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Inside Medical Liability

First Quarter 2021

 

 

Cover Story

Nuclear Verdicts Escalate

Verdicts rise as more awards exceed $100M

BY AMY BUTTELL

 

For the medical professional liability (MPL) community, nuclear verdicts aren’t anything new. What is different are the heights that verdicts are reaching with record-breaking awards.

The plaintiff’s bar is achieving more success than ever in moving the needle upwards to higher amounts even as the total number of MPL cases that are actually litigated declines. Data from the MPL Association Data Sharing Project shows that the number of awards of more than $1 million has gradually increased over time, reaching 12% of verdicts between 2016 and 2018. (See Data Snapshot, page 9.) Additional data shows that the 50 largest verdicts remained within a band of $15 to $20 million between 2001 and 2015.1 However, beginning in 2016, the average verdict severity rose by 50% between 2016 and 2019 to an average of $23 million.2

A number of trends are responsible for this increase, including the surge of private equity money funding plaintiff’s attorneys, the undermining of tort reform in a number of jurisdictions, publicity surrounding large verdicts, life care plans, general public complacency around large numbers, and the ability of the plaintiff ’s bar to elicit anger and sympathy from juries.

“The inherent subjectivity around pain and suffering and noneconomic damages can be an Achilles’ heel that far too often is being exploited and has become open to significant abuse,” said Sherman Joyce, CEO of the American Tort Reform Association. “As we have looked at some of these trials, we’ve seen the plaintiff ’s lawyer essentially put the defendant on trial. Instead of looking at the elements of proving that someone sustained a loss and whether a duty of care was breached, these go into the arena of publicly vilifying someone.”

The COVID-19 pandemic interrupted MPL litigation, as many courtrooms remained closed for months in 2020 and into this year. Because cases take years to work through the potential settlement process and scheduling for trial, it’s uncertain how COVID-19 might affect this trend. Regardless, there are strategies and approaches that MPL stakeholders can take to try to counter plaintiff tactics and hold the line on MPL awards.

Investigating plaintiff bar tactics

There are many strategies employed by the plaintiff’s bar to prod juries to deliver multi-million-dollar verdicts. Many of the tactics are emotionally driven, while some are based in storytelling and other approaches.

“While jury sympathy has always been a huge driver in large verdicts, what we’ve seen in recent years is that juror anger—and the ability of the plaintiff ’s bar to enrage a jury—has arguably taken the lead,” said Richard Henderson, senior vice president with TransRe. “In medical professional liability, negligence and causation are the fuel of the fire and damages are the ignition force. When you throw anger into the mix, it is an accelerant that causes the whole thing to explode.”

Strategies used by the plaintiff ’s bar include:

  • Reptile theory—Under this approach, plaintiff ’s attorneys appeal to the primitive and fearful part of jurors’ brains by charging that a healthcare provider and/or healthcare organization’s behavior is a threat to the community at large and the juror. Plaintiff attorneys attempt to persuade juries that absolute and simplistic rules should apply to complex healthcare situations and that any healthcare provider or institution violating these rules should be punished.
  • Anchoring—A tactic that introduces a huge number at the outset of a case, building that into the conversation with the jury and reinforcing it through the trial. This normalizes what otherwise might seem like an outlandish number to the jury that will then remember it during the deliberations phase and award it out of familiarity. “Anchoring—or the tactic of improper anchoring as we call it—allows the plaintiff’s lawyers to plant the concept of an abnormally large number with the jury, and it produces runaway verdicts,” Joyce said.
  • Trojan horse theory—“This strategy creates an environment designed to bring the jury into a story of injury and alleged injustice to get the jury to walk in the shoes of the plaintiff and feel what he or she is feeling, ideally playing into a ‘betrayal of trust,’” said Henderson. “There are a number of plaintiff ’s attorneys who are expert at playing on a jury’s emotions, and it can be very effective,” he added.
  • Life care plans—A life care plan creates a detailed report that accounts for a plaintiff ’s needs for the rest of his or her life following an MPL event. As life expectancies increase, these costs rise. Many of the costs in life care plans are unrelated to the actual damages incurred and are easy to pad with a variety of expenses, resulting in inflated figures that drive larger and larger verdicts.

