Physicians turn the tables on insurers, attorneys

Most doctors named as defendants in medical liability lawsuits prefer not to relive the ordeal and seek to put it behind them immediately, no matter the outcome or how it is reached.

There is usually little recourse against your medical liability insurance provider if you are unhappy with the lawsuit's outcome. Physicians pay premiums in case they are sued, with the insurer usually retaining the attorney and approving, or not approving, settlement amounts and trial strategies. And it's hard to win either a malpractice claim against an attorney or a malicious prosecution claim against a plaintiff.

But in two notable instances in the past several months, physicians who decided to fight back have had some success.

In Florida, physicians who were pounded with a $217 million jury verdict for failing to diagnose a stroke sued their attorneys who they believe should have settled the case. The lawsuit against the lawyers, filed in early March, has already been settled. Both sides signed a confidentially agreement, under which they will not discuss the case.

However, according to news reports, Michael Austin, MD; Franklin, Favata and Hulls physician group; and Carrollwood Emergency Physicians sued the attorneys their insurer retained for professional negligence for being more concerned with protecting the insurance company than the doctors, failing to properly advise the doctors and failing to respond to plaintiff settlement offerings of $1 million and $3 million.

While refusing to discuss the particulars of the case, attorney D. Frank Winkles, who represented the physicians group and Carrollwood Emergency Physicians, said that the tripartite relationship between the doctor, the insurance company and the attorneys the insurance company hired often gives rise to these kinds of issues.

He said that while case law nearly uniformly says that the attorney's primary allegiance is to the physician, insurance companies often pay lawyers by annual retainer. That fee arrangement can present a conflict for attorneys seeking to stay on retainer when it becomes obvious it is in the physician's best interest to settle but the insurance company wants to take the case to trial.

Winkles said physicians need to take more control over their cases by demanding the lawyer represent them to the fullest and settle when it is in their best interest or by hiring a separate attorney to look out for their interests.

Challenging an insurer

In another lawsuit filed by a physician who chose to fight back, the Massachusetts Supreme Judicial Court ruled late last year that a Woburn, Mass., neurologist can go forward with a malicious prosecution claim against The Travelers Insurance Co.

Travelers filed a medical malpractice lawsuit against Paul N. Chervin, MD, in July 1999 after the insurer settled a workers' compensation claim that Dr. Chervin's patient, Edward Mosher, filed. A Superior Court judge entered a judgment in favor of Dr. Chervin in February 2001, and Dr. Chervin sued Travelers for malicious prosecution in August 2001.

Initially, Travelers asked the trial court to rule in their favor without going to trial, and it did. The judge found that Travelers had probable cause to sue Dr. Chervin based on the statements of a lawyer it consulted before filing the lawsuit. According to court records, that attorney told Travelers representatives that she had consulted an expert who supported the medical malpractice action against Dr. Chervin. The trial court judge also found that Travelers had not acted "with malice or an ulterior purpose" because Travelers only filed the lawsuit to recover money by judgment or settlement. The state's Appeals Court upheld the lower Superior Court judge's ruling.

The Supreme Judicial Court, however, reversed the ruling. And it took the opportunity in Chervin v. The Travelers Insurance Co., et al. to formally substitute "improper purpose" for the element of malice in malicious prosecution. Experts said that while dropping the malice requirement in favor of "improper purpose" may sound like a significant legal shift, it's actually a small change that clears up decades-old confusion as to what constitutes malice in these cases. The court noted that it has ruled in previous cases that malice can denote something other than what may be encompassed by the literal meaning of the term and that malice may be inferred from the lack of probable cause.

The court said that in looking at "improper purpose," a jury should consider whether the defendant "was motivated by an improper purpose because it instituted a civil proceeding when it did not believe its claim to be meritorious or did so to force a settlement that had no relation to the merits of the claim."

And, the court said, a nonexhaustive review of the record in Dr. Chervin's lawsuit against Travelers indicates there are issues for a jury to decide on the "improper purpose" element. Some of that record, as recounted in the Supreme Judicial Court's ruling, follows:

• More than four months after Mosher's last visit to Dr. Chervin, he was involved in a single-car crash that left him a quadriplegic.
• During the workers' compensation proceedings, which eventually led to a $775,000 settlement, Travelers maintained that Mosher's car crash was a result of his own willful misconduct and garnered the opinions of two experts who said the crash was likely due to Mosher's noncompliance with medication instructions to use Dilantin (phenytoin) and physician instructions to avoid alcohol. One expert said that if Mosher had followed those instructions, it was "within reasonable medical certainty" that his seizure order would have been well controlled and the car crash would not have occurred.
• When contemplating whether to file suit against Dr. Chervin, an attorney Travelers employed sent a memo to the insurer's workers' compensation case manager indicating that five attorneys who practice medical malpractice law rejected the case.
• A claim representative in the insurer's subrogation unit spoke with the attorney it consulted before filing the lawsuit against Dr. Chervin. The attorney said she discussed the claim with an expert on a preliminary basis and that expert said that Mosher's physicians had not followed protocols. The attorney consulted did not identify the expert, state the expert's qualifications or what information the expert was relying on for his opinion.
• Before filing the complaint against Dr. Chervin, Traveler's knew that it likely could not succeed without Mosher's cooperation and it knew that Mosher did not want to participate and had so far refused to cooperate.
• After the filing, two other claims representatives, reviewing the same information available to claims representatives before the lawsuit was filed, recommended that the case be closed.

Based on this record, the court concluded that Dr. Chervin had offered sufficient evidence to raise a genuine and material dispute concerning whether Travelers "reasonably believed that a sound chance existed that the medical malpractice claim would be held valid on adjudication."

Travelers argued that different inferences could be made from some of the evidence, and the court agreed that might be the case. But, it said weighing and crediting the evidence is a job for a jury.

Dr. Chervin was required to disclose the lawsuit to the state licensing authorities, hospitals where he had privileges and health insurers.

According to court records, he experienced a loss of referrals from other physicians, and did not get a part-time teaching position at the University of Vermont because of the additional scrutiny and delay in connection with obtaining a Vermont medical license after he disclosed the lawsuit.

The court ruled that Dr. Chervin did not have to prove damages with certainty for his lawsuit to go forward and that any evidence that Travelers has to challenge Dr. Chervin's damages evidence should also be considered by a jury.

Dr. Chervin's lawsuit now goes back to the Superior Court where, unless a settlement is reached, Dr. Chervin could finally have his day in court.