Engaging Doctors: The Podcast for Financial Advisors Who Work with Doctor Clients

What Financial Advisors Need to Know about Med Mal Lawsuits

• Dr. Vicki Rackner • Season 1 • Episode 9

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When a doctor faces a malpractice lawsuit, the emotional and financial toll can be overwhelming. As a financial advisor, how can you provide real value and support during this critical time? In this episode, Dr. Vicki Rackner shares her personal experience of being sued and offers key insights into how you can strengthen relationships with your physician clients when they need you the most.

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Today, we're tackling a topic that's painful for us physicians, but essential for every financial advisor who works with doctors: what happens when your doctor client gets sued?

This episode is a shortcut to essential knowledge, giving you a powerful way to offer unique value. I know because I've been there myself. I'll share with you what it was like for me to be sued by one of my patients, and how you, as an advisor, can show up powerfully during one of the lowest moments in a doctor's life.

Welcome to the Engaging Doctors Podcast.

If you are a financial advisor who wants to accelerate your business growth by attracting, engaging, and serving more doctor clients, you are in the right place.

I'm Dr. Vicki Rackner, your host. I'm a retired surgeon who has spent the past 15 years helping financial advisors crack the physician code and reach the doctors who want and need their help.

Today, we're going to do three things. We're going to help you understand the legal landscape that doctors face. We're going to highlight some of the emotional and financial tolls of a lawsuit. And third, we'll explore how you, as a financial advisor, can offer real protection and peace of mind.

All right, so here is the headline: lawsuits happen, even to good doctors, even to great doctors. Doctors can face lawsuits even when they deliver excellent care and do everything right—and the emotional and professional cost is huge.

Now you already know that all medical interventions, like all investments, come with risk. Even if you do everything right, bad outcomes occur.

So before you undergo a medical procedure as a patient, a doctor has a conversation with you, laying out the risks and benefits of various options, and your signature on the consent form says, "Yes, I know that these things can happen, and I agree to undergo the procedure."

I remember speaking with the family of an elderly woman whom I evaluated in the emergency room. She had an incarcerated hernia. That means that bowel was poking out through a hole in her abdominal wall that shouldn't have been there.

The daughter said, "Oh, thank God. We thought it was cancer."

I said, "Your mother is in a grave situation. She might not have the reserves to pull through this operation."

Like you, doctors do not promise a perfect outcome. They say, "These things could happen, and here's what we're doing to mitigate the risks." But bad things do happen.

When I was in my surgical training, we had regular M&M meetings on Wednesdays. We didn't go there to eat candy. We gathered for the morbidity and mortality meeting. We talked about each and every patient who had a bad outcome, including death.

The idea is that each member of the community of surgeons could benefit from the lessons taught by each untoward patient outcome. So as a community, we defined the standard of care—what a reasonably prudent physician practicing in that community would do in certain situations.

So now we have two ideas. We have the idea of the standard of care, and we have the reality that bad outcomes occur.

In most cases of bad outcomes, the physician complies with the standard of care. It's just that stuff happens.

Sometimes the standard of care is violated—the wrong medication is administered, the lab test is lost, the doctor doesn't ask the question that would lead to an earlier diagnosis.

In most cases, the patient is not harmed. However, if there is a violation of the standard of care, the patient is harmed, and the harm is the direct result of the violation.

Now a patient could successfully sue and prevail in a case of medical negligence. So all three elements must be there for a patient plaintiff to prevail: a violation of the standard of care, the patient was harmed in a significant way, and the harm was a direct result of the violation.

Sometimes this is very straightforward. If a follow-up X-ray shows a surgical instrument in a patient's belly, there's obviously a case. Usually, the hospital just settles before going to court.

However, many cases fall in the gray area.

I was once an expert reviewing the records of a patient who wanted to sue her treating doctors for a delay in diagnosis of her breast cancer. When she was 22 years old, she felt a breast lump in the shower and immediately went to her doctor.

She said, "I'm worried I have cancer."

How do I know that? Well, the doctor included her exact words in the record.

The medical record went on to say that this patient had very dense breasts with lots of fibrocystic changes. His plan was to re-examine the patient in one month.

In the follow-up visit, the mass was still there. The patient requested a mammogram and was told that she was too young. She was advised to come in for follow-up in six months.

It was almost two years before this patient finally got into the hands of a doctor who ordered a mammogram and diagnosed her breast cancer. And when the doctors finally made the diagnosis, the breast cancer was widely metastatic.

I told the lawyer who asked me to review the case that there was, in fact, a delay in diagnosis. However, the question was whether the patient would have had a different outcome had the breast cancer been diagnosed earlier.

Both sides could find experts who could come to very different conclusions.

So how many doctors are sued?

