As in poker, you play the hand you are dealt. Occasionally doctors are sued where, each side, plaintiff and defendant, has strengths and weakness. These cases often linger unabated toward trial. The patient may have significant injuries, was a high earner, and likely to connect emotionally to a jury. On the other hand, his argument that the doctor’s actions caused the injuries might be weak.

What does each side want? Each side wants to win completely, of course.

More importantly, the doctor wants to avoid a judgment above and beyond policy limits. Further, the doctor does not want his named entered as a line item in the National Practitioner Data Bank.

The patient does not want to roll the dice and would prefer a certain payment today over an uncertain result down the road.

If the case makes trial and a jury decides, there are two outcomes:
1. The doctor wins and the patient collects nothing. The doctor avoids the Data Bank.
2. The patient wins. The doctor enters the Data Bank. The doctor might be liable for an excess judgment over policy limits.

It a game of high stakes poker for each side – winner take all.

Case Study:

1. Plastic surgeon performed a breast implant procedure. The patient was seen in the office post-op day #2 and #7. At the second visit, patient had some incisional pain, redness, and tenderness; she was afebrile, and her WBC was 11,000. Index of suspicion for infection was low; but not zero. Doctor and patient wanted to avoid removing the implants and starting from scratch. Neither side wanted to over-react to possibility of infection, even though removing the implants would be the proper treatment for an obvious infection. Antibiotics were started.

On post-op day #14, the wound broke down and was draining. The implants were removed and she was started on stronger antibiotics. Unfortunately, the wound breakdown caused sloughing of skin, leaving a sizable defect. The picture was not good.

2. Infant was born by vaginal delivery. The child was diagnosed months weeks later with severe cerebral palsy. During labor, there fetal heart rate showed transient slowing, but nothing significant. At birth, Apgar scores were 8 at 1 minute and 9 at 5 minutes. Cord blood demonstrated no acidosis. The infant has clear-cut medical and rehabilitation needs that will run easily into seven figures, but proving that a physician’s actions or omissions caused the injury could be difficult.

If these medical cases morph into a lawsuit, trial be risky for both sides.

There is another path: Binding arbitration with a high-low agreement.

Binding arbitration allows each side to work through the process quickly. There is no judge or jury; just an arbitrator – and pre-defined expert(s). The arbitrator is often a retired judge. The process is not appealable. It is final. And, it is private.

Binding arbitration is not enough, though. The arbitrator can still render a judgment above and beyond policy limits. And the patient might walk away with nothing. Binding arbitration, by itself, still creates a winner-take-all outcome.

Both sides can mitigate risk for one another by embracing a “high-low” agreement—a contract defining how a plaintiff will be paid based on a specific verdict, whether in court or arbitration.

Here’s how it works. If the high-low agreement is $500,000/$100,000, the defendant (or actually his insurer) is locked into one of two payments. If the arbitrator returns a verdict for the defense, the defendant pays $100,000; if the verdict is for the plaintiff, the defendant pays $500,000, regardless of the amount of damages awarded by the arbitrator. Without such an agreement, the range of potential judgments is no money at all to almost any amount. With the agreement, by design, the doctor avoids liability for an excess judgment.
When a high-low agreement is in effect, and the arbitrator returns a verdict for the physician, the settlement is not reportable to the Data Bank even though the defendant/carrier must make a payment.

Why not?

The payment is being made pursuant to a separate agreement between the defendant / carrier and the plaintiff. The benefit to the doctor / insurer is the limitation of its liability, even if the plaintiff wins at arbitration and is awarded the higher amount. The benefit to the plaintiff is a guaranteed payment, even if there is no finding of liability against the practitioner.

When each side has a challenging hand, it is possible to craft a strategy addressing the different goals of the parties. A patient with severe damages can lock into some minimal sum of money. That patient might also receive a larger settlement, but, not a lottery jackpot. The doctor can avoid a liability above policy limits. Further, if the arbitrator rules for the defendant, the doctor will not be reported to the Data Bank.

Finally, both sides will benefit from the speed and privacy afforded by binding arbitration.

Binding arbitration with a high-low agreement in place can sidestep that challenges faced by parties dealt both “good cards” and “bad cards.”