Posts Tagged ‘confidential settlement’

Why early settlement is a win-win for all

Friday, May 20th, 2011

There is an old adage in the law that cases settle on the courthouse steps. There is a reason for that. When the parties are actually walking into court to try their case, they seem to suddenly recognize that there are significant risks to going to trial, and that there is serious money at stake. When you go to trial, only one side can win. The other side goes home a loser. Faced with such a stark outcome, both sides tend to become more reasonable in their assessment of their case and more willing to talk settlement. After all, despite all the years of experience that trial attorneys amass, no one can ever predict what a jury is going to do in any specific case. As one mediator I know likes to tell the litigants, going to court is like going to Vegas:  you roll the dice and you take your chances. So often times, the closer a case gets to the trial date the more motivated the two sides are to talk settlement. But is there a better way?

A couple of recent cases made me start to think about settlements and how they come about. (If you missed it, Brian Nash wrote an excellent piece on the frustrations of mediation and trying to settle cases). I’ve recently handled two cases that illustrate how settlements work and how two cases can go down dramatically different routes to ultimately get to the same place. Both of these cases are subject to confidentiality agreements so I can’t divulge the names of the parties or the settlement amounts, but they were both seven-figure cases with significant injury.

In the first case, the patient alleged that her doctor failed to timely diagnose stomach cancer over a period of several years. By the time the patient was properly evaluated by another physician, the cancer had progressed to the point that there was virtually no chance of a cure, and the young woman was likely going to die in the next few years. In the second case, the patient alleged that he suffered serious neurological complications (motor and nerve dysfunction in his arms and legs) as a result of post-operative complications that were not treated quickly enough. In both cases, a lawsuit was filed in court.  At that point, the two cases diverged.

Case Example #1 – Getting it done early

In the cancer case, before any depositions had taken place, the defense attorney called and asked if we might be able to talk about resolving the case. That’s always a great call to get as a plaintiff’s lawyer because it means there is a good chance that you will be able to get a nice result for your client, which is always the ultimate goal. Within a matter of weeks, we had reached an agreeable number and the case was over.

Case Example #2 – Grinding it out to the courthouse steps

In the second case, there was no early talk of resolution. The case proceeded through the normal course of litigation, which in the District of Columbia usually means about eighteen months of discovery, depositions, expert meetings, etc. Twenty-five experts were hired to review records and testify. Twenty-seven depositions ended up being taken. The case got all the way up to the Thursday before trial was scheduled to start on the following Monday morning. At that point, the parties finally reached agreement on a number and the case was settled.

Why the difference in approach?

So we have two cases, both with significant injury and both with questionable care. One case settled right away, and one dragged on for almost two years before settling. Is there a simple reason why? Not that I’ve been able to figure out. After years of doing this, I, like every other attorney, get a gut feeling as to what cases are worth, which ones will likely settle, which ones will go to trial. But it’s still a gut feeling; there’s no science involved.

It’s usually a combination of factors – the quality of the medical care, the severity of the injury, the likeability of the plaintiff and the defendant (more important than most people realize), the specific jurisdiction you’re in, etc. On top of these factors you have a myriad of psychological reactions that pop-up in lawsuits and there is no predicting those. Sometimes people get entrenched in fighting for no other reason than to fight. Some people get a number in their head for what a case is worth and don’t want to budge. So even though I can’t sit here and explain why certain cases settle early and some settle late, I do want to talk about the value of early settlements to all sides.

Common Sense and good economics say “get it done early”

It is easy to see why early resolution of cases benefits everyone, and it comes down to the costs of litigation. In today’s world, it can easily cost $75,000 to $100,000 (if not more in many instances) just in expenses to take a case to trial; it can easily be much higher in complex cases. (I know of one attorney who spent $300,000 on a case that he took to trial; he lost the case). These expenses consist primarily of expert fees paid to doctors to review records and testify. Expert doctors routinely charge at least $400 per hour and oftentimes more for their time. For trial testimony, doctors usually charge around $5,000 per day (some substantially more). If it runs into two days, that’s $10,000 just for one witness. It’s not unusual to spend tens of thousands of dollars for expert fees alone.

On top of that there is the cost of court reporters for each deposition, copying charges, obtaining medical records, long-distance calls, travel expenses, etc. Going through litigation is an expensive undertaking, and the longer the case goes on the more expensive it is. On the plaintiff side, all of those expenses are usually advanced by the attorney (in jurisdictions where this is permitted), but they all get paid back by the client at the end of the case (assuming the plaintiff wins; if there is no recovery, the plaintiff’s attorney “eats” those costs). So every dollar spent on litigation comes straight out of the client’s portion of the recovery.

