What does consent to settle mean and why is it important? First, consider that settlement of a medical malpractice claim carries many potential risks:
Beyond that, a settlement will follow a physician for many years and will require disclosure in future insurance applications or in renewal of hospital privileges. It will remain a reminder of the stress and anxiety of a bad outcome.
Now, if a physician was clearly negligent and that negligence caused injury to a patient, then settlement is appropriate. That's what medical professional liability insurance is for. But what about when the physician believes he or she was not negligent, or that any alleged negligence really did not harm the patient? What if there is no desire to settle?
Settlement of a claim against a physician creates many potential consequences. As a result, most insurers write a contractual provision into the policy that only allows the insurer to settle a claim if it has the insured’s, typically written, consent.
Many insurers also seek to include additional policy terms in any such consent provision that protects the insurer. In some instances, it even allows the insurer to settle without the insured’s consent when circumstances permit. In other instances, it creates punitive measures against the insured if it believes the insured’s consent is being unreasonably withheld.
Read our blog if you're asking yourself what the difference between "consent to settle" and "patient informed consent" is.
Importantly, whether or not you consent to settle a claim is a decision you want to make collaboratively with your claims consultant, your defense counsel and in some instances, when the exposure realistically exceeds the limits of your insurance coverage, with your personal counsel.
At Indigo, we believe the decision of whether or when to settle a case should ultimately be yours. That’s what we call “defense of good medicine.” The Indigo policy has what's called a "pure" consent to settle provision. Indigo must obtain the written consent of the insured physician before settling any claim.
That consent requirement exists until the insured has had an award or judgment entered against them. No caveats, no limitations, no what ifs, ands or buts. It's the doctor’s decision.
There are MPL policies in the market that do not have "pure" consent to settle provisions. Some require that "consent must not be unreasonably withheld." Others require a third party review of consent to settlement (typically appointed by the carrier) to bind the parties. Others still have various forms of "hammer clause" where the insurer seeks to limit its liability under the policy if it wants to settle and the insured withholds consent.
Those limitations can be extremely onerous if an insured changes their mind, or if there is an adverse finding at trial, because under the hammer clause, the insurer will seek to limit its liability to what the claim could have settled for at the time it first requested consent to settle.
Jennifer Wiggins, CEO & Founder at Aegis Malpractice Solutions, provides an excellent summary of this topic on KevinMD.com and the various “consent to settle” provisions that are out there. Consent to settle is a vital policy provision to understand.
In 25 years, managing thousands of medical malpractice claims, experience has taught me that it's not just whether you consent to settle but when you consent. When liability and damages are clearly adverse, settlement should always be the goal - the sooner the better. Often, the best way to optimize an outcome under these circumstances is to settle early before legal expenses of either party begin to accumulate in earnest as a case is prepared for trial.
If there’s a negative expert review or an expert who has raised legitimate questions about the standard of care, then although that's not dispositive of itself, it's certainly reason to believe the plaintiff has favorable expert support and will proceed to trial. At that point, you want to have a comprehensive discussion with defense counsel and your claim consultant to discuss next steps. Often, the best chance to get an optimal settlement in a difficult case is early in the process before the parties incur significant legal expenses.
If you have unreservedly favorable expert reviews on standard of care and causation, then defending the case is generally a strong decision. In my experience, the vast majority of the medical malpractice cases that go to trial, the jury returns a defense verdict in favor of the physician. Moreover, in most medical malpractice claims, the physician prevails, and no loss payment is made on their behalf.
Often in these kinds of cases, the plaintiff's lawyers will seek to distract the defense away from the merits of the claim and create tension, or even conflict between the insurer and the insured by sending out inflated demands and threats to pursue the doctor's personal assets. These tactics are often designed to frighten the doctor into consenting to settle and to frighten the insurer into making an offer. Under these circumstances, if you are frightened into consent, it is likely that achieving that optimal outcome gets away from you.
I'm not suggesting you should ignore these kinds of letters, but I am suggesting you consult with your defense counsel, your personal counsel and your claim consultant under these circumstances. Make sure they work collaboratively together and remain strategic in determining if and when your consent is appropriate.
There are circumstances, when the best time to settle might be during a trial, when the evidence has not gone in as expected, or even during jury deliberation while the parties are awaiting a verdict. It's possible a hi-lo agreement might be negotiated that allows you to preserve your right to a defense verdict while capping the upside if the verdict goes against you.
These are all strategies that the defense team and a sophisticated claim consultant will understand. The key is, you want an insurance policy that ultimately allows you, not your insurer, to make that call and a claim consultant who has the level of sophistication to work with you and your defense counsel to get the best outcome. Indigo offers both.
It is true that too often, insurance companies are looking for the least expensive way to close a file. Cost of defense settlements are encouraged and those limiting consent to settle provisions are there to protect the insurer if it wants to settle but the policyholder does not.
So, when it comes time to settle or not to settle, make sure your decision is an informed one certainly, but in the interim, look closely at policies that compromise your right to settle or not. "Pure consent to settle" is what every physician should want in their professional liability policy and that's why Indigo has a "consent to settle" provision that protects you, and only you, with none of those annoying caveats.
Indigo is a new innovative medical malpractice insurance carrier for physicians and surgeons that leverages artificial intelligence to streamline the traditional underwriting process and charge you a premium that is truly reflective of your individual risk. It does so while maintaining that critical "hands on" and personal attention that every claim deserves, if a claim arises.
Visit Indigo to get a quote.
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