I Volunteered for the Hospital Board and was Sued for Millions.

 
The telephone rang. Why would he be calling? Must be a misdial, I figured. I  hadn’t worked with him in several years, and we were never known to make social calls back when we did work together.

That call was no mistake. What he had to say made me simultaneously queasy, fearful, and angry. It felt like the first couple loops on a rollercoaster ride I I didn’t sign up for. I had no idea at the time that I would be stuck on this coaster for years.

He had been sued. I had been sued. A few dozen other people whose names appeared in the Hospital Board minutes over the previous ten or so years had been sued. And we were being sued for tens of millions of dollars.

A few weeks later, I would receive the four-inch thick packet prepared by lawyers representing the trustee of the bankruptcy. A hospital that I had worked for had gone bankrupt two years earlier, and those who were owed money by the defunct hospital were looking to collect.

The hospital couldn’t possibly pay, so they went after the doctors and administrators who had served on the Board. Each and every one of us was accused of breaching a fiduciary duty to keep the hospital afloat.

 

I Volunteered for the Hospital Board.

 

How did I end up in this position?

In 2007, I worked a long-term locum tenens job at a small community hospital close to my wife’s extended family. It was not exactly a thriving community, but there was a lot to like in this small town, and they were in need of a full-time anesthesiologist.

By the time my temporary stint was up, I had signed on to return as the chief of anesthesia and the only anesthesiologist in the county. In hindsight, I realize it was a naive thought, but I believed my rarity meant real job security.

I also believed the place was in great financial shape, just as I was told when I formally interviewed. It would only be a matter of time before they added a dialysis unit, they said, a great place for my wife to use her dietitian skills. A beautiful clinic had recently been added on to give the front of the hospital a modern all-glass look, and there was talk of adding an outpatient surgical center; I might even be given a chance to invest!

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After a couple of years and a virtual carousel of administrators, it became clear that my “permanent” job might not be. Facing increasing operating losses, the hospital had dropped obstetrics, debts were mounting, and I was one of the higher paid independent contractors in town.

The President-Elect of our Medical Staff left for a more secure situation. I was asked to assume his role, which would be an appointed position in this situation.

Well, of course I wanted to be next in line to be the President of the Medical Staff. I had plenty of experience volunteering on the Quality Committee and Medical Executive Committee, and there’s no way the hospital would let the President-Elect go no matter how dire the situation, right? More job security, I figured. I gladly signed on to a more prominent role.

My position included an observational, non-voting role on the hospital’s Board of Trustees. I was being groomed for the Presidency, but I had to walk before I could run. With the fragile state of the hospital’s finances, the Board was meeting more frequently and for longer periods of time.

I had a toddler and infant at home and I was taking solo call every 3rd night and every 2nd or 3rd weekend with no post-call day off. I was burning the candle at both ends, but I knew it would all work out in the end. We had built our dream home, started a family, and were determined to see this through. We weren’t about to bail; we had made this town our new hometown.

 

The Hospital Let Me Go

 

The telephone rang. This was nearly three years prior to that other phone call, but it was a similar sock to the stomach. I was out of a job. Within a year, everyone else who worked there was out of a job, and the hospital was closed.

 

bankrupt hospital

actual photo of my former workplace

 

I would be paid for the next three months and expected to work the next two. I dutifully finished out those last eight weeks, attended my last two Board meetings, and returned to the locums circuit.

We landed on our feet of course, and by the time I was notified of the lawsuit, we had moved twice and were getting settled into what I can now say is likely my final “permanent” anesthesia job.

 

I Was Sued for Millions.

 

I experienced some intense emotions in those initial weeks after I was notified of the lawsuit.

Anger. How could they do this to me? I didn’t even have a vote! I was never compensated with anything better than a sandwich. We wanted nothing more than to see the hospital to survive and to remain in place. How dare they!?!

Fear. Could I really lose millions? I don’t even have millions. What’s the next step? How soon ’til it’s over?

Regret. How did I fail to see the writing on the wall? Why did take a seat on the Board at the busiest time of my career while starting a family? Why did I give up so much of my time only to be paid back like this?

