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Should You Settle or Go to Trial?

Welcome! This article is part of a Medscape Physician Business Academy course, . Visit the Course Page to take the full course and receive a certificate.

The Decision to Settle or Fight

Most medical malpractice lawsuits that get past the first hurdles are settled before they go to trial. That's because it's usually in both sides' best interests to avoid the added time and expenses of a trial.

A settlement gives plaintiffs their money earlier, and they don't face the risk of losing at trial. Meanwhile, defendants are likely to pay out less in a settlement than in a trial.

On the other hand, the doctor's settlement still gets reported to the NPDB. Therefore, if you have a good chance of winning, it makes more sense to stick to your guns and go to trial.

You can gain some reassurance from the fact that most malpractice trials are won by the defendant, but your own particular case may have poorer prospects. If the weight of the evidence is against you, or if your demeanor might not go over well with a jury, your attorney and carrier might suggest a settlement.

Consent to Settle and the 'Hammer Clause'

Even as your carrier pushes for a settlement, you may still want to fight. You and your carrier have different incentives. While the carrier might avoid a sizeable award at trial, settling means you would be reported to the NPDB.

For this reason, malpractice policies typically have a clause stipulating that the insurer must get your consent to settle a case. However, some policies also have a "hammer clause," stating that doctors who refuse to settle and then lose at trial have to pay the amount by which the judgment exceeds the proposed settlement. You would have to pay this amount out-of-pocket by liquidating assets.

Even as your carrier pushes for a settlement, you may still want to fight.

Another way you could end up paying out-of-pocket is if the award exceeds the policy limit, which is usually $1 million per case. However, plaintiffs' attorneys rarely get more than a $1 million, despite their eagerness to get as much for the patient as possible. In the Medscape survey, only 2% of respondents had awards between $1 million and $2 million.

Why do so few awards result in payments that exceed the $1 million limit? Plaintiffs' attorneys know they would have go after the physician's personal assets to get the excess. This might require further legal actions that are not only time-consuming and costly, but also might fail. Also, the defendant may appeal $1 million-plus awards, tying up payments to the plaintiff over a couple more years of litigation.

In some cases, the defense might be able to pay more than $1 million without resorting to the doctor's personal assets. Some malpractice policies have more than the usual $1 million limit. These are usually bought by neurosurgeons, ob/gyns, and other specialists who have higher payouts than most doctors. In addition, some physicians may have "excess coverage" policies that are provided by their hospital.

In some rare cases, defendants will be paying out-of-pocket. When this possibility becomes apparent—usually when the trial date nears—defendants sometimes hire their own attorney. The goal here is to make sure the carrier remains committed to putting up a strong defense.

High/Low Agreements

Settlement negotiations can take place at almost literally the 11th hour of the case—when the trial is wrapping up and the jury is about to make a verdict.

Both sides are very nervous at this point. Few cases that go to trial are an easy win for either side. Attorneys have made the best case that they could, considering the circumstances, and now it will be up to a jury to decide. Juries are unpredictable. What they come up with is often a surprise. When jurors have been asked how they came to their decision, they often provide entirely unexpected rationales.

Few cases that go to trial are an easy win for either side.

To deal with the unpredictability at the end of the trial, both sides might enter a "high/low agreement," which means agreeing on a payment range—say, from $200,000 to $800,000. Both sides agree that if the verdict is below that range, the actual payout would still be $200,000, and if the verdict is above that range, the payout would not exceed $800,000. The high/low agreement supersedes the jury's award.

The Medscape survey suggests that high/low agreements are used fairly often. The survey did not mention high/low agreements, but it did ask respondents whether their lawsuits were settled during trial but before the verdict, when high/low agreements are made. Four percent of respondents said their suit was settled at this point.

Because high/low agreements come at the end of the trial, the jury goes ahead and makes a verdict. What happens if the verdict turns out to be in your favor? Do you still have to make the agreed-upon payment? Yes, you do, but it would not be reported to the NPDB, because you won the case.

When a Physician Goes to Trial

The primary reason to go to trial is if you and your attorney think you have a good chance of winning. But even if your case is not winnable, you might go to trial to reduce the payout. If the plaintiff had asked for $5 million in settlement negotiations and you go to trial instead, and the jury opts for a $1 million award, it would be a big victory for you and the malpractice carrier. You'd be paying $4 million less than the plaintiff demanded.

