Will insurer want to settle med/mal claim?
When a professional liability carrier learns one of their insured is being sued, will they recommend a quick settlement or vigorous defense?
“Obviously, the insurance company is a for-profit organization. They are in business to make money, not to lose money. But they also realize that the reason for their existence is to support the rights of their physician insured,” says Leonard Berlin, MD, FACR, professor of radiology at Rush University and University of Illinois, both in Chicago, and author of Malpractice Issues in Radiology.
“The first thing they do when a lawsuit is filed is to assign a claims manager to size up the case and make an initial determination,” says Berlin.
A medical malpractice case that appears easily defensible at first glance could suddenly be a strong candidate for settlement, depending on what defense attorneys learn during litigation, says Joseph P. McMenamin, MD, JD, FCLM, a Richmond, VA-based healthcare attorney and former practicing emergency physician. McMenamin is also CEO of Clinical Advisory Services and principle consultant at the Venebio Group, both in Richmond.
“You have to keep your eyes open and maintain a measure of flexibility,” says McMenamin, adding that he makes a point of bringing a case’s strengths and weaknesses to physician defendants early in the process. “It’s important for doctor to have realistic expectations and be clued in to potential downsides and potential threats,” he says.
Berlin is aware of a case that was going well for the defense until the physician defendant’s cell phone rang on the stand and the judge gave him permission to take the call. “He said, ‘No, it can wait,’ and the insurance company’s claims manager, who was sitting in the courtroom, saw sudden grimaces on many of the jurors’ faces, and they lost the case,” he says. “He came across as a callous individual.”
Here are some factors that could cause a carrier or defense counsel to think seriously about settlement:
• An opposing counsel of high caliber.
While some law firms win 90% of the malpractice cases they try, others win only 30% of the time, notes Berlin. “Just as you have both superb and mediocre doctors, the same thing is true for the law,” he explains. “Without even looking at the medicine, if a ‘blue chip’ law firm takes the case, it doesn’t mean you can’t beat them, but it certainly throws the statistics in the plaintiff’s favor.”
• A judge that interprets the law in a way that makes it difficult for the defense to prevail.
“Most judges are ethically committed and straight shooters. It’s a rare judge that puts his thumb on one side of the scale, but they do exist,” notes McMenamin. “And there are jurisdictions where a case that could be won elsewhere might very well be lost.”
• Information that taints the defense expert.
“If you hire an expert and discover on the eve of trial something damning about his resume or capabilities, that could change the complexion of the case quite a bit,” say McMenamin.
• Negative information that comes up during a deposition.
“I try to learn the good, bad, and ugly quickly,” says McMenamin. “If you do have a case that should not be tried, it is far better and far cheaper to know it upfront than to figure it out on the eve of trial.”
Still, sometimes surprising information comes to light during litigation. In one medical malpractice case, McMenamin’s client, an emergency physician who was sued for failing to diagnose a heart attack, openly admitted fault to opposing counsel during his deposition, which occurred late in the discovery process.
“He effectively confessed to having missed the diagnosis. But the clincher was that he also testified that after he was unsuccessful trying to resuscitate the patient, he met with the new widow, got down on his knees, and asked forgiveness for his mistake,” he recalls. This confession prompted McMenamin to call the carrier immediately to discuss the possibility of settling an otherwise defensible case.
• A sympathetic plaintiff.
If the plaintiff is a child who is neurologically disabled due to a missed subdural hematoma, or a father who is now quadriplegic due to a missed fracture, for example, the defense is likely to strongly consider settling the claim. “Even if the medicine is good and the defendant makes a good appearance, the jury is very likely to rule in favor of a plaintiff they feel sorry for,” says Berlin.
Demographics can also play a role. “If you have a plaintiff who you think is going to be exceptionally well-received, that may tend to influence your thinking a bit,” says McMenamin. Depending on the circumstances and the venue, for example, if the plaintiff is a member of an ethnic group heavily represented on the jury, while your defendant is a member of a different ethnic group, especially one to which members of the plaintiff’s ethnic group often feel a measure of hostility, the defendant might be at a disadvantage wholly unrelated to the merits of the claim, he explains.
“In a perfect world, this would not be an issue. In the world we actually live in, however, it can be,” says McMenamin. “By no means does this mean that in such situations settlement is necessary, nor even desirable. It does mean, though, that in making judgments about the best course of action, one ought not to ignore such factors.”
• Critical documentation cannot be located, which could eliminate doubts about the appropriateness of care.
Katherine A. Miller, RN, CPHRM, a risk/claims consultant at RCM&D Self-Insured Services Co. (SISCO), says, “You might have a clear recollection of what is contained in this missing data, but jurors may believe the records were destroyed to cover up an error.” SISCO is a Baltimore-based subsidiary corporation providing specialized claim administration and risk control services to the healthcare industry.
• The plaintiff can establish that the chart was altered or deceitfully filled out.
“If based on the testimony of witness or evidence that a doctor was not called when the chart says he or she was called, this will greatly increase the likelihood that the case will be settled,” says Miller.
• The defendant fails to comply with one of their own organization’s written policies.
“Any policy, procedure, or protocol can be admissible as evidence and can be used to help establish or disprove that standard of care was met,” says Miller. “It proves very difficult to successfully defend when the defendant is not aware such a policy even existed.” (See related stories on how physicians can help their defense, below, and what physician defendants should consider before agreeing to settle a claim, below.)
