Unleashing the Power of Mediation in Professional Liability Cases

BY LEE WALLACE

Professional liability cases ought to mediate regularly and successfully. After all, trial is an unsavory option in a malpractice lawsuit, given the high costs of experts, the complex subject matter that is difficult to explain to a jury, and the lengthy trial time. Furthermore, mediation can be very effective at resolving cases. For example, in the medical field, pre-suit mediation “boasts a 75% to 90% success in avoiding litigation, cost savings of $50,000 per claim, and 90% satisfaction rates among both plaintiffs and defendants.”1 Mediation also dangles the possibility of intangible benefits, like healing or reconciliation of the professional and the client/patient.

Yet for all its promised benefits, mediation is less common and less effective in professional liability cases, and especially in medical malpractice lawsuits, than in other types of civil cases. “[H]ealthcare is one of the last major fields to consistently show interest in the possibilities of using” dispute resolution.”2 Alternative dispute resolution (“ADR”) “has not been as quickly embraced in medical malpractice as in other fields of commercial and civil litigation.”3

Why, when mediation would make so much sense, does it get so little traction in the professional liability field? The answer–both to why it has been underused and how to make it more productive–lies in (1) managing the emotional interplay, (2) understanding and explaining the complicated legal, insurance and professional backdrop, and (3) plunging headlong into the issues of consent and reporting.

I. The Grim Track Record of Mediation in Medical Malpractice Cases
Even while mediation was gaining steam in other areas of litigation, it began to get a bad rap in the medical malpractice field. In 1991, Wisconsin instituted a program it called mediation, although the system bore little resemblance to mediation as it exists today. Three-person panels were assigned to evaluate allegations of medical errors. The parties to the mediation had no discovery and many had not yet filed suit. The program was notoriously unsuccessful: “few positive attributes can be identified within such a system that leads to so few mediated agreements, allows so little participation for parties, and results in 92 to 97 percent of its claims being abandoned or heading toward the state courts.”4

In the early 1990s, North Carolina began requiring “mediated settlement conferences” in medical malpractice cases. These MSC’s were more akin to mediation as we think of it today. A study of the cases identified three unique features about medical malpractice mediation that continue to be true today: (1) medical malpractice cases did not settle at mediation as often as other types of cases (44.1% of the cases settled either at or as a result of mediation, as opposed to something akin to 70% for other types of cases); (2) physicians rarely attended or participated; (3) regardless of whether their case settled at mediation, attorneys overwhelmingly–73.5%–thought the process was helpful and believed strongly that all malpractice cases should be referred to mediation.5 In other words, the attorneys thought that mediation had value even when the case did not settle.

II. Removing the Emotional Barriers to Settlement
In order to make professional liability mediations not just helpful, but successful, the lawyers and mediator have to recognize that these cases have a personal, emotional dimension that most lawsuits do not. The plaintiff and defendant originally had a relationship of trust; now the relationship has soured and both sides feel betrayed. Given the context, mediation is far more difficult—and simultaneously, far more valuable, because it offers a chance for healing and reconciliation that a “day in court” cannot provide.

To get the case settled, the mediator and the lawyers have to wade headlong into the emotion, first thing. It is folly to try to move into the bread-and-butter questions of dollars, non-disparagement clauses, coverage, and so forth, before the emotions have been addressed. The mediation is not going to end in an emotional hug in every case, of course, although one of the great beauties of mediation is that it offers a chance for dramatic healing. But at a minimum, the mediator must be prepared to ask about and listen to the emotions on both sides before moving into the business transaction side of settlement.

A. The Plaintiff’s Emotional Barriers
Since plaintiffs (by definition) allege they have been injured, mediations are almost always emotional for a plaintiff. But in many tort cases, the plaintiff did not even know the defendant before she was injured. In stark contrast, in a malpractice case the plaintiff not only knew the defendant, but hired him and entrusted him with something important. When the relationship fell apart, the plaintiff felt her trust was violated.

In a legal malpractice case, the plaintiff has a trust issue laid on top of the trust issue. The plaintiff is suing a lawyer she believes violated her trust, but in order to do so she had to hire yet another lawyer. When her new lawyer advises her to take a deal, she may transfer her feelings of distrust to the new lawyer—who, after all, is wearing the other team’s uniform.

