– Chris Schulte, JD
And you can certainly give the plaintiff a little bit – maybe not a war chest – but you can give him a wallet of money to continue prosecuting the case against the remaining defendants. There’s incentive and reasons for both sides to do it. Certainly, it is a very big benefit for a physician because it doesn’t result in the proverbial “ding”.
– Jeff Segal, MD, JD
I’m surprised that some plaintiff attorneys haven’t figured out that doctors will fight tooth and nail just because of the Data Bank. Certainly, there are other reasons to fight, but that’s a sizable determinant and it’s somewhat surprising because there are so many line items in the Data Bank.
There are at least 250,000 physicians who have been reported to the Data Bank because if payment is made in the name of a doctor by an insurance company – either by settlement or judgment for even a dollar – that event gets reported to the databank. Now, a dollar settlement is not something that anybody would raise an eyebrow over, but it is reportable, and I think most doctors, to the extent that they CAN keep a pristine record, want to maintain that lily-white record.
– Chris Schulte, JD
I think it’s a big problem that the plaintiff’s bar doesn’t understand that this is not simply an exchange of wealth from one side of the table to the other. And a Data Bank report is not simply a professional slap in the face of the doctor.
Resolving the case can have separate consequences apart from the ego check with the Data Bank report. It does have real life consequences. Unless the plaintiff’s attorney has been involved on this side of the table in a prior life, they don’t appreciate the significance of that Data Bank report to the physician. A Data Bank report likely won’t prevent the doctor from getting a job, but it is something that must be explained. And most plaintiff attorneys have no idea.
Much in the same way I don’t appreciate having to negotiate a lien after a case settles, they don’t appreciate that this is something that the physician must explain, either individually or with my continued involvement. There’s paperwork to address. It’s a hassle.
– Jeff Segal, MD, JD
I hate to give practice pointers to plaintiff attorneys, but this is one that would certainly serve everyone’s interest. One thing that is not reportable to the Data Bank is payment that is made in the name of a doctor related to an oral demand for money.
Once it’s committed to writing saying, “Give me money for my client”, and money is paid by an insurance company, that’s de facto reportable. But if it’s in relationship to an oral demand, there’s certainly some circumstances where negotiations can be had and then ultimately a settlement occurs that is not reportable to the to the Data Bank. You may end up with the same outcome, but it’s not unreasonable to try an oral demand first, precisely because it’s not reportable.
And even if a carrier does report, and they almost certainly would report anyway, one can petition the Data Bank to remove that report. But that’s almost unheard of – just an oral request for money and having it honored. Typically, you want to see that someone’s really going to go to the mat for the distance, but it depends upon the facts of the case.
There are some cases where it’s so obvious that a settlement needs to happen early on that if a plaintiff attorney were to just couch this as an oral demand, it might very well make their life a little bit easier and their client’s life a little bit easier, as well as the life of the doctor defendant.
– Chris Schulte, JD
I see no reason why that would not work. If I could somehow convince the opposition to just tell me what they want, our lives would be much easier. “Don’t send me a follow up email. Don’t put it in your letter – just tell me what you want, and this will be a lot more palatable for everybody.”
– Jeff Segal, MD, JD
I understand why the Data Bank was developed and why it was formed decades ago, but I think it has outlived its usefulness. Now, a Data Bank report is considered a scarlet letter without much benefit.
Let’s talk a little bit about a scenario when the carrier wants to settle, but the doctor does not want to settle. You (the doctor) believe the case is defensible. Now what? And describe that in the context of a hammer clause, as well as the consent to settle clause, because sometimes doctors don’t know their rights.
And to be clear – it does come down to what their policy allows them to do. And describe your role in that decision-making process because the client is really your first concern – but you also get paid by the carrier.
I guess I asked you a compound question, and I shouldn’t have done that – guilty as charged.