The trial is an intricate, step-by-step process. Most trials last at least a week, and some go on for 3 or 4 weeks. This includes juror selection, procedural motions to bar certain evidence, opening statements, presentation of each side's case, and closing arguments. You will probably be called to testify—especially if the plaintiff's attorney believes you will make a bad impression on the jury.

Most medical malpractice trials last 2-4 weeks, but some can go on for months.

Basically, the same rules of behavior laid out for depositions apply to your testimony at the trial. But instead of directing your attention to the attorney, you should be looking directly at the jurors. They are the ones who are going to decide the case. Provide simple and complete answers, as you would when speaking to a patient.

Most medical malpractice trials last 2-4 weeks, but some can go on for months. The length depends on the complexity of the case, the number of witnesses, and the court schedule. Some courts conduct trials only on certain days of the week.

Ideally, you should attend all or most sessions of the trial. This will make a good impression on the jury. If you're not there, jurors might conclude that you don't care about the case. Being in court all the time, on the other hand, might wreak havoc on your appointment schedule.

One solution is to attend either the morning or the afternoon session each day. You'd have to stay for the complete session, because you shouldn't be seen walking out in the middle.

In the Medscape survey, 40% of those whose cases went to trial spent more than 50 hours in court and trial-related meetings. One doctor commented, "[I was] In court for 8 weeks. Couldn't practice. I should have sued the patient for lost wages." Another said, "Trial lasted 3 weeks—I lost 12 pounds."

In a long trial, you might be able to get a pass of sorts. Your attorney might request the judge to instruct the jury that you will not be able to attend every day, owing to your work schedule.

The Jury, the Verdict, and the Award

Jurors may follow their emotions rather than the facts of the case, and their emotional response tends to help the plaintiff. To address this problem, your attorney might say to the jury, "Base your decision on your minds, not your heart."

If the plaintiff's case appears to be weak, your attorney may move for a directed verdict that absolves you. This can happen in a multidefendant case in which the case against one defendant is particularly weak.

If you lose the case, the jury will then determine the award—the amount of money the patient will get. The award is broken down into economic; noneconomic; and, very rarely, punitive damages.

Economic damages cover loss of income or medical expenses. They can be very large if the patient has significant medical expenses for the rest of his or her life, or if the patient died and had a large income.

Noneconomic damages are less definable, and jurors can have wide discretion in setting them. Such payments cover permanent disability, disfigurement, blindness, loss of a limb, paralysis, or pain and suffering. Some states limit the amount of noneconomic damages. For example, the limit in California and Texas is $250,000.

To qualify for punitive damages, the defendant's conduct would have to be "egregiously insidious," such as performing surgery while drunk—behavior bordering on intent to harm the patient.

Judges can lower the jury's award, an action that is called "remittitur," or they can raise the award, called "additur." But in most cases, they let the jury's award stand.

Your Option to Appeal

If you lose your case at the trial court level, you might ask for an appeal, but it's a gamble. An appeal can take 1 or 2 years to resolve. Your carrier would have to spend more money to try the case again, and you might lose all over again.

Keep in mind that the appeal is not about retrying the facts of the case, but instead focuses on one or more points of law in the case. That is, either side might claim that in the trial that it raised a valid objection to a decision that the judge had made, and the judge inappropriately overruled them.

In many cases, you can get a verdict overturned on appeal, but if you still lose, you will have to pay interest on the award set during the trial. This has not been a big problem in the past few years owing to low interest rates, but it will take more of a bite now that rates are creeping up again.

One very common motivation to file for an appeal is to negotiate a payment that is less than the trial award. The settlement would be negotiated before the appeal can be decided. Why would plaintiffs accept less money? The prospect of an appeal dragging on for years, without getting anything, can motivate plaintiffs to accept the settlement money and call it quits.

So you can see that appeals are very useful, in many cases, but waiting for the outcome can take its toll on defendants. There will be more years of anxiety and uncertainty. As in every step of malpractice litigation, the sword of Damocles will be hanging over you.

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Welcome! This article is part of a Medscape Physician Business Academy course, . Visit the Course Page to take the full course and receive a certificate.


Sam Rosenberg, JD; Leigh Page

| Disclosures | January 01, 2017

Authors and Disclosures


Sam Rosenberg, JD

Partner, Rosenberg Jacobs & Heller PC, Morris Plains, New Jersey

Disclosure: Sam Rosenberg, JD, has disclosed no relevant financial relationships.

Leigh Page

Freelance healthcare writer, Chicago, Illinois

Disclosure: Leigh Page has disclosed no relevant financial relationships.