B. Pushing Past the Plaintiff’s Emotional Barriers
For many plaintiffs, addressing the violation is as or more important than getting money from the lawsuit. In a 2003 study, focus groups of patients said that if a medical error took place, their chief goals were: “1) to know why or how the incident happened, 2) to learn what the provider has done to prevent a recurrence, and 3) to receive a sincere apology.”6

If the professional can begin to see the case as a business deal, with insurance, the mediator can remind him that the insurance company has been paid so that the professional can put a case just like this one behind him, perhaps even confidentially.

In order to push past the emotions and reach settlement, the plaintiff must feel heard. Ideally the plaintiff can express these emo-tions in the mediation opening conference. If the case has turned too acrimonious to permit an opening conference, then the plaintiff’s lawyer and the mediator have to assume the responsibility of listening to the plaintiff in the private caucuses.

If the plaintiff’s emotions are addressed, for example if the defendant sincerely apologizes or at least listens empathetically to the plaintiff, or if the mediator listens and empathizes with the plaintiff’s concerns, then the plaintiff’s emotions will dissipate, and the parties can move forward to a discussion of the financial side of settlement.

But, an apology is not always an option, and when the feelings are not, or cannot, be addressed at the outset of the litigation, the plaintiff’s emotions are likely to increase as the mediation progresses, and the parties edge closer to inking their names to a settlement agreement.

Plaintiffs who have cooperated for the first part of the day may become more entrenched and resistant to settlement. The plaintiff is coming face-to-face with the cold reality that “in the civil liability system, money is the only remedy available to the victim of” malpractice.7 The settlement will reduce a matter of huge importance, perhaps even the life of a loved one, to a single number.

Since the plaintiff’s reaction is normal and expected, the mediator and the lawyer can address it from the outset of the mediation. They can reassure the client that she is not placing a dollar value on a life, or on health; she is dispassionately putting herself in the place of the jury, which itself has nothing but dollars to hand out.

C. Addressing the Defendant’s Emotional Barriers to Settlement
While it is common for the plaintiff to have emotional involvement at mediation, a professional liability mediation is especially challenging because emotions ride high on both sides.

I. Admitting Imperfection
To settle a case, the professional has to acknowledge that he or she did something wrong – something we all resist as much as humanly possible. The problem is especially acute for professionals, who “tend to strongly link their identities to competent practice of their profession.”8

Professionals train for years to earn the right to call themselves doctors, lawyers, accountants, architects or engineers. The title is a badge of honor, and most professionals take enormous pride in using their skills to help people. Acknowledging an error strikes at the heart of a professional’s ego, in the classical sense of that term, because it undermines the sense of self, what the professional believes makes him good and valuable and important.

When a professional makes a mistake, the very things that made him good at what he does—his commitment to being a professional and the fact that he does care, very much—make it difficult for him to admit that he made a mistake, and even more difficult to admit that he damaged the person he was trying to help. For this reason, a defendant lawyer may dig in his heels at a reasonable settlement demand that, if he were not the defendant, he would quickly advise a client to take. Because the professional will be defensive, in order to reach settlement the mediator and the attorneys have no choice but to address liability. The professional has to be convinced that he may be held liable, or he will be unwilling to settle the case. If possible, the plaintiff’s lawyer should use non-threatening, factual information, like black-and-white deposition testimony and documents, to present the bad news.

And everyone involved in the mediation needs to shift the discussion away from blame. Mistakes happen. But the professional needs to be credited for the fact that, knowing that he inevitably would make mistakes, he did the honorable and ethical thing by taking out insurance. From the outset of the relationship, the professional wanted to make his patient or client as close to whole as possible, and now he can achieve that same goal via the insurance he carefully put in place for exactly this purpose. If the professional can begin to see the case as a business deal, with insurance, the mediator can remind him that the insurance company has been paid so that the professional can put a case just like this one behind him, perhaps even confidentially. Litigation and trial mean more discovery, more publicity and more time away from what the professional wants to and has trained to do.

II. Concerns About Reputation
Professional communities are small and insular, and so the defendant lawyer, doctor, architect or engineer will legitimately be afraid that his reputation will suffer if he settles a case at mediation. His concern may throw him into conflict with his insurance company, which takes a business-oriented approach to the question of settlement.

