Wednesday, May 27, 2009

A Suggestion For Medical Malpractice Insurers

Companies that provide medical malpractice insurance tend to be pretty large and pretty sophisticated.

It's thus not surprising that the way they handle most of their business makes a lot of sense to us: They hire lawyers on a "wholesale" basis, asking law firms to defend a high volume of medical malpractice litigation for relatively low rates. The insurers win some cases and lose others, but, overall, the companies presumably maximize their profits by taking this approach.

We don't mean to over-generalize in this next paragraph, but we will: Insurers know what they're getting when they hire lawyers who spend their time trying medical malpractice cases on a high-volume, low-rate basis. Because dispositive motions are rarely available in med mal cases, lawyers who defend those cases typically don't hone their skills in writing dispositive motions. The med mal defense lawyers know a ton of medicine, have a great deal of trial experience, and are good on their feet, but their written work occasionally leaves a little something to be desired.

(We said we were over-generalizing there, but let the nasty comments nonetheless begin.)

Here's our question: Once in a blue moon, an appeal in a med mal case presents an important issue of broad application that will affect the results in many future cases. We're thinking about, for example, issues relating to the information that physicians must disclose in the informed consent process, how statutes of limitations apply, or how courts handle certain aspects of off-label use.

Lose an appeal on the question whether a physician must disclose aspects of his educational background, personal problems, or the like as part of informed consent and many new cases may follow in the wake of the bad precedent. So, too, for a liberal interpretation of the "discovery" of a claim for statute of limitations purposes, or the admissibility of evidence of off-label use to prove the standard of care.

In those types of situations, doesn't it make sense for med mal insurers to retain on appeal lawyers with more expertise writing briefs and framing appellate issues?

If so, why don't insurance companies routinely do that?

We've seen an awful lot of med mal cases where good-on-their-feet-but-not-so-good-on-paper med mal defense trial lawyers briefed and argued appeals, and those appellate results are not always happy ones. Those bad precedents foment more litigation, which costs the med mal insurers a lot of money.

Shouldn't medical malpractice insurance companies have an appellate specialist on staff (or on retainer) to flip through appeals and segregate run-of-the-mill appeals involving discretionary evidentiary rulings (where there's no need to hire appellate counsel) from broadly-applicable-legal-issue appeals that could eliminate a whole area of litigation (where specialized appellate counsel could do a lot of good)?

If that makes economic sense, then why don't the insurance companies do this?

Someone suggested to us that the insurers don't care: If the insurer loses an appeal and ultimately pays out more in claims, the insurer will simply raise its rates and maintain its profitability.

But that can't be right: The law of supply and demand says that, as prices go up, demand goes down. Thus, if insurance companies are forced to raise their rates, they'll sell less insurance. Ultimately, that has to decrease profitability.

Which leaves us with our suggestion: Medical malpractice insurers should try to sort out high-value appeals from the usual chaff (to mix a metaphor) and should retain specialized appellate counsel to increase the chance of success in the appeals that really matter.

Or, if insurers don't do that, they should at least let us know what we're overlooking. We'd be happy to be educated.

6 comments:

Andrew J. Barovick said...

As a former defender of med mal suits, and current plaintiff's med mal attorney, I've seen a lot of legal writing generated by both sides. I disagree with your view regarding the lack of opportunity for dispositive motions. From the defense perspective, there are often cases where a motion for summary judgment dismissal can be made. Cases based on junk science, or cases that are brought by inexperienced and/or sloppy plaintiff's lawyers will sometimes fall victim to summary judgment motions. Sometimes, it is worthwhile to move for partial summary judgment as well, i.e, narrowing the time frame involved in the suit using a statute of limitations theory; or, move to have the least culpable of several defendants dismissed from the case, if appropriate.
Additionally, many defense firms do have specialized appellate attorneys who handle the important legal writing duties. At the defense firm I worked for the longest, Kopff, Nardelli & Dopff, in NYC, Martin Adams was, and remains the go-to appellate attorney, and has contributed to more than his share of good law in NY's Court of Appeals.
I agree that the relationship between liability insurers and defense firms is far from ideal, but I do not see the quality of the legal writing being a major culprit.
Best regards,
Andy Barovick

Eric Turkewitz said...

Those that write the briefs and argue the appeals are rarely the trial guys. All the big defense firms have lawmen in the background who love the library more than the well of the courtroom. And they have tons of experience because trials often generate appeals.

So I think you are working with a faulty premise.

Max Kennerly said...

Though I, too, have seen more dispositive motion / appellate work by high-volume medmal defense lawyers than your post would imply -- particularly here in PA, where we're all fighting over the meaning of MCARE -- there definitely are issues where the insurer and/or counsel has fallen asleep at the wheel and ignored the bigger picture.

I've never done medmal defense, but IMHO medmal insurers seem less prone to consider settling cases to avoid bad precedent than other insurers. Usually if I'm sitting on a case with great facts that can lay down a terrible rule for defendants, the insurer will take that into account and put more on the table.

For medmal, that's rarely the situation: every case is evaluated purely on its own merits, and if there's a chance at winning appeal, that's good enough.

If that's how they decide settlement, then I imagine the same short-sightedness comes into play for appellate issues / counsel.

Ron Miller said...

I actually agree. I'm assuming from your commment, Eric, that NY is different but in Maryland and other states I have seen, there are a lot of smaller firms handling medical malpractice cases that don't have a backroom guy.

Plaintiffs and defendants both have amicus resources available for issues that matter to all.

Anonymous said...

I need to keep this anonymous, given how much work I get from the aforementioned insurance companies. If you fellows are trolling for work (a perfectly honorable endeavor), and hoping that some garden variety med mal insurer is going to take you up on your suggestion and retain the likes of your firm for, what, $500/hour and up to handle its high profile appeals, you are kidding yourselves. Now if you want to do the work for a buck-eighty-five an hour (you think I'm kidding, do you??), then maybe you can do some business. After all, that's probably no more than $25 an hour higher than what they are paying a lot of their front-line defense lawyers. These are, by and large, the best on-your-feet trial lawyers in the business, who have typically tried more cases by Memorial Day every year than your average white-shoe "litigator" has in his entire career. The pay scale is a national scandal. And that's before they send the bill off to an outside bill auditor for the customary 5-7% haircut. There is no hotter place in hell . . . .

Dan said...

I agree that they should separate their resources for appeals and the usual "chaff" as you put it. They are going to inevitably go with the most cost effective solution in their eyes. Florida medical malpractice insurance has become increasingly expensive due to inefficiencies (even if they are intentional) on behalf of the insurers.