Mar 22 2013

Supreme Court Rules Family Entitled to More Money in Malpractice Settlement

Published by at 5:07 pm under Healthcare Reform

This week, the U.S. Supreme Court decided that the state of North Carolina had over-reached and pried the states fingers away from a large portion of a medical malpractice settlement.


A little background.


In February, 2000, Emily Armstrong was born at Catawba Valley Medical Center. Emily was diagnosed with cerebral palsy following her birth by Caesarian section. Clinically, she was blind, deaf, and cognitively impaired. Without question, she has severe deficits.


The Armstrong family sued the obstetrician. The family also sued the medical center and others.


I make no comments on the legal merits of the underlying malpractice suit.


Expert testimony initially estimated damages at the $42M level. The family’s attorney secured a negotiated settlement for $2.8 million dollars (roughly in-line with insurance policy limits).


Emily received assistance from Medicaid.


Every state treats reimbursement obligations to Medicaid differently. Once a settlement is received, North Carolina state law mandates that Medicaid be reimbursed the lesser of (a) actual amounts disbursed by Medicaid for patient treatment; or (b) one-third of the malpractice payout. Here, North Carolina state officials estimated Medicaid had disbursed $1.9 million for Emily’s care (she’s 13 now). So, the state asserted a lien on 1/3 of the settlement – or $933k. Still a lot of money. Emily’s attorneys argued that amount was too high.

This case percolated up to the U.S. Supreme Court. This week it re-affirmed federal law prohibits states from attaching a lien on Medicaid beneficiaries. The long-standing exception- to recover money paying for medical care. Money for pain and suffering isn’t covered by the ban on liens. The Armstrong settlement was not explicit in describing how the $2.8 million was allocated; that is, how much was divvied up for actual past medical expenses – and how much was for pain/suffering or future medical expenses. Of course, that would still be an inexact art.

The Supreme Court ruled that the 1/3 claw-back was arbitrary. Justice Kennedy wrote “If a state arbitrarily may designate one-third of any recovery as payment for medical expenses, there is no logical reason why it could not designate half, three-quarters or all of a tort recovery in the same way.”

The Court understood that most of the settlement dollars would be use for long-term skilled home care (outside of the clawback envisioned by reimbursement of past medical expenses). The Court suggested North Carolina use a method employed by other states – a judicial hearing to allocate the apportionment on case by case basis; not one-size-fits-all.

Left unsaid is what would happen if the settlement did explicitly allocate money. For example, what if the settlement agreement stated $2.6 million was for pain and suffering with the remainder for past and future medical expenses. Wink-wink. I am guessing the agreed-upon allocation scheme between lawyers would have to pass some type of sniff test – otherwise a judicial hearing prompted by Medicaid could characterize the settlement as an intentional bad faith end-run around Medicaid statutes.

11 responses so far

11 Responses to “Supreme Court Rules Family Entitled to More Money in Malpractice Settlement”

  1. Matthew Romanson 22 Mar 2013 at 5:32 pm

    Never mind that medical research has determined that cerebral palsy is NOT caused by birth trauma. Is that scumball John Edwards suing doctors in the state of North Carolina again?

  2. Medical Justiceon 22 Mar 2013 at 5:41 pm

    I believe Mr. Edwards retired to his palace in Chapel Hill or Raleigh. Hard to keep track of palaces.

