By Dawn Chase
In what they call an "extraordinary joint effort," Virginia's leading associations of plaintiffs' attorneys, defense attorneys and physicians have teamed up to offer a mediation alternative for resolving cases against doctors who were left uninsured for malpractice when Doctors Insurance Reciprocal collapsed.
The "Mediation Alternative for DIR-Insured Physicians and Patient-Plaintiffs" appears to be the first effort in the nation to create a structure for disposing of thousands of medical malpractice cases stalemated by the liquidation of the risk-retention group. In Virginia, the number of pending lawsuits against DIR-insured physicians is estimated at 600.
The project was developed by the Virginia Association of Defense Attorneys, the Virginia Trial Lawyers Association and the Medical Society of Virginia, with input from The McCammon Group, a Richmond-based mediation and arbitration provider.
Although sponsors of the project are not recommending any particular mediation service, The McCammon Group has made an offer that will go a long way toward encouraging the mediation alternative: It will handle DIR cases for a flat $3,000 fee, payable up front. The fee will include mediating any pre-mediation conference, when attorneys would work out the details of what to bring to the table.
The flat fee is a departure for the group, which usually charges by the hour.
The idea for the project started with W. Scott Johnson, counsel to the Medical Society. "We had a lot of docs that had called and said we've got to do something," he said.
Johnson approached John B. McCammon of The McCammon Group, and the two went to the VTLA and VADA.
Representatives from each group met to develop a paper outlining the benefits of alternative dispute resolution, and a checklist that lawyers can use to prepare their cases for mediation. The material can be accessed at www.valawyersweekly.com.
"The checklist is to get the attorneys and the clients to be thinking about all the issues they need to think about before they go into the process, so they can be purposeful," said Richmond plaintiffs' attorney and past VTLA president Irvin V. Cantor, a member of the project group.
One of the remarkable features of the package is an agreement by the plaintiffs' and defense bar that both sides have been victimized by the DIR debacle.
"The DIR insurance failure has placed physicians and patient-plaintiffs in a very difficult position — physicians question how they will pay for legal representation, the costs of litigation and ultimately a judgment if there is an adverse jury verdict, and patient-plaintiffs wonder who will compensate them for their losses if they prevail in their case," they said in a joint statement with the Medical Society.
Because of the uniqueness of each med-mal case, no estimate is available of how much a successful mediation would save, in comparison with going to trial. One defense lawyer estimated the savings could be in the thousands of dollars.
"To the extent that when you mediate you can avoid a substantial amount of costs, that is even a bigger factor now than it is in a normal case," said Mark E. Rubin, a McCammon mediator who participated in the panel.
Financial issues are weighing heavily on former DIR-insured doctors. It appears that, for now at least, no DIR claims will be paid by the defunct insurer, and doctors will have to pay defense costs and any settlement out of pocket.
"In a mediation, you can be a lot more creative in terms of how you resolve things," Rubin said. That includes creative financing of settlements.
One area of the checklist the group discussed extensively was an issue peculiar to the DIR situation — the defendant's ability to pay. "Plaintiffs wanted some guarantee of the ability to pay before they come to the table," said Charles F. "Frank" Hilton, a Harrisonburg defense attorney and past VADA president who served on the panel.
"I don't recall ever going to a mediation in any kind of case where there had been known insurance coverage that that's ever been an issue," said M. Pierce Rucker II, a Richmond defense lawyer, also a panelist and a past president of VADA.
Plaintiffs' attorneys pressed for the ability-to-pay issue to be addressed in the checklist. The defense attorneys are concerned, however, that asking for that information "could essentially forestall" a mediation, Hilton said.
Defense lawyers ultimately agreed to inclusion of "ability to pay" on the list. "The important thing for people to understand about that checklist is there's nothing on it that's mandatory," Hilton said.
The list suggests exploring several avenues for financing any settlement that might be reached — other insurance, loans, annuities and practice group contributions, along with payments by the defendant doctor.
Is the change in who's paying the settlement affecting the value of cases? No, said plaintiff's attorney Charles J. Zauzig III of Woodbridge, who served on the panel. "A case is going to have a certain value regardless of these particular circumstances," he said.
When a physician is insured, "you know that an insurance carrier has insured a physician up to the cap" imposed on med-mal verdicts in Virginia, he said. "It's just a little bit different now."
Rucker agrees. If he were a plaintiff's lawyer, "I wouldn't ever mediate [a settlement] below what I thought its fair value was, regardless of the ability to pay," he said. Once the settlement figure is reached, the plaintiff can pursue a judgment if necessary.
Zauzig said mediation offers an opportunity to "streamline the process with a realistic goal of compromise."
Other than "ability to pay," the rest of the list is "plain vanilla, as far as mediation is concerned," Hilton said.
Hilton said that, of the three or four DIR defense cases he has left, "I'm going to recommend it to one or two." The bottom line for deciding whether it's worth the try is, "Is it going to save him money to do it? Do I think he can settle the case through this process?" Hilton said.
At this point, DIR pending cases are "all over the spectrum," in terms of how close they are to trial, Rucker said. And more are coming in.
Johnson said last week he heard of two more lawsuits filed. One was against a retired doctor who had DIR tail coverage. Another was against a doctor who had replaced DIR with a policy that included prior acts coverage, but the incident she was sued over had been reported to DIR before its demise, so is disqualified from prior acts insurance.
Johnson expects the suits will be coming in for years — especially in alleged med-mal cases involving minors, which have a longer statute of limitations.
He said mediation will not be an option in every case, and he has no goal of the number he'd like to see mediated. "If it can help any of the docs, we're happy," he said.
What of the estimated 90 Virginia lawyers facing malpractice suits who were similarly left without insurance with DIR's sister company, American National Lawyers Insurance Reciprocal, also went belly up? Could a similar mediation alternative program benefit them?
"I don't see any reasons why this would not work," Rubin said. "We would be happy to discuss that with anybody who's interested in doing it."
August 25, 2003
