Eric Turkewitz

Medical Malpractice Economics

Cross-posted from New York Personal Injury Law Blog

Two weeks ago I wrote Medical Malpractice - A Primer, directed toward members of the medical community due to a recurring theme I saw on medical blogs: The idea that such suits are brought cavalierly. (You can this in the comments section of blogs such as Flea, GruntDoc, and Kevin, M.D.)

I promised a follow-up on how cases are selected by a plaintiff's attorney, but first want to deconstruct the time and money needed if the matter is taken. For only by understanding the time and money risks can one appreciate the importance of careful screening for potential litigation.

Though all cases are different, let's assume this simple fact pattern: A 10 month delay in diagnosing and treating breast cancer in a 50 year old woman with a husband and two kids, one of whom is a minor. Her cancer has now spread to two lymph nodes. She has a part time business. All parties and witnesses are local.

The following time and money costs must be assumed to take such a case to verdict:
1. Obtain all medical records of any kind for her;
2. Expert review on the issue of negligence (perhaps a radiologist or OBGYN, depending on the facts of why the cancer was allegedly missed) prior to taking the matter, intermittent reviews as needed during litigation, and a day in court for trial;
3. Expert review on the issue of causation and damages (likely an oncologist), and a day in court for trial;
4. Expert review on the issue of lost wages or household services (economist or vocational economist) and a day in court for trial;
5. Cost of depositions (doctors, nurses and other witnesses);
6. Possible videotaping of depositions for those who may not be present for trial;
7. Daily copy of transcripts from trial;
8. The purchase or creation of demonstrative evidence to explain the medicine, facts of the incident or injuries to the jury. This could be anything from enlargements of documents and x-rays, to medical models, custom illustrations or video footage, as warranted; and
9. Due to personal circumstances of the sick woman and her family, they can't pay the out-of-pocket costs.

Since the case will always be thrown out without an expert (with the exception of the rare res ipsa case, such as the retained clamp above), the liability and causation experts are not optional.

The attorney's time involved for litigating the case for a few years will entail record reviews, expert discussions, document drafting, depositions (and prep), possible motion practice, and 5-10 court conferences. It will probably be a two week trial if all goes very smoothly -- but depends on the judge's schedule, the schedules of the experts on both sides, and the longwindedness of the attorneys -- and can very easily go longer. It will, in sum, likely be several hundred hours, though it could be more. The opposing attorneys will be top-notch medical malpractice litigators because the insurance companies don't hire a jack-of-all-trades for this sort of thing.

The out of pocket costs will easily be $30,000 -- $50,000, and quite possibly higher depending on the particulars of the case.

If the case is lost at trial -- perhaps because of a defense expert who "goes the extra yard" for a fellow physician, a plaintiff less attractive than the defendant doctor, "bad facts" you didn't know about at intake, a tendency for juries to favor doctors, an unexpected scheduling problem that prevents a witness from appearing, or a plain old dispute as to the standard of care -- your money and time should all be assumed to be gone. It is unlikely you will recoup the disbursements from the client. You still have to pay the rent, personnel, utilities, computers and other costs of running a business.

One should never assume that the case will settle, of course, but if it does it will probably only be after you have prepared for, or even started, the actual trial. (See: No, your medical malpractice case will NOT settle fast.)

If you win and get paid back your disbursements and receive a fee, it will still likely take a few years. (You may want it to go quicker, but defendants do not, and the court may not be able to.)

From a cash flow standpoint, this is not an attractive business model. And in New York, those fees if you are successful start at 30% and slide down to 10% as the recovery increases. And if another attorney did some work on the file and then forwarded it on to you, you will be sharing that fee with others.

This, of course, assumes no appeals. If the trial court or appellate thinks the verdict is too high, it will be thrown out. (see, How New York Caps Personal Injury Damages)

In short, the economics from a business standpoint are quite poor, which is why case selection becomes so important for the careful practitioner. It is also why the average malpractice recovery is so high, since the medical community enjoys de facto immunity for smaller cases based on these economics.

To call this a high-risk endeavor would be a significant understatement. The vetting process for such a case is therefore critical, and will be the subject of a future blog posting.

Eric Turkewitz: Author Bio | Other Posts
Posted at 2:14 PM, Apr 26, 2007 in
Permalink | Email to Friend


This is an excellent discussion of how to pick cases and is an great review of the costs of doing the med-mal business. One option that has been proposed and is in place in some areas is to have review boards look at cases to determine if they are indeed potential cases of mal practice. This is to screen out "paid medical experts" and to defray the cost of having cases privately reviewed with the overall intention of decreasing the number of suits that do no go anywhere. Still, with the vast number of suits not going to a jury the question remains, are most of these cases illegitimate, or are they settled early or dropped because of pure economic reasons.

Posted by: Chris | April 26, 2007 3:34 PM

In short, the economics from a business standpoint are quite poor, which is why case selection becomes so important for the careful practitioner. It is also why the average malpractice recovery is so high, since the medical community enjoys de facto immunity for smaller cases based on these economics

A few questions →
1. if you are loosing a majority of cases on trial, this post is not an adequate explanation of why such claims are brought. It is difficult to argue that plaintiffs' attorneys find such cases attractive, because they lose most of them (72 %) and also lose money so the selection of cases may not be that important for you.
2. if representation for the smaller cases is that of a concern, and you can’t afford to take all these cases fir economic reasons → would you ask for a HMO style legal service where the risk can be equalized ?