Although the truth may have to be broken gently, the professional’s concern is irrational. The professional’s reputation is more likely to be damaged by a public trial than by a mediated settlement. (The exception to this point is the reporting requirement for defendant doctors. That issue will be addressed infra.)
Mediation also gives the professional a chance to mollify an angry and potentially vengeful patient or client, which could never happen at a trial. Years ago, Dale Hetzler, General Counsel of Children’s Healthcare of Atlanta, announced that the hospital would proactively mediate every malpractice claim, as part of an effort to “efficiently resolv[e] claims while focusing on rebuilding trust” with aggrieved patients:

[The patients] will tell friends, neighbors, and others not only about their perception of the occurrence but also how Children’s treated them when they voiced their questions and concerns. The listeners are just as likely to be our own neighbors and friends—all community members with an interest in how consistently Children’s honors its commitment to children. If we want to make Children’s the model for treating children, then it is important to stay focused on the best interests of the patient at all times. That means behaving in a supportive manner when events and circumstances cause someone to suspect that an error or unexpected outcome has occurred.9

Hetzler’s words are more true today than they were in 2005, as clients and patients increasingly head online to read reviews before they pick a lawyer or doctor. Mediation gives the professional a chance to defuse a situation that has the potential to inflict long-term damage to his reputation.

D. The Chance for Healing
If the parties can move past the emotional barriers toward settlement, mediation offers something a trial can never produce. Trials are scorched-earth, winner-takes-all affairs. At mediation, on the other hand, the two sides have one last chance to close the chapter without the animosity a trial can spawn.

Healing is important to the defendant as well as the plaintiff. At the deepest human level, “doctors, as well as patients, have a need for mechanisms that will allow them to express their emotions and experience catharsis.”10 Mediation also gives the professional the chance to acknowledge that he made a mistake without suffering any additional legal consequences.

But, this healing can only take place if the professional attends the mediation. The defendant lawyer almost always attends the mediation in a legal malpractice case. He hears from the other side and learns about the evidence they have. At least in theory, his legal training should take over so that he can make a logical decision about settlement.

But in a study of 31 medical malpractice mediations from 11 nonprofit hospitals in New York City, the researchers were struck by the fact that no doctor participated in any of the mediations, calling it a missed opportunity that “deprives them and their patients of the opportunity for healing, understanding, forgiveness, and repair of broken relationships and failed communication.”11 Another commentator called it “counterintuitive” that a defendant doctor would skip mediation.12 Anecdotally, the fact that the doctor is a no-show also means settlement is less likely than in a legal malpractice suit.

III. Addressing Consent and Reporting Requirements
Assuming that the plaintiff refuses to dismiss her case, the only way a professional liability mediation can succeed is if the de-fendant makes an offer. While that point may seem obvious, getting above zero can be difficult in a professional liability case, because most professional liability insurance policies give the professional the right to refuse to consent to settlement. Even if the defendant’s insurance company believes settlement makes financial sense, the defense cannot make an offer without the defendant’s consent.

Sometimes judges send a case to mediation, hoping that the process and the mediator will convince the defendant to consent. In those cases, the defense attorney has the unenviable task of attending a court-ordered mediation knowing he has no authority to make an offer. Still, when the defendant attends the mediation, he faces his former client/patient, and is reminded of the per-sonal side of the relationship. He also listens to the lawyer for the other side make a cogent argument, even if he vehemently disagrees with it. Afterwards, the mediator and the defense lawyer can reason with the defendant as he grapples with whether to consent to a settlement.

For two reasons, medical malpractice cases are more likely to get bogged down with consent problems than other types of malpractice cases. First, of course, if the defendant doctor does not attend the mediation, he never faces the plaintiff, hears op-posing counsel, or discusses the case with the mediator. Second, the defendant doctor knows that if he settles the case, federal law requires him to report the settlement:

If even one penny is paid to a patient disputant as a result of a negotiated settlement arising out of a written claim or notice of allegations of professional negligence, the physician is reported to the National Practitioner Data Bank: (NPDB), regardless of whether the physician is to blame, and even if the disputants agree the physician is not to blame: This information, although not openly available to the public, is available to hospitals, state medical boards, medical associations, and insurers. This can directly or indirectly negatively impact physicians’ ability to maintain good standing with their malpractice carriers, providers, peers, and patients, and may even jeopardize their hospital staff privileges and medical board status.13