– Chris Schulte, JD
I think I can provide some insight. This is a classic relationship. As you said, I’m beholden to the physician client. Obviously, certain bills are being paid by the insurance company, so there is this inherent conflict. It is my hope I never have to see my client again – at least not in this setting. I also hope the insurance carrier will continue to give me business – if I do the right thing and handle their claims appropriately.
But I am ethically bound to the insurance company and I am ethically bound to the physician – and I’d rather keep my license as opposed to worrying about losing a carrier.
– Jeff Segal, MD, JD
And the carrier knows that – it’s not as if they’re playing in a vacuum. They understand that your first duty is to your client.
– Chris Schulte, JD
Across the board, most of them do. Now, the example I’m about to provide is state specific and contract specific, as some states require the insurance contracts have a consent to settle clause within them. You referenced this, and I had this happen the other day – I don’t know what my homeowner’s insurance policy says. But I know I pay a premium, and the physician I was speaking with said, “I don’t know if I have the consent to settle clause or not.”
And I found that a little bit unusual. But if I think about it at a 30,000-foot level, that probably isn’t so unusual. You call your broker and they find you an insurance company. You pay a premium and you trust you have the coverage you require. You don’t know the gritty details, but if the contract provides for it, and the physician doesn’t want to settle, and yet the insurance company says this is right within the continuum of where we think the case should settle financially, I’m in a pickle either way.
Whether they want to settle the case or not, I’ve made my recommendations. In those situations, oftentimes it comes down to something like this:
“Dr. Smith, I recommend that you hire a personal attorney, obviously at your own expense, to weigh in on this process.”
Because then we’ve eliminated the insurance company – and your insurance assigned attorney has eliminated your fear. And I’m not saying that this fear is irrational – but we’ve eliminated the fear and concern that the insurance company and their appointed attorney aren’t acting in the doctor’s best interests.
Now you (the doctor) has someone who’s 100% your attorney, and he’s going to make the recommendations that he or she sees appropriate for this case.
– Jeff Segal, MD, JD
The consent to settle clause is something that is very desirable. If you’re shopping for professional liability coverage, that would be one thing to prioritize. I would argue that’s one of the most important things to keep you in the driver’s seat going forward. But even with that clause, many policies will have something known as a hammer clause. I don’t think it’s ever called a hammer clause, but it means that if you refuse a reasonable settlement and you don’t give your consent to settle, if the case goes to trial and you lose well above the amount that it could have been settled, you may be responsible for the overage.
It’s a way for carriers to prevent irrational behavior. I think it’s called the hammer clause, but I’m sure it goes by different names in different policies.
– Chris Schulte, JD
Most of the carriers we work with have letters that go out, either at the beginning of the case or within the case. These letters remind the physician, “This is a consent to settle policy – if you don’t consent to settle, be advised that failure could result in ‘X’. We will still pay. We still have the coverage limits specified, but overages are on your nickel.” And the consent to settle provisions and policies recall the phrase, “Absolute power corrupts absolutely.”
It is a good power to have, but it can’t be abused. There are situations where the facts of any given case say, “Listen – this is a case that needs to go in the rearview mirror quickly.” And if some physicians get beside themselves with not wanting to settle, invoking the wrong provision in the policy at the wrong time can come back to bite them.
And, candidly, since we’ve gotten the consent to settlement provision in our legislation in the state of Florida, it has become a topic of conversation with the physicians in each of my cases. In all my cases, we ask ourselves, “What are the downsides of you consenting to settle? What’s the downside of you not consenting to settle?”
From the perspective of someone defending a case in the trenches, sometimes a refusal to consent to settle has the benefit of beating the other side down financially. If the doctor isn’t going to consent to settle at this level, will he take $25,000 -$50,000 less to be rid of the case? Sometimes it is a good negotiation tool. But sometimes a failure to consent to settle lights a fire and the other side says, “Listen – I’m not going to give you any more opportunities. I’m coming after the doctor personally.”