On the defense side, insurers and self-insured institutions (like hospitals) have those same expenses, but on top of that, they also have to pay legal fees to their attorneys. Defense attorneys charge by the hour for everything they do on a file from reviewing records to meeting with clients to talking to experts to taking depositions. The complexity of medical negligence cases means long hours of work on each file, generating substantial legal fees. Those fees get paid to the defense lawyer whether the case is won, lost or settled at the last minute. The longer the litigation lasts, the higher the legal fees.

Of course it always costs money to investigate a case. There is no avoiding that.  Records need to be obtained and reviewed. Experts need to be retained for an initial opinion. But instead of spending $75,000 or $100,000 (or more) on a case, it may cost only several thousand dollars to work-up a case to get it ready to file – that is, to be in a position where early resolution can be discussed with the defendant. If a case can be settled early on, all of those thousands of dollars that would have gone to litigation costs go straight to the client. That is a huge benefit to the client.

The defendant benefits too. No hospital or insurance company wants to spend money needlessly. Early resolution means that the defendant doesn’t have to spend tens of thousands of dollars in expenses and tens of thousands more in legal fees. The only way it makes sense to spend that money is if, at the end of the day, the “defendant” (read insurer/hospital) believes it can either win the case or settle it for less down the road. But here’s the thing – a case can usually settle early on for less than the case would be worth had the case gotten closer to trial. This isn’t always true, of course, but as a general rule, a good case does not become less valuable over time.

Plaintiffs’ attorneys don’t undersell their cases to get an early settlement, but in practical terms, attorneys and clients are usually willing to consider some discount because they know that an early settlement is to their mutual benefit.The plaintiff gets a guaranteed financial payment now rather than waiting eighteen months for a trial and then a possible appeal that may drag the case out another two years. In that circumstance, the plaintiff is usually willing to take a little less money now because it is certain. It’s the age-old question: would you rather have X amount of money now, or wait eighteen months for the chance of getting more? For most plaintiffs, it’s an easy answer. Also the defense can pay less on a case than it would have ended up paying anyway and save thousands in expenses and legal fees by doing so. It’s a win-win for all parties.

Just do the math!

The big secret with early settlements (and which can sometimes be difficult to explain to a client) is that even though an early settlement might be for less than what a jury might award, the client can actually put more money in his or her pocket with a lower settlement amount. Again, we’re back to the issue of litigation costs. If a firm spends $10,000 to investigate a case and get it ready to file rather than $100,000 to take a case to trial, that is an extra $90,000 that goes straight to the client. Also, some law firms will have a contingent fee agreement in which the fee is higher (usually from 1/3 to 40%) when the case goes to trial, which serves to compensate for the additional time,  risk and expense of going to trial. When you consider the higher legal fees and the increased costs of litigation that have to be paid back, it can actually take a substantially larger jury verdict to put the same amount of money in the client’s pocket as he or she would get with a smaller early resolution.

Some cases may just need to be tried

I don’t mean to imply that every case that gets filed should be settled early. Far from it. Some lawyers undoubtedly file cases that are simply without merit and should be defended vigorously. Other cases – while they may be defensible – fall into a middle category where the care may not be the best but the plaintiff has problems with his/her case too. Some cases can be difficult to evaluate without further investigation and discovery to gauge the strength of the case. In those cases, it is entirely appropriate to proceed with litigation – even on a somewhat limited scale through discovery. No doubt there are instances where insurance companies do need to protect the interest of their doctors, and sometimes that means vigorously defending a case all the way through trial.

Some cases, however, – the cases where the medical care is truly egregious and the damages are clear – need to be looked at early on to see if the two sides can be reasonable and find some middle ground. If a case is going to ultimately settle (and believe me, experienced attorneys and claims adjusters can usually identify those cases early on), it makes sense to talk sooner rather than later. It requires compromise on everyone’s part, but the value to both sides is so great that it makes sense to talk early and get it done.

What has been your experience?

I’d be curious to know the experience of our readers. Has anyone been involved in a lawsuit that settled? Did it resolve early on or did it stretch out for years? Do you think the time involved had any impact on the amount of the settlement? Any tips or tricks you might suggest? Let’s hear from you – maybe we can all learn how to get these cases resolved earlier and stop wasting time, resources and money.

You may also want to read these related posts:

Frequently Asked Questions (FAQ’s)

A View from the Shady Side – The Defense Perspective

Every bad outcome does NOT a malpractice case make! Some practical advice

 

Confidential Settlement Agreements: Which should win – privacy or right-to-know?

Tuesday, June 1st, 2010

Understanding the term – ‘confidential settlement agreement’ – is the easy part. What’s the ‘sticky wicket’ of this ever-growing form of  settlement agreement? - the conflicting interests of the parties’ privacy concerns versus the public’s right to know.