With reason, doctors are concerned that settling a case will have long-term repercussions for their careers. Unfortunately, the fact that a settlement must be reported becomes “[a] major impediment to physician use of ADR in medical malpractice.”14 “The perverse incentive posed by statutory reporting requirements makes an already bad situation worse. There is already a resistance of health care providers to admit errors, accept responsibility for adverse outcomes, and openly discuss such matters with their patients.”15

Despite heavy criticism from nearly every quarter, mandatory reporting for doctors remains firmly ensconced in the law.16 The only way to deal with this elephant in the mediation room is to address it head-on.

Despite the difficulties posed in a malpractice mediation, the good news is that lawyers remain firmly and overwhelmingly convinced that mediation is helpful.

IV. Complex Legal Reality Checking
Malpractice mediations are complex because the underlying cases are complex. A professional liability case involves at least two disciplines: the professional’s field and the legal framework that will be used to decide the case. Legal malpractice cases can be even more difficult, since they involve a case within a case, laid on top of the legal framework.

As a neutral third party, the mediator’s job is to help both sides accurately assess the case and make good decisions about the settlement offers and demands. In a professional liability case, the mediator’s job is especially challenging because she has to be prepared to “reality check” against the complicated backdrop of a malpractice case.

For example, the parties—and for that matter, inexperienced counsel and mediators—may struggle with legal concepts like “standard of care.” In order to accurately assess her risk at trial, the plaintiff has to understand that a professional may not be held legally liable, even when something terrible happened on his watch. The plaintiff also may wrestle with the concept of “proximate causation” in a legal malpractice case where the underlying case was weak. Both the plaintiff and the defendant may have to con-front financial reality if the insurance company is entering the mediation under a “reservation of rights.” In order to help the parties understand their choices, the mediator has to be prepared to work alongside counsel to unpack the complex legal and factual framework for the parties.

V. Hard, But Worth It
Despite the difficulties posed in a malpractice mediation, the good news is that lawyers remain firmly and overwhelmingly con-vinced that mediation is helpful: “Satisfaction data indicate that the plaintiffs and their attorneys and the defendant’s attorney were satisfied with the process whether or not settlement was reached.”17 By focusing on the emotional aspects of the case, addressing consent and reporting, and understanding and explaining the complex legal and factual framework of the case, mediators and lawyers can make the mediation not only helpful, but more likely to succeed. ●

I would like to express my appreciation to the numerous luminaries of the professional liability bar who helped me think through these topics, including Scott Bailey, Frank Beltran, David Bills, Bill Bird, Douglas Chandler, Patti Gorham, Warren Hinds, Neal Howard, Jenny Jensen, Linley Jones, Jane Lamberti, David Lefkowitz, Brian Smith and Lyle Warshauer. The conclusions I draw and all errors in thinking are my own.

ABOUT THE AUTHOR

Lee Wallace represents whistleblowers who are trying to stop fraud against federal or state governments by filing qui tam cases under the False Claims Act, state Medicaid recovery acts, or FIRREA, or who want to be SEC whistleblowers or IRS whistleblowers. She is also a registered mediator with the Georgia Commission on Dispute Resolution and has taken both Harvard Law School’s Negotiation Workshop and Mediation workshop.