– Jeff Segal, MD, JD
That is one of the challenges. If you don’t consent to settle and the settlement may have been within policy limits, you take your chances at trial. If you lose big, you could very well have a personal liability. We’re not in Florida, but in other states you could lose your house, or you could certainly can lose assets, and potentially be bankrupted. It’s something to think about. I know there are some doctors who still want their day in court no matter what, but they want to hedge their bets. And one way to potentially do that is with a high-low agreement – assuming the opposite side agrees.
Can you describe at a 30,000-foot level – what is a high-low agreement and how is that a tool for mitigating risk? So that if the doctor must have his day in court, he doesn’t put all his assets at risk?
– Chris Schulte, JD
Sure. Let’s start by stating that in this arena, everything is, for the most part, shifting wealth from one side of the table to the other. No one wants to lose in a trial setting, but – someone is going to lose. It is a zero-sum game. For the most part, the high-low agreement allows both parties to protect their upsides and downsides.
So, the plaintiff’s attorney (and the plaintiff) are getting some money, regardless of the verdict. If it is a zero verdict and the jury returns with a determination of no liability, the “low” of that agreement is the amount that is going to be paid.
Here’s another example: In this imaginary high-low agreement, $100,000 is the low. $500,000 is the high. For any verdict that’s returned by the jury less than $100,000, the defendant is going to pay the plaintiff $100,000. If the verdict is between $100,000 and $500,000, that in-between sum will be paid to the plaintiff by the defendant.
The benefit to the defendant on the high end of things is this: Let’s pretend there is a runaway verdict. The jury comes in with a five million-dollar verdict on a one million-dollar policy. But, there’s a high low-agreement agreement in play. The most the defense is going to pay is $500,000 – the agreed upon “high”. There are incentives for both sides to reach those high-lows because they’re going to be protected one way or the other.
You’ll still have the verdict that comes out. But the judgment that’s ultimately rendered will be that high, or that low, or some number in between. So, it’s kind of like putting a stop-loss order on a stock sale.
– Jeff Segal, MD, JD
That’s a great way to put it.
I’ve seen it with cerebral palsy cases, where the damages are great and require a life care plan. These plans are very expensive and certainly evoke the sympathy of the jury for the plaintiff. But in terms of standard of care, the doctor likely followed the standard of care, so the doctor would check the box and typically win under standard of care, but under damages and who’s sympathetic, the plaintiff would win. So, each side brings to the table tremendous risk that they’re trying to abate, and the high-low agreement allows the doctor to have his day in court and everybody is going to get some benefit out of it. The doctor’s not going to risk all his personal assets. The plaintiff will not walk away with absolutely nothing, though he may not get much – it may be mostly reimbursement of the attorney for their expenses.
But it at least allows everyone to go to court, have their day in court, and foreclose the possibility of either side going bankrupt. They’re useful tools, but it does take two to tango. Both sides must agree to the agreement in advance of the jury coming back and rendering its verdict. And my understanding is you can do this up to the time that the jury comes back and renders its verdict. Is that correct?
– Chris Schulte, JD
That is correct. Until the foreman opens his or her mouth and utters the words, a high-low agreement can be leveraged. And negotiating a high-low is the same process as negotiating a number. Each side wants to get the most favorable high-low they can possibly get, either as wide of a range or as narrow of a bandwidth of a range as possible. And oftentimes negotiating a high-low is a lot more difficult than negotiating to a number. It depends on the person on the other side, and how much money they stand to win or lose. The example you raised is probably the premier example.
There is so much money that has been invested by the plaintiff’s attorney to prosecute a case in bringing these high-level experts – because you’re talking about neurologists, experts in child neurology and radiology – all kinds of specialists whose time isn’t cheap. And the plaintiff’s attorney at least wants to get his money back and stay out of the red. By the same token, the defendant doesn’t want to pay millions of dollars for the life care needs for an affected child for the duration of the child’s life. There’s incentive on both sides to come to that range so they can mitigate the downsides of risk.
