Give an overview of how costs are handled from the defense side, showing that the lawyers who are driving the settlement or litigation of a case are not risking their own assets or investing in cases. Contrast this to the plaintiff's lawyers risks and out of pocket during the pendency of a case. The goal is to give readers a deeper appreciation of why plaintiffs lawyers must be selective and what a privilege it is to have a successful firm select a case.
When a healthcare provider secures a malpractice insurance policy, they consider a bevy of factors and tailor a policy that best fits their needs. An insurance policy is a complex, multi-faceted proposition. If a claim is brought against an insured provider, the insurance company has express authority over how the defense funds will be allocated. Furthermore, they strictly monitor and audit how they are spent. These funds are readily supplied to the defense lawyer, who is almost never a one-time client of the insurance company. Defense attorneys for such claims have an active, ongoing relationship with the company who routinely and systematically supplies them with cases. This business relationship which sees the insurance company acting as “boss” sets up a dynamic in which the defense lawyer is forced to provide the most cost effective defense. The insurance company may pressure the attorney or firm into cutting corners to ultimately save the company money, as they are the ones funding the defense.
Medical Malpractice Attorneys and Litigation Costs
Perhaps the chief difference between the plaintiff attorney and the defense attorney is the financial risk incurred during a medical malpractice case. The defense attorney not only has steady employment in the form of a steady string of cases from the liability insurance company, they also do not put their own money down in order to defend the case.
Plaintiff attorneys, to contrast, might well be characterized as “investors” in their plaintiff's case. They are using their own assets and funds to finance the prosecution of their client's claim. If the claim is lost, the plaintiff is awarded no money but the plaintiff attorney loses all money they'd poured into the case. These include costs associated with research, compensating expert witnesses, filing fees, and the hours of their time spent on the case. If the case is lost, the money the plaintiff attorney spent on these resources is lost as well. For this reason, plaintiff attorneys are extremely selective about which cases they choose to represent. The incredible amount at stake for the attorney and firm creates an atmosphere of extreme selectivity and discernment. Plaintiffs legal representatives are shrewd and made with meticulous consideration. If a successful firm chooses to pursue your claim of medical malpractice, you should be excited for a number of reasons. Placing your claim in the hands of a successful firm not only means it will be expertly represented, but this decision speaks to the raw merit of your case. Answering to no higher power like an insurance company, the plaintiff firm is free to pursue your claim with no third party restraints. They litigate on behalf of you and you alone, not forced to consider the financial interests of a corporation in the course of representing you.
Plaintiff attorneys render a great service to those who have been injured or otherwise harmed by medical malpractice, as they take on enormous personal risk in order fight for the injured party's compensation. Without plaintiff attorneys and the contingent fee arrangement, they offer, at great risk to themselves, a pathway to the courthouse for injured claimants. If this were not the case, injured claimants would face substantial obstacles in their efforts to get their claim heard in court. As the injury was unexpected (unlike liability claims, which doctors anticipate and insure against), most prospective plaintiffs do not have the starting capital on hand to retain an attorney and commence litigation. This is why plaintiff attorneys offer contingency fee arrangements, in which the plaintiff pays nothing at all for the cost of defense unless the claim is won. The attorney will be awarded a percentage of the settlement, as compensation for their services. The full financial autonomy and high financial risk incurred by of plaintiff attorneys are the chief differentiating factors between plaintiff and defense attorneys in medical malpractice and other personal injury or liability claims.
Medical Malpractice Insurance
To explore the cogs and gears of how defense handles the cost of fighting a medical malpractice claim, the best place to begin is the insurance policy that was set long (or shortly) before the claim arose. For our purposes, ‘the physician' will be a stand in for any healthcare provider prospectively seeking liability insurance. The insurance company usually offers the prospective physician client a choice between two kinds of policies - these may be referred to as ‘defense inside the limit' and ‘defense outside the limit.' Defense inside the limit refers to a policy that would set a limit of coverage that encompasses both the costs of the defense and any potential settlement payout.
For example, a policy limit is $1,000,000 and the physician has opted for a defense inside the limit policy. If a claim is brought against them, let's say the cost of defending it is $800,000. When all is said and done, the jury awards the plaintiff $475,000 in economic and noneconomic damages. There is only $200,000 left in the physician's policy coverage, so they would be forced to pay the remaining $275,000 of the settlement out of pocket. A ‘defense outside the limit policy' allows separate limits for defense costs and court-awarded damages. This way, the cost of defending a claim does not ‘count against' the limit set for court awarded damages, because there are two discrete limits for these two discrete elements of the defense. Whichever policy type the physician opts for could determine their financial situation at the conclusion of a lawsuit.
Defense costs are meticulously supervised by the insurance company. Certain protocols are in place to monitor the legal expenses and ensure they do not balloon out of proportion. The insurance company touts these measures as efficient and focused, they may be characterized as cost-skimming. Defense attorneys will routinely report to the insurance carrier and make an explicit request should they need to retain an additional expert or some other additional cost.