The Insurance Company in a Medical Malpractice Case

A patient's medical malpractice lawsuit is really against the insurance company, rather than the doctor or health care facility responsible for the mistake.

A patient may be surprised to learn that when a doctor is sued for medical malpractice, the doctor generally has little involvement with the case as the lawsuit progresses. Instead, the doctor’s malpractice insurance carrier appoints an attorney to defend the doctor. That attorney, who is also paid by the insurance company, then defends the case on behalf of the doctor, and if the patient wins, the insurance company generally pays the full amount of the judgment.

So, in reality, the patient’s medical malpractice lawsuit is more against the insurance company than it is against the doctor or health care facility responsible for the mistake. The doctor is the named defendant -- and will participate in discovery procedures like interrogatories and depositions -- but the insurance carrier is the party who puts up the day-to-day fight.

Read on to learn more about the implications of medical malpractice insurance, including how insurers approach settlement, and the roles of attorneys and expert medical witnesses play in resolution of a case.

Insurance Policy Limits and Settlement Options 

In most medical malpractice cases, a settlement or court judgment will be paid by an insurance company (not by a doctor who has committed medical negligence), so every patient should understand how the defendant's liability insurance policy limits will affect the case.

To illustrate, imagine a doctor makes a particularly egregious error that causes significant injuries. The patient's attorney believes that if the case were to go to trial, a jury would award about $1.5 million. The doctor’s malpractice insurance policy has a limit of $1 million. The insurance company believes that the patient has a pretty good case and that a jury might award up to $1.5 million, but that a jury could also award less, and there is a remote possibility that the jury will side with the doctor and find that no malpractice occurred. Assume that the patient's attorney offers to settle the case for $1 million. Will the offer be accepted?

It is important to remember that the insurance company -- not the doctor -- will decide whether to accept or reject settlement offers. In this case, the insurance company will probably reject the offer because it has little incentive to accept. If the case goes to trial and a jury awards $1.5 million, the insurance company will only have to pay $1 million (because that is the policy limit). The doctor will technically be responsible for the rest of the judgment. If the case goes to trial, the insurance company could pay as little as zero in damages. So, the insurance company might as well take its chances at trial if the best settlement offer it can obtain is $1 million.

Attorneys and Experts Appointed by Insurance Companies

In-House Attorneys

Often, an insurance company will rely on an in-house attorney (one that works exclusively for the insurance company) to handle a medical malpractice case. This has a couple of implications.

First, the insurer's legal costs may stay low, relatively speaking. The insurance company does not have to pay the attorney by the hour. As a result, the insurance company will have little financial incentive to avoid a long pretrial process.

Second, in-house attorneys litigate hundreds of similar cases. Whereas a doctor may have an emotional or reputational stake in a case, an insurance company’s attorney will not. So, every decision made by the attorney will be a careful calculation based on a number of different economic and strategic factors.

Expert Witnesses

An insurance company will usually appoint an expert medical witness (or multiple experts) to provide opinions and proffer evidence that favors the doctor and the choices that he or she made in choosing and carrying out the course of treatment that led to the malpractice allegations. The expert understands that the insurance company is paying for his or her opinion, so there is no question as to which side of the case the expert's opinion will reinforce.

So, it is important for the patient to be skeptical of an insurance company that says, “You don’t have a case. We submitted this case to an expert who confirmed that the doctor did everything right.” That may be an accurate representation of the expert’s opinion, but the caveat is that the expert almost always agrees with the insurance company writing the checks. And the patient (through his or her attorney) will counter the insurance company's position by retaining their own expert witnesses who will show how and why the doctor's conduct rose to the level of medical malpractice. In this way, many medical malpractice cases often come down to a so-called "battle of the experts," especially at trial.

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