In the latest issue of the magazine Trial, thereis an interesting article about how medical malpractice settlements are reasonably related to the quality of care provided according to an analysis of 11 different studies on settlements. The article is in the December 2007 | Volume 43, Issue 12 and the author isValerie Jablow, Associate Editor.
Below is an excerpt of that article:
An analysis of the results of 11 studies of medical malpractice claims and settlements shows that “medical malpractice settlements are neither random nor irrational” and that “quality of care drives settlement outcomes,” with the likelihood of payment and the amount paid “closely related to the merit of the underlying claim of medical negligence.” (Philip G. Peters Jr., What We Know about Malpractice Settlements, 92 Iowa L. Rev. 1783 (2007).)
“People who studied the field have been aware of these findings for some time,” said Philip Peters, a University of Missouri law professor who conducted the analysis. “But the previous descriptions of them have tended to be relatively anecdotal, not attempting to tie them all together in a concrete way to show what the pattern is.”
Tort “reformers” have long alleged that medical malpractice settlements are an “irrational lottery,” where fault and settlement are unrelated, Peters noted in his report. Many critics have relied on a small analysis in the widely cited Harvard Medical Practice Study, which concluded that the merits of 51 malpractice claims examined had no relation to the likelihood of settlement. (Troyen A. Brennan et al., Relation Between Negligent Adverse Events and the Outcomes of Medical Malpractice Litigation, 335 New Eng. J. Med. 1963 (1996).)
Peters looked at that study and 10 others completed between 1988 and 2006 that examined settlements in almost 20,000 medical malpractice cases. He found that the 1996 Harvard study is an “outlier”: Taken together, the data Peters analyzed showed that “weak claims are much less likely to result in a settlement payment than strong claims,” with only 10 percent to 20 percent of weak cases resulting in payment (and then, usually only a “token” amount, such as forgiveness of unpaid medical bills).
Strong cases, Peters found, settle at a higher rate (85 percent to 90 percent) and for much larger average payments. “Borderline” cases fall somewhere in between strong and weak ones.
Peters also found that many cases settle at a “discount,” often for less than their expected value. Such discounts operate in two ways, Peters wrote, “once in the insurer’s decision whether to make any settlement offer at all and again in the size of the offer to make.” He found settlement offers to be significantly less likely in weak cases than in strong ones, and when an offer is made in a weak case, it is significantly smaller.
This “surplus discounting,” Peters noted, reflects the “superior bargaining power of malpractice defendants,” including greater risk tolerance, better access to information and experts, and more experienced lawyers.
The fact that some weak cases settle “does not mean that the process is working unfairly,” Peters wrote. “This conclusion would only be justified if the payments were not being discounted to reflect the weakness of the claims being settled.”
The report also noted that about the same percentage of strong cases—10 percent to 20 percent—get no payment at all.
However, the study also concluded that “to the extent that settlement outcomes depart from the merits, the discrepancies usually favor malpractice defendants. . . . As a result, plaintiffs have more reason to complain about the system’s imperfections than defendants do.”
“Through 11 studies, we have the benefit of people who have accessed the files and found that cases settle much the way ordinary people would handle them if they were lawyers,” he said. “The reassuring finding from these studies is that the civil justice system really is asking the right question: ‘Did the patient get competent care or not?’ The findings show the system works.”