ENDNOTES
1 David H. Sohn and B. Sonny Bal, Medical Malpractice Reform: The Role of Alternative Dispute Resolution, 470 Clin. Orthop. Relat. Res. 1370 (2011) (abstract), available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3314770.
2 Ginny Morrison and Rob Robson, ADR in Healthcare: The Last Big ADR Frontier?, Mediate.com (Nov. 2003), available at https://www.mediate.com/articles/robmorr1.cfm.
3 Sohn, Medical Malpractice Reform: The Role of Alternative Dispute Resolution, available at https://www.ncbi.nlm.nih.gov/pubmed/22161080. See also J.J. Fraser, American Academy of Pediatrics Committee on Medical Liability, Technical Report: Alternative Dispute Resolution in Medical Malpractice, 107 Pediatrics 602 (2001), available at http://pediatrics.aappublications.org/content/107/3/602 (“it is surprising that ADR methods remain underutilized, especially when reforms based on ADR potentially make the tort system more equitable and affordable to both plaintiffs and defendants.”)
4 Catherine S. Meschievitz, Mediation and Medical Malpractice: Problems with Definition and Implementation, 54 Law & Contemp. Probs. 195, 212 (Winter 1991).
5 See Bradley Ng, Consideration of Three Medical Negligence Mediation Program Evaluations, Australian Centre for Justice Innovation, Civil Justice Research Online, Mediation (2011), available at http://www.civiljustice.info/med/1.
6 Dale C. Hetzler, Superordinate Claims Management: Resolution Focus From Day One, 21 Ga. St. U. L. Rev. 891, 894 (2005), available at https://readingroom.law.gsu.edu/gsulr/vol21/iss4/4/?utm_source=readingroom.law.gsu.edu%2Fgsulr%2Fvol21%2Fiss4%2F4&utm_medium=PDF&utm_campaign=PDFCoverPages, original study by T.H. Gallagher, A.D. Waterman, A.G. Ebers, V.J. Fraser, and W. Levinson, Patients’ and Physicians’ Attitudes Regarding the Disclosure of Medical Errors, 289(8) JAMA 1001 (2003), available at https://www.ncbi.nlm.nih.gov/pubmed/12597752. See also Ezra Zonana, Getting Healthier: A Proposal for Improving Medical Malpractice Mediation, 5 Amer. J. Mediation (2011), available at http://www.americanjournalofmediation.com/pg7.cfm (“At the top of the list of nearly every study conducted on why patients sue is a desire on the part of patients that that what happened to them should not occur again.”)
7 Zonana, Getting Healthier, available at http://www.americanjournalofmediation.com/pg7.cfm.
8 Morrison, ADR in Healthcare, available at https://www.mediate.com/articles/robmorr1.cfm (referring to healthcare professionals).
9 Hetzler, Superordinate Claims Management, 21 Ga. St. U. L. Rev. at 898.
10 Zonana, Getting Healthier, available at http://www.americanjournalofmediation.com/pg7.cfm. See also Hetzler, Superordinate Claims Management, 21 Ga. St. U. L. Rev. at 897 (“Our employees, particularly nurses and front line staff, also benefit by being able to share their stories and participate in resolution processes. Emotionally and professionally, facing patients with information, rather than participating in the accusatory and adversarial litigation process, often helps to relieve the pressure that comes with involvement in an event that results in a claim. This involvement may also foster personal resolution.”)
11 Chris Stern Hyman, Carol B. Liebman, Clyde B. Schechter, and William M. Sage, Interest-Based Mediation of Medical Malpractice Lawsuits: A Route to Improved Patient Safety?, 35 J. Health Polit., Pol’y & Law 797 (2010), doi: https://doi.org/10.1215/03616878-2010-028.
12 Zonana, Getting Healthier, available at http://www.americanjournalofmediation.com/pg7.cfm.
13 Marc R. Lebed & John J. McCauley, Mediation Within the Health Care Industry: Hurdles And Opportunities, 21 Ga. St. U. L. Rev. 911, 920 (2004-2005).
14 Fraser, Technical Report: Alternative Dispute Resolution in Medical Malpractice, available at http://pediatrics.aappublications.org/content/107/3/602. See also Sohn, Medical Malpractice Reform: The Role of Alternative Dispute Resolution, available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3314770 (“The main obstacle to ADR is the punitive reporting requirements of the NPDB.”).
15 Lebed, Mediation Within the Health Care Industry: Hurdles And Opportunities, 21 Ga. St. U. L. Rev. at 922.
16 See, e.g., Hetzler, Superordinate Claims Management, 21 Ga. St. U. L. Rev. at 905 (“Until the government aligns the system of regulating the practice of medicine and reporting the resolutions of claims with the interestbased claims resolution process of disclosure and system improvement, comprehensive progress is not likely.”)
17 Chris Stern Hyman and Clyde B. Schechter, Mediating Medical Malpractice Lawsuits Against Hospitals: New York City’s Pilot Project, 25 Health Affairs, No. 5 (Sep./Oct. 2006), available at https://doi.org/10.1377/hlthaff.25.5.1394.

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