To Settle or Defend

Apple's iPhone muse and general know-it-all, Siri, can provide a ready answer to nearly any question. Its analytical ability would, however, be sorely taxed by the agonizing decision that physicians must make when facing medical malpractice claims: to defend or empower the insurance company to try to settle?

To systematize an approach to making reasoned decisions in this regard, let's examine eight practical considerations for physicians to weigh when deciding whether to defend or settle. This analytical construct may also be of use to defense attorneys who represent health care professionals, and to insurance claim professionals who participate in the litigation and defense process.

Getting Started

Physicians should weigh eight major factors when deciding whether or not to consent to the medical malpractice insurer settling a claim. In no particular order, these are:

1. Standard of care defensibility. Just because a medical procedure went awry does not necessarily mean that a physician was negligent or deviated from the standard of care. The defendant physician must consider the caliber of the defense experts retained by defense counsel to support the doctor's decisions. Consider the credentials, specialty, and medical standing of both the defense and plaintiff experts. Ultimately, in many malpractice cases, the courtroom outcome may turn on a battle of the experts, combined with the defendant doctor's ability to persuasively articulate the rationale for what he or she did or did not do.

2. Scope of damages. This is the extent of the patient's quantified damages, usually medical bills and possibly lost wages. This includes past lost wages and future loss of wage-earning capacity due to alleged medical malpractice. In addition, juries can award money for pain and suffering. If a doctor has a $1 million medical malpractice insurance policy and the complaining patient can “black-board” medical bills of, say, $800,000 and lost earnings of $250,000, the defendant physician may face a genuine “Maalox Moment.” Special damages are quantifiable in dollars and cents. General damages do not readily lend themselves to monetization but include pain and suffering, loss of enjoyment, humiliation, etc.

With alleged damages in the six-figure range, a doctor with a $1 million medical malpractice policy may be worried about a potential excess verdict. The danger is a jury award exceeding the insurance coverage. Any amounts above the insurance policy limit will be the physician's responsibility, and may drain personal assets. This is a scenario that any prudent practitioner wants to avoid.

3. Uncovered damages. Perhaps not all the allegations against a physician are covered by insurance. For example, in cases alleging egregious conduct, plaintiffs may seek punitive damages against a doctor, aiming to punish the physician and deter other physicians from similar egregious conduct. Many insurance policies exclude punitive damages. (Tip: READ YOUR POLICY long before any claim arrives!) Some states, for public policy reasons, consider punitive damages uninsurable. Further, claims could include allegations of battery, intentional acts or sexual misconduct ' claims an insurance policy may exclude. In such cases, defendants must guard against the prospect of a financial hit rooted in allegations not covered by insurance, forcing the physician to shoulder financial risk.

4. Plaintiff sympathy factors. Some plaintiffs make a more compelling and persuasive appearance than others. I have served as an expert in cases where, during a plaintiff's testimony in a medical malpractice trial, a court bailiff distributed Kleenex to jurors. Not a good sign! While patients often like their own doctors, and physicians win most medical malpractice cases that go to trial, it is a high-stakes wager if the plaintiff can elicit juror sympathy.

In some cases, jurors may be thinking, “Hmm, at the end of trial, if I tick this box, the poor patient gets nothing. If I mark the other box, the patient gets money, likely funded by the physician or his/her insurance company.” For some jurors, this is a no-brainer. Thus, in deciding whether to defend or agree to settle, the defendant physician should objectively assess the appearance that the plaintiff will make in court.

Next month we will discuss four more consideration when deciding to settle or defend a medical malpractice claim.

Kevin M. Quinley, CPCU, ARM, is the Principal of Quinley Risk Associates LLC, a risk management consulting firm, and a member of this newsletter's Board of Editors. His book, Bulletproofing Your Medical Practice, is available from SEAK, Inc. Reach him [email protected] or at 804-796-1939.

Apple's iPhone muse and general know-it-all, Siri, can provide a ready answer to nearly any question. Its analytical ability would, however, be sorely taxed by the agonizing decision that physicians must make when facing medical malpractice claims: to defend or empower the insurance company to try to settle?

To systematize an approach to making reasoned decisions in this regard, let's examine eight practical considerations for physicians to weigh when deciding whether to defend or settle. This analytical construct may also be of use to defense attorneys who represent health care professionals, and to insurance claim professionals who participate in the litigation and defense process.

Getting Started

Physicians should weigh eight major factors when deciding whether or not to consent to the medical malpractice insurer settling a claim. In no particular order, these are:

1. Standard of care defensibility. Just because a medical procedure went awry does not necessarily mean that a physician was negligent or deviated from the standard of care. The defendant physician must consider the caliber of the defense experts retained by defense counsel to support the doctor's decisions. Consider the credentials, specialty, and medical standing of both the defense and plaintiff experts. Ultimately, in many malpractice cases, the courtroom outcome may turn on a battle of the experts, combined with the defendant doctor's ability to persuasively articulate the rationale for what he or she did or did not do.

2. Scope of damages. This is the extent of the patient's quantified damages, usually medical bills and possibly lost wages. This includes past lost wages and future loss of wage-earning capacity due to alleged medical malpractice. In addition, juries can award money for pain and suffering. If a doctor has a $1 million medical malpractice insurance policy and the complaining patient can “black-board” medical bills of, say, $800,000 and lost earnings of $250,000, the defendant physician may face a genuine “Maalox Moment.” Special damages are quantifiable in dollars and cents. General damages do not readily lend themselves to monetization but include pain and suffering, loss of enjoyment, humiliation, etc.

With alleged damages in the six-figure range, a doctor with a $1 million medical malpractice policy may be worried about a potential excess verdict. The danger is a jury award exceeding the insurance coverage. Any amounts above the insurance policy limit will be the physician's responsibility, and may drain personal assets. This is a scenario that any prudent practitioner wants to avoid.

3. Uncovered damages. Perhaps not all the allegations against a physician are covered by insurance. For example, in cases alleging egregious conduct, plaintiffs may seek punitive damages against a doctor, aiming to punish the physician and deter other physicians from similar egregious conduct. Many insurance policies exclude punitive damages. (Tip: READ YOUR POLICY long before any claim arrives!) Some states, for public policy reasons, consider punitive damages uninsurable. Further, claims could include allegations of battery, intentional acts or sexual misconduct ' claims an insurance policy may exclude. In such cases, defendants must guard against the prospect of a financial hit rooted in allegations not covered by insurance, forcing the physician to shoulder financial risk.

4. Plaintiff sympathy factors. Some plaintiffs make a more compelling and persuasive appearance than others. I have served as an expert in cases where, during a plaintiff's testimony in a medical malpractice trial, a court bailiff distributed Kleenex to jurors. Not a good sign! While patients often like their own doctors, and physicians win most medical malpractice cases that go to trial, it is a high-stakes wager if the plaintiff can elicit juror sympathy.

In some cases, jurors may be thinking, “Hmm, at the end of trial, if I tick this box, the poor patient gets nothing. If I mark the other box, the patient gets money, likely funded by the physician or his/her insurance company.” For some jurors, this is a no-brainer. Thus, in deciding whether to defend or agree to settle, the defendant physician should objectively assess the appearance that the plaintiff will make in court.

Next month we will discuss four more consideration when deciding to settle or defend a medical malpractice claim.

Kevin M. Quinley, CPCU, ARM, is the Principal of Quinley Risk Associates LLC, a risk management consulting firm, and a member of this newsletter's Board of Editors. His book, Bulletproofing Your Medical Practice, is available from SEAK, Inc. Reach him [email protected] or at 804-796-1939.