Truth not biggest concern when deciding to settle or fight a lawsuit
September 1, 2000 7 minutes read
Truth not biggest concern when deciding to settle or fight a lawsuit
Decide only after you have enough information
Rarely will you be perfectly certain whether to settle or fight a lawsuit all the way through a trial. In far more cases, that decision takes a great amount of discussion, and many risk managers end up basing their choice on bad reasoning, say some experts.
In too many cases, the risk manager and others involved decide whether to settle or fight before they have enough information in front of them and before they have considered the real effects of the decision, says Greig Coates, MD, JD, an attorney with Mithoff and Jacks law firm in Austin, TX. He previously practiced medicine and now is a malpractice attorney.
Avoid hasty decisions
The decision usually will be made jointly by legal counsel, insurers, and hospital representatives, but the risk manager usually will be involved, sometimes with the responsibility of making the primary recommendation. Some risk managers are prone to making a hasty decision if the case seems at first glance to be heavily lopsided either for or against the hospital, Coates says. That early impression can be quite misleading, he says.
"I cannot emphasize enough that the real risks posed by a jury trial cannot be known until the last expert and the last fact witness have been deposed, both those the defendant intends to use and those the plaintiff intends to use," he says. "Hospitals often have these committees that make a decision what to settle, and they will make those decisions long before the cards are on the table. That’s a big mistake that can take you to trial when you shouldn’t go anywhere near a courtroom, or it can make you pay out to a plaintiff who would lose at trial."
The early decision is particularly dangerous because it is hard to rescind, Coates says. Even if all the facts are gathered before the settlement is finalized or trial begins, most organizations will find it difficult to go back on that initial decision. Remember that it is much easier to delay a decision than to change a bad one, he cautions.
The rules of justice
Coates also urges risk managers not to rely too much on whether their facilities and staff actually did anything wrong. The insignificance of guilt can be difficult for risk managers to acknowledge, he says, partly because they have a personal stake in the facility’s quality and partly because they probably are in contact with the individuals alleged to have harmed the patient.
Coates says that when it comes to making a decision about how to resolve a case, the realities of the legal system make the truth a minor consideration. It’s certainly not a meaningless consideration, but it’s far less important than other factors, he says.
"At the end of the day, whether the risk manager thinks in his or her heart that the hospital did something wrong should be taken out of the calculation," he says.
"The truth may or may not be revealed at the time of the trial. The average person assumes that the trial is all about seeking truth, but the trial is about seeking justice, and that is done according to the rules of evidence. Risk managers say they know for a fact that the hospital acted properly and met all standards, but that can all go out the window if a nurse admits on the stand that she didn’t follow the rules precisely and could have done better," Coates explains.
The crucial point is that the jury’s reaction can be extremely subjective. It is a huge mistake to make your decision as if the facts were going to be presented to a jury of medical professionals, Coates says. A lay jury can be swayed by emotion or by the way the rules of evidence prohibit certain disclosures.
"The real jaw-dropping outcomes that just flabbergast the defendant come when the risk manager was certain you didn’t do anything wrong, but you didn’t know the nurse was going to get on the stand and say something you didn’t expect," he says. "I just had a case where the doctor defendant was adamant that she did nothing wrong, would not settle, and she didn’t even call a single person to the stand to justify her actions. She had a judgment in excess of $2 million against her."
Cases inevitably will arise in which the risk manager is certain there was no wrongdoing but believes a trial would be too risky, notes R. Stephen Trosty, JD, MA, director of risk management at Mutual Insurance Corporation of America in East Lansing, MI.
"If you decide there is no negligence of malpractice, that doesn’t mean you refuse to settle," Trosty explains. "There are some instances in which you might have what I call an economic settlement. You look at what it will cost to go to trial and what you think you can settle it for, and if you can settle for considerably less than taking it to trial, you can settle for economic reasons."