Examining other causes

Outside of plaintiff bar tactics, a variety of other factors are driving the size of verdicts higher. These factors include:

  • Sensationalized large verdicts—When nuclear verdicts are recorded, they get more publicity than ever before, which then reaches more Americans through diverse news sources and social media. “The number of sources from which people get their information has exploded and there’s more publicity about, and sensationalism around, large verdicts,” said Elizabeth Leedom, a partner with Bennett Bigelow & Leedom P.S. in Seattle, Wash.
  • Willingness to punish the healthcare system—As consolidation continues in the healthcare industry, more and more hospitals and medical practices are being acquired by large institutions. “We’re in an era where the Boy Scouts, large academic institutions and large health systems have experienced very difficult incidences that have been in the press,” said Chris Smith, former CEO of MCIC Vermont. “A major driver, especially with millennials, is jurors’ willingness to severely punish the healthcare system and healthcare providers. There is a growing distrust of large institutions and a belief that they have virtually unlimited deep pockets. In addition, there are expectations that when you’re dealing with a large healthcare institution, you’re going to get perfect care, and that’s just not realistic.”
  • Private equity funding—Private equity groups specializing in litigation financing work closely with plaintiff ’s attorneys to fund MPL litigation at a very early stage. That means plaintiff ’s attorneys and the plaintiffs themselves have less interest in settling because they don’t have to worry about running out of money during the lengthy run-up to trying a case. In addition, the interest of third parties may run up the eventual awards while also removing the decision-making power to resolve a case from the plaintiff and plaintiff ’s attorney, Henderson noted. “Essentially, you’re turning the mechanism for financing and then paying the claim into a business, which is one reason the verdicts are going through the roof,” said Joyce.

Leveraging strategies for successful mitigation

While large and nuclear verdicts make up a very small portion of the entire universe of MPL claims, these outcomes define the parameters of how far plaintiffs and the defense can push their side of the case, according to Henderson. “If verdicts are going up, that emboldens plaintiffs’ counsel to ask for higher and higher numbers in settlement, because if they don’t get them, they will go ahead and try the case and may get an even larger award,” he continued. That’s why it’s important for MPL stakeholders to employ strategies that can successfully counter the plaintiff ’s bar. There is a range of tactics that can be useful.

  • Private trials—In some U.S. jurisdictions, private trials overseen by a retired judge can act as a positive alternative to jury trials and other types of alternative dispute resolution, said Kari Adams, vice president of claims at Physicians Insurance A Mutual Company in Seattle, Wash. “In these situations, when the plaintiff’s attorney agrees to this approach, both sides accept the exhibits, rules of evidence, and confidentiality provisions, which can cut down the length of trials and aren’t likely to produce huge verdicts,” she continued. “While these aren’t necessarily likely to produce defense verdicts, they come with lesser costs and the potential of an overall lower award.” Adams added that negotiating a high/low agreement is another feature that can increase the attractiveness of private trials.
  • Alternative life care plans—By presenting alternative life care plans with a more reasonable cost basis, defense attorneys can mitigate the inflated figures presented in plaintiff life care plans. However, this tactic also serves to legitimize this approach in general. MPL defense lawyers can attack the basis of a life care plan and the methodology behind it, undercutting the plan and exposing its speculative nature and extravagant claims.
  • Judicial reform—Reform of some of the rules around litigation could go a long way to level the playing field for the defense bar, said Leedom. “We need new evidentiary rules that would allow us to submit evidence of what it would cost to buy an insurance policy to pay for the plaintiff ’s future care needs, which we can’t do in most states,” she continued. “We also need some leeway to get in evidence about amounts paid versus the amounts billed because we all know in healthcare that the amount billed is absolute fiction.” Modification or abolition of the collateral source rule would allow defendants to introduce evidence of payments made to the plaintiff by sources other than the defendant.
  • Tort reform—Tort reform across the country would significantly improve the judicial environment. In addition to the traditional reforms the MPL Association has long supported—a $250,000 cap on noneconomic damages, limitations on attorney fees, collateral source rule reform, etc.—elimination of “phantom damages” (healthcare expenses billed but not required to be paid), restrictions on venue shopping, and affidavit of merit requirements could all prevent abuse of our justice system.
  • Collaboration—The plaintiff ’s bar is known for its collaborative nature and willingness to share tactics and strategies. The MPL defense bar could also benefit from greater collaboration. By sharing data and actively disseminating successful approaches, the defense bar may succeed in mitigating nuclear verdicts and helping restore a level playing field in MPL litigation.

