South Florida Hospital News
Friday February 26, 2021

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October 2013 - Volume 10 - Issue 4

Florida Physicians Gain “ Consent to Settle” Authority

“With great power comes great responsibility.” (Voltaire, 1832)
The Florida legislature amended statute 627.4147 that is commonly known as the “consent to settle” statute on 10/1/2011. The Florida Medical Association and doctors have fought for the right to refuse to settle malpractice claims for nearly 30 years. The new law allows the insurers to give doctors the right to consent to a settlement. Malpractice insurers are required under this law to clearly state within their policy whether the physician policyholder has the “exclusive right” to veto any settlement offer. The revised statute now brings Florida in line with the consent to settle statues in most other states.
What is consent to settle … ?
In many standard insurance policies, the authority to defend or settle a claim will normally rest with the insurer. This is common for most automobile, homeowner, and general liability type insurance policies. The insurer may settle purely for economic reasons and does not need consent from the policyholder.
Professional liability policies protect doctors against malpractice and regulatory type claims. Doctors can be exposed to greater indirect damages if a claim is settled simply for economic reasons. There is a permanent public record of all claim settlements made against doctors in Florida. Therefore, a settlement can damage the doctor’s reputation, future earnings, and even their ability to obtain malpractice insurance in the future.
How does the new law change the insurer’s responsibility?
The new legislation makes it clear that malpractice insurers still have a responsibility to “act in good faith and in the best interest of the insured.” The best insurers will want to maintain their good reputation for defending doctors against lawsuits. In the past, the insurer was exposed to a secondary claim of
“bad faith” if they defended a claim that lead to a bad outcome at trial. Ironically, the doctor could then sue their insurer for making the wrong decision to defend if they could have settled within the doctor’s policy limits. The insurer could then be exposed to unlimited punitive damages along with the plaintiff’s entire legal costs. Giving doctors the sole authority to defend or settle will relieve the insurer from the dreaded exposure to bad faith claims when they have provided a competent defense.
How does the new law change the doctor’s responsibility?
Given the “exclusive right” to veto settlement, doctors will more likely need to consult with their own legal counsel when faced with a lawsuit. Doctors now need to be counseled about their exposure to an excess verdict, legal costs, and/or punitive damages. It would also be prudent for doctors to consider carrying greater liability limits of coverage to lessen this exposure. Doctors who carry greater liability limits will be more confident to defend against a lawsuit when the limits are sufficient to cover any bad outcome at trial.
What is a “worst case” or bad outcome at trial?
Imagine that the patient has an unrealistic view of winning and refuses any reasonable settlement offer. A lawsuit can take 3 – 4 years to resolve and the effort will cause the physician stress over this time. The doctor feels confident that the defense will prevail and rejects the plaintiff’s demand for policy limits. If the jury awards the patient an amount that is greater than the policy limits, then the doctor is exposed to a secondary claim for collection of any judgment amount above their insurance coverage’s limits of liability. The doctor will be responsible for all damages that exceed the policy limits; and possibly legal costs and punitive damages. It is important to note that the jury is never told the policy limits that are carried by the doctor - so this will NOT be taken into account when the award amount is determined.
Can this new-won authority create a greater exposure for the doctor?
Yes. Greater authority typically comes with greater responsibility. It is understandable that doctors fought hard to gain this new authority over the insurers. Doctors in Florida now have the same authority as most all other states in the country. It is equally important to note that doctors typically carry higher limits of liability coverage in most other states.
Finally, there is a wide misconception among Florida doctors who believe they are less susceptible to a lawsuit if they carry minimum coverage or no coverage at all. Doctors are simply a “target” for lawsuits whether they carry insurance or not; and the amount of coverage is initially unknown to the plaintiff. The greater concern is how doctors protect themselves against lawsuits that can be made with or without merit or cause. We recommend that doctors carry the maximum limits of coverage that they can afford to protect them against a worst case claim outcome. Carrying minimum limits of coverage exposes a doctor to even greater losses that can exceed their liability limits. The amount of premium to increase the limits is often nominal when compared with the added security.
Matt Gracey and Dan Reale are Malpractice Insurance Specialists with Danna-Gracey, Inc. They can be reached at (800) 966-2120.
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