Legal Intern, Manhattan Institute's Center for Legal Policy
Recently the New Hampshire legislature voted to override the veto of Gov. John Lynch and enact an "early offer" system for medical malpractice cases. As Walter Olson describes, the law incentivizes "defendants to make offers early in the litigation process that cover plaintiff's economic losses such as medical bills and lost wages." The plaintiffs can then choose whether to accept the early offer from the defendant doctor or continue to litigate the case. According to Section XII of the statute, if the plaintiff ultimately does not prevail, a form of "loser pays" takes effect:
XII. A claimant who rejects an early offer and who does not prevail in an action for medical injury against the medical care provider by being awarded at least 125 percent of the early offer amount, shall be responsible for paying the medical care provider's reasonable attorney's fees and costs incurred in the proceedings under this chapter.
In addition to being advantageous for the doctors as defendants, "early offer" also can benefit the claimants in certain situations:
Early offers allows, but does not force, a claimant to bypass the tort system. Tort law has virtues, but among them are not certainty and swiftness. Because of an understandable focus on individual justice, the tort system can be very uncertain and slow, with significant transaction costs. There are many claimants who would prefer to have their claims resolved along insurance principles--with more certain payment for economic loss, taking care of the their urgent needs. I have sat at the hospital bed of a catastrophically injured loved one. After his health, my main concern was that he not be bankrupted by the enormous costs of life-saving care.
New Hampshire is the first state in the country to enact an "early offer" system. Given its benefits for doctors and patients, maybe more states will choose to follow the Granite State's lead.