To help defense, provide this input
While most malpractice policies state that the physician has to agree to a settlement, some state that the insurer has the right to settle a claim without the physician’s consent, notes Leonard Berlin, MD, FACR, professor of radiology at Rush University and University of Illinois, both in Chicago, and author of Malpractice Issues in Radiology.
If the insurance carrier wishes to settle a malpractice claim, defense counsel still should consult with the physician, even if his or her consent isn’t required to settle, according to Joseph P. McMenamin, MD, JD, FCLM, a Richmond, VA-based healthcare attorney and former practicing emergency physician. (For more information on this topic, see “Check policy now for ‘consent-to-settle clause,’ Physician Risk Management, March 2013, p. 105).
“Counsel’s job is to represent the client first and foremost. The carrier, although also a client in a sense, is in a subordinated position in terms of the magnitude of counsel’s duty,” says McMenamin. “You have to look after the insured first.” Here are some ways in which physician defendants can provide input that can help their defense:
• Look at the situation objectively.
Physicians should keep in mind that the insurance company is unlikely to recommend settlement if a claim is really defensible and plaintiff attorneys do their homework before filing a malpractice claim, says Berlin.
“Plaintiff attorneys work on a contingency basis. They may spend upward of $100,000 or $200,000 on a case and are paid nothing if he or she loses,” he adds. “So therefore, they will be very careful when taking a case.”
• If you are unhappy with the defense lawyer, ask your insurer to provide you with another attorney.
“All the physician has to do is write a letter and say, “I don’t think this attorney is representing me properly, I want another defense lawyer,’ and the carrier will give him one,” Berlin says. The reason is that physicians have sued successfully for negligent representation. The physicians claimed that they complained about their lawyers, the insurers did nothing, and as a result, the physicians were found liable, he explains.
• Attend the deposition of the plaintiff’s expert.
“It’s hard to intimidate a plaintiff’s expert if the medicine is on the plaintiff’s side. But if it’s a shady case — and you do have experts that are out there just for the money — sit across the table and stare at the expert,” says Berlin. “Sometimes they do back off a little.”
Consider these items before settling claim
Lawsuits arising out of premises liability or automobile accidents are often just a matter of economics for the insurer and the insured, says Katherine A. Miller, RN, CPHRM, a risk/claims consultant at RCM&D Self-Insured Services Co. (SISCO), a Baltimore-based subsidiary corporation providing specialized claim administration and risk control services to the healthcare industry.
Professional liability claims, such as medical malpractice, on the other hand, often have an adverse effect on the insured’s life far beyond just the amount of money paid to the plaintiff and the defense attorney, says Miller.
“The decision to settle or defend a medical malpractice case is one that deserves careful consideration on all parties’ part,” says Miller, noting that about 6% of medical malpractice lawsuits go to trial.1 “Most are dismissed for a variety of reasons without any remuneration to the patient,” says Miller. “In reality, most medical malpractice lawsuits do not go to trial and are settled out of court, with payment made to the patient.”
The physician-defendant needs to confront settlement issues and understand the settlement process to make or be a part of this decision whenever possible, urges Miller. She says physicians should consider these items:
• Are your personal earnings at risk?
“In some serious cases, the verdicts awarded by juries have been higher than the limits of the professional liability policy,” says Miller. “The defendant’s attorney will be able to assess if the case has an excess verdict possibility.”
For example, if the jury awards a verdict of $3 million and the policy limit is $1 million, the physician’s personal assets and future earnings are at risk. “Evaluate whether you want to risk the possibility of a verdict in excess of your policy,” advises Miller. “If the plaintiff’s attorney is willing to settle the case within your policy limit, you need to evaluate whether you should consent to settle.”
In some cases, there is excess exposure over the limits of the policy, says Joseph P. McMenamin, MD, JD, FCLM, a Richmond, VA-based healthcare attorney and former practicing emergency physician. “... in this case, there is probably an obligation to point out to the defendant that there is a possibility that his personal assets could be at risk,” McMenamin says.
In one case, McMenamin learned that a physician’s insurance company had gone bankrupt, putting the client’s own funds at risk. “I called the opposing counsel and was very candid,” he says. “Fortunately, he was not really aggressive about poking into my client’s assets, and we settled early and cheaply.”
• If other physicians, health professionals, or healthcare institutions are named as codefendants, are your defenses compatible?
Do the defendants present a united front? Conversely, will the other defendants point to your treatment of the patient as beneath the standard of care? Or, in the course of your defense, will you focus on other physicians or institutions as the cause of the plaintiff’s condition?
“To be the only defendant remaining on trial when all other codefendants have settled will put you in an unpredictable and explosive position,” warns Miller. “Remember, the other treating physicians will probably be called to testify at trial. The jury will wonder why you are a lone defendant.”
• How do you appear as a defendant witness?
“Insurance companies will look closely at this,” says Miller. Do you appear arrogant, defensive, or misinformed at your deposition? Was your testimony confused or disorganized? Do you appear logical, compassionate, and willing to listen? Will the jury respect and believe you at trial?
“These are difficult questions to ask oneself but play a significant role in the settlement decision,” says Miller.
1. Vidmar N. Juries and medical malpractice claims: Empirical facts vs. myths. Clin Orthop Relat Res 2009; 467(2):367–375.