The medical malpractice insurance company covering the doctor who made a mistake spends a considerable amount of effort assessing and reassessing the value of the case as the claim evolves.
The money a victim receives by settlement or verdict is only part of the total expense incurred by the insurer. The malpractice insurer also pays for the attorney and expert fees - no small chunk of change - as well as other costs associated with preparing and moving forward with litigation.
While the value of a case may be a certain dollar amount for the victim, the insurer often has a larger figure in mind, and this is the single most influential factor in how a malpractice insurer approaches a claim of medical malpractice. Because what they care about is how much the claim is going to cost them when all is said and done. Period.Initial Assessment
When a claim first arises, the insurer will make an initial assessment of how much the case is worth based on their evaluation of the strength of the victim’s claim and the amount of damages potentially available. No doubt, the adjuster is working off limited information at this point. But insurance companies are on an endless treadmill of trying to figure out how much the outstanding value of claims are because that is the key to their profitability (and how much money they can invest).
Are you frustrated trying to figure out the value of your potential malpractice case? You can get information about the value of different types of medical malpractice claims here.
"Damages" are the amount paid to a victim following a settlement or successful lawsuit. It consists of economic damages (past and future lost wages and past and future medical expenses. Total damages also include non-economic damages, the dollar value placed on a victim’s pain and suffering and emotional distress.
While the damages are often summarized—though not quantified—in a summons and complaint, an insurer can still make a guestimate of the potential damages earlier in the claims process based on the medical record, additional information provided by the victim and by comparing the claim to similar past cases. They are also aided, in most cases, by having most of the medical records to make that call.
Even at this early stage, the insurer will even set aside (place on reserve) an actual dollar amount in anticipation of a payout. Depending on how the claim evolves, the insurer may adjust the reserve.
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Although payment to the victim will not be awarded until after a successful trial or settlement is reached, a medical malpractice insurance company will begin spending money on a claim well before either of these events.
If the claim has merit and the victim is likely to pursue litigation, the insurer will hire an attorney to represent the doctor and communicate with the other parties to the case on the physician’s behalf. At that point, the attorney can start billing the insurer for time spent reviewing the facts of the claim with the doctor and advising him/her going forward, as well as the time and expense involved in gathering and reviewing records.
The malpractice insurance company itself may devote its personnel to the matter, gathering and reviewing records and interviewing the insured doctor (and other involved physicians) to assess the strength of the claim and the extent of damages. The defense attorney and medical malpractice insurance company are in frequent contact with each other and the doctor to formulate a strategy moving forward, and this adds up to many hours of personal time and attorneys fees—even before the filing of a lawsuit. Just like plaintiffs' lawyers, the doctors' attorneys want to get out ahead of the curve on how the case will break.Expert Fees
Another significant expense to the medical malpractice insurance company that arises long before damages are paid out is expert fees. Again, if the insurer feels a claim of negligence is likely to result in a lawsuit, the insurer may contact other doctors in the same specialty to get their opinions on the matter. The insurer seeks these opinions for two purposes. Most commonly, in the early stages of a claim, these experts are asked to review the facts of the case and give their opinion as to whether the doctor met the standard of care. This means the doctor performed his/her duties in a manner considered acceptable by the medical community. If the expert feels the doctor met the standard of care, the insurer may choose to defend the claim. They will also try to convince the victim to drop the lawsuit. If the expert feels the doctor did not meet the standard of care, the insurer must decide (along with the advice of the defense attorney and the approval of the insured physician) whether to pursue a settlement or risk going to trial and facing a large award.
A settlement at the early stage of a malpractice case is rare, however, even when the insurer believes there is liability. Why? Because they want to see the case - the whole case - before assessing the damages. Being responsible for an injury or death is different from how much to pay for the claim.
The median malpractice settlement/verdict in Maryland is approximately $900,000.
The second reason that an insurer may hire an expert is to start assessing potential damages. While the final determination of the dollar amount will be made by the jury or determined by an agreed to settlement, it is imperative that the insurer has accurate idea of the possible damages. We call it "how much money we can put on the board." Because of the cap on non-economic damages in Maryland, this is a finite number.
So the insurer will review the facts of the claim and speculate as to the future medical expenses the victim will likely face, as well as to the impact of the injury on the victim’s quality of life moving forward. If it appears that a significant amount of damages is a possibility, the defense team may aggressively pursue settlement to avoid a potentially devastating jury award.
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As one can see, a medical malpractice insurance company may spend a significant amount of time and money on a claim even before litigation begins, and even if a trial never results. This initial legwork prepares the insurer and the defense team to make the most informed decision regarding whether to pursue settlement or go to trial. The first question is always whether malpractice occurred; if so, the second question is how much money might the insurer have to pay out in the end.
If the facts of the case do not support the victim’s claim, the case provides little risk to the insurer beyond those expenses necessary to defend the insured doctor (expert and attorney fees). In these circumstances, the defense team may continue the litigation process on the assumption that the victim will eventually drop the lawsuit, or a jury will find for the defendant doctor and no damages will be awarded.
Of course, the experts may advise the defense lawyers that the standard of care was not met by the doctor and the claim will likely be successful in court. In this case, the insurer will look at the total amount of expenses it faces (fees, costs and, most importantly, potential damages) and may direct the defense team, with the approval of the insured doctor, to offer a settlement to avoid an even larger payout after a trial.
Obviously, the stronger the case and more significant the potential damages, the greater value a case has from the perspective of the insurer, and the more money the defense team may be willing come to the settlement table to avoid the risk of an even larger award at trial.
In the real world, you can always find a doctor who, for a fee, will defend any other physician. Often, the defense lawyers will just pick again if their first expert renders an unfavorable report.
It is a shame, but it is what you repeatedly see in virtually every malpractice case. But the insurance company knows that, too. So they are not just listening to their expert's opinion but getting a handle on just how strong it will be and how well it will hold up under plaintiff's counsel's cross-examination at trial.Conclusion
Although medical malpractice insurance companies are expected to cover the damages awarded a victim at trial, an insurer also faces significant expenses leading up to that point. In fact, many cases never go to trial but still cost insurers large sums of money. Well before the victim sees a check—in fact, even if the judgment or resolution is in the doctor’s favor—the insurer may have spent a substantial amount of money on attorney and expert fees, as well as considerable employee hours developing a strategy for the case.
Naturally, the driving force behind the strategy is always the value of the case as viewed by the insurer, which includes litigation expenses in addition to the potential damages a victim can claim. The stronger the case and the greater the available damages, the more urgently an insurer will pursue settlement. However a claim may end, it is the insurer who cuts the check—whether it be for the significant expenses required to defend a doctor against a claim they will ultimately defeat, or for the settlement or jury award following a victim’s successful claim of medical malpractice.Free Maryland Malpractice Claim Consultation
If you live in the Baltimore-Washington area and believe you have been a victim of a medical mistake that has resulted in severe injury or death of a loved one, call 800-553-8082 or get a free online medical malpractice consultation.