If you ever find yourself as a defendant in a medical malpractice case, you will want to know about high-low agreements. These agreements allow a defendant to avoid the results of a verdict. However, unlike pre-trial settlements or settlements that are reached during a trial and so prevent the case from ever going to verdict, these are settlements that actually depend on the verdict.
They set up an alternate payment framework that the verdict will trigger. The role of the verdict then is to provide the facts that will determine the outcome under the agreement: who won and, if it was the plaintiff, for how much? This should not be confused with a post-verdict settlement. Those are “13th hour” attempts to avoid lengthy appeals by settling the case within policy limits after a large plaintiff’s verdict. Under a high-low agreement, by contrast, the plaintiff and the defendant pre-negotiate the limits and agree that those cannot be appealed. They set a “high,” a maximum amount that the defendant will pay if the verdict is for the plaintiff even if the actual verdict is for more than that, and a “low,” a minimum amount that the defendant will pay the plaintiff if the jury’s verdict is for the defendant or is for the plaintiff but below that amount.
Of course, such an outcome gets the immediate interest of physicians, but when they then consider that they would have to pay the plaintiff even if they win, they bristle at the idea that they should have to pay a plaintiff they just beat. However, high-low agreements can actually have substantial benefits for the defendant doctor.
True, the plaintiff gets the protection of a “floor,” but the doctor gets the protection of a “ceiling.” This can be very significant for a doctor who would prefer to settle but is swept along in a case by a powerful co-defendant like a hospital that wants to continue, a doctor licensed in a state that institutes disciplinary proceedings based on high awards, or a doctor at risk of losing their insurance or having their premiums raised to an unaffordable level if a very large award comes in against them.
These agreements also help deflect the lack of inflation indexing in medical professional liability policies. Standard policy limits are often still at the $1 million/$3 million level that they have been for decades even though costs have sky-rocketed, increasing the risk of personal exposure for doctors as their policy terms become inadequate to cover actuarially set awards to severely injured plaintiffs. A high-low agreement usually sets a cap no higher than the policy limit.
This article was written by Dr. MedLaw, a physician and medical malpractice attorney.