One Way to Avert a Sky-High Malpractice Award

Mark Crane

Disclosures

October 06, 2011

In This Article

When High-Lows Are Appealed

Many high-low agreements specifically state that no appeals are allowed. After all, their purpose is to promote compromise, certainty, and finality. Still, there are many pitfalls in negotiating a high-low, and courts around the country have both upheld and overturned these agreements.

High-lows may be reached "when the parties are under the gun, memorialized on the record, and without a signed agreement," says Brandt. "Because these agreements can be negotiated on the fly, the parties often fail to consider all the issues that can arise."

The true informed consent of the plaintiff and defense clients is essential. "Let's say you obtain the patient's consent for a high-low with a $900,000 high," says Griffith.

"The verdict or the arbitrator's award is for $3.5 million. Human nature being what it is -- greedy -- the client may then swear that he or she was never told about the possibility of an award of that magnitude, and [the client] finds a lawyer to sue for the difference."

Most high-lows are not appealed. "Judges encourage settlements and generally won't undo an agreement made in good faith before the verdict," says Brandt. A plaintiff who would have been awarded millions if not for the high-low might try to find a way to void the agreement. "Courts typically hold their feet to the fire and uphold the high-low."

Still, courts have gone both ways when high-lows were appealed. In a Maryland case, a doctor was entitled to rescind the agreement when the plaintiff appealed a verdict that found for the doctor. The $250,000/$1 million high-low stated that no appeal could be taken from the jury's verdict. When the plaintiff appealed, he essentially broke the agreement, and the physician was not required to pay the $250,000, the court held.

A Pennsylvania court upheld a $1.15 million judgment against a urology group, rejecting the plaintiff's request to strike the high-low and pay him the jury's $9 million award. Under the high-low, the defendant's primary insurer was limited to paying no less than $50,000 and no more than $150,000 toward the award. The excess insurer was limited to paying $1 million. The plaintiff argued that the agreement "was never consummated" because the excess insurer, the state MCARE Fund, had agreed off the record not to appeal the verdict. Because the fund appealed, the high-low was void, the attorneys unsuccessfully argued.

By definition, high-low agreements are compromises that can leave both sides unsatisfied. "No physician is happy to be paying the low amount when a jury finds in his favor," says DeKleine. "And no plaintiff is happy about receiving a capped high when a verdict is in the millions. Some say there are no winners with high-lows."

Still, these agreements are prevalent because they limit each side's risk. In some cases, that may be the best solution, however emotionally unsatisfying.

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