Medical Malpractice Settlements: How They Work

Most medical malpractice cases get resolved before trial. Here's how the process works.


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Medical malpractice settlements may work in much the same manner as any other settlement of a civil injury case, or they may carry conditions that are specific to your jurisdiction. Often, due to state and insurance reporting requirements, medical malpractice settlements can be slightly more difficult to obtain. Read on to learn just how medical malpractice settlements work.

Negotiation

As with any settlement, the actual dollar amount of a medical malpractice settlement is negotiated between the plaintiff and the defendants (often through or at least alongside the defendant's insurer).

Economic damage amounts -- meaning quantifiable, provable expenditures or losses caused by the injuries claimed -- can be relatively easy to calculate. Where the real negotiation begins is with non-economic damages. A plaintiff’s idea of appropriate compensation for things like pain and suffering and loss of enjoyment can be vastly different from a doctor’s or an insurance company's valuation.

Learn more about Damages in Medical Malpractice Cases.

Approval

Unlike in more common types of personal injury claims, the settling physicians often must approve medical malpractice settlements. As a general rule, settlements for slips and falls or auto accidents can simply be settled by a defendant’s insurance company, whether the defendant wants to settle or not. Policy language clearly outlines who has the final say regarding settlement, and while it sometimes may be possible for a settlement to be denied, a “regular” personal injury defendant could incur significant financial liability if he does not comply with his insurance companies desire to settle.

In medical malpractice cases, doctors often have the final say on whether a settlement is approved. There are numerous databases and state reporting repositories that track medical malpractice settlements. As a result, medical malpractice settlements don’t carry the same level of confidentiality that other types often do. This has a direct and often dire effect on the cost of a doctor’s malpractice insurance.

A physician may want to take his chances at trial rather than settle, instead of risking grossly inflated insurance premiums or being dropped by his insurance carrier. Furthermore, many doctors refuse to look at malpractice cases in a dispassionate matter, and if they feel they have not committed malpractice they will fight tooth and nail to attempt to prevent a plaintiff from recovering anything.

Certain insurance companies, as well, take a hard line on settlement. These companies may have “unofficial” policies that favor trying cases as oppose to paying out settlements. Medical malpractice insurance is a high stakes game, and insurance companies sometimes want to promote the perception that they are hardliners, in an attempt to discourage litigation against their insureds.

Once a settlement is negotiated and approved by the parties, it is often necessary to obtain court approval, particularly in cases involving minors. This is to prevent settlements that may be designed to provide lawyers and defendants with quick payouts at the expense of actually providing for any long-term financial needs. While the courts are not babysitters, there is a real public policy interest in ensuring that settlements are reasonable, as the societal cost of an inappropriate settlement (in the form of publicly-funded healthcare or otherwise) can be very high.

Payment

Depending upon the age of the plaintiff, the laws of a particular jurisdiction, and the nature of a plaintiff’s injuries, settlements may be paid in a lump sum, in a structured settlement, or a combination of the two.

Some states don’t allow insurance companies to pay for future costs of medical care over time, favoring a lump sum approach instead. Others prefer a more monitored, pay-as-you-go system. In the case of minor plaintiffs, courts will often require structured settlements that are designed to cover current medical expenses with a payout once the minor reaches the age of majority.

The payment and collection of settlement amounts is often negotiated concurrently with the actual dollar values, and insurance companies will often look to discount an overall settlement in exchange for quick payment.

Settling a medical malpractice case can be as simple as agreeing upon a number and receiving a check, or can be so convoluted as to spawn more litigation simply relating to the settlement. An experienced medical malpractice attorney is your best ally when negotiation a medical malpractice settlement.

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