How to Determine the Value of a Medical Malpractice Case

How to Determine the Value of a Medical Malpractice Case

Each medical malpractice case has a unique set of facts and circumstances. This means that the value of a claim is also case-specific instead of there being a flat value for what a claim might be worth. Both malpractice insurers and Philadelphia medical malpractice lawyers calculate the value of malpractice claims based on the factors involved, and there can be external factors that can also influence the amount of a settlement.

Malpractice claims can include damages for both the economic and non-economic losses that victims have sustained as a result of their providers’ medically negligent actions. Economic damages that might be recovered include the following examples:

  • Past and anticipated future medical expenses
  • Past and future income losses
  • Rehabilitation costs
  • Additional surgeries
  • Medication costs
  • Prostheses expenses
  • Other out-of-pocket expenses

Calculating economic losses is a straightforward process. The insurance companies and medical malpractice lawyers in Philadelphia will total the out-of-pocket expenses you’ve already sustained and the value of those that you will likely need in the future. For example, your doctor might provide a list of the types of care you will need in the future, which can aid in the calculation. In some cases, you might have already reached maximum medical improvement, making the calculation even simpler.

While the calculation of your pecuniary losses is fairly simple, it’s much more difficult to calculate your non-economic losses. These are the losses you have suffered for more intangible things that are difficult to place a monetary value on. The following are some examples of non-economic damages that might be recoverable in a medical malpractice lawsuit:

  • Past and future physical pain and suffering
  • Mental anguish
  • Disfigurement/scarring
  • Disability
  • Loss of the ability to enjoy life
  • Others

For these types of losses, how they are calculated by the insurance company and your Philadelphia medical malpractice lawyer can differ and be the subject of continuing negotiations as your attorney tries to reach a fair settlement offer. Here’s some information about how attorneys and malpractice insurers calculate the value of medical malpractice claims from the law firm of Raynes & Lawn.


Calculation of Settlement Values vs. Verdict Awards

It’s important to note that medical malpractice claims can be valued in two ways, including the value of a potential settlement and the value of a potential trial verdict. Insurance companies and plaintiffs typically prefer settling malpractice claims because they can avoid the risks of trial. When a case goes to trial, there is no guarantee of what the jury will decide, so both sides face the risk that going to trial could result in a loss.

Medical doctors, hospitals, and other healthcare providers who are defendants in a malpractice claim also face risks of publicity and reputational harm if they go to trial. Trials are public, and the media sometimes reports on cases involving medical malpractice. Some hospitals and doctors decide to settle cases to avoid potentially negative publicity and reputational harm.

Plaintiffs also face a risk of losing their cases when they take them to trial. Even if a plaintiff wins at trial, the defendant can file an appeal. The appeals process can add significant time to a case, and if the trial court’s judgment is overturned, the case will have to go through a new trial.

For these reasons, both parties typically find that it is in their best interests to settle malpractice lawsuits rather than take them to trial. As a result, settlement values are typically much lower than the value of a claim if it goes to trial and reaches a verdict in the plaintiff’s favor. While a settlement value might be lower, settling your claim allows you to avoid the risks involved with losing at trial and walking away empty-handed.

The value of your claim if you take it to trial is what you might expect to be awarded if you win. For example, if you can reasonably expect to receive a verdict of $2 million if you win your case at trial, you might also calculate your chances of winning as 25%. In that situation, a reasonable settlement offer would be roughly 25% of $2 million or $500,000. You can get a rough estimate of your settlement value by multiplying the reasonable value of a winning verdict by the chance you will prevail at trial.

Below is how both medical malpractice lawyers in Philadephia and malpractice insurers calculate the trial value of a case by analyzing the various factors involved.

How Philadelphia Medical Malpractice Lawyers Calculate Damages

An attorney will review all of the medical records, receipts, and other evidence to begin calculating the value of a medical malpractice case. They will start by dividing the damages into economic or special damages and non-economic or general damages. As previously mentioned, economic damages are fairly easy to calculate since they have an exact value as out-of-pocket or pecuniary expenses.

Calculating Special Damages

Special damages in a medical malpractice case include the pecuniary losses the victim has suffered or can reasonably expect to suffer in the future. They can be calculated exactly to a specific dollar amount.