Hope. There’s no way I could actually be held liable. I was on the Board for under a year and never voted on a single thing. They’ll be reasonable and dismiss me when as soon as the extremely limited role I had on that Board is better understood.

 

The Neverending Lawsuit

 

I made some phone calls and learned that a former Board Member with a similarly limited role had been dismissed. The President-Elect who had served a longer term before I took over was not even named in the lawsuit. I contacted the lawyer who had helped a fellow Board member in his successful quest for an early dismissal from the suit.

My new lawyer and I had a pleasant chat. Many of his family members were physicians and this action by the Trustee made him sick. He offered to write a letter on my behalf free of charge. Like me, he was hopeful that would be the end of it for me.

It wasn’t.

As a highly paid specialist, the Trustee’s lawyer was not about to let me off the hook. Instead, he asked me to provide a detailed list of my assets. Twice. I declined both times.

Over the following months, there were conference calls among lawyers, frequent e-mails, and glimmers of hope always followed by a kick of the can down the road.

The lawsuit bounced back and forth between the bankruptcy court and federal district court. The Trustee refused to accept that our Directors and Officers (D&O) insurance did not cover us in the event of a bankruptcy, which is what the bankruptcy court had ruled. Ultimately, I believe the Trustee was most interested in an insurance settlement, but it was my name on the docket and my finacial future at stake.

Months turned into years. My legal fees increased from three to four to five figures. Our stress level waxed and waned with each and every turn and loop-de-loop on the seemingly never-ending rollercoaster, but not a week went by that I wasn’t reminded that the ride had not yet come to a complete stop.

 

Redemption. At Last.

 

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In the fall of 2017, three and a half years after I was sued and more than six years since I had served on the Board, I received glorious news. A judge had granted me dismissal with prejudice and barring an appeal, I would be free and clear of the lawsuit for good. My dismissal was not appealed.

I was ecstatic to step off that costly ride but saddened to hear that numerous friends remained on this nightmare of a ride for yet another pass. The lawsuit is still ongoing, and a number of my former colleagues are waiting for this unamusement park to close its doors.

 

Lessons Learned After Being Sued for Millions

 

As a physician who lived with the threat of losing my life’s savings for several years, spending enough on legal fees to buy a nice used RV, I have a better understanding of the phrase “no good deed goes unpunished.”

I used to be quick to say “Yes” to medical staff appointments. I actually took on a similar title as Chief of Anesthesia & Surgery with a spot on the Medical Executive  Committee in my next job. That was before the lawsuit. Now, I am quick to say “No.”

Asset protection is more important than I realized. If you have the letters M.D. behind your name, you have a target on your back. Know which assets of yours are protected and which can be confiscated, and do what you can to minimize the latter.

I’m not saying it’s imperative to create complex irrevocable trusts or shell companies to hide your assets, but simple steps like titling assets together with a spouse may be a good move. Asset protection varies by state, so be sure to consult someone with a working knowledge of your local laws.

Recognize that participation on the Board of a non-profit can open you up to substantial liability. I may be paranoid, but when I was asked to serve on the Board of our local curling club, I swiftly declined. What’s my liability when someone is overserved at the club’s bar, slips on the ice, and cracks a skull? Probably zero, but why take that chance?

If you do serve on a Board, be sure you are provided with adequate Directors & Officers insurance; this should come from the organization.

I know very little about D&O policies, but I now know that insurance that doesn’t cover you in the event of the non-profit filing for bankruptcy is woefully inadequate. Bankruptcy is exactly the sort of event that could be most likely to result in a lawsuit against the Board.

Carry umbrella insurance. I don’t believe it would have helped protect me in this particular case, but the target on a wealthy individual’s back is ever-present, and umbrella insurance can protect from lawsuits related to your home or auto. When I had this lawsuit cloud over my head, my home and auto carrier wouldn’t consider covering me. After my dismissal, I was able to secure $3 Million in coverage at a cost of under $200 a year. It’s a small price to pay for peace of mind.

