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The CMG Voice

Subrogation Claims

Posted Monday, April 22, 2013 by Gene Moen

In almost every medical malpractice claim, there are related medical expenses that were paid by health insurance or by a government program, such as Medicare or Medicaid. What most people don’t realize is that, when there is a settlement of a malpractice claim, the health insurance company or the government program usually has a right to be repaid all or part of the amounts it paid for medical care caused by the malpractice.

In legal terms, those entities are “subrogated” to the malpractice claim, which means they stand in the shoes of the claimant to recover what they have paid. This can sometimes be an impediment to resolution of a claim because the amounts claimed are often so large that, after payment of fees, costs, and subrogation amounts, it does not leave enough for the injured person.

Government programs such as Medicare, Medicaid, and Labor & Industries, have statutes that provide that they share on a pro-rated basis in the fees and costs necessary to obtain a recovery. Some programs also provide for a method of reducing the subrogation claim to reflect difficulties of proof as to liability or damages or to reflect hardship if the full subrogation amount were to be paid. And some health insurance policies also include such language in their policy documents, or are willing to negotiate as to the amount of a subrogation claim that must be re-paid.

Washington State also has case law that requires a sharing in fees and costs in most subrogation situations (these do not include government programs like Medicaid or L & I). There is also a case that specifies that subrogation claims must be paid only if the injured person is “made whole” first. In other words, the first amounts from a settlement go to compensate the claimant for physical injuries and then what is left can be used to pay the subrogation claim. This situation typically comes into play where there is limited insurance coverage for a defendant so that a settlement is for less than full value of the claim, but it may also apply when other factors lead to a partial rather than a full-value settlement.

It is not uncommon to settle a claim without knowing what the final subrogation interest will be. This often occurs in cases where Medicare paid for the related medical care. Sometimes there can be a long delay, after a case is resolved, before negotiations with Medicare allow a final figure to be reached. When these delays occur, it is common that the settlement agreement requires that the full amount of the Medicare lien be held in the trust account of the claimant’s attorney until there is a final resolution.

There can also be issues determining what medical expenses were caused by the negligence, and what expenses would have been necessary even without negligence. An example is a case involving a delay in diagnosis of cancer. The settlement with the defendant may reflect only the additional care needed because of a different stage of the cancer or a reduced life expectancy. But the full treatment expenses, including chemotherapy, may have been required even without the negligent delay. In such cases, nurses or even physicians have to sign declarations as to whether a medical expense is related or not for purposes of determining whether it should properly be part of the subrogation interest.

A major difficulty in this area of law was highlighted in a recent U.S. Supreme Court case, decided on April 17, 2013, regarding ERISA policies: US Airways v. McCutchen. ERISA is the Employee Retirement Income Security Act of 1974, a federal law under which many employer-paid health insurance policies are issued. Because the policies are issued under federal law, state laws or cases, such as those mentioned above in Washington, do not apply.

The thrust of the Supreme Court’s decision is that an employer or employer-issued ERISA policy can demand full payment of its subrogation lien, without sharing in fees or costs and regardless of whether the injured person was made whole. In Mr. McCutchen’s case, that meant his net recovery of $66,000 would have to be paid in full to his employer who paid approximately that amount for related medical care. The result is that he would receive nothing from having pursued his liability claim and nothing for his other harms and losses.

Most law firms representing plaintiffs are now going to carefully investigate, before taking on a case, whether an ERISA policy would have a subrogation claim. For cases where there is disputed liability and a large potential lien, it may not be feasible to pursue the case at all. There is a need for Congress to revisit ERISA and fashion new legislation that will allow injured persons to pursue meritorious cases and have a reasonable means of negotiating a reduction in an ERISA lien.

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Surgery Mistakes Can Be Difficult to Prove

Posted Wednesday, April 17, 2013 by Gene Moen

All medical negligence attorneys deal with cases in which a surgical error or mistake caused great injury or even death. The difficulty is in proving that the surgeon was negligent. The mere fact of a bad outcome does not establish negligence, and the burden is on the claimant to present expert testimony that the surgeon was negligent in causing the injury.

If the injury or incident is one that ordinarily would not have happened in the absence of negligence, then the claimant can rely on the doctrine of “res ipsa loquitur.” In essence, this Latin phrase means “the thing speaks for itself.” However, in most cases the claimant still needs expert medical testimony to establish that the mistake would not happen unless the surgeon was negligent. In addition, the doctrine only shifts the burden to the defendant to offer a non-negligent explanation for what happened.

In most cases, unless the error is egregious, the defendant and his/her experts will testify that the particular harm is a “known risk” of the surgery and will cite studies about how it can occur in a certain percentage of such surgeries. These case studies or reports may be describing the percentage that was actually the result of negligence, but establishing that is also difficult at best.

