Series: Malpractice From A-Z Fifth of a Series of Five

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Series: Malpractice From A-Z

Fifth of a Series of Five

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by Phillip R. Dupont, JD & Maggie Nigro, JD

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After two weeks of trial, the judge enters the courtroom, turns to the jury and asks, “Ladies and gentlemen of the jury, have you reached a verdict?” The jury foreman responds, “Yes.” Time seems to stand still as the bailiff retrieves the verdict form from the jury foreman. There is a desert in your mouth as you scan the juries’ eyes looking for any hint as to the verdict. The lawyers stare down at their shoes and the plaintiff’s family holds hands. The judge begins to read: “On the claim of plaintiff against the defendant on Count I, we the members of the jury find in favor of . .”

The verdict is in. In a medical malpractice case there are few mixed results. The defendant doctor either wins the case in an outright defense verdict or a liability verdict is entered against the defendant doctor. Given these two potential outcomes, what are your options? If you win, do you have a claim against the plaintiff or plaintiff’s counsel? Will plaintiff likely appeal and, if so, what is the likelihood that plaintiff will win the appeal? How long will the appeal last?

If you lose, should you consider an appeal? Will you be reported to the National Practitioner’s Databank? Will an adverse verdict affect your hospital privileges? Are your personal assets in jeopardy if a verdict exceeds your insurance policy limits? What, if anything, should you do to protect your personal assets before a verdict?

This article will attempt to answer these questions.

Maggie L. Nigro, JD, is an associcate, and Philip R. Dupont, JD, is a member at Husch & Eppenberger, LLC, in its Kansas City, Missouri, office. They practice Iaw in the fields of general business litigation, health law and product liability and toxic tort. Husch & Eppenberger, LLC, acts as outside general counsel to the MSMA.

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The doctor defendant wins. Physicians take malpractice suits personally. Suits are an affront to their professional ability and often, as the case develops in discovery and in the courtroom, an attack on the physician’s personal integrity. It is rare that a physician defendant admits that he or she deviated from the standard of care so the physician almost always disagrees with the plaintiff and thinks the plaintiff’s expert is lying. Often times the physician will ask the defense attorney if the plaintiff, or the plaintiff’s lawyer can be sued for malicious prosecution.

The physician’s concerns are legitimate. In Missouri, health care defendants win over 70 percent of the cases that actually go to trial. Nearly 50 percent of the lawsuits filed against health care providers are dismissed. While there are many reasons why physicians who have the intestinal fortitude and patience to see a case through to verdict prevail, surely one of the reasons is many of the cases that are filed should never have been filed in the first place. The dismissal rate is high because plaintiff’s lawyers often include all health care providers involved in the patient’s care to avoid the possibility that one health care provider will blame another health care provider who is not a defendant in the lawsuit. More cases are filed and later dismissed because plaintiffs’ lawyers want to protect themselves1 from the statue of limitations

running. Regardless, the dismissal is a tacit admission to the physician defendant

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that the suit should never have been filed because it had no merit.

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There are practical and legal considerations in evaluating whether a physician who prevails either at the dismissal stage or at trial should bring suit for “malicious prosecution” against the plaintiff, or plaintiff’s attorney.

A primary practical consideration is, whether the physician defendant who prevailed really wants to dedicate more time, energy and emotion to pursuing a lawsuit? “Vengeance is best served cold” and there is no good way to quietly mount a stealth offensive against a former patient or plaintiff’s counsel. A lawsuit for malicious prosecution against the defeated plaintiff will require the physician defendant to retain new counsel because the attorney representing him in the underlying malpractice case will not likely file the suit if, for no other reason, the defense attorney may be a material witness and will be conflicted out of the representation. Also, for the same reasons that physician defendants often will not act as an expert witness for the plaintiff in the town or community where the two physicians practice, lawyers are extremely reluctant to sue another lawyer. Medical malpractice defense lawyers are even more reluctant to pursue such a claim because their practice is dedicated primarily to defense work, not plaintiff’s work. If the physician does find an attorney willing to prosecute a malicious prosecution claim, the physician will probably need to retain a medical expert to essentially prove the merits of the defense of the underlying case. In other words, the physician must prove a case within a case. The physician’s expert in the underlying medical malpractice case could be an appropriate expert, but often times this expert, particularly one who has attended trial, is unwilling to invest more time and energy to a case against a plaintiff.