Your medical expenses in a medical malpractice lawsuit include expenses related to treating the injuries or worsened condition caused by the doctor’s malpractice, including both those already incurred and expenses that can reasonably be expected to be incurred in the future. In medical malpractice claims, future medical expenses can sometimes be substantial.

Your lost earnings and your future lost income are the income you would have earned but have not and will not because of the provider’s malpractice. Your wage losses also include lost benefits, including contributions you would have made to a 401(k), lost vacation time, and lost health insurance benefits.

Calculating your past income losses is simple since it involves adding up your employment benefits and wages that you lost while not being able to return to work. The calculation of your future income losses is more complicated and will likely require your attorney to retain an economic expert to make the calculations so your lawyer can present them to the malpractice insurer or have the expert present them to the jury. Your future lost earnings capacity will typically be based on your level of education, career field, and your expected lifespan if the malpractice did not occur. Future lost earnings are calculated by their present value since they can extend long into the future. Since the calculation is complex, courts typically require this type of information to be presented by an economic expert.

Calculation of General Damages

Calculating general damages involves more than simply adding up receipts and determining the value of your future medical expenses and wage losses. Juries can’t review charts to determine how much they should award a plaintiff for their non-economic losses. Instead, jurors will be instructed to use their experience, background, and common sense to determine the value of non-economic damages. Since non-economic damages can’t be exactly calculated, they are often in dispute during the negotiations between malpractice attorneys and insurers.

Attorneys might use a multiplier that ranges from one to five to arrive at a rough estimate of the value of general damages. More severe cases would use a higher multiplier while less severe cases would use a lower multiplier. The lawyer would then take the product of the chosen multiple by the total of your economic losses to arrive at a rough estimate.

How Medical Malpractice Insurers Calculate Claim Values

Medical malpractice insurers expend a lot of effort when analyzing the value of a claim while the case continues. Malpractice insurers must account for the money the victim might receive in a settlement or verdict award, the cost of the defense attorney, expert witness fees, and other litigation costs.

When a malpractice insurer extends an offer for a specific dollar amount to a malpractice victim, the company will also have a larger total that combines both the settlement amount and all of the other expenses involved. Medical malpractice insurers and hospitals ultimately care about their bottom lines and what they will have to pay in total to resolve a claim.

Malrpactice Insurer’s Initial Analysis

The malpractice insurer will complete an initial analysis of the value of a claim right after it first arises. This initial assessment will be based on the company’s assessment of the strength of the claim and the potentially available damages. However, insurance adjusters will be working with limited information at the beginning of a claim, so the assessment process will be ongoing as the case unfolds.

In your summons and complaint, your attorney will list your potential economic and non-economic damages, but they won’t be quantified. The insurance company will still assess their value based on your medical records, other evidence, and a comparison of your claim with past cases with similar facts. Even at the initial stage, malpractice insurers typically place a specific amount in reserve in anticipation of paying out a settlement. This reserve might be adjusted based on how the case evolves.

Even though the insurance company won’t pay the victim until a settlement is reached or a verdict is awarded in the victim’s favor, the insurance company will be spending money on defense lawyers, experts, and other litigation costs long before either of these events occur. The insurance company will retain a defense lawyer to represent the medical provider if it determines your claim has legal merits and that you are likely to pursue litigation. Once the defense lawyer is retained, they will begin billing the malpractice insurer for their time and effort.

Personnel who work for the malpractice insurer might also be devoted to your claim and tasked with gathering records, reviewing them, and interviewing the medical provider and others involved to determine how strong your case is and what your damages might be. The defense lawyer and the insurer will engage in frequent communication as they strategize how to defend against your claim, which will amount to significant attorney’s fees before your lawsuit is filed. While you won’t need to worry about the costs the insurer pays to build a defense case, it’s important to understand that insurers include that amount when they are considering how much to offer in a settlement.

Cost of Experts

Medical malpractice insurers will also spend significant amounts on expert witness fees before they will pay damages to you. Insurers hire experts when they believe that a malpractice claim is viable and will likely lead to a lawsuit and litigation. They will contact other physicians in the same practice area and field to get their expert opinions about what happened for two primary reasons.

