You may recall the questionable $217 million verdict issued against Florida doctors for allegedly misdiagnosing a stroke after a CT-scan was negative. (Also: Oct. 7.) The attorney, Steve Yerrid, got a lot of publicity from promising to donate the $100 million punitive damages award to charity.
In March, we reported that the case settled, and promised a follow-up from the public-reporting system.
We’ve done that follow-up. Medical Malpractice Closed Claims Report No. M200745119 from the Florida Office of Insurance Regulation refers to a suit over a misdiagnosed stroke on August 9, 2000, brought in the same county against the same doctors and hospital, with the same case number, with the same alleged injury, and which settled on March 9, 2007. Though the file does not identify the plaintiff or the verdict amount (or any earlier settlement offers) we are quite confident that this report refers to the Navarro suit.
According to the closed-claim report, the insurer settled the case for $4,766,781. The report does not disclose whether there were additional payments made by the doctor, or by the hospital, which settled out of the case, so it is possible Navarro settled for more. Interestingly, the entire award was classified as non-economic damages, one suspects for reasons of avoiding tax and avoiding subrogation from Medicaid or health insurance. And, of course, the report does not disclose how much money went to Steve Yerrid, or whether Navarro and Yerrid gave any of the money to charity after announcing their generous intent back in October. Perhaps a Florida reporter could follow up.
As Hyman et al. correctly note in their paper on post-verdict “haircuts” after jury trials, it is important to examine the actual consequences of jury trials: here, the eventual award was far lower than the actual verdict. One of the co-authors of that paper, Charles Silver, has separately argued that insurance limits operate as de facto caps. This result, where the insurer had aggregate policy limits of $3 million, but paid much more, contradicts the more carelessly phrased Silver claim on an anti-reform blog. (Why would an insurer pay more than policy limits? The risk of a bad-faith judgment for failure to settle, which, as we’ve complained about before, is almost always improperly judged in hindsight. The problem is exacerbated in Florida, where winning plaintiffs have a third-party bad-faith cause of action against the insurer. Policy limits would thus be largely illusory.)
The settlement amount more likely reflects the likely outcome on appeal: the almost-certainty that the punitive damages would be struck down; the very likely reduction of noneconomic damages by a large amount; and what appears to be a large risk of a complete reversal. If so, then the $4.7M reflects the expected value of the jury verdict after appeal, with a discount (or, possibly, a bonus) based on the chance of success of a bad-faith claim, and would be a sad commentary on the jury’s accuracy. Of course, such qualitative judgments about the merits of the case are impossible to measure definitively in a quantitative study on the relationship between jury verdicts and settlements (not least because the appellate court is hardly 100% accurate itself, and the court’s biases for defendants or plaintiffs will be reflected in the ultimate settlement), but these qualitative issues are at the center of the debate over medical malpractice reform.
Side note for completeness: on February 15, the insurer filed a report indicating it had paid about $520,000 in loss adjustment expenses to defense counsel and experts and costs; its final report indicated a total loss adjustment expense of over $650,000.
Thanks to AEI research assistant Sara Wexler for finding the Florida report.
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