Perhaps the most important issue the physician who wants to pursue a malicious

prosecution case against a plaintiff or a plaintiff’s attorney should consider is what can be achieved by suing. Courts are typically not equipped to render any form of justice other than money. Most plaintiffs do not have money or assets to satisfy a judgment. Most attorneys’ assets are protected to avoid a personal judgment. The attorney’s professional liability insurance usually will not provide coverage for a claim of malicious prosecution because the physician is not the client of the plaintiff’s counsel. In other words, it usually is only the plaintiff who can make a claim against the plaintiff’s attorney’s professional liability policy. At first a suit against the plaintiff or his attorney may seem like a good idea and may provide some ephemeral satisfaction to the physician, but, in the end, the practicalities of such a claim are usually unsatisfactory and undesirable.

An evaluation of the legal merits of a malicious prosecution claim should be considered as well. An essential component of bringing a claim for malicious prosecution is that the underlying medical malpractice case against the defendant ended in the physician defendant’s favor either by dismissal or at trial. Settlement of a medical malpractice claim by a physician will defeat any future claim by the physician against the patient or the patient’s attorney.

Any time a plaintiff brings a medical malpractice lawsuit against a physician and is successful in retaining a qualified medical expert to testify against the health care provider, the merits of a potential suit for malicious prosecution are probably eliminated. In other words, the fact that a plaintiff and his attorney were successful in obtaining the testimony or potential testimony of another member of the medical profession necessarily means that the physician will have a nearly impossible task in proving that the plaintiff and the plaintiff’s attorney did not have “reasonable grounds”2 to bring the suit. The expert

provided the reasonable grounds. Almost without exception claims by physicians against plaintiffs and plaintiffs’ attorneys

can only have merit when no expert could be found and no expert was retained by plaintiff.

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Although it is impossible to predict in an individual case, most unsuccessful medical malpractice plaintiffs do not appeal. There are many reasons why a plaintiff, in consultation with counsel, chooses not to appeal.

The decision to appeal is obviously made on a case by case basis but the likelihood of success on appeal is an important, if not the most important, consideration. Fewer than 20 percent of appeals are successful so the odds of successfully appealing a defense verdict are not good. The issues which lay persons typically consider good grounds for appeal are often a weak basis to appeal. For example, most decisions by judges on evidentiary issues are rarely challenged successfully on appeal and thus do not result in overturning a jury verdict. If the basis for the appeal is that a judge refused to allow a lawyer to ask a certain question or if the judge refused to allow plaintiff’s counsel to introduce a certain piece of evidence, the likelihood of success on appeal is slim. Appellate judges evaluate the trial court’s decision by asking whether the trial judge abused his or her discretion. Inherent in this standard is that trial judges have discretion and that appellate courts need not necessarily agree with that discretion. Rather, appellate courts consider the trial courts’ ruling under a much stricter standard of whether there was an abuse of discretion by the Court. This narrow standard makes an appeal based on an adverse evidentiary ruling unlikely to succeed.

An appeal based on a faulty jury instruction is much more fertile grounds for a successful appeal. In Missouri, the Supreme Court has issued Approved Jury Instructions. The instructions are designed to provide consistency throughout the state in instructing juries on most types of lawsuits, including medical malpractice lawsuits. The

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instructions are required and deviations from the instructions as written by the Missouri Supreme Court are strongly discouraged, even if the judge and litigants believe a slight change in phrasing will improve the instruction. Because the Approved Jury Instructions have been in use by Missouri judges in some cases for over 30 years, there are fewer and fewer instances of instructional error. Judges understand that lawyers for both sides attempt to insert minor modifications to the instructions for tactical advantage but judges ordinarily find a path between the two advocates’ positions. That path is most often the exact language of the Missouri Approved Instruction. If a prejudicial modification of an approved instruction is the basis of an appeal, the appeal has a decent chance of succeeding. In addition to the poor chances of success on appeal, plaintiffs undergo the same practical considerations in deciding whether to appeal that anyone would undergo in deciding to prosecute or further prosecute a lawsuit. If the basis for appealing would not likely change the ultimate outcome of the case, then a plaintiff might choose not to appeal irrespective of the merits. A typical example is juror misconduct. Often attorneys will intentionally ask questions in jury selection that the lawyer knows may not cause one or more potential jurors to respond. A typical question is “has any member of the jury panel been a party to a lawsuit before?” Lawyers know that many jurors forget that a divorce or a bankruptcy are in fact lawsuits and the plaintiff’s lawyer may not remind them. If defense counsel does not catch the ambiguity and it is later revealed after a verdict against the plaintiff that one of the jurors had been a party to a lawsuit, then Missouri courts have in the past concluded that the juror’s failure to disclose this fact during jury selection constitutes juror misconduct. This will result in a new trial if the appeal on this point is successful. In evaluating whether to pursue an appeal based on juror misconduct, however, the plaintiff and

plaintiff’s counsel will consider whether the fact that one juror failed to disclose a bankruptcy or divorce will actually influence the ultimate outcome of the case. Most lawyers would conclude that a different verdict is unlikely. Nevertheless, creating the circumstances for juror misconduct is a known strategy designed to achieve an easy appeal in the event the plaintiff does not like the result. Finally, a physician and the insurer will naturally consider whether to settle a case, even though there was a successful defense verdict to avoid the appeal and to avoid a possible new trial. Once again, this decision can only be made on a case by case basis but given one defense verdict and plaintiff’s slim chance of success on appeal, settlements by physician defendants after a successful trial are rare.