I guess as you get closer to the jury rendering its verdict, it becomes even more challenging, because you have all the facts on the table. You get a feel for how the facts and the presentations play before a jury. That’s probably a sweet spot in terms of coming up with a high-low agreement, as opposed to waiting to the last minute. But even so, at the last minute, maybe it is still a coin flip. Maybe nobody really knows and you’re all in the same boat, so to speak.
– Chris Schulte, JD
Unfortunately, egos can take over at that point. And I mean the egos of the attorneys, not of the physicians. Speaking in the voice of our hypothetical attorney: “I’ve invested my time and my effort – I want to win the case. I don’t want to settle the case.”
– Jeff Segal, MD, JD
It’s a gambler’s fallacy. Even though you’ve lost 25 times at the roulette table, you’ll be up next. Next time, you are going to win big.
– Chris Schulte, JD
Exactly. Exactly.
– Jeff Segal, MD, JD
Listen, we’re running tight on time. I have two additional questions – kind of the potpourri – and would like to hear your answers and feedback.
Is it reasonable to employ a private investigator to determine if a patient is living the life of someone who’s claiming a horrific injury? I remember we had a member physician of Medical Justice who was an ophthalmologist, and the plaintiff said that she couldn’t see at night. She claimed she had no vision whatsoever in a dark place. She even cut her deposition short, because she wanted to drive home before it got dark. Ultimately, they put a put a private eye on her and it turned out that after the deposition, she went straight to a movie theater.
She was watching a movie, eating popcorn. So, whatever challenges she had seeing in the dark, they weren’t so challenging that she couldn’t see a movie. That may not be the most egregious example, however.
But what about using a private investigator? Is it ethical to do so? Is it done frequently? What’s the purpose of doing it?
– Chris Schulte, JD
It is certainly ethical. It’s a strategic choice, based on the case, the nature of the injuries, and the likelihood the private eye will uncover valuable information. Surveillance with a private investigator, in any case, is usually a crapshoot. Financially, you’ve got to put the investigator out there for, God-knows-how-many-hours, and you’re trying to prognosticate, “When’s this person going to be active?”
9 times out of 10, I’m not going to know that – it’s a shot in the dark.
And so, you butt heads with the strategy and its consequences. I can put a private investigator on someone 7 days a week, 24 hours a day. And maybe I’ll get something good. Maybe I want to present that to the jury. But here’s the risk – the jury may look at your methods and say to themselves, “These people stalked the plaintiff.” And they’ll punish you for that.
There is a sweet spot as to how much time, how many hours you have on a plaintiff, etc. And where you cross into the territory of a stalker is variable. Ideally, the P.I. extracts all the data he needs on the first day. But that is extremely rare. Most of time, that doesn’t happen.
I have had it argued against me, just like I told you, that we spent too much time monitoring an individual – and like I said, the investigation was perceived as harassment. Or at least it was construed that way by the plaintiff’s attorney.
We stay away from kids. Almost exclusively, we stay away from kids.
And you must pick the spot where you’re going to do the surveillance. If you pick the wrong spot, you assume risk. For example – there was a time a P.I. monitored a motorcycle convention. Things got a little rough and rowdy.
It was potentially a great video, but they captured stuff that the jury would have likely never seen, anyway. The P.I. captured some images he probably took too many liberties in capturing. The judge threw out the whole thing. So, on the subject of private investigators, we use them, but they are a circumstantial strategy. It’s the exception, rather than the rule. It all depends on the injury.
– Jeff Segal, MD, JD
And sometimes it gets explained away. I remember when I was taking care of a worker’s compensation patient who was trying to make the case that he was fully and completely disabled, but he didn’t quite seem it. And so, the workers compensation company put surveillance on the patient. And this was a patient who said he couldn’t bend over and pick up his newspaper in front of his house. Yet the footage showed him in Indiana, getting into a car, driving across Illinois, going into a riverboat casino, and jumping up and down in front of a craps table with his leg up in the air, shouting “Seven, Come Eleven, Seven, Come Eleven!” When the patient was shown the video, the patient paused, and after a little while looked up and said, “Well, doc, some days are good, some days are bad.”
