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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.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.