Mediation ins and outs for medical malpractice cases

 

Getting ready for successful mediation and trial starts when the lawsuit is filed

 
August 31, 2018

Mediation is a part of virtually every civil lawsuit in many Texas.

In Harris County, for instance, most judges issue standard scheduling orders that require mediation, or an objection to be filed, by a certain deadline. If there is not a good ground for an objection, it is often overruled.

I read a horror story today about a judge’s ruling in a case in Conroe, Montgomery County, Texas. The attorneys appeared at a docket call (pre-trial hearing) to announce ready for trial. When the judge found out that they had not mediated the case, she dismissed the case. Both sides offered to mediate before the trial was scheduled to start in a week and a half, but the judge would have no part of it.

As a Houston, Texas medical malpractice lawyer, I am frequently in mediation. In fact, I mediated a medical negligence case today in which my client alleged that two surgeons were negligent in treating her, leading to a lengthy battle with an infection.

I am writing this article for those who are unfamiliar with mediation and as a resource for my clients who will be attending mediation with me in the future.

Planning ahead to give it the best shot for success

One of the worst things that attorneys can do is schedule mediation prematurely. It will almost certainly fail and can poison the well in terms of potential future negotiations.

In my view, competent plaintiffs’ attorneys should start preparing for mediation and trial as soon as they file the lawsuit.

This includes collecting affidavits and evidence to prove the plaintiff’s past and future medical expenses, past and future lost earnings (loss of earning capacity), and any other evidence necessary to prove the damages, or money, that the plaintiff seeks in the lawsuit. The depositions of the parties and any other fact witnesses need to be completed, as well as any medical or nursing experts designated by the plaintiffs.

To give mediation the best chance to succeed, the plaintiff’s lawyer should make sure that all of this information is complete and available to the other side at least six weeks before mediation. That allows ample time for the defense lawyers to report back to the insurance carriers with information, analysis, and recommendations, and then time for the carriers to study the case. At the conclusion of all this work, the insurance adjuster handling the case will be empowered with a certain authority—an amount of money—to pay to settle the case.

Liens and subrogations

Another issue that requires advance planning by an experienced plaintiff’s lawyer is so significant that it deserves to have its own heading.

If Medicare or Medicaid paid any portion of the medical bills related to the alleged negligence, they have an automatic “super lien” on any recovery. I call it a “super” lien because, as the government, they can go after everyone to enforce it—plaintiffs, defendants, their lawyers, and insurance companies. Dealing with Medicare is slow and excruciating, so it’s best to get an early start. Medicaid is usually a bit faster.

If an employer-based (ERISA) health insurance plan paid any portion of the medical bills at issue in the lawsuit, then they may have a contractual right of subrogation. It may be easier to think of subrogation as another type of lien. If a plan places the plaintiff or plaintiff’s attorney on notice, then the attorney is obligated to resolve the subrogation before disbursing funds. The interpretation of ERISA plans is a complex area of the law where the devil is in the details. It takes time to obtain the relevant plan documents and makes sure that the insurance company, or subrogation agent, is not overstating the insurer’s right to subrogation.

So, what’s the bottom line on liens and subrogations? They allow Medicare, Medicaid, or the plaintiff’s health insurance company to swoop in at the last minute with their hand out to take a portion of any settlement. In my practice, I investigate liens and subrogations early in a lawsuit, so we can understand—and share with defendants and their carriers—how these third-party demands may increase the amount of necessary to settle a case. After all, plaintiffs and their attorneys aren’t interested in developing and investing in a case just to turn all the money over to the government or an insurance company.

Confidential and non-binding

First and foremost, mediation is a confidential, non-binding process. From a plaintiff’s perspective, it is essentially the process of using the day to find out who much money the other side brought to the table, if that number can be increased, and if it is enough to settle the case.

Mediation is confidential in the sense that if the case does not settle, neither side can repeat or use anything said during mediation to the judge or jury.

