Jane Dotson
Medical malpractice cases are complex and can take years to resolve. Settlements are a compromise where both sides give up something in exchange for certainty about the outcome. Insurance companies have a duty to defend and indemnify the physician, which includes paying expenses and settlement amounts. Settling out of court is faster and guarantees some compensation, but it may be lower than what could be awarded at trial. Trials are expensive and risky for both plaintiffs and defendants, and the outcome is uncertain. Medical professionals may prefer to settle to avoid public scrutiny and the time and stress of a trial. The decision to settle or go to trial depends on the specifics of the case, and plaintiffs should seek legal advice to understand their options.
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What You'll Learn
The physician's insurance policy
Medical malpractice lawsuits are time-consuming, resource-intensive, and emotionally charged. In the United States, many such lawsuits are settled out of court, with a payment made by the physician's insurance company.
The insurance carrier has two primary obligations under a medical malpractice policy: the duty to defend and the duty to indemnify. The duty to defend entails retaining a lawyer to defend the physician against legal claims and covering related expenses. The duty to indemnify requires the carrier to pay up to the policy limits for any settlements or judgments on covered claims against the insured physician.
While most insurance policies allow the physician to have a say in the settlement decision, some professional liability policies enable the insurance carrier to settle a claim without the policyholder's consent. Physicians typically have the authority to approve or reject a proposed settlement, but their malpractice insurer may be more inclined to proceed to trial, particularly if they feel they have not committed malpractice.
Physicians Insurance, a subsidiary of the Massachusetts Medical Society, is a leading provider of medical professional liability insurance in certain states. They offer tailored insurance services to physicians, clinicians, and healthcare organizations, prioritizing support and guidance for their members. Other companies, such as Actuate Insurance, also provide professional liability insurance, emphasizing their understanding of the complex insurance needs of healthcare professionals.
In summary, the physician's insurance policy plays a crucial role in mitigating the financial and legal consequences of medical malpractice claims. It ensures that physicians have access to legal defense and indemnification while also providing them with a degree of control over settlement decisions.
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The plaintiff's idea of compensation
In the United States, a medical malpractice lawsuit is initiated by the plaintiff filing a summons, claim form, or complaint, which outlines the alleged wrongdoings of the defendant and demands relief. The plaintiff must prove four elements to succeed in a medical malpractice claim:
- A duty of care was owed by the healthcare provider or hospital
- This duty of care was breached as the healthcare provider or hospital did not conform to the expected standard
- The breach resulted in an injury
- This injury caused considerable damage to the patient, whether physical, emotional, or financial
The plaintiff's idea of appropriate compensation may differ vastly from the defendant's or the insurance company's valuation. The plaintiff is seeking compensation for the harm they have suffered, which can include pain and suffering, loss of enjoyment of life, and loss of earning capacity, among other things. They may also seek punitive damages if the defendant is found guilty of malicious or willful misconduct. Punitive damages are a form of punishment and are awarded in addition to actual damages.
The time and resources required to litigate a medical malpractice case are significant, and many lawsuits settle out of court to avoid these costs and the stress of a trial. In some cases, the insurance company can settle without the consent of the policyholder. However, the physician's approval is usually required before a settlement can be finalized, and they may prefer to take their chances at trial rather than settle, especially if they feel they have not committed malpractice.
The plaintiff's lawyer will likely encourage settlement, as the majority of their costs and fees are covered by a percentage of the final settlement amount. Therefore, a higher settlement amount is beneficial to both the plaintiff and their lawyer, and they may push for a settlement that covers these costs and provides a reasonable payout to the plaintiff.
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The defendant's willingness to settle
Additionally, the physician's malpractice insurer's stance on settlement plays a significant role. Malpractice insurers often take a hard line and are more willing to litigate than other types of insurers. They may have "unofficial" policies favoring trials over settlements to promote the perception of being hardliners and discourage future litigation. The insurer's decision-making process involves a committee that evaluates the case presented by the defense counsel, who understands when settlement is preferable to trial.
