Can I Lose My House if I Get Sued?

Mark Crane

Disclosures

May 18, 2016

In This Article

Why Large Awards Are Usually Settled

Both plaintiff and defense attorneys agree that there's strong incentive on both sides to settle the case within the doctor's policy limits, which are typically $1 million per incident.

"Malpractice cases are lengthy and expensive," said Michael Sacopulos. "If the plaintiff's attorney succeeds—and that's a minority of the time—he wants a check and not an Easter egg hunt. The attorney has fronted tens of thousands of dollars in expert witness fees and other expenses. The client needs money to pay for current medical expenses. The attorney wants his contingency fee. No one gets paid until the case is settled, and insurance coverage is almost always enough to do that. To go after a doctor's assets requires protracted litigation that just isn't worth the effort."

Although some plaintiffs want the physician to pay something out of pocket, their attorneys will rarely make the attempt. "An angry client will often demand that the doctor be forced to pay something," said Miriam Weizenbaum. "The patient feels betrayed and wants the doctor to feel some pain. We always advise against this. Our purpose is to make the injured person whole again. We have no interest in destroying the doctor. It's not a personal issue. Trying to tap a doctor's assets can be a difficult, ugly fight."

James E. Beasley Jr, MD, JD, a plaintiff's attorney in Philadelphia, tells a similar story. "Any time a client says, 'It's not about the money; it's about teaching the doctor a lesson,' I get a little worried. If there's enough insurance to help the patient recover from this negligence, that ought to be enough. I tell clients, 'You won the case. You'll never get back to where you were before the malpractice. Why do you need an extra pound of flesh, and a possible 3-year war to try to collect the doctor's assets? It's time to close the chapter and move on.'"

Malpractice Insurers Fear Bad-Faith Lawsuits

If a malpractice insurer refuses to settle a case for an amount within policy limits, especially if the doctor requests it, the carrier could be liable for a bad-faith lawsuit. That means the insurer didn't protect the physician and put its own interests over the doctor's.

"Let's say the liability is clear, such as a surgeon leaving a foreign object in the patient," said Michael Sacopulos. "The doctor demands that the case be settled within the policy limit of $1 million. But the insurer may believe the case is defensible or the plaintiff's demand is too high. The case goes to trial and the jury awards $3 million, thereby exposing the surgeon's personal assets. The law is that the insurer is then gambling with its own money, not the doctor's, and can be required to pay the full verdict."

That's why insurers may pay something over the policy limits if there is an excess verdict. This isn't done out of altruism. If the insurer doesn't settle the case, the physician can file a bad-faith lawsuit charging that the insurer mishandled the claim and needlessly exposed his or her assets. Insurers want to maintain goodwill with physicians, who often have a choice about which malpractice carrier to select.

"If there's an excess verdict, the defendant doctor will often assign his bad-faith claim to the plaintiff and testify that he asked the insurer to settle for coverage, but the insurer refused," said Nancy Miller.

"The law, at least in Rhode Island, is well established," said Miriam Weizenbaum. "If the insurer refused a settlement offer for within policy limits and the verdict comes in higher, the insurer is on the hook for all of it, not the doctor.

"It's wise for a physician to retain her own attorney to send a letter to the insurer demanding settlement, so that she isn't personally exposed," Weizenbaum said. "If doctors are so concerned about protecting their assets, it baffles me why so many never get their own lawyers. Often at malpractice trials, one lawyer hired by the insurer is defending several doctors and/or a hospital or clinic. Doctors need to get an independent perspective to make sure the insurance company lawyer isn't cutting corners or favoring one defendant over another."

James Beasley said it's generally easier to fight an insurance company in court than go after an individual doctor's assets.

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