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The Orthodontist’s Increased Risk of Litigation by Donald E. Machen, DMD, MSD, MD, JD, MBA, CFA

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Over the past 25 years, both as a practicing defense attorney and as a trial court judge, several risk themes occur again and again. To the extent that most (if not all) are either avoidable or controllable, the knowledge of these scenarios might be helpful.

A brief introduction might be useful, before reviewing two cases. Recent studies involving surveys of affluent individuals, many of whom are health-care practitioners, about their risk and litigation perceptions have been reported. Some of these individuals related personal experiences that at the very least should give pause for consideration and thoughtful planning.

One universal area of risk received extensive media coverage. Several months ago, a newscast did an in-depth story on the safety of home decks. It reported that a significant number of decks had collapsed, seriously injuring or killing people. (Note: the report mentioned that deck inspectors estimated that more than half of the decks installed had serious flaws in one or more aspects.) One situation described a group of celebrating friends who had assembled at an elegant, oceanfront home for cocktails before going to a local restaurant. They had crowded onto the oceanfront deck for a photo. However, the deck collapsed, seriously injuring many of the guests. Subsequently, there were many lawsuits against the homeowners. The years that followed were filled with the stress of ligation and the loss of friendships. Most insurance policies are written with limits for one occurrence and limits for all occurrences during a particular policy year, i.e., $1 million/$3 million. In this case, the damages far exceeded both limits and the homeowners were required to pay a large amount out of their personal assets in order to settle the matter instead of going to trial on each case.

Other potential risk management situations that the affluent should be aware of and plan for include some obvious and some not-so-obvious situations, such as home swimming pools and other sporting and entertainment equipment like trampolines, younger drivers in your family, etc. In one representative case several years ago, a new teenage driver was given a sports car for his birthday and was seeing how fast it could go, notwithstanding that he was in a residential area. Unable to stop in time, he severely injured a pedestrian and when all the litigation was over, the traditional insurance policy was inadequate to cover the damages. In the end, the boy's parents were responsible for part of the settlement that was far in excess of the policy limits.

Another relatively common situation involves the use of snowmobiles. Significant liability exists when owners of these recreational vehicles allow friends and guests to use them. Even when experienced riders use equipment that they might be unfamiliar with, problems may occur; imagine allowing a guest who is completely or relatively unfamiliar with them to use one. Then, perhaps add some holiday cheer to the mix. This describes the potential for a catastrophe both for the guest and the owner.

Also consider the ownership of another type of asset that isn't generally considered to involve significant risk: real estate, including commercial property, apartment complexes and farms or horse stables. These can be investments or side businesses or merely for personal use and use of guests. One recent case involves the sexual attack of a female tenant in an apartment complex. The management company had recently advised the affluent owner that repairs were needed to the security system. However, the cost was high and the owner was somewhat dilatory in authorizing the needed repairs. The ensuing lawsuit resulted in an award that exceeded the insurance policy limits, exposing the owner's personal assets.

With an awareness of the risks posed by everyday life, the following are two instances involving health-care professionals. These examples relate more specifically to professional practice but also illustrate how vulnerable affluent and seemingly affluent individuals may be to the risk of lawsuits.

For many reasons, couples might desire to practice together. Two examples stand out and are illustrative of the potential for catastrophic outcomes. The first involved a husband and wife orthodontic-pediatric dental team. They formed their practice together; a single limited liability company (LLC). Since this occurred just after graduation, they created this practice entity with the help of one of their friends, a recent law school graduate. After several years and much hard work, they enjoyed significant success. So much so that the pediatric dentist had a significant backlog of patients waiting for sedation/anesthesia. In this area, few practitioners were offering these services in the private office setting and fewer yet were offering their expertise to state-insurance patients, due to lower reimbursement. Both the orthodontist and the pediatric dentist felt good about helping the community meet their dental needs and also being able to treat a high volume of patients and earn a substantial income.

Several days each week, their reception area was standing room only with orthodontic and pediatric patients waiting for their turn for treatment. This all came to an abrupt end when for reasons that are not important, something went terribly wrong with one of the pediatric anesthesia cases. A lawsuit ensued and, much to their dismay, they were advised that their joint assets and their lifestyle that included a large home, expensive automobiles and frequent travel, were at risk due to their choice of practice entity.

During the discovery process, the couple was surprised to learn that some aspects of their life mentioned above became issues when raised in depositions by witnesses, staff, other patients and the plaintiff 's family. Their success and apparent wealth had not gone unnoticed, human nature being what it is.

After several very stressful years that included many interactions with the legal system, the matter was settled. However, their joy of practice and the practices themselves were not the same. This unfortunate situation was made more difficult by the couple's choice of practice entity.

The second instance involves an oral surgeon and nurse anesthetist couple. As you might already expect, the nurse anesthetist provided anesthesia services for the oral surgeon's patients. Without going into the specific details, something tragic occurred.

The oral surgeon had a professional corporation, however, the nurse spouse was an officer. The nurse had an LLC, and the oral surgeon was a member. When these were created at different times, good intentions were involved.

This couple's litigation experience was very much the same except that the matter was unable to be settled before trial and the couple had to endure a trial. Once again, as a result of their manner of practice, their joint assets were at risk. Also, the potential for an excess verdict, a verdict in excess of the insurance coverage, weighed heavily on them. Although the final award was within the policy's limits, the stress of the litigation took its toll and they divorced shortly after the trial.

From the discussed scenarios, as well as your imagination and the expertise of your advisors, it is not unreasonable to consider that affluent/perceived affluent individuals might have a higher litigation/risk exposure. But don't despair. Proper consideration and planning can prepare you for almost any situation. Consider doing a review of all of your assets and activities, and those you have responsibility for or potential responsibility for, from a risk perspective. It is suggested that you consult with your attorney and advisors on a regular basis and when changes in your specific situation occur. Be proactive as opposed to being reactive, when it might be too late. Stress test your asset and activity portfolio. Think outside the box. Consider worst case scenarios. Remember to be proactive, with the moral being to plan carefully.

Author's Bio
Dr. Donald E. Machen is the recognized authority on risk management in orthodontic practice, having initiated the discipline in the mid- 1980s. He developed, moderated and presented at the AAO's first national risk management telecast to more than 2,600 orthodontists. He has represented orthodontists, dental specialists, general dentists and physicians in malpractice lawsuits and other legal matters as a trial lawyer and is currently a trial court judge in Pennsylvania, having served for more than 14 years. He is a board certified orthodontist maintaining a part-time practice and is on the orthodontic faculty of Case Western University Dental School and The University of Pittsburgh School of Dental Medicine. He is also an adjunct professor of Law at Duquesne University School of Law where he teaches malpractice litigation. Dr. Machen was the editor of the Legal Aspects of Orthodontic Practice column in the AJO, writing a monthly column, and has authored columns in JCO and Ortho Tribune. He lectures extensively to orthodontic groups, both large and small, focusing on developing highly effective systems for eliminating lawsuits, optimizing patient care and increasing practice referrals. Dr. Machen is the author of Managing Risk in Orthodontic Practice and is managing director of Risk Management Consultants, LLC. He can be contacted at: drmachen@orthormc.com.

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