Let’s start by providing you with the somewhat typical, generic language used (in some form or other) of such provisions in a settlement agreement:

Confidentiality:  The Releasing Party (Releasor) agrees that neither he nor his attorneys shall reveal to anyone, without prior written consent of the Party Being Released (Releasees), the facts or any of the terms of this Settlement and Release Agreement. Releasor will not disclose the identities of the Releasees, whose conduct was the subject of this lawsuit.  It is further understood and agreed to by the parties to this Settlement and Release Agreement that no part of this non-disclosure agreement shall be construed to prohibit counsel from making reasonable and necessary disclosures to carry out the administrative and ministerial tasks incident to this settlement.

Needless to say, these can be quite specific and many times are aimed at prohibitions of disclosure of not only the fact of settlement but also any specificity regarding the identity of the settling party and the amount of the settlement – basically prohibitions against disclosing any identifying information to the public and even more specifically to any form of media outlet. It’s one thing for Client Jones to tell his neighbors that he just settled his lawsuit for thousands or millions of dollars; it’s quite another when a settling doctor or hospital sees their name splashed across the print or online headlines of local media outlets.

The Settling Defendant’s Interests:

This is perhaps the easiest  to understand from the viewpoint of the person who agrees to pay settlement monies to the plaintiff who sued them. In the context of medical malpractice cases, no health care provider, especially a physician, wants their good-name/reputation tarnished by news of having settled a malpractice case. Since the reasons for agreeing to a settlement might be avoidance of a verdict  in excess of  the physician’s malpractice insurance, it could be argued that in such instances it is simply not fair to broadcast the fact that the physician settled because they knew they had done something wrong which hurt one of their patients. Keep in mind, that in settlement agreements there is usually a statement that the settling party – e.g. the physician sued for medical malpractice – denies all allegations of wrongdoing.

That being said, what about those instances – which are not the minority in our case load – in which the conduct of the health care provider does constitute a violation of the standard of care – aka medical malpractice/negligence? Why shouldn’t the public be aware that Dr. Smith did render bad care that caused serious harm? Was this just a ‘bad day’ for Dr. Smith in the operating room or  office or a pattern of poor care? Doesn’t the public have a right to know this?

Dr. Smith’s counsel will argue, as trained to do, that there is a defense to every case. In my 35 years of experience, this is often the case. Some defenses are better than others; some are flat out lame. Can’t the public decide on their own? Don’t they have a right to make that judgment? Some would argue they don’t since they don’t possess the expertise to understand the many nuances that go into these settlement decisions. Are they right? It seems you will never get the chance to decide since you will never know about what happened due  to confidentiality agreements.

The Plaintiff-Patient’s Interests:

It is unfortunately the case that when a number of our client’s wins a large amount of  cash in settlement or verdict, they fear their past and present friends and relatives will then come out of the woodwork. I liken it to professional sports figures whose coterie of friends are at  best ‘hangers-on’ for the money and good times.

People who have had to relive tragedies in their lives don’t want the pubic to know for a multitude of reasons.  We have represented people whose parents didn’t even know (and to this day don’t know) that they had been in a lawsuit and even gone through a trial! We have always respected the client’s right to privacy. Does that trump the public’s right to be informed?

The Plaintiff Lawyer’s Interest:

What interest could the lawyer possibly have? – you ask. Since this is my bailiwick, permit me to answer the question – marketing. Have you had occasion to visit the websites or print media advertisements of any plaintiff lawyers recently. If you have, I suspect you have seen the crawl or large font posting of verdicts and settlements blasted across the screen/page. If you have a confidentiality provision, this probably should not be the situation. I say probably because some lawyers insist that the right to publicize ‘anonymously’ be  crafted into the confidentiality agreement. Many likely do not have this ‘exception’ language but seem to have amnesia when it comes to this provision.

If you look at our website, you won’t see this form of advertising/marketing. Does this mean we haven’t settled a number of cases for large amounts of money for our clients? Hardly. Since the beginning of this year alone, we have settled a number of cases for millions of dollars, with the likelihood of many more  to come – God willing! We have elected to respect our client’s  right to privacy on the one hand. We have also determined that in some instances there will be no settlement if we put our firm’s interests of marketing ahead of the client’s ability to obtain a settlement, when the defendant is demanding confidentiality.

Do we have news accounts of past verdicts on our website? We do. Those cases went to trial and were deemed newsworthy enough by local media to report on the verdicts regardless of our position on marketing. They were in the public domain; we took the marketing advantage. Hey, we’re just being lawyers. Have these cases gone to appeal or settled post-verdict? You’ll never know.

Have we settled cases for millions of dollars?  Well, you’ll never know that either. We do understand our client’s rights to privacy and right to  have their interests in obtaining a settlement ahead of our marketing interests.

