One of the most critical decisions any family with a viable birth injury claim will make is whether to settle the case out-of-court or take the lawsuit to trial. This is also a major decision for physicians, nurses and hospitals, who hope to lower their exposure to large jury awards and minimize their obligations to injured patients.
Why Do Medical Professionals Offer Settlements?
Doctors, nurses and hospitals often choose to offer a settlement when the evidence suggests that medical negligence took place. The more convincing the evidence, the more likely a settlement offer becomes. Defendants, after all, would usually prefer to stay out of court, saving time and money.
That’s especially true for families who have a good case, backed by compelling witness testimony and water-tight expert statements, or when the injuries involved are so severe that a jury’s emotional response to the facts at hand make a defense verdict unlikely. Many defendants believe that juries, who are just ordinary people, will prove more sympathetic to injured children and issue inappropriately-large judgments as a result.
Trials Can Be Unpredictable
The inherent uncertainty of a trial can make receiving a settlement offer very likely. Cerebral palsy cases can result in enormous jury verdicts, since many children who have suffered birth-related brain damage will require life-long medical care. In most states, juries are also allowed to tack on “punitive” damages, intended to punish particularly reckless negligence, which can quickly skyrocket.
- $43.5 Million awarded to a New York State woman who developed cerebral palsy after suffering severe brain damage during her birth (October 8, 2009)
- $78.5 Million granted to a Philadelphia child who developed spastic quadriplegic cerebral palsy after an 80-minute delay in performing an emergency c-section (May 4, 2012)
- $13.9 Million awarded to a Georgia baby who suffered oxygen deprivation during birth and developed cerebral palsy and an epilepsy disorder (2015)
Defendants usually assume that negotiating an acceptable settlement will result in lower amounts of compensation (which is, in most cases, true).
Benefits Of A Birth Injury Settlement
Is settlement good for children and their families?
That all depends on the facts of the case. It’s a question of risk and reward, one best left answered by your cerebral palsy attorney. It’s also the same question that the lawsuit’s defendant will be asking themselves. Is the likelihood of winning at trial great enough to offset the risk of losing? Are the significant rewards of securing compensation at trial enough to balance out the time and money that will be spent litigating the case? These are complex questions and you should have long discussions with your attorney before making a choice.
Avoiding The Uncertainty Of Trial
Accepting a settlement offer avoids the considerable risks involved in going to trial. Court proceedings can be filled with uncertainty. What if the jury finds in favor of the doctor or nurse, awarding the child no damages at all? Or, alternatively, what if the jury finds in favor of the plaintiffs, but awards a far lower amount of compensation than the family believes is acceptable?
An added consideration, applicable now in most states, is that many jurisdictions limit the amount of money that can be awarded to plaintiffs who win a medical malpractice lawsuit, including children affected by birth injuries. In Pennsylvania, for example, a state law places a “cap” on punitive damages in cases of medical negligence, limiting this specific sort of award to no more than twice the amount of “actual” damages.
Other state laws are far more restrictive, controlling maximum amounts for economic damages (medical bills, lost wages, loss of future earning potential) and non-economic damages (pain and suffering). With a damages cap in place, plaintiffs and their attorneys may fear that securing full compensation at trial will be impossible, even in the event of a favorable verdict.
Saving Time & Allowing Families To Care For Their Children
Birth injury settlements also cut down on time. Making it to trial can take a while, often years. Presented with a choice, most parents would like to focus more on caring for their child, navigating the complex world of healthcare, learning about cerebral palsy disorders and planning out their family’s future. Litigation is usually low on the list. Agreeing to a settlement offer allows families to turn to their child’s care as quickly as possible.
Settlements eliminate uncertainty. The amount offered, arrived at after lengthy negotiation sessions, is known beforehand to all parties involved. If the amount is too low, the settlement can be rejected, leading to further negotiations or, if an acceptable settlement appears unlikely, a trial.
Most settlements conserve the damages break-down observed in personal injury trials. A good settlement offer will assign damages for the cost of medical treatment, both current and future, loss of earnings potential and emotional trauma, along with money (if applicable) to compensate for the experience of physical pain and psychological suffering. Funds will also likely be portioned out to compensate parents for their financial losses.
Downsides Of Taking A Settlement
The primary downside to accepting a settlement offer is losing the opportunity for a trial. Thus, families with strong cases should think long and hard before agreeing to settle the case, since almost every agreement will absolve the defendant of all liability in the future. In short, once you settle, there is no turning back.
Another problem? Most settlement agreements include a confidentiality clause, preventing families from speaking out on details of the case or even the settlement amount. This can be a sticking point for plaintiffs who wish to expose wrongdoing in public; court verdicts are almost always released into the public domain. Along similar lines, defendants are almost never required to admit responsibility for a child’s injuries, which can rankle at some families’ sense of justice.
How Does Settlement Work?
Some states encourage pre-trial settlements, by forcing medical malpractice plaintiffs to engage in mediation or arbitration before filing a formal lawsuit. Pennsylvania is not one of these states. Here, parents can proceed immediately to court, although judges can (and often do) order mediation when it’s requested by the healthcare defendant.
Alternative Dispute Resolution
Mediation and arbitration are “alternative dispute resolution” mechanisms, which allow a family to meet with the defendant (or, usually, the defendant’s insurance company) and hash out an acceptable amount of compensation in more- or less-structured proceedings. While these proceedings are technically outside the traditional civil legal system, applicable state-established damages caps can make an appearance.
As we mentioned above, most settlements are actually negotiated by the defendant’s insurance company. Doctors, however, are often given the final say, either approving the settlement offer or forcing their insurance company to renegotiate or take the issue to court.
Pennsylvania’s MCARE Fund
When an offer reaches above the defendant’s insurance limit, additional money can be drawn from state-run funds established to provide injured patients with fair compensation. Pennsylvania’s Medical Care Availability and Reduction of Error Fund (MCARE) serves this purpose, managing around $12 million and paying out over $170 million to malpractice victims every year.
MCARE also serves as an “informal mediator” for cases that involve multiple defendants and offers a neutral alternative dispute resolution process for cerebral palsy claims. The MCARE fund is financed by payments from healthcare providers throughout the State, much like an insurance program.
Structured Cerebral Palsy Settlements
Once settlement has been reached, there are two basic ways for the money to be distributed:
- lump sum – plaintiffs receive the full compensation award all at once
- structured settlement – plaintiffs receive a steady stream of payments over a fixed period of time
Lump sum and structured settlement are not mutually-exclusive. It’s very common, for example, to see a portion of the settlement paid out immediately as a lump sum, while the remaining compensation will be used to purchase a life insurance annuity that provides periodic payments into the future.
Periodic Payments Rule
Some states have laws that prevent settlements or jury verdicts intended to compensate child victims from being disbursed as a lump sum. Pennsylvania has a hybrid model, known as the “periodic payments rule,” under which all “future damages” over $100,000 must be paid out in installments.
Future damages encompass compensation awards intended to cover medical expenses and other financial losses that will be incurred in the future as a result of disability or on-going medical issues. Plaintiffs, however, have the right to object to these periodic payments.
Regardless of differences in state law, most settlement agreements must be approved by a judge. Many judges prefer structured settlement for minor plaintiffs, providing a stream of payments to cover the child’s foreseeable medical needs and a final distribution when the plaintiff reaches the age of majority.
Since most birth injury attorneys, including our own, work on a contingency-fee basis, plaintiffs only pay legal fees and case expenses when a settlement or jury verdict is reached.