  3. Marian Beruon 22 Mar 2013 at 6:33 pm

    How could the expert witnesses determined that in fact the cerebral palsy was due to the lack of oxygen during the birth processor to a mechanical complication that produced brain pressure or injury? How about an episode of hypotention (drop in blood pressure) suffered by the mother during coming to the hospital or during the days preliminary to the birth of the child. There are a million possibilities on top of the cesarean section event. But usually the lawyers take pictures of the damaged baby and showed them to the jury. They take advantage of the jury members’ feelings as well as of their lack of knowledge. Then, they bring in a prostitute doctor that testifies the unscientific “truth” just for money. There is a pool of “whore” doctors of different specialties that will testify what ever you tell them to for a fee. The tort lawyers have access to such lists. This is why some states such as Florida has recently voted a law that allows only the doctors practicing in Florida to testify in Florida courts. So, these doctors can be made responsible in front of their peers. Also, the medical societies representing different specialties started having very strict rules and severe punishments for the members that testify as expert witnesses and do not observe the scientific truth.
    Of course, this case could be different and legit. Every case is different because it has different circumstances to consider, but it should not be played at the intense emotional level. In fact, it is done intentionally at this level because the lawyers want to make money; They do not care about the suffering of the family. It is pathetic how they cry and scream: one can believe they care. In fact, between the fees and expenses, the parents were probably left with less than half of the money. For the trial lawyers, this is a business involving capitalizing on emotions, lies, and the lack of knowledge of the general public. To satisfy one’s curiosity, one can go to such trials, and watch the jury selection process. The less education a potential jury member has, more he or she is wanted in the final jury list by the plaintiff’s attorneys.
    There is also, an organization in Florida called NICA (The Florida Birth-Related Neurological Injury Compensation Association. They provide money for long term care of these unfortunate babies. The money comes from the fees paid by all doctors in the state The GYN/OB pay $5000 per calendar year, while all other specialties pay $250 every two years when they renew their licenses.
    Nothing is taken from the tax payers money.

  4. Medical Justiceon 22 Mar 2013 at 6:43 pm

    I wonder if this factored into the motivation for settlement.

    “The Armstrongs sued the obstetrician, who had a history of drug abuse, as well as the medical center and others.”

  5. Michael M. Rosenblatt, DPMon 23 Mar 2013 at 1:05 am

    For the sake of discussion, let’s assume that it costs 250 dollars/day to take care of this or a similarly damaged child. That would amount to 91,250/year. Assuming that this child lives to be 65 years old (long enough for disability under SS), that would calculate to 5,931,250.

    Let’s assume that the lawyers are “entitled” to a “reasonable” fee of 2 million dollars, that would raise the total to 7,931,250 dollars.

    That leaves the original “expert” calculation of the damages of 42 million dollars in the dust. At some point in time Federal funding would become a part of the equation of care.

    While I can see that some kinds of care are very expensive, tube feeding, management of infections and decubitus ulcer prevention are the primary focus of this case. We are not talking about expensive cancer treatments, diagnostic testing or high-power terminal care. A DNR order would probably be in the chart.

    Nobody is suggesting that this person is not entitled to what our society can do for her. Please tell me if you think my calculations or train of thought is unreasonable. I just think that 42 million dollars is way unreasonable.

    Michael M. Rosenblatt, DPM

  6. Medical Justiceon 23 Mar 2013 at 8:14 am

    Even if $42M were a reasonable calculation – and it does not seem to be – no doctor (or collection of doctors or any other permutation of health care providers/institutions) carries $42M in professional liability insurance. So, why does the court even entertain this exercise? Perhaps if the hospital sees that number, they will step up with policy limits or go under. Texas Hold-em.

    It’s a myth that the tort system renders medical malpractice plaintiffs uniformly whole.

    If the tort system did deliver on that promise, no sane physician would take care of rock stars, hedge fund managers, tech titans, or anyone else making a lot of money . While flattering to be asked to care for such individuals, the financial risk – if something went wrong – would be unforgiving.

  7. Kathyon 24 Mar 2013 at 4:02 pm

    First of all, the 42 million probably has not been reduced to present value. The value of 1 million dollars today may only be 300, 000 15 years from now. However, given the lack of coverage, their was no need to perform the calculations, usually done post trial. In New York, we usually know what the present value calculations are as well as the future calc. over time. Otherwise, you would never be able to engage in any meaningful settlement negotiations.

