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Posted 09.25.07

 
 
   

Malpractice Settlements Tied to Patient Care, Legal Researcher Finds

COLUMBIA, MO - Critics of malpractice law contend the civil justice system operates like a lottery - outcomes turn on luck of the draw rather than justice. That's hardly the case, according to a University of Missouri-Columbia law professor, whose review of two decades of research studies shows that settlements are neither random nor irrational. Instead, settlement outcome are tied closely to the quality of care provided to the patient.

Philip Peters.Philip Peters, who is the Ruth L. Hulston Professor of Law at MU, found that the likelihood of receiving any settlement at all and the amount of compensation paid are both closely related to the strength of a plaintiff's medical malpractice claim. His conclusion is based on an extensive review of all the empirical studies. Those studies cover a period from 1989 to 2006. They include state-based studies in New Jersey, Michigan and North Carolina and national studies based on the experience of both major insurers and selected specialties.

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Peters' synthesis of this research revealed that payment is most likely to occur when the quality of care was poor, less likely when it was uncertain and least likely when it was good. He also found that settlement amounts are lower when the quality of care was good, higher when the quality was too-close-to-call, and highest when the quality of care was poor.

"The studies say that medical malpractice cases are settling just as we would expect them to settle in a sensible system, and that's true for the great majority of cases," Peters said. "By and large, the outcomes are pretty close to what you'd reasonably expect as a lawyer for either a doctor or a patient. That's because lawyers calculate the value of a fair settlement by multiplying the damages sustained by the patient by patient's probability of winning. Weak cases have at best only a small settlement value, while strong cases have a settlement value that is close to the total amount of the patient's damages. Physicians don't like these outcomes because they think that settlement outcomes should look more like trial verdicts, where a weak case gets nothing."

Peters said only 10 to 20 percent of the weak cases actually result in payment, which is typically just a token amount for forgiveness of unpaid medical expenses. He said strong cases settle at a much higher rate - 80 to 90 percent - and for a much larger payment. Borderline cases, he said, fall in the middle.

"The odds of collecting a settlement increase based on the strength of the evidence against a doctor who has been accused of carelessness," Peters said. "The patients with the strong cases have a very good chance of getting some recovery. The patients with the weakest cases are likely to get nothing."

Although the findings won't surprise any practicing attorneys, Peters said there remains a "cloak of secrecy" about the resolution of malpractice claims that leaves the public unsure which claims about them to believe. His research aims to educate the public about this aspect of the legal process.

"Jury verdicts are public, but settlements are private," he said. "The goal of my research is to eliminate all of the mystery. We have almost 20 years of research and data documenting what has taken place in secrecy. 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. 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."

The article, "What We Know About Malpractice Settlements," was published in the September issue of the Iowa Law Review. An abstract is available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=891120.

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