Virginia’s Cap on Medical Malpractice and Tax Exempt Physician Foundations

The Virginia Supreme Court is expected to rule soon on whether tax-exempt physician foundations should have immunity from malpractice liability.

The arguments on both sides are easy to predict. The hospitals’ claim that the purpose of their work- helping people who are hurt and sick – is being compromised by medical malpractice liability. Virginia is already one of just a few states that have a hard cap on economic damages in medical malpractice cases. In other words, regardless of the economic damages or future medical care cost, the cap on malpractice awards now stands at $2 million. (In other words, Virginia limits damages only in catastrophic cases. This makes absolutely no sense.)
Obviously, medical malpractice lawyers (both plaintiffs’ lawyers and defendants’ lawyers, who fear the loss of business, too) take a very different view, contending that charitable is an end run around what is a very profitable business. What is to stop a doctors’ group from forming a non-profit and then having the “charitable foundation” pay the doctors the same handsome wage they had in private practice while becoming immune from medical malpractice lawsuits? So, if the Virginia Supreme Court decides that tax-exempt physician foundations should be exempt from medical malpractice liability, the 1200 physicians and 3 Virginia medical schools might be just the tip of the iceberg.

I cannot imagine the Virginia Supreme Court would allow this to happen, but we will have to see.