Importantly, mediators have no power to order the parties to do anything except show up and work through the process. They can’t require the defendant to pay a dime and can’t require a plaintiff to accept even an excellent settlement offer.

Mediators and cost

Mediators host mediations. Mediators are typically experienced attorneys or retired judges who are neutral and have” no dog in the fight.” One mediator that I have used in several cases is a former insurance company adjuster. He’ss not an attorney, but I think he is highly effective.

In terms of cost, the going rate for a medical malpractice mediation in Texas is around $1,500 to $2,000 per party.

Opening session

Typically, mediations begin with a general session, where all the parties meet in a single room with their attorneys, insurance company representatives, and the mediator. The mediator begins by explaining how mediation works and then gives an opportunity for the attorneys to give opening remarks.

By the way, the parties typically do not speak at the opening session. When I have seen it happen, it really hasn’t gone well. Lawsuits are so emotionally taxing on both sides that I think it is preferable to let the attorneys do the talking.

Ten or 15 years ago, attorneys for both sides would prepare elaborate PowerPoint presentations and go through the evidence and their positions on the case. I think these lengthy presentations sometimes backfired and made the sides “dig in” to their positions.

On the other extreme, some lawyers now skip opening statements all together. In certain cases that may make sense, but most of the time I think it is unwise.

In my view, plaintiffs’ attorneys should use the opening statement as an opportunity to speak directly to the defendants and their insurance carriers. The length and style of the opening statement at mediation has to be decided on a case-by-case basis.

In my mediation opening statements, I typically focus on key admissions of the defendant either from their deposition testimony or from the medical records. I then like to end with a discussion of recent appellate cases that have upheld jury verdicts and judgments in favor of plaintiffs (patients).

Physician consent

Going into many medical negligence mediations, a big looming question is whether each defendant doctor will consent.

You’re probably wondering—what is consent? Almost all medical malpractice insurance policies require the physician insured to consent, or give permission, to settle before the insurance company can pay any money to settle the claim.

Some doctors decide to withhold consent, I think, because they got bad advice that made them overly-concerned about any settlement appearing on their record with the National Practitioner Databank. The databank is a federally-mandated confidential reporting system for healthcare providers. Any time a lawsuit or claim is filed against a doctor, it must be reported to the databank. The same is true for any settlement or jury verdict. When physicians apply for staff privileges to work at a new hospital, hospitals check the databank for any negative information.

In my view, the better way for healthcare providers to look at medical malpractice insurance is to consent to settle and then let their insurance companies pay to make the case go away and eliminate the risk of going to trial.

In the end, though, the decision is up to the doctor. Thus, it is important to know going into a medical malpractice mediation that there may be an obstinate doctor who refuses to consent and derails settlement.

Let’s step back to the topic of opening statements at mediation for a moment. When physicians are defendants, I like to end my mediation opening statement with a quick discussion of recent jury verdicts and appellate decisions. This gets their attention and I think it positively influences them to consent to settle. In the last few mediations, I have highlighted the Texas Supreme Court’s 2018 opinion in Gunn v. McKoy, which upheld a jury verdict and trial court judgment of over $10 million against a Houston doctor. That case certainly generates attention.

After the opening

When the opening statements are finished, the parties separate and retreat to their own “safe spaces.” In fact, the opening statement is typically the only time during mediation that the plaintiffs will see the defendants. Once the parties are settled in their own rooms, the mediator starts some “shuttle diplomacy,” typically starting with the plaintiff.

During the initial meetings with each party, the mediator gets acquainted, establishes rapport, and asks questions.

In the plaintiff’s room, the mediator will get a demand to share with the defendants. The plaintiff’s initial demand is the starting point of the negotiation. The initial demand has to be carefully thought-out. If it’s too low, you leave money on the table. If it’s too high, it gives the defense the impression that you incorrectly evaluated the case and can make it harder to settle the case.

Next, the mediator goes to the defendants’ rooms, runs through the same process, and leaves with offers to share with the plaintiff.