Posted by: Anirban | April 26, 2007 11:54 PM

Oh, come on. Why don't you cross post Castro speeches on the state of the Cuban economy? Far more accurate and credible, far less self-serving and misleading.

What was this lawyer's take home pay? Did it have 6 or 7 numbers in it? The economics of this air-tight, rigged lawyer enterprise is quite favorable in plundering clinical care, with no recourse for the victims of the lawyer.

Most claims are meritless, nuisance claims, that will settle for $50,000. That happens to be the cost of going to trial, minus a discount for baselessness. The problem with settling these false claims is that settlement encourages more of them. So the cost is not $50,000, but $millions as dozens of the lawyers file similar false claims. So spending $100,000 to win at trial deters $millions in future jackings of clinical care.

The lawyer knows there is no substantive personal risk. He needs to score once in 10 Big Lotto attempts. The defense bar needs these false claims far more than they need the client, a mere commodity between lawyers. The lawyers have drinks after trial, and toast to the stupidity of the public.

The plaintiff lawyer knows the defense will never report him to the Disciplinary Counsel for gross violations of weak lawyer Rules of Conduct. He knows the Disciplinary Counsel laughs and throws out any report by members of the public. He knows defense lawyer will never file a counter claim, nor sue the lawyer on the bench. He knows the rigged racket does not even permit the Federal government to enjoin the totally biased, doctor hater, out of control, lawless, lawyer on the bench.

Most plaintiffs are money grubbing sleazeballs with massive contributory negligence burdens. Who else but a sleazeball is willing to undergo the rigors of discovery? Most plaintiffs are also superficially appealing, or else are rejected, no matter how meritorious the injury. The lawyer makes no mention of the claim as theater production, and the spinning of wild fairy tales, with almost no truth telling anywhere in the case. So, before walking into the office of the lawyer, don't be fat, a smoker, a foreigner, a homosexual, have poor manners, so on, stuff that would detract from the fairy tale telling.

The lawyer fails to mention that non-testifying expert opinion is privileged. Twelve experts oppose the claim. The lawyer raises his price, and gets a has been, drink besotten, raggedy street walker type expert. Claim goes forward, no matter what. The Rules of Civil Procedure should change to open all non-testifying expert opinions. All should be in writing. All phone calls should be recorded and subject to discovery, with the sanction of mandatory, statutory, summary dismissal for any infraction of the rule. This would be true if discovery were really about relevance, and not part of the theater production.

The lawyer fails to mention that most experts are academics less experienced and less competent than the defendant. Remember the maxim about those who can't? They teach. Those who absolutely cannot, join the faculty of top med schools. They become "scholars," too good for the muck and mire of clinical care. Patients are for the residents. The latter may know more about clinical care, because they do it more than the faculty. The lawyers on the Supreme Court have granted them absolute immunity from civil liability for their false testimony.

The lawyer fails to mention that the medical literature represents the medicine of five years before, as mere verifiers on faculties write grants and do error ridden studies, almost as fictional as a tort claim. When these are summarized in clinical guidelines, after periodic consensus conferences, these bogus guidelines represent the medicine of 7 years before, useful solely to beginners, such as med students. They are almost always used as spears against defendants, almost never as shields by the lawyer rigged system and the biased lawyer on the bench.

I know the lawyer conducts business as it was done 700 years ago, so 7 years is no problem. However, that is a big problem in medicine. The expert standard of care is false and dangerous, because the expert is inexperienced, and testifies about obsolete approaches. Yet this dangerous medical standard gets imposed on all the doctors of the state treating a similar case, at the point of a gun of the lawyer. Guess who suffers most from this false testimony. It's not the doctor.

The lawyer fails to mention massive consequential costs of litigation. The defendant spends 1000 hours a year for two years preparing the case. At $300 an hour, the lawyer owes the doctor $600,000 in quantum meruit and quasi-contract. This time could be spent on relaxing, refreshing, continuing education, or pro bono work. The lawyer causes the cost of clinical care to jump by 10% in worthless, defensive medicine. These false claims have driven out doctors from high risk specialties. The worst, biggest costs dwarfs these by several orders of magnitude. The lawyers' false claims deter 1) clinical innovation; 2) open investigation of real medical errors, since all findings will be subject to discovery; 3) poisons the loyalty of clinical relationships with the now adversarial patient, all of them, even the desperate ones that would never sue because their lives were saved, and transformed by modern care. The clinical encounter takes on the atmosphere of a deposition, and any risk factor disqualifies desperate people from care, for fear of subsequent litigation.

Defensive medicine counts the cost of extra procedure. That cost is dwarfed by the cost of suffering caused by risk aversion by the doctor who refuses to treat the less than ideal patient.

The lawyer claims plenty of statutory recourse for the victims of the false tort claim. The reality is otherwise, and no substantive legal recourse exists.

The first step is the boycott of the lawyer by all service and product providers. The lawyer should fear patients and their families. If this boycott fails, the patients and their families have the right to self-defense against lawyers who kill patients by their plundering of clinical care.

Posted by: Supremacy Claus | April 27, 2007 7:05 AM

if you are loosing a majority of cases on trial, this post is not an adequate explanation of why such claims are brought.

Generally speaking, the cases with clear liability settle, leaving only the cases with difficult liability for trial. So it is not 2/3 of the whole that is lost, but 2/3 of the tough ones.


Posted by: Eric @ New York Personal Injury Law Blog | April 27, 2007 10:12 AM