February 26, 2020

Physician’s Failure to Comply With State Malpractice Insurance Requirement Does Not Give Rise to Non-dischargeable Debt

The 11th Circuit (Federal Courts in Georgia must abide by 11th Circuit precedent) recently issued an interesting decision denying the appeal of a malpractice victim in a bankruptcy petition filed by a Florida doctor, Dr. Fernandez-Rocha.  The case arose from a malpractice verdict won by a couple, the Guerras, whose newborn baby died under the care of Dr. Fernandez-Rocha.  Although Florida law requires obstetricians to maintain a minimum of $250,000 of malpractice insurance, Dr. Fernandez-Rocha was not insured.  After the judgment was issued, the doctor filed for bankruptcy in an effort to discharge the debt.

The Guerras objected to the discharge of this debt, claiming that the Florida malpractice law created a “fiduciary duty” in the doctor to maintain insurance.  The bankruptcy court disagreed and the 11th Circuit Court of Appeals affirmed the decision of the bankruptcy court.

This 11th Circuit decision seems to run contrary to several hearing decisions I have seen over the years.  For example, I have been involved in several cases where a “buy here/pay here” auto dealer objected to the discharge of damages arising from a auto accident when the debtor failed to maintain insurance.  I remember specifically one such case with the judge specifically commented that the debtor’s failure to adhere to the law requiring vehicle insurance was wrongful behavior that would support a creditor’s objection to discharge (or an objection to confirmation in a Chapter 13).

Presumably, at some point, a debtor’s negligent or reckless behavior in not maintaining insurance would rise to the level where the debt arising from that negligence/recklessness would not be discharged.  I wonder if the debtor in the Fernandez-Rocha case pursued other grounds for non-dischargeability other than the fiduciary duty argument.

Thanks to attorney Scott Riddle of the well researched Georgia Bankruptcy Blog for discussing this case. Additional discussion and a copy of this decision is on Scott’s blog.


About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.

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