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When the judge reads that the jury verdict is for the plaintiff, the health care defendant is crushed. While the amount of the verdict has some impact, the real blow is that plaintiff’s challenge to the physician’s professional competence has been confirmed. After months of discovery, hard work and confrontation, the claims made by the plaintiff, the plaintiff’s attorney, and the plaintiff’s experts who the physician has come to loathe and even demonize, have been believed and supported by twelve supposedly impartial jurors. It is embarrassing. What are the physicians options, and what are the considerations?

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Although statistics are not readily available, verdicts against health care providers are more often appealed than verdicts against plaintiffs. One of the reasons health care providers appeal more often than plaintiffs is that physician defendants have the financial resources of an insurance company to finance an appeal. Generally, the assets and finances required to fund an appeal are not the physician’s, so the decision whether to

appeal is often a business decision made or at least influenced by the insurance carrier. The decision to appeal is also often used as leverage by the defendant/ carrier to obtain a more favorable settlement. A plaintiff who has obtained a favorable verdict has everything to lose and will often compromise a verdict by 10 to 15 percent of the verdict to avoid an appeal. A physician on the other hand may feel it can’t get worse so why not appeal. Ultimately, the decision whether to appeal or not is made with the advice of counsel with considerable influence by the insurance carrier.

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Opinions about what it means to physicians to be reported to the National Practitioner’s Databank vary from philosophical to obsession. Some physicians understand that being reported four or five times means virtually nothing and do not base settlement decisions on whether they will be reported to the National Practitioner’s Databank. Other physicians obsess over the possibility of being reported to the National Practitioner’s Databank even once. They want “a clean record” throughout their entire career.

Physicians are reported to the National Practitioner’s Databank any time money is paid on their behalf. Money can be paid to satisfy a judgment, or it can be paid because of a settlement. Either event is reportable. Usually the money is paid by an insurance company and the insurance company has the obligation to submit the reporting information to the databank.

Although not condoned by the National Practitioner’s Databank, there are ways to avoid a reporting to the National Practitioner’s Databank. In a case where there are multiple defendants covered by the same insurance company, the physician defendants, the lawyers and the carrier can agree that a settlement is made in the name of only one defendant. The non-settling defendants are

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dismissed. No reporting is required because no payment was made on behalf of that defendant. Ordinarily, plaintiffs’ attorneys do not mind structuring a settlement in this way and most plaintiffs’ attorneys and plaintiffs show little interest in forcing a defendant physician to enter into a reportable settlement. Obviously, one physician defendant must accept the fact that, by settling in his or her name, a report to the National Practitioner’s Databank will be made by the carrier.

In the case of physicians employed by hospitals or clinics who are defendants in a lawsuit, the settlement can be made in the name of the institution alone. Hospitals and clinics do not get reported to the National Practitioner’s Databank. Only physicians are reported. Here again, the physician is dismissed with prejudice before the settlement is concluded and no reportable event occurs. These methods are not necessarily approved methods to avoid a reporting. Because the insurance carrier is ultimately responsible, avoiding a reporting is not always possible or appropriate.

In those instances where the physician is dismissed with prejudice, in addition to not being a reportable event, the physician can enjoy responding to insurance applications and applications for staff privileges which ask about prior suits by disclosing that suit was filed but that the physician was dismissed with no payment.

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Any physician who has been sued by a patient with catastrophic injuries fears the possibility that his or her personal assets are in jeopardy. A verdict over the applicable coverages is known as an “excess judgment.” Oftentimes the threat of an excess judgment compels a physician to settle “within the policy limits” to avoid the risk of an excess judgment.

The threat of an excess judgment cannot be taken lightly. Having said that, we have never heard of a physician ever

paying a dime from his or her own pocket to settle a case or satisfy a judgment. There are several practical reasons why a physician’s assets are almost never touched.

First, physicians often demonize plaintiffs’ attorneys and much of the demonization includes the claim that plaintiffs’ attorneys are only in it for the money. If this is true, physicians would also assume that plaintiffs’ attorneys are only interested in the easy money and that means they are only interested in the proceeds from an insurance policy. Whatever their motive it is true that plaintiffs’ attorneys are usually interested in only the insurance policy. Plaintiffs’ attorneys understand that the business of chasing a physician’s personal assets is often economically untenable and unsatisfactory. Another possibility and one that many physicians who demonize plaintiffs’ attorneys will not agree with, is that plaintiffs’ attorneys are a businessmen and intend the physician no personal financial harm. Whatever the motive, it is very clear that in 99.9 percent of the cases, the lawyer wants no more than the applicable and available insurance coverage.