The plaintiff's demands and the potential judgment amount also influence the defendant's willingness to settle. If the plaintiff's demands are perceived as unreasonable or if the potential judgment exceeds policy limits, the defendant may be less inclined to settle. On the other hand, if the plaintiff's case is strong and the potential judgment is within manageable limits, settlement may become a more attractive option.
Furthermore, the defendant's consent to settle is crucial, as settlements impact their reputation and future prospects. Settlements are reported to the National Practitioner Data Bank, affecting the physician's standing with insurance providers and patient acquisition. Therefore, the defendant's willingness to settle is a complex decision influenced by insurance policies, insurer strategies, potential judgment amounts, and the desire to protect their professional reputation.
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The role of the insurance company
In most cases, insurance companies will appoint a lawyer to work on the case when a lawsuit is filed, but some may do so earlier when the notice letter is received. The insurance company will typically assign a lawyer approved to work on its cases, but they will often honour a physician's request for a specific lawyer. It is worth noting that in rare instances, doctors may be self-insured, allowing them to negotiate settlements without the involvement of an insurance company.
The insurance company's role also extends to settlement negotiations. While the physician usually has input and approval rights in settlement decisions, the insurance company has a significant influence on the process. They may have "unofficial" policies favouring trials over settlements to promote a hardline image and discourage litigation against their insured physicians. Additionally, insurance companies often seek to reduce overall settlement amounts in exchange for quick payments.
During negotiations, the insurance company actively participates in determining the settlement value. Damages are typically separated into two categories: economic and non-economic. Economic damages, such as medical expenses and lost earnings, are relatively easier to calculate. On the other hand, non-economic damages, including pain and suffering, are more challenging to quantify and often lead to the most controversy. The insurance company's valuation of non-economic damages may differ significantly from the plaintiff's expectations.
Furthermore, insurance companies have a financial interest in settlements. They can issue liens against settlement proceeds to reimburse themselves for medical expenses covered under the plaintiff's insurance policy. This process, called subrogated interest, directly impacts the settlement amount received by the plaintiff.
In summary, the insurance company's role in medical malpractice claims involves providing legal defence, influencing settlement decisions, negotiating settlement values, and protecting their financial interests through liens and subrogated interest. The complexity of these roles highlights the critical position of insurance companies in the medical malpractice claims process.
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The time taken to settle
The number of defendants in a case can impact the settlement timeframe. Cases with multiple defendants can take longer to settle as the discovery phase is more complex and time-consuming. For instance, when there are five defendants, there will be five depositions, five sets of document requests, and so on. Hospital defendants are more likely to settle malpractice claims quickly compared to individual doctors. Hospitals are self-insured and want to protect their public image, whereas individual doctors worry about their malpractice insurance rates increasing.
The type of negligence alleged and the ease or difficulty of proving it can also influence the settlement timeframe. Cases that are more complex and involve traumatic personal stories, complicated medical issues, and legal complexities can take longer to settle. The discovery process, where parties exchange relevant evidence, witness depositions, and physical evaluations, is an important factor in determining the timeline of a case.
Settlement negotiations can occur throughout the case, alongside the legal process. The first offer in a lawsuit is typically much lower than the expected compensation, and negotiations continue until both sides agree on a settlement amount. The plaintiff's expectations for compensation for pain and suffering may differ significantly from the doctor's or insurance company's valuation, further extending the negotiation process.
In some instances, defendants or their insurers may make a settlement offer when, or shortly after, the complaint is filed. However, if the sides cannot settle, the case will proceed to trial, which can take at least a year or longer to occur. Post-trial litigation can also extend the time it takes to resolve a case, as either side may file post-trial motions or appeals.
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Frequently asked questions
Medical malpractice lawsuits are time-consuming, resource-intensive, and emotionally charged. Settling out of court saves time and resources for both parties, and the insurance company can still pay the plaintiff without admitting liability.
It depends on the insurance policy. Some policies allow the insurance carrier to settle without the policyholder's consent, while others give the physician the authority to decide whether to settle or proceed to litigation.
It depends on the complexity of the case and the damages demanded. Simple cases with limited damages could settle in a few months, while more serious injury claims can take years.
