Have you ever been sued? Were you ready for the challenges of being sued and the disruption to your practice? Here's what can happen, and here's how to avoid the whole thing.
When does the litigation stop?
Any dentist who has been involved with litigation knows the time and costs that can be incurred with attorneys, accountants, expert reports, and testimony. Depositions, discovery and presentation of supporting documents, and reviews with the dentist’s advocates require an enormous amount of time away from the practice. The loss of income is also detrimental to the dentist’s well-being and practice growth.
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These items call for settlement discussions and mediation in order to be resolved. If those attempts fail, the next step is the courtroom. The preparation and support of the argument allows the judge to decide who wins and who loses. But once a decision is made, does the litigation end? What happens to the dentist who loses the case, and how much must that dentist pay to the winner of the lawsuit? A presentation to the court of damage claim reports and treatises for an amount to dismiss the case is prepared.
What does the decision of an award by way of a monetary amount reflect?
Unfortunately, a decision by the courts is typically a narrow one in that the outcome does not include an amount for payment of the damages but only a verdict to decide who committed the errors in the dispute and who did not. The damage award is another trial to be decided by the judge. This requires additional reporting and testimony by experts, including projections of what would have been had the dispute not occurred. The income that was lost, what would have happened with that income, and the station in life that the damaged party would have attained can enhance the amount lost by the aggrieved participant.
Certified public accountants and certified valuation analysts are experts in evaluating these items and presenting them to a court. This justifies the lost income that would have been used to reach goals by the suffered party, and where he or she could use the money or assets that were lost. This type of trial and the award of damages is usually heard by the same judge who adjudicated the original case since he or she is most familiar with the case. Sometimes an award of damages is not in money but in the remittance of certain assets if the loser does not have enough money to pay the financial award. All of the data about the loser must be available to the advocates of the winner for proof to the court of what is available to transfer to the party who won.
What's an example of a trial for a decision and another for a damage award?
Cases that may seem easy because there was an executed agreement between the parties can result in two trials. An example is a fully executed agreement restricting competition between dentists. This might seem non-negotiable and easily enforceable in a courtroom since it was signed by both parties. A litigant may argue that the amount of damage is too little to be paid to the injured party, or the party at fault may argue that it is unconscionably high.
There may be vague language in the executed agreement, or it may be interpreted differently by the parties. This is an example of when a trial takes place to determine right or wrong according to the contract. Once that is determined, if the parties can’t agree on a damage amount, another trial occurs.
It is not unusual to have litigation when an existing executed contract is in effect. This is an area that dentists can find confusing after they've taken the time to have the contract prepared, reviewed, and executed before a partnership occurs. The surprise is that the contract language is often the source of the lawsuit. The lack of understanding after the fact, when an actual event occurs and the agreement is read to determine what to do, can lead to litigation.
What steps can be taken to avoid all of this?
There are steps that can be taken to eliminate some of the risk of litigation, but there is no guarantee that if someone wants to sue, that a lawsuit will not take place. The main step is to retain a dental CPA and a dental attorney who have experience with contracts, an understanding of dental language, and who can clearly put an agreement into writing. The experience of these professionals will not stop litigation, but will hopefully prevent lawsuits based on unclear language or ambiguous wording in a contract.
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Bruce Bryen is a certified public accountant and certified valuation analyst with over 40 years of experience. He is a principal with RKG Tax & Business Services LLP, an affiliate of Robin, Kramer and Green, with offices in Fort Washington, Pennsylvania. He specializes in deferred compensation such as retirement planning design, income and estate tax planning, asset protection, and structuring loan packages for presentation to lenders. He is experienced in providing litigation support services to dentists, and valuation and expert witness testimony in matrimonial and partnership dispute cases. He has prepared expert reports for the courtroom for damage claims, and is a writer for several dental journals. Contact him at (215) 641-8300, extension 123, or at [email protected].