The second practical reason why physicians’ personal assets are rarely exposed is the old doctrine of joint and several liability. Before tort reform in August of 2005, there was some threat of joint and several liability. As a consequence, physician defendants in a suit where there were multiple defendants were more willing to settle to avoid the possibility of having to pay a portion of a codefendant’s judgment. With tort reform effective in August of 2005, joint and several liability was nearly eliminated. Although there has been as yet no discernable change in the instances where physicians’ personal assets are touched, it is possible that one of the side effects of tort reform’s near elimination of joint and several liability is that the instances of excess judgment will increase since a co-defendants insurance policy is no longer available to satisfy a judgment. As a

result, physicians may want to purchase greater amounts of insurance.

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It is impossible in the context of this article to fully and adequately discuss mechanisms for protecting a physician’s assets from a judgment by a successful plaintiff. Consultation with a debtor’s rights or an estate planning attorney is essential. Both areas of law are highly specialized. Attorneys who practice in the area of debtors and creditors’ rights and estate planning often dedicate their practice exclusively to these areas. Your medical defense attorney is highly specialized in trial work and is not likely to be the appropriate attorney to protect your assets. Irrespective of the threat of a judgment, every physician should contact an estate planning attorney to establish an estate plan which avoids taxes and minimizes probate.

One method of protecting assets is to place the assets in a trust. A revocable trust or living trust – often created to avoid probate and minimize estate taxes – will not shield assets from creditors. Revocable trusts essentially leave assets in your control as creator of the trust and, therefore, the trust assets are not exempt from execution. On the other hand, Missouri law allows for the creation of an irrevocable trust in the form of a spendthrift trust, where assets are placed in trust by the physician for the physician’s benefit in order to shield assets from creditors. It is important that the trust be administered by a third party and distributions from the trust for the physician be subject to the third party Trustee’s discretion. There are specific statutory requirements to achieve asset protection with a spendthrift trust and consultation with an estate planning attorney to meet the requirements is essential. The downside to a spendthrift trust is that the physician permanently loses control of the assets placed in the trust.

Another way to protect assets is to transfer assets to others, such as the

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physician’s spouse or children. The gift could be outright or in trust. Again, it is important to consult an attorney to discuss the estate and gift tax effects of such gifts. In Missouri, property held in joint tenancy by the entirety is immune from creditors of one of the spouses. More often than not, married couples in Missouri hold their homes and other and property in joint tenancy by the entirety. Unmarried physicians do not enjoy such protection and are protected only by a homestead exemption under bankruptcy rules.

A physician’s 401k, Individual Retirement Accounts (IRAs), and other qualified plan funds are typically not subject to creditors claims. It is therefore important for physicians to maximize contributions to these plans.

Finally, the creation of a family

limited partnership provides another highly technical way to protect assets. While creditors can obtain a family limited partnership interest belonging to the physician, that interest is often illiquid and of little value.

Although protection of the assets is discussed in this, the last in a series of five articles on Malpractice From A-Z, asset protection should begin now. Waiting until a judgment is imminent or entered creates the possibility that the physician is conveying property to avoid a known or potential creditor. This is known as a “fraud on creditors’ rights” and, if proven, will void a transfer of assets and make the asset subject to a creditor.

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1. Under the Savings Statute, a plaintiff can extend the Statute of Limitations by up to one year if suit is filed and then dismissed.

2. The Missouri approved jury instructions contain the essential elements of a claim for malicious prosecution. Missouri approved instruction 23.07 titled “Verdict Directing – Malicious Prosecution – For Initiating or Continuing Criminal or Civil Actions reads as follows:

Your verdict must be for plaintiff if you believe: First, defendant [instigated], [‘continued’] a judicial proceeding against plaintiff [the defendant] but terminated in favor of plaintiff, and second, in so doing, defendant acted maliciously and without reasonable grounds, and third, plaintiff was thereby damaged.” Under MAI 16.01(a), “maliciously” is defined as follows: “The term ‘maliciously’ as used in this instruction means intentionally doing a wrongful act without just cause or excuse. It does not necessarily mean hatred, spite or ill will.”

MAI 16.06 defines “reasonable grounds” as follows: “The phrase ‘reasonable grounds’ as used in this instruction means that under the circumstances an ordinarily careful person after having made a reasonable inquiry would have believed the facts alleged that the judicial proceeding was valid.” MMMMMMMMMM

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