This is a story I’ve been wanting to tell for some time, but I was unable to discuss it while still party to the lawsuit. It was a rotten experience that has left me rather jaded, and the ordeal is no doubt a contributing factor to my willingness to walk away from the medical profession at an age where I could continue practicing for another twenty years or more.

Additionally, the lawsuit has been the number one reason I haven’t wanted to publicly associate my name and face with Physician on FIRE.

When the lawyer suing you for millions of dollars keeps asking for a list of your assets, having that list show up in a blog post with a simple Google search of your name is less than desirable. I’m not saying you’ll be seeing my smiling mug in the sidebar tomorrow, but now that this ridiculous lawsuit is behind me, I find I’m smiling a whole lot more.

 


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If you know someone who might benefit from learning about my ordeal, please consider sharing via Facebook, Twitter, e-mail, etc…

I look forward to your comments below.

 

125 comments

  • What a nightmare POF. I’m glad it’s finally over for you. Psychologically, I don’t know how I could function under such a dark cloud.
    Many physicians serve as medical directors without knowing all the risks. I serve as a medical director and just got my malpractice insurance to add verbiage that covers me in that role.

    • That’s very proactive of you, MD MD. Most people, including me, never think about the risks until it’s too late.

      I was able to function because I knew deep down that the odds of actually being found personally liable for millions seemed extraordinarily small. But it still seemed real until the day I was sure my appeal could no longer be appealed.

      Best,
      -PoF

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  • Oh my goodness, what a crazy story and nightmare. I am so glad this is all behind you now. To think I was whining about not being on MEC/medical board a few months ago.
    So many things we can learn from your experience, and to consider financial and legal liabilities before serving on non profits and for profit boards, medical related or otherwise. I am so sorry to hear of all the legal fees, time, stress you endured.

    • I think med staff positions are largely thankless, although it is true that someone’s gotta do it and if you’re not at the table, you’re on the menu.

      I know that some institutions pay physicians to attend certain meetings, which would make it much more tolerable. I spent hundreds of hours in meetings on my own time over about six years at two different hospitals and never received a dime. So, yeah… I’m done. Somebody else’s turn.

      Best,
      -PoF

  • NP

    Does anyone know if “director of quality” of your department carries any risk?

  • Wow – I am so shocked to hear this, I guess here in the UK we don’t realise how litigious the culture is in the US. Glad it’s all over, and it’s actually a lesson that I need to consider, as I am taking on some additional responsibilities in a voluntary role.

  • That is nuts. You don’t deserve any grief, no one on that board did. How insane! I would go ballistic and burn the world down if someone dragged me for 3 years on that unamusement park. I’ll show you crazy ✊💢

  • RadDocJB

    When I saw the title I was wondering if somehow POF was someone I knew… This story hit very close to home for me.

    I am a radiologist who spent my first decade in practice at a small hospital. I served in many capacities for the medical staff of the hospital, including on the MEC and two years as President of the Medical Staff. During the time as President, when I served as the medical staff member on the Board, the hospital went through its first round of bankruptcy proceedings to refinance excessive bond debt brought on building projects, which occurred long before my time. During that period I came to mistrust our own bankruptcy counsel and the consultants that were supposed to be on “our” side – not the bond holders. But the refinancing package drawn up by the legal consultants was passed, with a few of us dissenting. It just seemed like the bond holders were getting the better deal, but at least we were on more solid ground…

    Fast forward a few years and the hospital is back in financial trouble and I knew it from being on the Med Exec committee. I was asked to rejoin the Board as someone with experience. Not knowing any better – and like you wanting to help the only hospital I had known in my post-residency life – I said yes. Well, first meeting that year I find out that we are really in trouble. The Board has already rehired lawyers as we are streaming towards bankruptcy – and possible closure – for the second time.

