For captives on the receiving end of a nasty medical-malpractice lawsuit, it pays to be polite.
Rapid disclosure, a formal apology and an early settlement offer can yield big dividends, according to legal experts.
"Our experience is that it doesn't change the indemnity, but it really reduces your expenses," said Jeffrey F. Driver, chief risk officer of Stanford University Medical Center, which insures 1,500 doctors.
Expenses associated with loss runs and keeping open a claim, for example, plummet when opposing parties settle and a malpractice claim can be closed in weeks instead of months, according to Driver.
With a little luck, defendant captive insurance companies can see their legal fees slashed by as much as 50 percent to 60 percent.
The luckiest defendants, particularly smaller companies, might even find indemnity costs cut by up to 25 percent, the experts said.
Driver said that families that are the victims of medical mistakes are sometimes just as eager as the physician's insurance company to avoid a debilitating legal battle.
In such cases, it is possible for would-be defendants and would-be plaintiffs to settle the case with only a few thousand dollars changing hands.
These outcomes, however, are more likely with smaller medical-malpractice cases. With larger disputes, attorneys are not going to compromise the interest of their clients, said one captive insurance manager.
Driver, who spoke at a seminar hosted by the Vermont Captive Insurance Association in August, agreed.
"We've seen it go both ways," he said. "In the early-offer process, we bring in a mediator in a complex situation."
The next step after unsuccessful mediation typically is litigation.
Driver said the best studies about the outcomes of disclosure and apology strategies, published over the past few months as white papers, were being conducted by researchers at the University of Michigan and in Chicago.
Driver admitted, however, that adopting the right strategy for handling a medical-malpractice claim brought against a captive insurance company was, at least for the moment, still more of an art than a science.
"You have to find the right spot for that strategy," he said. "Sometimes it works. Other times it doesn't."
Whatever the claim, whatever the cost, whatever the outcome, the endgame is the same.
"The only sweet claim is a closed claim," said William N. Boone, senior vice president, alternative risk solutions, Marsh USA Inc.
September 15, 2006
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