So what is the answer?:

From the viewpoint of the advocates of the public’s right to know, they can effectively argue in most instances that the client doesn’t have a privacy right once a lawsuit is filed. This is a matter of pubic record. Anyone can go to the courthouse in your county or state (in the case of the District of Columbia – the Superior Court) and ask to see the court files – absent an order sealing a record, which is by far the exception rather than the rule. Even in situations where a case settles under a confidentiality agreement, if one looks at the court docket of any given case, you can trace the history of a lawsuit. When you see a dismissal, do you not understand that absent the case being dismissed in favor of a defendant on motion or by court order for failure to prosecute, the case most likely settled? What happened to the non-disclosure of the fact of settlement or the likely parties to the settlement?

Are there other means to determine if a medical malpractice case has settled? If so, for how much? Well there are and there are not. Were you aware that whenever a doctor settles a lawsuit he/she is reported to the National Practitioners Data Bank? Well, all the information one could ever want is stored there, but the public has no access to this data bank – at least in terms of getting information as to a specific healthcare provider. The following is the express statement on the NPDB’s FAQ page:

The Data Banks are prohibited by law from disclosing information on a specific practitioner, provider, or supplier to the general public. However, persons or organizations may request information in a form that does not identify any particular healthcare organization or practitioner for research purposes.

Well, there goes that potential source of right to know.

What about the local state licensing agencies?  Let’s take Maryland, for example. The entity that controls the licensing and disciplining of physicians in the state is known as the Maryland Board of Physicians. It also has a website, which, quite  frankly, is much more transparent and informative than many and certainly more informative than the NPDB. By going to the “Search Practitioner Profile” link, you can type in a doctor’s name and find out, among other things, if there has been any disciplinary action against that physician for the past ten years. Maryland should be applauded, in fact, for its access to information on physicians. Could it do more, perhaps. That’s for another day.

In the District of Columbia, did you know you can access similar information? I invite you to undertake this exercise. Don’t be thrown-off when you do your Google, MSN or other search engine inquiry and see the District of Columbia Board of Medicine, but then you find you have been linked to the California Department of Consumer Affairs – for the Physical Therapy Board of California. Must just be a broken link! Transparency may also have a different definition in D.C.

In many of our posts we urge our readers to be informed consumers when it comes to their healthcare. Is one of the ways to become educated about your doctor or the hospital to which you planned to be admitted the  ’best’ or ‘right’ healthcare provider for you to do such a search? We think so – at least in part. Being sued or even settling a case does not necessarily mean a physician or hospital is a bad doctor or a bad hospital. It may, however, particularly in the case of the physician, be a place you may care to start your query.

So, what is the public’s right to know in terms of confidential settlement agreements? Does the public’s (i.e. your) right to know trump that of the patient/plaintiff or the healthcare provider/defendant? Should there be a restriction on the use of these agreements – even if that also means a prohibition on the lawyer’s right to publish these settlements on their websites or ads?

I encourage and welcome your thoughts and comments. Please take a moment of your time and share these with our community of readers.

Baltimore: After police officer accidentally kills bystander, settlement reached but terms confidential

Monday, May 31st, 2010

A Rosedale woman, and mother of two, was killed when a Baltimore County police officer accidentily side-swiped her 1997 Mercury Tracer.

Bonnie Pappas, age 45, was traveling across Pulaski Highway when a police officer, Ray Pabon, sped over a hill at an estimated 85.7mph. The investigations conducted by both the Baltimore County Police Department and Pappas’ family found that Officer Pabon did not have the emergency lights and/or sirens on at the time of the collision.

A nearby liquor store’s surveillance tape confirmed that at the time of the crash, the cruiser lights and sirens were off. Ronald Parker, counsel for the Pappas’ family stated:

…an officer who arrived moments after the crash ran to Pabon’s car and turned on the emergency lights.

“We contend that had the officer had his siren and lights on when he was driving, our client would have seen or heard them,” Parker said.

A deputy states attorney for Baltimore County , Sue Schenning, later claimed that prosecutors had decided not to file charges of vehicular manslaughter. Grounds for this decision were claimed to be that lack of evidence could prove Officer Pabon acted with gross negligence, which is defined at times in Maryland as the conscious disregard for the high risk of others.

The Baltimore Sun reported that the civil suit was filed by Mr. Parker on behalf of the Pappas’ family, which sought $1 million in damages for Ms. Pappas’ estate and $50 million  for her two children. Although the suit was settled, the award and terms remain confidential. Keep in mind that Maryland ‘caps’ non-economic damages, such as pain and suffering and the distress and mental anguish of  loved ones who lose their beloved through the negligence of others.

Coming this Week: On the issue of ‘confidential settlement agreements,’ keep a lookout this week – should the public know? are they in the client’ s best interest? We’ll lay it out there for you to discuss and decide.