    Secondly, it’s interesting that you allow Marian Beru to call expert witnesses “whores.” Ms. or Mr. Beru, the expert’s I use are are not only clinically excellent, but have academic credentials and have published on the subjects they testify to. Your speculation regarding what “might” have happened is just that – rank speculation. There are ways of proving the timing of birth injuries including the type of brain injury suffered, laboratory results, the clinical condition of the infant which, in order to prove an intrapartum injury, must include HIE and not just neonatal encephalopathy. In a recent case I just settled, I retained a fetal maternal expert, neonatologist, pediatric neurologist (treating), pediatric neuroradiologist and a rehabilitation expert physician who evaluated the child and provided the costs of care over time. Each one of them is recognized expert in their field.

  8. Michael F. Mascia, MD, MPHon 28 Mar 2013 at 6:51 am

    Hello, Folks …
    Perhaps “we” (Physicians and Patients) should start working on a “UNIVERSAL-no fault” adverse outcome sort of coverage that would be paid for by patients upon entry into the health care arena and institutions that provide care.
    Clearly, adverse outcome does not equal malpractice, neglegence or substandard care. But, in addition to “shit happens” there are adverse outcomes that are a result of “shitfer” care. Transparent remediation would go a long way toward fixing this.
    Just sayin …
    Dr. Mike
    Infinity Health Solutions
    Veritas Health Care
    PS. What’s up with the mega disclaimer?

  9. Michael M. Rosenblatt, DPMon 28 Mar 2013 at 1:59 pm

    Dr. Mascia, I think every non-attorney reading this blog agrees with you. The problem is that attorneys do not. They have a vested interest in a system that they themselves designed and have the keys to.

    Plaintiff’s attorneys would look at a no-fault system as an unmitigated disaster. Most personal injury and plaintiff’s attorneys can barely tolerate each other if they share the same room. But they get together like long-lost relatives anytime a “threat” like you’re proposing even comes close to the legislature.

    I regret to say that politically it is a non-starter. Plaintiff’s attorneys will spend their own kid’s college tuition fighting this before they will accept it.

  10. Dr. S. T.on 31 Mar 2013 at 9:47 pm

    Medical Justice’s comment that the tort system can’t render plaintiffs “whole” is a key to this issue.

    Remember when John Ritter’s family sued his doctors and hospital for $65MM, their estimate of his future earnings? (The family lost as no malpractice was demonstrated.)

    If plaintiffs could be made whole, what sane doctor would dare to remove a hangnail from Floyd Mayweather ($85MM in 2012 alone)?

    Would a plastic surgeon operate on the breasts of a Pamela Anderson or the face of an Angelina Jolie?

    Who would touch LeBron James ($50MM) – or scores of other athletes?

    The answer is that sane orthopedic surgeons operate on these people all the time. How can that be?

    Because these athletes (and their team owners) carry massive disability insurance on them which covers inability to play even if it is a result of medical malpractice.

    If people want to be whole, then they should carry more disability insurance.

    It’s that simple.

    And it could solve the entire medical malpractice problem. If an individual wants to be made whole for whatever reason – accident, disease, or medical malpractice – then they should pay for it themselves. Why should the rest of society have to share the risk for these others’ disability?

    Let it be an individual matter.

  11. Kathyon 05 Apr 2013 at 6:48 pm

    Dr. Mascia:

    There is little satisfaction with workers comp. which is a no fault system covered by employer’s payment of worker’s comp insurance. Secondly, part of the problem does lie with the issue of fault as opposed to remediation. However, health care providers do have to take responsibility for “shitfer” care. Both Drexel and Rush Presbyterian, large prestigious medical centers with medical schools, have developed highly successful mediation programs, which use plaintiff and defense lawyers trained in mediation, and which has resulted in patient satisfaction, the appropriate use of apology, fair compensation, and savings for the hospitals. When patients, the few of them, that do not agree with the mediation, go to trial, they usually lose. However the vast majority – 95% – do agree with result. Also, sometimes it just involves sitting down and getting clarity about what exactly happened and does not result in any monetary settlement.

    I also believe the we need an overhaul of the medical conduct discipline system. Having represented doctors and nurses, fining people is not the answer. For those actions which do not need to result in suspension or revocation of a license, there should be a path for correction of the root causes of errors.