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"The Equation"

New York Magazine (via Lawbeat) has a lengthy story on a medical-malpractice trial that settled for $1.5 million before the verdict came in:

Melnick had a different kind of problem, a gambler�s problem. He was highly confident that he would win the case. Still, if Melnick didn�t win, a verdict could run $10 million or more. So the hospital�s insurance managers (Beth Israel is part of a self-insured pool of nonprofit hospitals) had to make a decision not only about whether they were likely to win, but what the odds were. Nassau, from her own experience on the defense side, gets it down to a simple process: �If there might be a $10 million penalty and they think they have a 50 percent chance of winning, offer $5 million.�

The evening before the jury was to be given its charge, the insurance company called Nassau to offer a settlement of $1.5 million. It was, for this kind of case, a pretty good outcome for the hospital. Under the circumstances, it was also a good figure for the plaintiff. Nassau and Torres accepted the offer.

The settlement naturally will confirm many people�s feelings about malpractice law. John Fitzgerald says that he asks for medical records in only one in 50 to 100 inquiries that come into the firm�s referral line. But in the cases in which the firm does go to the step of getting medical records, it files suit in fully half. The math here is clear: Simply delivering a child who is seriously premature and seeing its patient go to a law firm like Fitzgerald�s means that a hospital is already facing a 50-50 chance of finding itself in a position in which a $1.5 million settlement is a pretty good outcome for the defense.



Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute

Katherine Lazarski
Press Officer,
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.