Early in the day of mediation, the parties may send messages back and forth, through the mediator, with points from the evidence that they want to emphasize. As the day proceeds, though, usually after lunch, the back and forth focuses more on demands and offers of money. One mediator that I’ve used likes to say “I have to feed ‘em first,” referring to getting the insurance adjuster to loosen the purse strings and start making realistic offers.

After three or four of these moves, a good mediator and lawyer will be able to tell where the defense side is headed. At that point, the plaintiffs and their attorney should talk about the risks and benefits of trial versus settlement.

Now is a good time to say that with each and every demand and offer, the client is in the driver’s seat. Lawyers are there to advise and counsel  clients, but the client is the ultimate decision-maker.

Once the final offer is on the table, the plaintiff must decide whether to accept it or walk away and take the case to the judge and jury at trial. I never tell a client that “you should take this money,” but if I find an offer to be within a reasonable range for the case, I will encourage them to strongly consider it.

There are several factors that I recommend plaintiffs consider. The easy one is is the amount of the offer in comparison to the plaintiff’s best-case scenario in court. There is the risk of going to trial and getting nothing. There is the risk of going to trial and winning but getting an intermediate award that is less than what the plaintiff asked for. And there is the fact of the additional expenses of trial, which are paid out of the plaintiff’s share of any recovery.

Settling the case

When a case settles at mediation, the mediator will prepare a short, written agreement for the parties to sign, which describes the basic terms of the deal. Although it is a legally-enforceable contract, defense lawyers invariably prepare a more comprehensive agreement for plaintiffs to sign a few weeks after mediation.

One of the key terms in most medical malpractice settlement agreements is confidentiality. Doctors, hospitals, and insurance companies want the dollar-amount of the settlement, and sometimes the fact of settlement itself, to be kept secret.

Most settlements fund within 30 days of mediation. Generally speaking, a settlement for damages because of personal injury (which includes medical malpractice) is not subject to income tax. The relevant statute for this law is Section 104(a)(2) of the Internal Revenue Code of 1986, as amended.

My impression of mediation

In 1947, Winston Churchill famously said to the House of Commons, “it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time…”

That is exactly how I feel about mediation.

Mediation is expensive in terms of time and money. Clients find the all-day experience to be physically and emotionally exhausting. Yes, I think that attorneys should be able to work out many cases without mediation. Yet, mediation is popular because it often works.

I mentioned earlier that I mediated a case today. The mediator, a retired judge, started the opening session by saying that mediation works about 98% of the time. Why is that?

I think, in large part, that the success of mediation is it puts a date on the calendar when all the decision-makers set aside a day to talk about settling the case. It brings to mind another saying, “If it isn’t scheduled it isn’t done.”

We are here to help

If you or a loved one has been seriously injured by hospital or care, then the experienced medical malpractice attorneys at Painter Law Firm, in Houston, Texas, are here to help. Click here to send us a confidential email via our “Contact Us” form or call us at 281-580-8800.

All consultations are free and, because we only represent clients on a contingency fee, you will owe us nothing unless we win your case. We handle cases in the Houston area and all over Texas. We are currently working on medical malpractice lawsuits in Houston, The Woodlands, Sugar Land, Conroe, Dallas, Austin, San Antonio, Corpus Christi, Bryan/College Station, and Waco.

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Robert Painter is a medical malpractice attorney at Painter Law Firm PLLC, in Houston, Texas. He is a former hospital administrator who represents patients and family members in medical negligence and wrongful death lawsuits against hospitals, physicians, surgeons, anesthesiologists, and other healthcare providers. A member of the board of directors of the Houston Bar Association, he was honored, in 2017, by H Texas as one of Houston’s top lawyers. In May 2018, the Better Business Bureau recognized Painter Law Firm PLLC with its Award of Distinction.

Robert Painter

Robert Painter is a medical malpractice lawyer at Painter Law Firm PLLC.

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