Managing Potential Large Claims

Building a repeatable process helps organizations better manage mega claims

 

When a medical professional liability (MPL) insurer and a healthcare organization face a major claim, the insurer, in collaboration with the healthcare organization, institutes a standard process: investigation/discovery, evaluation, strategy development, ongoing management, and resolution. “The idea is to figure out are we liable in this situation, and if we are, what are the potential damages for that type of claim in that type of venue,” said Chris Smith, former CEO of MCIC Vermont.

What elevates an ordinary claim up to a potentially large claim are whether it falls within a category of cases that can result in nuclear verdicts. “Are there common areas where we’ve been seeing in these big cases?” Smith asks. “The answer is ‘yes.’ Sexual misconduct, sepsis, neurological impairment of an adult or a child, and in some cases wrongful death can all fit in this large claim category. Also, very large claims can occur in situations where a provider gave bad care over a long period of time to multiple patients, which leads to what we call a ‘batch’ claim. Such claims can result in a class action suit, which can involve hundreds or even thousands of patients.”

“Lastly, there can be situations in which the affected patient was a high earner,” Smith continued. “We’ve seen these particularly in New York and Connecticut. All of these are the factors that we look at in trying to determine whether a claim falls into the potentially catastrophic claim category.”

Standard process

Some insurers and healthcare organizations are late to the party when it comes to MPL claims. That’s because many plaintiff’s attorneys wait to gather as much evidence as possible before filing a claim. By keeping the defense in the dark for as long as possible, they have the opportunity to strengthen their case.

However, proactive healthcare organizations are paying more attention to negative healthcare outcomes for several reasons, including:

  • Preventing potential claims
  • Improving hospital safety protocols
  • Fixing broken processes

While electronic medical records (EMR) can work against healthcare organizations and MPL insurers because they offer plaintiff ’s attorneys more information, they can also help the defense.

While clinicians’ memories may fade, EMR are always available.

Once an MPL insurer and healthcare organization are notified of a claim, an MPL insurance team swings into action to identify more information about the claim in collaboration with the healthcare organization. That involves diving into the details around the claim by gathering all relevant information, including interviewing stakeholders.

In the evaluation phase, the insurer’s team analyzes the information available in an effort to decide how serious the claim might be. If a claim is for a high-profile type of case, more resources will be deployed to defend it because of a potential nuclear verdict.

In the discovery phase, each party gains the opportunity to examine the evidence of the other party. In potentially large verdict cases, the stakes get higher through the processes of interrogatories, requests for production, and depositions.

Once the discovery phase is concluded, a case moves towards trial. The entire process takes many years, typically three to five years from an MPL incident until trial.

Potential settlement

Smith noted in cases where there is possible liability—especially if there is potentially large liability—the strategy of exploring settlement as soon as possible is a good idea. If you realize, early on, that a claim has a likelihood of escalating, it is better to settle early, before plaintiff ’s counsel has expended a great deal of effort digging deeper into the claim, and bring in outside counsel.

The high degree of organization and collaboration within the plaintiff’s bar means that this is all too possible, as smaller firms with fewer resources frequently partner with out-of-town or even out-of-state firms that are highly experienced in cases with nuclear verdict potential. “The less time a plaintiff’s counsel spends on a case, the less cost they incur,” Smith noted. “They may have more motivation to settle early because it is very costly to try these cases, or even work them up. That involves filing a complaint, taking depositions, etc., all of which is intensive in terms of time and energy.”

Even with an experienced co-counsel, there is no guarantee that a specific claim will pan out with a large or even a nuclear verdict. The vast majority of cases never get to court, and of those cases that do get to court, very few actually reach the verdict stage. Most are settled before the case is tried or during the trial.

Where large verdicts are concerned, clear and defined processes are crucial. Both healthcare providers and MPL insurers need as much insight as possible into individual cases to keep settlements and potential verdicts reasonable.

 

References

1. “An Overview of Medical Malpractice Verdict Awards,” 2020 Aon/ASHRM Hospital and Physician Professional Liability Benchmark Analysis, 2020.
2. “An Overview of Medical Malpractice Verdict Awards,” 2020 Aon/ASHRM Hospital and Physician Professional Liability Benchmark Analysis, 2020.

 


 

   
 


Amy Buttell is the editor of Inside Medical Liability.