What happens to doctors after they lose a malpractice claim? In many cases, malpractice insurance takes care of the actual payment. Most doctors have to carry malpractice insurance as a matter of good business policy. But when a fight erupts between a doctor and their insurer, the results can get expensive quickly.
Here is one instance. In 2004 a physician performed a liposuction procedure on a patient. Later that evening the patient suffered a heart attack and died. The patient’s estate told the doctor they would file a malpractice suit. The doctor’s insurance company agreed to a settlement and sent a check for the policy limit.
However, the doctor’s attorney also offered to submit the case to binding arbitration with no limitation on the amount of damages. That arbitration panel awarded $35.3 million to the estate. The doctor believed that the insurance company acted in bad faith in handling the original claim. The case went to court and a circuit judge sided with the insurer, but on appeal that decision was rejected. Now the doctor can pursue bad-faith arguments related to the decision to go to arbitration.