When a medical malpractice lawsuit begins, physicians often have no idea of what to expect or what might be the possible outcomes. Many are surprised to learn that most medical malpractice lawsuits never end up in a courtroom. The majority resolve in some way prior to ever going to trial. Some are dropped. A minority are mediated. More commonly, a settlement is reached.
Unfortunately, many of us have very little information about settlement of medical malpractice lawsuits. So, let’s explore a few of physicians’ most frequently asked questions regarding medical malpractice settlements.
1. What is a Settlement?
Settlement represents a negotiated agreement between the parties -- plaintiff and one or more defendants -- to the lawsuit. In medical malpractice lawsuits, a settlement involves monetary payment to the plaintiff in compensation for the unfortunate outcome or alleged injury which prompted them to file the lawsuit. The terms of the agreement are typically negotiated by the lawyers representing each party with input from their clients and from the insurance carrier which will make the payment.
2. What are the pros of settlement?
First, settlement brings the malpractice lawsuit to a close, and may be useful even in cases where the physician feels certain that the care they provided was appropriate. In some instances, a physician may prefer to settle in order to reduce the stress of an on-going lawsuit. In others, the physician or hospital believes it’s the right thing to do. According to the regulations governing the National Practitioner Data Bank, “[A] payment in settlement of a medical malpractice action or claim shall not be construed as creating a presumption that medical malpractice has occurred.”
Additionally, the insurance carrier or hospital involved may prefer a settlement if they believe that the case will result in a payout regardless of whether or not it goes to trial. When a settlement is successfully negotiated, the risk of a jury choosing to award a higher payout and the costs in time, money, and strain of proceeding to trial are averted.
3. What are the cons of settlement?
For some physicians, the payout of a settlement amount in a case where they feel certain that they did nothing wrong is distressing. So much so for some that they are willing to risk an adverse verdict in order to have their day in court.
In addition, all moneys paid as a result of a medical malpractice action or written claim -- whether through settlement or jury award -- must be reported to the National Practitioner Data Bank (NPDB) and the state licensing board. Whether the licensing board makes further inquiries regarding the circumstances preceding a payout varies from state to state. Depending upon one’s specialty and the circumstances, an accumulation of reports over time may potentially have other professional impacts on areas such as credentialing.
In some instances, a hospital settles but the physicians are dropped. In that case, no NPDB report is required.
4. What if the insuror wants to settle and the physician doesn’t?
Many medical malpractice insurance policies contain a “consent clause.” This clause guarantees that the insurance carrier will not agree to a monetary settlement without the consent of the insured physician. A consent clause is most common in instances where a physician or physician group in private practice contracts directly with the insurance carrier.
In many instances where there is no true consent clause, the insuror or hospital nonetheless recognizes that the outcome of a malpractice claim is often important to a physician, whether at a professional or emotional level. It is not uncommon for them to take the physician’s wishes regarding settlement into consideration as they map out the best course of action in a given case.
Caveat: In some instances, however, the contract with the malpractice insurance carrier contains a clause (often called a “hammer clause”) which states that if the physician refuses the insuror’s recommendation to settle, the physician will be personally responsible for the costs of defending the case from that point forward. In the event that you disagree with your insuror about whether or not to settle, you will want to confirm that they will continue to cover all legal expenses -- which can be extensive -- before making your choice.
5. What if the physician wants to settle and the insuror doesn’t?
Sometimes physicians prefer to settle even when the insurance company has assessed the case as “win-able” at trial. You as a physician may want to end the stress of a lawsuit for reasons ranging from health to family issues, or may fear the prospect of a trial or a high jury award.
An experienced defense attorney tells me that it is exceedingly rare for a high jury award to put a physician’s personal assets at risk, and strongly recommends that you not make a decision regarding whether or not to settle out of fear for your personal assets. Instead, consider hiring outside legal counsel at that point (another malpractice defense attorney may be a good choice). Request that this outside counsel draft and send a letter to the malpractice insurance carrier requesting that they settle the case within your policy limits.
Should the insurance carrier deem the case so likely to be won that they continue to press you to go to trial, then simply do your best in the courtroom. Know that in the rare event that your case goes to trial and a high jury award is returned with no other agreement in place between defense and plaintiff’s, this letter will help you to direct responsibility for the award toward the insuror, thereby protecting your personal assets.
6. When is it best to settle?
A medical malpractice defense attorney I spoke with emphasized that there’s no easy answer to this question. Each case they confront is unique. Just as a surgeon has a general method for, say, cholecystectomies, but approaches each individual case in a stepwise manner, navigating a malpractice claim requires a stepwise approach. An entire team is required for success, and a surprisingly wide variety of factors come into play.
While you as a physician-defendant will generally know the patient’s medical case best, an experienced defense attorney will have seen many malpractice cases unfold over time. Some of those cases may even resemble yours.
They also may have prior experience with the particular judge assigned to your case and juries in your jurisdiction, as well as some prior history with the opposing attorney. They have frequently established relationships with relevant experts, and the content and forcefulness of the opinions those experts render will come into play. Roll all of that together with the nature of the plaintiff’s loss and the damages they allege, and you’ll start to see that whether or not to settle is a decision that can only unfold one step at a time.