When You and Your Malpractice Insurer Disagree on Your Case

You’ve been sued for medical malpractice. If you are a physician in the United States, that is not an unlikely scenario.

An analysis by the American Medical Association shows that almost half of all physicians are sued by the time they reach 54. In some specialties, such as OB/GYN, one is almost guaranteed to be sued at some point.

But that’s what medical malpractice insurance is for, right? Your medical malpractice insurer will assign an attorney to take care of you and help you through this situation. Won’t they?

Maybe so, but the attorney and the claims representative your insurer assigns to your case may have a different idea about how to proceed than you do. Though the defense attorney assigned to you represents you, he or she gets paid by the insurance carrier.

This can create a conflict when your defense counsel and your insurance claims representative aim to take your case in a direction you don’t like.

Issues dividing defendant physicians, their insurers, and insurance company lawyers who represent them often arise from conflicting perspectives on risk, financial considerations, and reputation damage. Disagreements might include

• Choice of expert witnesses
• Tactical decisions related to trial strategy
• Public relations considerations
• Admissions of liability
• Allocation of resources

To Settle or Not?

One of the most challenging — and common — disagreements is whether to settle the case.

Sometimes a malpractice insurer wants to settle the case against the defendant doctor’s wishes. Or the doctor wants to settle but is pushed into going to trial. In the following case, one doctor had to face the consequences of a decision he didn’t even make.

The Underlying Medical Malpractice Case

Dr D was sued by a patient who had allegedly called Dr D’s office six times in 2 days complaining of intermittent chest pain.

Dr D had been swamped with patients and couldn’t squeeze this patient in for an office visit, but he did call back. The patient later claimed that during the call he told the doctor he was suffering from chest pain. The doctor recalled that the patient had complained of abdominal discomfort that began after he had exercised.

The physician wrote a prescription for an ECG at the local hospital and called to ensure that the patient could just walk in. The ECG was allegedly abnormal but was not read as representing an impending or current heart attack. Later that evening, however, the patient went to the emergency department of another hospital where it was confirmed that he had suffered a heart attack. The patient underwent cardiac catheterization and stent placement to address a blockage in his left anterior descending artery.

The patient subsequently sued Dr D and the hospital where he had the original ECG. Dr D contacted his medical malpractice insurance company. The insurance company assigned an attorney to represent Dr D. Discovery in the case began.

The plaintiff’s own medical expert testified in a deposition that there was no way for the heart attack to have been prevented and that the treatment would have been the same either way. But Dr D could not find a record of the phone calls with the patient, and he had not noted his conversation the patient in their medical records.

Dr D held a policy for $1 million, and his state had a fund that would kick in an additional $1 million. But the plaintiffs demanded $4 million to settle.

A month before trial, the plaintiff’s attorney sent a threatening letter to Dr D’s attorney warning him that Dr D was underinsured and suggesting that it would be in the physician’s best interests to settle.

“I want to stress to you that it is not my desire to harm your client’s reputation or to destroy his business,” wrote the plaintiff’s attorney. “However, now is the time to avoid consequences such as these by making a good faith effort to get this case resolved.”

The letter went on to note that the defense attorney should give Dr D a copy of the letter so that everyone would be aware of the potential consequences of an award against Dr D in excess of his limits of insurance coverage. The plaintiff’s attorney even suggested that Dr D should retain personal counsel.

Dr D’s defense attorney downplayed the letter and assured him that there was no reason to worry.

Meanwhile the case inched closer to trial.

The codefendant hospital settled with the plaintiff on the night before jury selection, leaving Dr D in the uncomfortable position of being the only defendant in the case. At this point, Dr D decided he would like to settle, and he sent his attorney an email telling him so. But the attorney instead referred him to an insurance company claims.

Just days before the trial was to start, Dr D repeatedly told the claims representative assigned to his claim that he did not want to go to trial but rather wanted to settle. The representative told Dr D that he had no choice in whether the action settled.

A committee at the insurance company had decided to proceed with the trial rather than settle.

The trial proved a painful debacle for Dr D. His attorney’s idea of showing a “gotcha” video of the allegedly permanently injured plaintiff carrying a large, heavy box backfired when the jury was shown by the plaintiff that the box actually contained ice-cream cones and weighed very little.

Prior to trial, the plaintiff offered to settle for $1 million. On the first day of trial, they lowered that amount to $750,000, yet the defense attorney did not settle the case, and it proceeded to a jury verdict. The jury awarded the plaintiff over $4 million — well in excess of Dr D’s policy limits.

The Follow-up

Dr D was horrified, but the insurance company claims representative said the insurer would promptly offer $2 million in available insurance coverage to settle the case post-verdict. This did not happen. Instead, the insurer chose to appeal the verdict against Dr D’s wishes.

Ultimately, Dr D was forced to hire his own lawyer. He ultimately sued the insurance company for breach of contract and bad faith.

The insurance company eventually attempted to settle with the plaintiffs’ counsel, but the plaintiff refused to accept the available insurance coverage. The insurance carrier still has not posted the entire appeal bond. The case is still pending.

Protecting Yourself

The lesson from Dr D’s experience: Understand that the insurance company is not your friend. It’s a business looking out for its own interests.

The plaintiff’s attorney was absolutely correct in suggesting that Dr D retain his own attorney to represent his own interests. You should hire your own lawyer when

• You disagree with your insurer on how to proceed in a case.
• You receive a demand that exceeds your available insurance coverage or for damages that may not be covered by your policy, such as punitive damages.
• Your insurance carrier attempts to deny insurance coverage for your claim or sends you a letter stating that it is “reserving its rights” not to cover or to limit coverage for your claim.

Retaining independent counsel protects your interests, not those of your insurance company.

Independent counsel can give you a second opinion on the strengths and weaknesses of your claim, help you prepare for your deposition, and attend court dates with you to ensure that you are completely protected.

Independent counsel can challenge your insurance company’s decision to deny or limit your insurance coverage and ensure that you receive all of the benefits to which you are entitled under your insurance policy. Some policies may include an independent lawyer to be paid for by your insurance carrier in case of a conflicts.

The most important takeaway? Your medical malpractice insurance carrier is not your friend, so act accordingly in times of conflict.