Let me share some highlights from the 2023 Medscape study entitled, Is Your Risk of Being Sued Climbing? I'll leave a link in the show notes so you can sign up for a free Medscape account and read the full report.

55% of physicians surveyed had been named as defendants in medical litigation, and that risk is higher if you're a specialist than if you're a primary care doctor.

The three specialists most likely to get sued include general surgeons like me, OB/GYNs, and orthopedics.

Doctors who practice in certain states are more likely to be sued, and this is shaped by tort reform. More than 25 states have implemented a damages cap.

How does this impact lawsuits?

Well, the lawyer who accepts a patient plaintiff takes the case on contingency. The amount that they get paid is tied to their ability to prevail and then collect damages. When damages are capped, it makes it less attractive for a lawyer to take a risk.

I remember my mother-in-law was hospitalized in Pennsylvania with severe respiratory problems. The doctors told her that she probably wouldn't survive. So we gathered at her bedside.

It was there that I noticed that one of the medications she was currently on could cause the ground-glass pattern seen on her X-ray. It's just that none of her doctors had noticed.

She was taken off the medication and went on to survive 20 more years.

Her children explored a lawsuit. However, because of the laws in place in Pennsylvania, they could not find a lawyer to take on the case.

About 44% of physicians have been sued once, and 49% have been sued two to five times.

The New England Journal of Medicine published a study of medical litigation. They found that about 1% of all physicians accounted for 32% of paid claims. And among physicians with paid claims, 84% incurred only one during the study period. 16% had at least two paid claims, and 4% had at least three paid claims. So the risk of recurrence increased with the number of previously paid claims.

Medical litigation is just an unpleasant part of the landscape of taking care of patients. But doctors carry medical malpractice insurance to protect them.

For employed physicians, the hospital normally pays the medical malpractice premiums. And for doctors in private practice, the premiums usually represent about 1% to 3% of the overall practice's overhead.

Now here's something that you want to know: when doctors retire, they have a chance to purchase a tail. So the statute of limitations in most states is three years.

Let's say an OB delivered a baby on his last day of practice, and there was an untoward outcome. Two and a half years later, the family could file a claim. In order to be covered for that event, the doctor must have active coverage in place.

So what kinds of violations of the standard of care lead to medical malpractice lawsuits?

Well, first, there's failure to make a diagnosis or a delay in diagnosis. Next, there's complications from treatment. There's a failure to treat or a delay in treatment. There's poor outcome or disease prevention. And unfortunately, wrongful death.

A large majority of physicians said that the lawsuit was unwarranted. They were surprised when they found out that they were sued, and this consumed a chunk of their life.

On average, lawsuits lasted from one to two years, although it can drag out up to five years.

In well over 90% of the cases, the physician prevails. 40% are dismissed. In 30% of the time, the case is settled. And in 12% of the time, the verdict favored the doctor.

When the patient got an award or a settlement, over half the time, the settlement was lower than $500,000.

Most physicians are insured for a million dollars per claim and $3 million in aggregate over a year. But these numbers do not reflect the complete cost of being sued.

Let me tell you about my own experience.

The first time I was sued, I was in my second year of surgical residency. My husband and I were having dinner. Out of the kitchen window, we saw somebody back into the driveway, keep his car running, and come to our door.

My husband answered the door, and the person asked for me. When I went to the door, he confirmed my identity, and just like on TV, he handed me an envelope and said, "You've been served."

My husband and I went back to the table, and I opened the envelope. There were legal papers. It had identified the patient and the reason I was being sued. I was actually off of the attending physician's service, so I had no idea what had actually happened with this patient.

My husband said, "Can I take a look at those papers?"

He nearly screamed when he saw that the defendant was listed as Vicki Rackner, MD and her marital community.

He said, "We could lose everything."

The next morning, I contacted the risk management representatives and calmed down. I would be dismissed from the lawsuit.

At that time, there was no "the buck stops here" on my desk, but I knew that that day would come.

When I finished residency, I went into private practice. My second year in practice, a patient came to see me on a Friday afternoon in pain.

He told me stories about how doctor after doctor had let him down. Being inexperienced, I thought, This poor guy. He's had a string of bad luck. I'm going to step up and do the right thing by him.

So I went above and beyond to offer him the highest standard of white-glove care.

Well, when I was a practicing surgeon, I did my best for every patient, but one day, I opened a letter saying that this patient was accusing me of medical negligence. I was being sued.

That moment was crushing.

I remember a sick feeling in my stomach—the fear and the shame. I had dedicated my life to helping people, and now I was being accused of harming somebody.

Further, he alleged that he called in to report a post-operative problem that was usually related to regional anesthesia, and he said that I ignored this call. Now he had a long-term problem, and he wanted me to pay—literally and figuratively.