    I will never forget sitting in on my first conference call with our lawyers that winter. We are discussing closing the hospital because things are so bad – there is a statute that hospitals need to notify the State HHS department if closure in 90 days is imminent. I flat out say ” then we need to do this”. The lawyers, who were are paying $900 an hour – say, “Nah, you will get out of this and I’m sure the bigger hospital down the road will bail you out… and you guys don’t need the bad press which will just accelerate the bankruptcy or closure” The rest of the room grumbles but goes along with the high paid counsel. We had also been in daily contact with the State via the Secretary of health

    60 days later we close the hospital – we were down to so little cash that payroll would not have been covered – and the media and unions and State officials all go ballistic. Not only that, we are located in a blue collar town where our current Attorney General grew up – and they are currently running for Governor. Talk about bad timing for us. Of course, the politicians knew exactly what was going on as our CEO met with them once a week, but they wouldn’t say that publicly

    We – as the volunteer board being given direction by lawyers and state officials – were suddenly the villians. Everyone got raked through the mud. There was such a union presence, which turned very ugly, that the CEO literally left town with a police escort and I never saw him again (and sadly he was a good person in a bad situation who cam in after the first bankruptcy).

    The AG, running for governor, opened a state sponsored investigation (even though the HHS officials knew everything) and we were all named in a lawsuit requiring a large retainer, even though we had good D&O insurance. Thankfully my money out of pocket was less that 5 figures, but the stress was crazy living in the town with everyone knowing we were on the Board. Thankfully, since the hospital had been struggling so long, everyone kind of knew what was going on and weren’t too surprised, but it was still terrible.

    The best thing that happened was that the AG did not become Governor and was also no longer AG. The new AG decided that it was silly to pursue and it was just faded away. But it was a real eyeopener.

    And kind of sad – since like POF, I might think – I now have lots of knowledge and experience, but in the current state of healthcare I am loath to get involved again.

    And the lawyers that were making $900 an hour and gave us the bad advice. Nothing. Untouchable. Said that we could have given the notice anyway…

    But thanks POF for sharing your story. You aren’t the only one, and I happy to see that yours is finally behind you as well.

    • I’m sorry for your troubles, JB, and it sounds like you lost more than I did. Or just as much, at a minimum.

      Granted, most people won’t find themselves in a situation as dire as you and I did, but once you’ve been through it, I can’t imagine putting myself in a position where it could happen again, however remote the chance.

      Best,
      -PoF

  • Ugh I’m so sorry this is how you learned about the exposure of sitting on a Board but am so relieved for you that you were finally dismissed.

    My older and much wiser friend shared their experience of being a Board Member when it went bad – half the Board refused to behave ethically in a difficult situation, that caused significant and demonstrable harm to an individual in their organization, and that person rightfully sued. My friend was named in the suit as a Board member, even though they argued vehemently for the Board to take the ethical course of action, and had to go through a similar roller coaster as you did to be dismissed.

  • HarjotSingh

    *Hugs*. I am glad the ordeal is over. You have helped others during such difficult times – mark of a leader.

  • Hey PoF.
    You story is awful, and I am glad your part in it is over.
    Like another commenter, not being a US-based doc offers me a slight disadvantage in understanding how truly litigious the US is. Nonetheless, I did want to pose a query, with all respect to the ordeal you’ve experienced.

    There was an article in HBR not that long ago that outlined the benefits that having physicians in leadership/executive roles brings to a hospital. My personal observation is that the ever-increasing number of non-clinical bureaucrats takes the places I’ve worked at further and further from how I would like to see things done.

    What you have described should give any doctor pause. But if the docs won’t help, will our health services be left to accountants? And where does that leave us? And our patients?

    Of course, I live and practice in the healthcare socialist utopia of Australia. But if docs won’t advocate for our patients and each other, where will we end up?

    Again, no disrespect to your experience meant. Just asking what you think the ramifications could be if episodes like yours lead to us docs bowing out of leadership altogether.

    Hope you enjoyed your IPA, it sounds like you deserved it! 🙂 And congrats that this is all over, at least for you.

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  • jz

    A question about umbrella insurance: My understanding is that umbrella insurance only extends coverage of one’s auto and home to a higher amount. I don’t believe umbrella covers professional liability.

