Suffolk County Medical Practices Face Unprecedented Financial Crisis as Skyrocketing Malpractice Insurance Costs Push Healthcare Businesses to the Brink of Bankruptcy
Medical practices across Suffolk County are experiencing an alarming surge in bankruptcy filings as malpractice insurance premiums have steadily increased over the past decade with no signs of slowing down in 2025. The combination of rising insurance costs and what experts call “nuclear verdicts” is creating a perfect storm that’s forcing healthcare providers to make impossible choices between staying in practice and financial survival.
The Nuclear Verdict Crisis Driving Insurance Costs Through the Roof
Nuclear verdicts, those more than $10 million, are increasing at a drastic rate. The average of the top fifty medical malpractice verdicts rose from $32 million in 2022 to $48 million in 2023 and reached an alarming $56 million in 2024. This explosive growth in verdict amounts has created a ripple effect throughout the medical malpractice insurance industry, with 49.8% of medical professional liability insurance premiums increasing between 2023 and 2024.
The financial impact is staggering. Research conducted by Moore Actuarial Consulting found that inflation—both economic and social—has added an estimated $4 billion in insured losses and expenses to the physician-focused malpractice market over the past decade. That figure represents eleven percent of booked losses for the decade ending in 2024.
Suffolk County Practices Hit Hardest
For medical practices in Suffolk County, the situation is particularly dire. An OB/GYN practicing in Long Island could face premiums as high as $195,891 annually. Neurosurgeons in New York also encounter steep premiums, driven by the high frequency and cost of claims in their field. These astronomical costs are forcing many practices to consider drastic measures, including closure or bankruptcy.
Hospitals and practices, particularly smaller ones, may struggle to remain financially viable due to the rising costs of malpractice insurance, defense, and high compensatory awards in these cases. The burden is especially heavy for independent practices that don’t have the financial backing of large hospital systems.
The Bankruptcy Solution: When Medical Practices Can’t Survive
When medical practices can no longer sustain these crushing insurance costs, bankruptcy often becomes the only viable option. Doctors and other workers in the medical field rely on malpractice coverage to save their practice from extremely costly lawsuits that could otherwise lead to bankruptcy, but when the insurance itself becomes unaffordable, practices face an impossible situation.
A medical practice’s bankruptcy proceeding rarely salvages employed physicians’ claims-made plus tail coverage. Tail coverage owed to physicians becomes a liability of the insolvent practice. This obligation is treated as a general unsecured debt — the same category as unpaid rent, utilities, or vendor invoices. As lenders are considered secured creditors in bankruptcy, insufficient funds are usually left to cover a significant amount of unsecured debt.
Chapter 11 Reorganization: A Lifeline for Struggling Practices
Businesses in Suffolk County struggling with overwhelming debt often turn to Chapter 11 bankruptcy to restructure and stay operational. This form of bankruptcy allows medical practices to reorganize their debts while continuing to operate, potentially providing a path forward for practices drowning in insurance costs.
For medical practices considering bankruptcy, working with an experienced Bankruptcy Attorney Suffolk County is crucial. The Frank Law Firm P.C. is a team of professional attorneys and support staff that provide legal services for businesses on Long Island, in New York City, and the surrounding areas.
The Broader Impact on Healthcare Access
The bankruptcy crisis among Suffolk County medical practices has far-reaching implications beyond individual businesses. When inflation accelerates, insurers are forced to raise rates. That cycle threatens affordability and drives up health care costs across the board. As practices close or reduce services due to financial pressures, patients face reduced access to care and longer wait times.
Social inflation increases the price of healthcare. It ratchets up the costs of doing business for healthcare professionals and facilities, and fear of litigation inspires defensive medicine. This creates a vicious cycle where healthcare becomes more expensive and less accessible.
Legal Solutions for Medical Practices in Crisis
The Frank Law Firm’s lawyers have extensive experience handling cases involving corporate disputes, contracts, foreclosure, bankruptcy, residential and commercial real estate, financing, and much more. No matter what your legal issue is, their dedicated group of lawyers will go above and beyond to resolve it successfully. The Frank Law Firm has the resources, capabilities, and experience needed to protect your legal rights in any size, complexity, or type of case.
At the Frank Law Firm, they make sure that all of your needs are accommodated while offering personalized attention throughout each step of your legal process. They value the attorney-client relationship and go above and beyond for each of their clients.
The Road Ahead
As Suffolk County medical practices continue to face unprecedented financial pressures from skyrocketing malpractice insurance costs, the need for experienced legal counsel has never been greater. Malpractice insurers must set premiums based on expectations of future claims. When inflation accelerates, insurers are forced to raise rates.
For medical practices facing financial distress, understanding all available options—including bankruptcy reorganization—is essential for survival. The crisis facing Suffolk County’s medical community requires immediate attention from both legal and healthcare professionals to preserve access to quality medical care for residents throughout the region.
Medical practices struggling with overwhelming debt and insurance costs should seek immediate legal counsel to explore their options before it’s too late. With proper legal guidance, some practices may be able to reorganize and continue serving their communities, while others may need to pursue liquidation to protect their personal assets from business debts.