– Chris Schulte, JD
That’s a classic example of, “Well – you caught me on a good day.”
– Jeff Segal, MD, JD
I’ve room for one more question. And this is an important one. Ultimately, the relationship between an attorney and a doctor-client is a human one. What happens if a doctor doesn’t trust the carrier supplied attorney? What are his options? And does timing make a difference?
– Chris Schulte, JD
They’ll always have options, but some not as palatable as others. I would hope that if a relationship has not blossomed like I would like it to, or if it has soured like I don’t want it to, that I would have seen that outcome coming. And given my obligations to that client, I would have backed out and said, “You need to ask for a reassignment.” And it is likely I would have made that call beforehand – because I would’ve seen it coming.
But as much as the insurance carrier is entitled to a cooperative client in defending the case, so too is the client entitled to a lawyer who will zealously advocate his best interests. If neither one of those are happening, the insurance company is going to make some calls. Many insurance policies have a consent to settle clause – but they also have a clause that allows them to assume control if the doctor is not cooperative.
And if they invoke that clause, the case is done. Alternatively, if you don’t like your attorney, and you know you can’t resolve your differences, the insurance company has an obligation to assign you a different attorney. At the end of the day, the insurance company stands in a fiduciary relationship with its insured physician. And if the insurance company doesn’t do the right thing as a fiduciary, that company is going to encounter problems down the road.
And at that point, the insurance company will find counsel.
But like I said, I’m hopeful that in this hypothetical situation, I would have seen the described outcome coming and acted early.
– Jeff Segal, MD, JD
And timing also does matter. If the doctor has the belief that one week before trial, he can change captains of the ship here – or in this case, attorneys – but the judge may not allow it. It may very well be that the judge is on a timeline and realizes it would be impossible to get another attorney up to speed. And even if the magic is not there, the judge will likely say, “If the magic wasn’t there three months ago, you should have done something about it three months ago.” Correct?
– Chris Schulte, JD
That’s right. A late-game switch is probably not going to happen. The judge in that situation will rule against the change. The attorney may raise a stink and the physician may as well, but the judge will probably hold people’s feet to the fire. Like we said, the judge has a timeline. And a late-game switch upsets the timeline. Up until this unexpected request, everything has gone swimmingly. Discovery is over. The judge will likely say, “You guys are trying this case – hammer it out afterwards.”
– Jeff Segal, MD, JD
Chris, we’re up to the line in terms of time. I can’t thank you enough for participating today. You’ve been a wealth of information in terms of educating physicians and the public more broadly about the type of job you do and the challenges you face, as well as the things doctors should know if and when they are sued.
Do you have any final thoughts? Is there a question that I should have asked, but forgot to ask? And I’m not including Dr. Welby trivia at this point.
– Chris Schulte, JD
No, I think that we’ve covered the waterfront. This is Medical Malpractice 101. We’ve talked a lot about depositions, but the best practices we discussed are also applicable to trial. The same presentations and the same personality dynamics apply with equal force and effect. I’d tell the doctors in these claims, “Don’t worry about the lawsuit – because if you’re worried about this lawsuit, chances are you’re not worried about the patients sitting right in front of you. And I don’t want to see you a second time because this lawsuit was distracting you.”
So, let the attorneys deal with the headaches. That’s our job. You worry about your patients. That’s the most important thing.
– Jeff Segal, MD, JD
That is always solid advice. Chris, how do our listeners get in touch with you if they want to reach out?
– Chris Schulte, JD
My email address is cschulte@wsvlegal.com or my phone number 813-221-1154. Our website, which has all this information, is www.wsvlegal.com.
– Jeff Segal, MD, JD
And in addition to get the list of “How-To Rules for Depositions”, reach out to us at info@medicaljustice.com.com. Again, info@medicaljustice.com.com. Chris – thanks a thousand. Actually, thanks a million for joining us today. I hope you’ll come back and we’ll speak again. Thanks so much.
– Chris Schulte, JD
Thank you, Dr. Segal. I appreciate it.
