up, your shoulders back. You've got this, and we can help. We'll see you next time on the White Coat Investor podcast.

Disclaimer:
The hosts of the White Coat Investor podcast are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.