Chapter 4.E--Damages and Settlement

Click here to read the Health Care Quality Improvement Act, which governs the National Practitioner Data Bank.
Its website contains Annual Reports, which provide current statistics about trends in the number, amount, and types of paid claims. 
See also Amitabh Chandra, et al., The Growth of Physician Medical Malpractice Payments, W5 Health Aff. 240 (May 31, 2005).; Univ. Texas Center on Lawyers, Civil Justice, and the Media, Medical Malpractice Claiming In Texas; Bernard Black, et al., Stability, not crisis: medical malpractice claim outcomes in Texas, 1988-2002, 2 J. Empirical Legal Stud. 207-259 (2005) (controlling for population and inflation, the number of significant paid claims was roughly constant from 1990-2002, and actual payouts in tried cases showed little or no change).

Regarding per-diem computation of pain and suffering awards, see Note, 92 Va. L. Rev. 289-325 (2006).

For another court accepted a limited action by parents for "wrongful birth," see  Schirmer v. Mt. Auburn Obstetrics & Gynecologic Assocs., No. 2004-0296 (Ohio Mar. 3, 2006).

In Florida, physicians successfully sponsored a ballot initiative in 2004 to cap lawyers' contingency fees in medical malpractice cases, in order to deter suits, but lawyers got the upper hand with a competing measure, also approved by voters, that automatically revokes the medical license of any physician who has three malpractice judgments against him.  It is widely believed that this mandatory "three strikes" law will produce huge pressure on physicians to quickly settle suits against them, in order to avoid any strikes, and therefore will greatly increase the number of suits.

Reporting Medical Errors.  The concern that the threat of liablity deters reporting medical errors and therefore hampers quality improvement is receiving renewed attention in the public policy community.   Congress recently enacted the Patient Safety and Quality Improvement Act of 2005 (P.L. 109-41), which protects from discovery any reports of medical errors made by health care providers to certified "patient safety organizations," such as the Joint Commission (JCAHO).  Attacking the view that liability exposure deters error reporting or quality improvement, see David A. Hyman and Charles M. Silver, The Poor State of Health Care Quality in the U.S.: Is Malpractice Liability Part of the Problem or Part of the Solution?, 90 Cornell L. Rev. 893 (2005).

For a thorough literature review of empirical research on settlement practices, see Philip G. Peters, What we Know about Malpractice Settlements, http://ssrn.com/abstract=891120  (March 2006).

For thorough analysis and critique of states' increased efforts to disclose physicians' malpractice histories, see Matthew E. Brown, Redefining the physician selection process and rewriting medical malpractice settlement disclosure webpages, 31 Am. J.L. & Med. 479-507 (2005).   Links to each state's physician profile webpage can be accessed at http://www.docboard.org/docfinder.html   The disclosure cite in Massachusetts is:  http://profiles.massmedboard.org/Profiles/MA-Physician-Profile-Find-Doctor.asp






The following problem can be used to explore how damages are calculated and how settlement strategy is devised in a typical medical malpractice case. This problem was developed by Temple University law professor and experienced litigator Frank M. McClellan, in Medical Malpractice: Law, Tactics, and Ethics (1994)

Problem:  Valuing a "Personal Injury"

Joe Jenks is paralyzed from the waist down as a result of negligently performed surgery on his back. At the time of the surgery he was thirty years of age and employed as a forklift operator for Wheeling Manufacturing Co. He graduated from high school at age eighteen, spent two years in the army (receiving an honorable discharge), and immediately after discharge went to work for Wheeling. Before the surgery he was in good health, except for chronic back pain that plagued him for six months after he fell while playing basketball. He earned $30,000 as a forklift operator in the year before the accident. In addition, that same year he earned $20,000 moonlighting as a security guard on evenings and weekends. He has never been married and lives alone.

He was a below-average student in high school, graduating at the bottom of his class. He was, however, a well-liked and ambitious young man who had a strong aptitude for mechanics. His paralysis is permanent.

Jenks has filed suit against his orthopedic surgeon, alleging that the surgery was negligently performed and that he was not adequately informed of the risks of the surgery. If a jury decides the case in favor of Jenks, what is the likely award? How much is the case worth if it is settled without a lawsuit? How much is the case worth if it is settled after commencement of a lawsuit but before substantial discovery? How much is the case worth if it is settled on the day of trial when the parties are ready to pick a jury? What additional information would you want before placing a value on the case? . . .

In assessing the settlement value of the case, it is useful to list the dominant factors that may influence the verdict and assign a grade to each factor. . . . Counsel might come up with the following figures:

This figure used for pain and suffering equals the special damages. As such it is relatively conservative in terms of multiples customarily used by attorneys and adjusters in settlement negotiations.

Next counsel must assess the potential impact of the factors that influence damage awards on this potential high verdict. In our example counsel will assign a percentage value to each of the considerations and arrive at an average percentage that he will use to multiply the high potential verdict. If a particular factor supports the high potential verdict, he will assign a high percentage, and if it is detrimental to the verdict, he will assign a low percentage.

In this example the probable award would come to 60 percent of $3,400,000, or $2,040,000. The probable award was derived by multiplying the average percentage attributed to the factors that influence verdicts by the high verdict potential. The same formula may be used to project the probable low verdict if there is a serious dispute as to such special damage items as income loss or future medical expenses.

Obviously, this kind of computation is not a scientific exercise, and it lacks an empirical basis to support its use. In addition, the illustration does not address the important considerations of inflation and reduction-to-present-value approaches that may be required in the jurisdiction. The goal of the illustration is simply to . . . conduct a realistic evaluation of the settlement value of the case and prepare an effective case on damages in the event that the case cannot be settled.
 

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