Consider the cost of bad publicity
Another reason to consider an economic settlement is the potential for bad publicity at a trial. The actual dollars paid out are not the only potential cost to the facility. If the allegations become public record, the facility’s reputation can suffer in ways that might translate into a dollar loss down the road. Again, the actual truth of the allegations may have little to do with that result.
"But there is a flip side to that argument. You don’t want to get a reputation as a soft touch or a pushover," Trosty says. "If a hospital or a physician gets a reputation as someone who is willing to settle fairly easily, you may encourage lawsuits that are not legitimate. So you need to be really careful when deciding to settle even though you think the charges are without merit."
Coates and Trosty offer this additional advice on what factors to consider when deciding to settle a case or take it to trial:
1. Look at the allegations, not the facts.
You will have to investigate the facts, of course, but the strategy for the lawsuit should be based on the charges brought by the plaintiff.
"That’s what the jury is going to hear. You may know what happened. The question is, what will the jury know? Those are very often two different things," Coates says. "But remember not to react too quickly to those allegations because there will be a lot of twists and turns along the way. If you make your assessment of the exposure too early, you really can’t get rid of that bias as you go forward.
2. Watch for the doctor to settle out.
If the malpractice case is brought against both the hospital and a physician or physicians group, the doctor sometimes will settle out and leave the hospital to face the allegations alone. Except in unusual cases in which the liability is crystal clear, it is important to delay your decision until it seems the physician has decided to fight or pay. If you decide to fight the case and then the physician bails out, the odds against you suddenly may be much worse, Coates says.
"The plaintiff can easily and very effectively move their turrets to train them all on the hospital," he says. "By then, the hospital has made its determination of what their exposure is and may not realize what they’ve been left holding now that the doctor is out."
3. Don’t underestimate the value of nurse testimony.
Risk managers may be threatened by the idea of injured plaintiffs or family members testifying to a jury, knowing that the hospital is unable to provide testimony with the same emotional punch. Likewise, the hospital will be seen as a deep-pocket corporation rather than a human being like the physician defendant.
Coates urges risk managers, however, to think in terms of numbers of witnesses, matching the other parties’ emotions with a volume of opposing testimony.
"Hospitals can’t put doe-eyed spouses and children in court to humanize them like doc- tors can, but their ace in the hole is the fact that hospitals can put on people in numbers," he says.
"Never underestimate the credibility of nurses or the value of those nurses marching up to the witness stand serially and saying they did not see condition XYZ. You may not be able to give the jury a warm fuzzy like the doctor or the plaintiff, but juries like the idea of one hard-working nurse after another saying she didn’t see anything wrong," Coates says.
4. Know your community’s jury demographics.
Another unfair reality of the court system is that juries in one community may react very differently than juries in another. Local attorneys usually become familiar with the demographics of surrounding communities and know how that can affect the likely outcome of a case. Jurors in some communities are much more likely to find for a plaintiff or defendant, regardless of the facts, and some are much more or less likely to hand out large awards.
5. Watch the trial carefully and be ready to change your decision.
When a case goes to trial, Trosty says the hospital should have someone in addition to legal counsel in the courtroom every day watching the proceedings. The risk manager is a good choice for that task, he says.
"Things can come out during the trial that will make you want to rethink the need to settle and what you’re willing to settle for," he says. "And you also want to watch the attorneys to see how well you’re being represented." (See story at right for Trosty’s advice on choosing the best legal counsel.)
6. Be suspicious of last-minute settlement decisions.
If the hospital’s attorneys suddenly decide on the eve of a trial that settling is a prudent move, look at that recommendation skeptically. Trosty cautions that such a last-minute decision can have more to do with the attorneys’ abilities than in the merits of the case.
"It could mean that the attorneys are not very experienced in trial work and were hoping all along to force a settlement. Now that the trial is upon them, they’re panicky and want you to just settle the case and be done with it," he says. "If they do that at the last minute, they’d better come up with some strong reasons, like information that wasn’t available until now."
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