Sorry about not posting in a while –
the start of the fall semester and the submission of job applications has taken
considerable time.
I would like to discuss a topic that
is, admittedly, not as common an issue for most debtors as those I have
previously discussed, but still interesting in my view. Broadly speaking, this is the ability to
discharge a debt under section 523(a)(6), which is for “willful and malicious
injury by the debtor to another entity or to the property of another entity.” Narrowly speaking, I will be discussing this
in the context of medical malpractice debts.
Speaking very generally, a debtor
can discharge the equivalent of a negligent tort, but not something that would
amount to an intentional tort. A tort
is, broadly speaking, a wrongdoing for which the law provides a remedy in a
civil case. To illustrate in a simple
example, if I am driving my car, drop my cell phone on the floor, and I
accidentally run over a person who later sues me, I can probably discharge this
debt in bankruptcy. I use this example
rather than drunk driving, as that presents somewhat different rules under
523(a)(9) – I’ll write more on that in a later post. If I am driving my car, see a person whom I
dislike, put the pedal to the metal and purposely hit that person who later sues
me, bankruptcy will not relieve me of this duty (as it shouldn’t).
A special situation, then, arises
for physicians and other medical professionals.
The leading case on this subject was issued by the Supreme Court in Kawaauhau v. Geiger, 523 U.S. 57
(1998). In a unanimous opinion issued by
Justice Ginsburg, the Court held that a debt arising from a medical malpractice
judgment for negligent or reckless conduct was dischargeable in
bankruptcy. Despite its unanimity among
the Court members, I recall feeling great skepticism the first time I read the
case, and still find its reasoning somewhat questionable. I have chosen to write about this case, in
part, because when I was a staffer on an academic journal last year, I realized
that I wanted to write about this subject at a point when it was too late to
make such a decision. But I
digress.
In Geiger, the patient had a foot injury. She sought treatment from Dr. Geiger, who
prescribed her oral penicillin in order to reduce the risk of infection,
despite his knowledge that intravenous penicillin would have been more effective. Dr. Geiger then left for a trip, and upon his
return, overruled the decision of other physicians to transfer the patient to
an infectious disease specialist, as he believed the infection was less severe. Dr. Geiger was wrong, and the patient eventually
had to have her right leg amputated below the knee.
The patient then sued Dr. Geiger,
and obtained a judgment for about $355,000.
Dr. Geiger, having had his wages garnished as a result of his lack of
malpractice insurance, then filed for bankruptcy. The Bankruptcy Court for the Eastern District
of Missouri did not allow this debt to be discharged, holding that it Dr.
Geiger’s actions were below prevailing medical standards, and so amounted to “willful
and malicious” injury in 523(a)(6). The
District Court agreed. The U.S. Court of Appeals for the Eighth Circuit reversed,
holding that the exemption from discharge is confined to actions amounting to
an intentional tort, and allowed the discharge.
The Supreme Court agreed to hear the
case, and affirmed the Eighth Circuit’s decision to allow the discharge. The Court interpreted 523(a)(6) to mean that
the exception from discharge is limited to acts done with the intent to cause
injury. Applying the statute to mean
that all acts done intentionally which cause injury was too broad of a standard
for the Court. It went on to say that
intentional torts “generally require that the actor intend ‘the consequences of
an act,’ not simply ‘the act itself.’”
I don’t take issue with the
reasoning in general. The result in the
case of medical malpractice debts in particular seems inequitable to me,
though. Why not hold professionals, such
as physicians, to a higher standard? Dr.
Geiger, without malpractice insurance (which he probably should have had),
decided to practice medicine in a manner that he knew was less effective. The patient alleged that this was simply a
cost-cutting measure. The result for the
patient was that she had a good portion of her leg amputated, and yet did not
receive any compensation from her physician who was, by all accounts,
negligent. To me, a physician such as
Dr. Geiger should have known better than to practice medicine in this manner,
whether it was for cost-cutting or not. Generally
in tort law, physicians and other professionals are held to a higher standard
of care than the average person. To me,
it only makes sense for this special standard of care to translate to a special
exception for discharge in bankruptcy as well.
Otherwise, the higher standard of care may be reduced to a lack of
meaning should the physician file for bankruptcy.
The Court’s decision was
well-reasoned. The Bankruptcy Code, then
as today, does not provide an exception of discharge for medical malpractice
debts. Near the end of the Court’s
opinion, Justice Ginsburg writes that although the Court declines to make a
policy exception for discharge for medical malpractice debts, “Congress, of
course, may so decide. But unless and
until Congress makes such a decision, we must follow the current direction §
523(a)(6).” It’s in Congress’s hands to
fix what I perceive as an inequitable loophole.
I’m not getting my hopes up.
I expect to write again next week on
a topic which applies to (nearly) all individual debtors: state exemptions from
the bankruptcy estate. I’ll focus on my
state of Virginia, as it has some interesting provisions. Thanks for reading.
-JP
