How Hospital Lawsuit Settlements Cases Are Valued

Almost everyone has heard about medical malpractice cases.The stories get passed on through the media and word of mouth.

People hear about enormous verdicts or settlements, some of which never happened, the numbers exaggerated, or the cases reversed on appeal. 

Most malpractice settlements are confidential, so they are never known to the public. Like many stories, reality is quite different than the stuff of urban legends.

In reality, medical malpractice cases are complex and expensive. In many states, including Florida, there are very specific and detailed procedures that must be followed just to get a malpractice case started. 

For instance, a malpractice pre-suit process must be done before a medical mistake case can even be filed in Florida.

This means that the medical records must be reviewed and evaluated by a qualified expert witness. He or she must determine whether the “standard of care” was met – whether the care by the hospital or health care provider fell below accepted medical standards based on all the facts.

How Hospital lawsuit settlements look

Whether it is before a hospital malpractice lawsuit is filed or after the case has begun, there are settlement evaluations being done by the hospital and its insurance company. 

They look at the injury, the patient, the health care providers involved, who may or may not have made  a mistake, whether the mistake was a judgment error or a clear violation of medical or nursing standards.

They will evaluate whether there were any violations of hospital policies or procedures, whether policies even existed (or should have existed) for the situation presented, whether there was appropriate and timely treatment and follow up, and, most importantly, whether any of that would have likely changed the outcome.

Why do hospitals do this evaluation? Because they need to understand the risk they face in the case.  Hospitals rarely conduct these evaluations just to improve patient care.

They are most concerned with limiting their liability and getting “bad” cases resolved. Although they may have insurance for the case, they almost always have a self-insured retention (like a deductible) they have to be responsible for. 

Many hospitals are self-insured up to a large amount (sometimes the first $1 million or $5 million), which helps keep their insurance costs down but provides them protection for large losses.

When a new hospital malpractice case is first brought to the attention of the hospital and its insurer, the hospital’s risk management department will go to work. 

They will secure the medical record and speak with all involved employees. They will conduct private interviews and evaluations of the care provided to the patient. 

They will then work on their defense strategy and, along with their lawyers, work to develop a plan to minimize or eliminate their financial risk.

Some examples of hospital lawsuit settlements claims

• In many cases there may be legal defense they case use. For instance, if the error was on the part of a doctor who is not employed by the hospital and is not considered an agent of the hospital, they will claim to have no liability for the malpractice. That’s because most physicians who practice at a hospital are considered “independent contractors” who are not employed or controlled by the hospital. The doctors merely have privileges to practice at the medical facility.

• The hospital may also try to blame some other person or cause for what happened, ore claim that the care was good but the patient had a bad outcome. Often there are patients who have a bad result but the care was within acceptable standards. This is something that is often in dispute but the hospital will almost always make this claim.

Hospital lawsuit settlement timeline behind the scenes

The hospital’s risk manager and its insurance company will evaluate the potential value of the case. This starts with an initial assessment of the risk and damages to the plaintiff. 

Insurers then set a “reserve” amount for the case. That’s the amount they consider the eventual amount of the claim that they feel they may have to pay. 

They may never have to pay that much, or any at all. Yet it is an amount that they set aside as the likely total payment amount. That number will never be known to anyone outside the insurance company.

As the case progresses, there are times when negotiations take place between the hospital/insurer and the plaintiff’s attorney. There may be a demand made by the plaintiff seeking a specific amount to settle the case. 

That may start the ball rolling. Or there may be an offer before a demand. In either case, once negotiations begin the two sides may be engaged in both settlement discussions and litigation at the same time.

In Florida there is mandatory mediation for each case that is in litigation. This means that there will be at least one conference with both sides (or all sides if it is a multi-party medical malpractice case, perhaps the hospital and doctor(s)) and a mediator.

A mediator is someone who tries to effectuate an agreement to settle the case. They are not judges and do not make any decisions. An effective mediator is one which gets both sides to recognize the weaknesses in their case and moves each party closer to a compromise settlement.

Factors that considered in reaching a settlement with hospital lawsuits:

• How close the case is to trial. The closer to trial, the more pressure on each side to settle the case without losing control over the decision-making.
• How the testimony and evidence has gone so far in the case. This will vary from case-to-case, with each side seeing the facts a little differently than each other. Experienced medical malpractice lawyers will be able to evaluate their cases with a critical eye. If they are skilled they will know all the weaknesses in their own case and how best to address them.
• Reasonable positions. If one or both parties are unreasonable in their demands or expectations, there is less of a chance to get the case settled. At trial it is usually a win or loss for one side, but in settlement there is a win-win possibility is handled properly. That only happens if both sides are realistic.
• The severity of the injury. In medical malpractice cases there are extraordinary expenses that are incurred in preparing and trying the case. In a modest or small injury case, the expenses can easily outstrip the ultimate value of a case. For example, if a case has a jury verdict range of $100,000, but the costs to take that case to trial are $150,000, even a jury trial win will result in a net loss to the plaintiff. A serious injury is much more likely to get the attention of a hospital and its insurer, as that presents a greater risk of a substantial verdict they would have to pay.
• Comparable verdicts and settlements. All malpractice lawyers and insurers look to comparable verdicts and settlement, especially in the region and state where the case is located, to determine the value of the malpractice case. That’s because in the end the negotiations are based on predicting what a jury will do with this case when and if it reaches the courtroom. So the closer the case is in facts to another case where there has been a verdict, the greater the use in predictability.
• The lawyers involved in the case. Hospitals and liability insurers know who the lawyers are that are skilled in handling and trying medical malpractice cases. When they come across a lawyer who is out of their field, or is unskilled or poorly prepared, they take advantage of that. Their evaluations always include an assessment of who is representing the plaintiff in the case. That goes a long way in getting cases settled. Likewise it plays a major role if the case gets tried to a jury.

Cases can be negotiated and settled without a mediation, and many are. Sometimes hospitals seek to settle cases early, as that can result in a better settlement for everyone. If there is an early settlement, the costs of litigating the case are eliminated for both sides, and the plaintiff can afford to settle the case for less. 

This also avoids the possibility that the case for either side goes bad. A deposition of a doctor or nurse, if handled skillfully, could destroy the hospital’s defense. A plaintiff who testifies poorly at their deposition could badly damage the plaintiff’s case. Any number of factors could increase or decrease the value of the malpractice case.

In the end, reasonable parties have a much better opportunity to negotiate and settle medical malpractice cases.  The valuation of each case is dependent on the facts, the parties, expectations, records, witnesses and the lawyers involved.