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!
After a couple 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 they 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.
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.
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.
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.
I look forward to your comments below.