By Rachel Emma Silverman

With medical malpractice insurance premiums climbing steeply, a growing number of physicians are taking a radical step: They're canceling their coverage altogether.

Going bare, as it is known, or "self-insuring," means that doctors, rather than insurance companies, are responsible for legal fees and any judgments or settlements if they're sued. For patients it means potentially less money if their doctor botches the job.

Many of the physicians going bare so far practice in Florida, which consistently has some of the highest malpractice insurance rates in the nation and is known for its activist doctors. More than 5% of Florida's roughly 47,700 active medical doctors don't have malpractice insurance coverage, up from 4% of doctors a year ago, according to the Florida Department of Health statistics. In Miami-Dade County, in South Florida, nearly 20% of the county's 6,360 active medical doctors are bare. The phenomenon is most common in high-risk specialties such as neurosurgery and obstetrics, but even primary-care physicians are forgoing insurance.

As premiums edge beyond the reach of physicians in other states, doctors elsewhere are studying, and in some cases adopting, the option. As a result, some in the medical profession expect the phenomenon to continue to spread.

Many of the doctors dropping malpractice insurance are sheltering assets in sophisticated trusts or partnerships, safely out of reach for legal judgments down the road. In Florida, doctors know that assets such as their homes and annuities are protected by state law from creditors, one reason why so many doctors in the state are accepting the risk of no coverage.

Nobody knows for sure how many doctors are bare nationwide.

Mark Macumber, a family practitioner in Berwyn, Ill., dropped his coverage last spring, after his premium climbed to $40,000 from about $11,000 the year before. With $130,000 in medical-school loans and a big mortgage to pay, Dr. Macumber decided the coverage wasn't worth it. Without an insurance policy, he lost his hospital privileges and isn't part of an HMO network anymore. Instead, he started a low-cost health-care clinic that targets uninsured patients at $40 a visit.

When Dr. Macumber decided to go bare, he sent a letter to his patients letting them know. Most stuck with him. "It didn't change my opinion of him, nor did it change the way he practices medicine as far as I'm concerned," says Rex Morioka, a longtime patient. All his patients must sign a form stating they are aware of the doctor's uninsured status, a common practice among uninsured physicians. Dr. Macumber's form doesn't waive his patients' right to sue.

Going bare isn't limited to doctors. A number of nursing homes and hospitals across the country also have dropped liability coverage because of high premiums. In Arkansas, for instance, more than 100 nursing homes, out of a total of 237 in the state, had no liability insurance. If a nursing home carries no insurance, injured residents might not be able to collect sufficient compensation, patient advocates say.

Off the Hook for $4 Million

What happens when patients sue a doctor without insurance? Patients often settle for less and do so more quickly because a doctor can file for bankruptcy, says Marc Singer, of Singer Xenos Wealth Management, Coral Gables, Fla., which advises doctors on how to protect their assets. Mr. Singer advises his clients first to hire a bankruptcy attorney, rather than a defense attorney, if they are sued. "What plaintiff's attorneys fear most in a lawsuit is bankruptcy," he says.

That's what happened in one such case, a dispute over a gall bladder surgery performed by a Florida surgeon, Alan Goldenberg. The patient, Shirley Sawczak, filed suit against him for malpractice. Dr. Goldenberg had no malpractice insurance and filed for Chapter 7 bankruptcy the same day the jury was to begin its deliberations in the suit.

Ms. Sawczak won a judgment for more than $4 million against the surgeon. While Dr. Goldenberg had nearly $3.8 million in assets, almost all of his money was held in his house, retirement accounts and other assets -- assets exempt from creditors under Florida law. The case reached the Supreme Court of Florida, which ruled that Dr. Goldenberg's annuities also were protected under Florida law. Ultimately, the $4 million judgment was discharged, meaning that Dr. Goldenberg was off the hook. Ms. Sawczak received nothing, according to her attorney.

Most states don't actually make doctors carry malpractice insurance. But hospitals and managed-care organizations often have insurance requirements, which makes going bare impractical for many physicians.

Florida law allows doctors to practice without liability insurance as long as they are financially responsible for as much as $250,000 of any judgment against them. If they fail to pay within 30 days of a judgment, they can lose their license. The state's laws also require doctors to post a notice in their waiting room or give a statement to patients saying they are uninsured. For patients in other states, medical licensing agencies generally track whether doctors have malpractice insurance, but the best and easiest way for a patient to find out for sure is to ask the doctor directly.

Promising Not to Sue

David Lee Vastola, a North Palm Beach internist and gastroenterologist, gave up his malpractice insurance two years ago, after his annual premium rose to $60,000 for only $250,000 in coverage from $12,000 for $1 million in coverage the year before. He has gone a step further than most physicians who go bare, by requiring his patients to sign a waiver promising not to sue him or his professional corporation for any reason.

All but one of his 10,000 patients have signed the waiver, although some potential new patients have refused and been turned away, he says. Whether the waiver is enforceable hasn't been tested in court.