Medical Malpractice and Asset Protection Part 3: Settlements and Verdicts

In part one of this series we looked at several medical malpractice risk factors including which specialties get sued the most, which states are the highest risk for doctors and the growing trend of medical malpractice premiums rising. We also looked at rewards for those risks including which states and specialties pay physicians the most and the effects of gender and employment status on physician compensation.

In part two we examined physicians’ age, gender and employment status (self-employed vs. employed) as lawsuit risk factors, as well the fact that that medical malpractice awards have been growing in size for a number of years across the U.S. with the majority of states reporting judgments greater than $10 million over the last six years.

A recent report from the Expert Institute that summarizes info from the HHS National Practitioner Data Bank adds some interesting details about medical malpractice payouts as well. It’s important to consider both settlements and actual lawsuit verdicts, which vary widely based on the factors outlined above.

Here are a few notable points to consider in your risk own analysis:

• In 2018, (the last year included in the study), over $4 billion was paid out to medical malpractice lawsuit plaintiffs
• The total amount of annual payouts increased every year for the six previous years
• The average settlement payout (as opposed to lawsuit verdict) across the U.S. is about $350K, but that number varies widely by geography and can be as much as $100K higher
• The average death claim is about $400K, but the average claim for injuries like brain damage is nearly $1MM. This puts the “average” for those claims right at the $1MM per-occurrence limit of most physicians and means that many of them are over that $1MM limit, making the physician was personally financially liable out of pocket for some portion of the claim.

The report also pointed out spikes in the numbers of payouts in certain geographic areas but does not provide details as to why claims and payouts spiked in those areas.

New York topped the list, with an average payout of $446,461 in 2018. In New York, 1,535 claims were paid, totaling $685,317,000, and marking an 11% increase from the year prior. The second highest state average was in Pennsylvania, averaging at $405,978 based off 909 claims and a total of $369,034,250. Many states experienced astronomical payout increases over the previous year, such as Minnesota (101%), South Dakota (199%), and Vermont (a whooping 486% increase in 2018).

The details outlined above are a cold, mathematical look at settlement payouts that (hopefully) fall within the scope of the standard $1MM per occurrence, $3MM aggregate medical malpractice policies most doctors have. Of course, not being out of pocket on a claim is only part of the problem and overlooks the reputational damage, stress, trauma, and other effects of being involved in any litigation, but especially one that threatens your wealth and livelihood. Let’s look at the claim details that put you personally at risk and think of this beyond the standard, “Well, only a small percentage of claims go to trial and result in a verdict…”, and think about in more basic, practical terms. What if one of these claims is against you and it is your patient, your career and your assets at risk?

• The majority of claims get settled – “only” about 4% go to trial
• That 4% accounts for about $145 Million in payments resulting from court judgments

As someone who represents a large number of specialty physicians I regularly get panicked calls from other doctors seeking asset protection planning after something bad has happened, when the asset protection and risk management planning they should have done earlier won’t help them and ranges from ineffective to illegal. I can tell you that the facts and numbers outlined above provide zero comfort when you are the defendant and it’s your life savings that are potentially on the line. That is precisely why the central theme of this column for the last decade has been identifying and managing all your predictable risks, including your professional liability.

We’ve taken a detailed look at med-mal claim numbers to help you make an objective, factual risk assessment. Next, we look at defense strategies. 

_{About the Author}

_{Ike Devji, JD, has practiced law exclusively in the areas of asset protection, risk management and wealth preservation for the last 16 years. He helps protect a national client base with more than $5 billion in personal assets, including several thousand physicians. He is a contributing author to multiple books for physicians and a frequent medical conference speaker and CME presenter. Learn more at www.ProAssetProtection.com.}