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Wednesday, Feb 1, 2023

Physician to Appeal Setback in Insurance Trust Suit

Physician to Appeal Setback in Insurance Trust Suit


Staff Reporter

Stymied by a 2nd District Appellate court decision that found he could not directly sue fellow doctors in a failed L.A. insurance cooperative, a Northern California surgeon is considering an appeal to the state Supreme Court.

The physician, Dale Stoops, was one of nearly 770 doctors who formed Physicians Interindemnity Trust, aimed at avoiding the increasing malpractice premiums charged by insurance companies. The ruling, in L.A. Superior Court, came in late July.

“The inducement was that all your brothers would support you,” Peter Viri, Stoops’ lawyer, said of the trust.

But when most of the doctors stopped paying, the trust was forced to dissolve.

“When I took over, there was $40,000 in the bank,” said David Gill, the lawyer who was named the trust’s receiver at the request of the state’s Department of Corporations. “There was no money with which to pay the lawyers to provide defense to people who were insured.”

Stoops reached an agreement with PIT that called for the trust to cover $1.65 million for a malpractice judgment, plus 10 percent annual interest over two years. Earlier this year, he received a second settlement of $750,000 in punitive damages. But because the bulk of the other members stopped paying into the fund, he has only been able to collect $64,000.

His final attempt to recover his costs sue the doctors failed last month. Even if he receives the settlement dollars from the trust, Stoops may take his case to the California Supreme Court on the premise that the doctors had an ethical obligation to the trust’s members to pay their fair share, Viri said.

PIT, formed in the early 1980s, was operated by an entity called Physicians Interindemnity Cooperative Corp. and was one of two “interindemnity” trusts designed as an alternative to traditional malpractice insurance.

But through what Gill described as mismanagement and disloyal members, the trust left several doctors, patients, lawyers and others with up to $72 million in unpaid claims.

“A lot of (the doctors) didn’t have claims pending,” said Viri. “They were figuring, ‘Why should we pay?'”

Gill said the trust’s former administrators tried to collect as much as $32.5 million in levies owed by its members before it was taken over, and that when he tried to pick up the collections, the doctors balked.

“They thought they’d be insured and that the insurance company would step up. When it comes to business sense, doctors don’t have a lot of it,” said Keith Rouse, a Pasadena attorney who represents 350 of the PIT doctors.


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