When a claim is in its early stages, the insurer will consult experts and ask them to review your claim and provide opinions about whether the provider’s treatment met the expected standard of care. If the medical expert believes that the doctor did meet the standard of care, the malpractice insurer will likely vigorously defend against your claim and will attempt to get you to drop your case. However, if the defense expert believes that the doctor failed to meet the expected standard of care, the insurer might decide with the defense lawyer’s advice to instead try to pursue a settlement.

However, a settlement during the early phase of a malpractice claim is rare, including when the insurer believes that the doctor was negligent and is liable for the patient’s losses. This is because the insurer will want to evaluate all of the evidence before it assesses the value of the damages.

The other primary reason insurers might hire experts is to begin assessing the damages. While the jury or both parties will determine the final dollar amount, the insurer will try to arrive at an accurate estimate of the potential value. The insurance company will calculate the economic losses, including your past and likely future medical expenses, your past income losses, and your future loss of earnings capacity. It will then calculate your potential general damages based on the total it calculates for your economic losses.

If your case appears to involve a substantial amount of money, the insurer might be likelier to try to negotiate a settlement agreement to avoid the risk of trial and its associated publicity. Litigation costs and the risk of adverse media attention can be taken into account and might influence an insurer to make a higher offer to try to settle your case.

Hospitals are concerned about negative publicity, and this can add to how much your case might be worth. If your case involves an egregious mistake that would likely be picked up by the media if it went to trial, the insurer, hospital, and doctor might be likelier to want to settle your case instead of risking a trial. By contrast, if your claim is not against a hospital but is instead against an individual doctor, the insurer might be less likely to be concerned about negative publicity and may be likelier to pursue litigation instead.

Similarly, if punitive damages might be involved in your case, the insurer and hospital will likely want to reach a settlement and offer a higher amount. While they are rare, punitive damages are paid in addition to your general and special damages in cases in which the provider’s conduct was particularly outrageous. Your lawyer can tell you if punitive damages might be at issue in your case. If they are, Pennsylvania caps them at 200% of your total compensatory damages.

Negotiating Settlements

Both attorneys and malpractice insurers spend a lot of effort on investigating and valuing claims before litigation. The initial work allows both sides to prepare and make informed decisions about the value of a potential claim. Like the insurer, your attorney will take time to fully investigate your case, gather and review your medical records, and consult experts to determine the legal merits of your claim. Under Pennsylvania law, you must have your claim reviewed by a medical expert to determine whether the doctor’s care met the expected standard of care or deviated from it before you can file a claim, and you must file a certificate of merit at the time you file your lawsuit.

If our medical malpractice lawyers in Philadelphia determine that your claim is not viable, they will explain this to you and won’t accept representation. However, if your claim does have legal merits, your lawyer will fully value your claim and begin negotiations with the provider’s malpractice insurer to try to secure full compensation on your behalf. While litigating a medical malpractice lawsuit can be expensive, the attorneys at Raynes & Lawn work on a contingent-fee basis. This means that you won’t have to pay legal fees until and unless your attorneys successfully recover a settlement or verdict in your favor.

If your case is strong and has potentially substantial available damages, you can expect the insurer to be more willing to offer a settlement to avoid the risk of losing even more money to you at trial. Your legal team will analyze your case and help you understand its strengths and weaknesses and will also explain the potential settlement and trial values to you.

While malpractice insurers pay significant expenses before a lawsuit is ever filed, the vast majority of malpractice claims are resolved outside of court without going to trial through settlements. Your lawyer can help you understand whether a settlement offer you receive is reasonable or if you should instead continue negotiating. If it appears that the insurer will not offer a fair settlement offer, then your attorney will talk to you about filing a formal lawsuit and going through the court process.

Consult Our Experienced Philadelphia Medical Malpractice Lawyers

If you think you might have a valid claim against a medical provider for your injuries, you should consult the experienced medical malpractice lawyers in Philadelphia at the law firm of Raynes & Lawn. Our firm has represented malpractice victims for more than five decades and has successfully recovered billions of dollars for our clients. While our past results can’t guarantee the outcome of your case, our reputation often helps us recover much higher settlements for our clients since malpractice insurers know that we are unafraid of trials and have a record of successful verdicts. To learn more about your claim and your legal rights, call us today for a free case evaluation at 1-800-535-1797.


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