This guy was lying. He never made that call to me.

Well, I called my medical malpractice carrier, who told me that they would assign a lawyer. They advised me not to speak with anyone about the lawsuit, because any person I discussed this case with could be deposed.

So now I'm in pain, and I'm feeling completely alone in the pain. It felt like I was the only doctor who had ever been sued.

I met with the lawyer, who heard my story and offered the opinion that the case would be dismissed in summary judgment. He filed a motion for summary judgment, but the hearing kept on getting delayed.

My lawyer informed me that my former patient, now the plaintiff, had gone through several lawyers—whom he had either fired or been fired by.

In the meanwhile, my med mal carrier enrolled me in what I fondly call deposition charm school.

The main thing I remember that my coach said is that I should expect that opposing counsel would sling charges at me to take me off my balance. He encouraged me to think of these words as fireworks displays.

He said, "Just wait a few seconds before answering. In a short amount of time, the fireworks extinguish."

So over time, I learned that my former patient would represent himself in a bench trial, in which we brought the case to a judge and not a jury.

My lawyer and I just looked at each other in disbelief as this patient dug himself into a hole. Very quickly, the judge found in our favor.

When my lawyer called me to tell me that we had won, he said, "Now, this is great news. It's finally over after three years."

But here's the thing about medical litigation—even when you win, you lose.

Once it was over, I saw the toll that this lawsuit had taken. It was like I had spent the past three years under a dark cloud that constantly followed me. I felt beat up.

I found myself suspicious of my patients. Who would be the next one who would sue me?

Now, in retrospect, the red flags with that patient were there. I should have understood that when somebody comes to you with a list of complaints about other doctors, I would soon join this list.

To this day, I do not accept clients who bad-mouth previous consultants.

Here is the one thing that made a huge positive impact: a psychiatrist friend had an idea to form a consulting group of women physicians who would support each other through the process of being sued.

We all paid each other $1, and now we could talk about our experience in safety. I will always be grateful to my friend for doing this.

I went on to serve as an expert in medical litigation. I was paid very well to learn more about what it means to be a good doctor and how to avoid medical care going off track.

When I meet physicians who want to augment their clinical income, I often suggest this as a possibility.

Okay, how can you use this information?

Well, this is where you, as a financial advisor, can make an enormous difference. One of the most valuable things you can offer isn't a product—it's permission. It's to help your clients build a support team so they can talk in a safe environment about what they're going through when they get sued.

So here's how you do it. Just structure a consulting group where each person is paid $1 to serve as a consultant. This might include a therapist, a physician’s coach, or a peer, or maybe even clergy.

Because here's the truth: lawsuits are not just legal events. They are emotional earthquakes. And when you help a doctor weather that storm, they will not forget.

All right, so there are financial fallouts for lawsuits. There are legal fees that, fortunately, the med mal carrier pays. Premiums could go up. There's lost income from missed work, and there's reputation damage.

And that’s just with medical litigation. But let’s talk about other threats.

Doctors are vulnerable to more than just medical malpractice claims. They’re potentially liable when somebody slips and falls on their rental property, when somebody in their family gets into a car accident, when they own a practice and get sued by a former employee, or they’re involved in a business partnership that goes sour.

So remember: wealth attracts lawsuits. Your high-earning doctors are targets.

So what that means is that you can also help protect doctors from losses. You can begin with insurance—do they have the right insurance and the right coverage?

Then there are legal strategies like trusts and LLCs and family limited partnerships. So make sure that the assets are titled correctly. Use ERISA-protected retirement accounts. And work with attorneys who can set up a solid estate plan that protects wealth across generations.

Then, if you’ve got a doctor client who wants to generate an additional revenue stream, maybe you can suggest that they serve as a medical expert in litigation.

For me, it was healing. It gave me a new purpose, and it created a highly profitable way for me to invest my work hours. So as a financial advisor, you can help clients consider this path. It turns a painful chapter into professional and financial redemption.

In closing, if you want your doctor clients to see you as more than a number cruncher, start by showing up when it hurts. That’s when real trust is built.

Lawsuits happen, even to good doctors, even to great doctors. But when you show up in that moment—not just with strategies but with compassion and a plan—you go from being a financial advisor to being an indispensable ally.

And that’s how you build trust.

This is how referrals happen. And this is another way you can make a difference.

Well, thanks for listening. If you found value in this podcast episode, please subscribe to our podcast and leave a rating or review.

Want to learn more about working with doctor clients? Sign up below to access our on-demand training: How and Why to Attract, Engage, and Serve Doctor Clients in 2025.

Until our next episode, I'm Dr. Vicki Rackner—and my cat, Winnie—reminding you that in the financial advice business, you bring tremendous value.

Thanks for listening.