    • The only way to know for sure is to look into the details of your policy, but I came to the same conclusion. My attorney did ask if I had a policy, and actually used the fact that I did not have umbrella coverage in one of several pleas to have me dismissed earlier (with the thought that the plaintiff’s attorney was most interested in an insurance settlement).

      From the post: “I don’t believe it would have helped protect me in this particular case, but the target on a wealthy individual’s back is ever-present, and umbrella insurance can protect from lawsuits related to your home or auto.”

      It’s an aspect of asset protection that I had ignored early in my career, and am happy to have now in case that black cloud starts raining down on me once again.

      Best,
      -PoF

  • Texancoqui

    So sorry this happened. It’s sad how they come after you so ferociously. It would definitely leave me jaded, too. I hope you will be able to move past this in a constructive and peaceful way now. Again, my condolences.

  • Mark C.

    If you had all your assets “protected” when you were sued, what would you have done differently? Told the attorneys to pound sand? Did the opposing side do an asset search on you prior to filing?

  • Vee Tee

    Wow, that is horrendous! Usually if your intentions are sincere you come out clean but it sounds as though you’ve been put through the wringer! I was once offered Chief of Service in my hospital I didn’t think I was old enough but they were short on docs. I thought it would have been cool to have on my CV and I always wanted a cool title like Chair or Chief. But family came first and we were planning on moving so there was no point being groomed if I knew I was leaving. Yours is a cautionary tale to physicians who are altruistic with nothing but the best intentions. This will make me pause if I ever have the privilege of a prominent role in the future. My old Chairman never had good stories about lawyers which is why I innately distrust them. They do their job defending their client nothing personal just business not realizing how it can ruin someone’s life then have lunch with the opposing attorney no big deal. My Chair would always tell me do your job well and be sure to document everything you do. This has always stuck even years after training. You did your job well and had nothing but good intentions. Unfortunately, there is evil in the world with lots of people and attorneys trying to make a quick buck regardless of how good the person is. It’s an unfortunate state of affairs we constantly guard against. No wonder you’re so secretive with your identity more than most docs with blogs. I am the same no pics of my kids on the internet. I delete all comments on websites with my real name after a few days. I do not think it’s prudent to leave your identity out and about even in a closed forum or site.
    You should write a book! I just saw this off chance on a FB physician site. Good info to learn from. Physicians by nature of the profession are good people but we must guard against situations like these. Thanks for sharing!

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  • Free at Last

    I am not a physician but until very recntly served as president of the board of our small rural homeowner’s association. Because we had a particularly messy set of covenants, very early in my tenure I sought to obtain legal counsel. By luck I came across a retainer arrangement with THE community association law firm in our state, one of the first 2 established in the country.

    Our retainer arrangement included a one hour meeting with our designated attorney. The first question out of our attorney’s mouth on our first meeting was “Do you have D&O insurance and who is it with?” Upon hearing the answer, he advised us to switch carriers immediately! That insurer, a very large national firm, was know in the legal community to have many loopholes in their policies. They advised us that rather than going through a general small town insurance agent, we should go through an agency that specialized in community association insurance. We did so and drastically revised our coverage, including the addition of an umbrella policy for the association.

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  • Chris

    Well, that’s certainly a depressingly familiar story with a reasonably happy outcome.

    The only real lesson here is understanding that the US is overly chockfull of attorneys – including my wife – who aggressively chase after anyone even vaguely related in an effort to recoup money. I’m glad it “worked out” for you – quotes because six years of PITA dealings with plaintiff attorneys isn’t exactly a dream job.

    While protecting your online identify is understandable, don’t have too much faith in it. It’s easy enough to identify pretty much anyone with a prominent presence online. More likely the plaintiff’s attorney convince the court to have you disclose it directly. If the court orders you as a potential defendant to disclose personal assets, it’s a tough road defying it. Unfortunately, I’ve been in the same position three times over the year and had to jump through hoops to get it dismissed with prejudice each time. Two were easy; one was a nightmare.

  • Chris

    Oops, mean to write “over the years.” Three lawsuits in a single year would be insane.

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