A classic example - and one that is often seen by a malpractice attorney - is a laparoscopic abdominal procedure that results in an initially undetected bowel perforation. A bowel perforation is not an acceptable outcome, but surgeons will tell you that it can occur even in the best hands. If it is a small hole or a burn from a cautery tool, it may not open up and lead to peritonitis (infection of the peritoneum) for several days.

If not caught early, it can result in the patient’s death. In many instances, one cannot establish that the surgeon was negligent in causing the bowel perforation, but only that the patient complained of post-operative symptoms suggesting peritonitis and she/he was not seen emergently to treat this dreaded complication.

One thing a plaintiff attorney most dreads is the defense expert who looks like Doc Welby in the old TV series and presents as a careful and prudent physician. If that expert testifies that he has also had this bad event occur in his surgeries and he was not negligent when it happened, juries are inclined to give the defendant doctor the benefit of the doubt. This is especially true when the defense expert talks about anatomical variations and other differences in each person that makes any surgery inherently risky for some people.

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Big Hospitals Become Bigger

Posted Monday, April 15, 2013 by Gene Moen

A recent trend in Washington is changing the face of hospital medical care. Hospitals are merging, acquiring other hospitals, or otherwise entering into arrangements for some kind of operating control or joint practice. Examples include Swedish Medical Center, which has taken over the former Stevens Hospital (now called Swedish Edmonds). Swedish, in turn, is now in a partnership arrangement with the Providence hospital group in Washington, Oregon, and Alaska.

Elsewhere, Multicare in Tacoma now operates Auburn hospital and Harrison’s in Bremerton. The University of Washington is now operating Northwest Hospital and Valley Medical Center. And in Spokane, there is an entity called “Rockwood Health System” which now includes Deaconess Medical Center, the Rockwood Clinic, and Valley Hospital.

Another trend is for these mega-hospitals to purchase existing physician clinics and practices. It is now very common for a physician who sends a patient to a hospital to also be an employee of that hospital, even while working out of a separate clinic or medical practice. An advantage for the hospital is obtaining a steadier stream of admissions. The physician obtains the benefit of a more certain income and, usually, malpractice insurance purchased by the hospital.

There are also obvious advantages for the hospitals in terms of economies of size and the ability to have better and more consistent systems in place.

What it all means for patients of the physicians and hospitals involved is less than clear. Sometimes rapid growth means a delay in establishing good procedures and guidelines for patient care, or a rush to hire providers who may not be properly trained or supported.

This trend also presents challenges for those of us who represent injured patients. Rather than dealing with a local risk manager at a hospital, we are now dealing with claims representatives at remote sites who have been hired by national risk management firms.

In addition, in the past we might use a physician or nurse at, for example, Providence Everett to be an expert in a case involving Swedish. Now those potential experts have conflicts of interest that prevent them from serving as an expert. It makes it more likely that plaintiffs’ attorneys have to go out of state to find independent experts to testify in Washington medical negligence cases, which adds to the costs of litigation.

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Hospital Transparency is a good thing for patients

Posted Wednesday, March 27, 2013 by Tyler Goldberg-Hoss

The issue of transparency in hospitals is not a new one, particularly when errors occur. On the one hand, hospitals prefer not to disclose information that might open them up to liability due to an error that resulted in injury to a patient. Hospitals also argue that allowing it to have a degree of privacy makes patients safer, because they can have internal discussions about what went wrong and fix the problem so that it hopefully will not happen again.

To patients who have been harmed by the negligence of a hospital or its employee, this cloak of secrecy is an unfair impediment to finding answers and accountability. To patient advocate groups, more transparency - not less - makes patients safer.

This is a topical subject both nationally and locally. Nationally, two separate sets of data have been published on hospitals around the nation. First, the website Hospital Inspections, run by the Association of Health Care Journalists, has published federal hospital inspection reports, including 18 reports in Washington.

The substance of some of these reports might seem innocuous (hospital failed to send a required grievance letter in response to a complaint from a patient), while others less so (failing to ensure that all patients received care in a safe setting, including multiple patient safety issues that put patients at risk for harm or potentially death). Overall, patients should be pleased at this increased transparency.

The US Government’s Medicare Program provides the other set of data. It’s recently unveiled “Hospital Compare” program on it’s website Hospital Compare allows patients to search for and compare hospitals all around the United States in such categories as “Timely & Effective Care” and “Readmissions, Complications & Deaths.” This is a fascinating tool that promotes transparency, and will be more so when it includes more data.

Locally, the Washington state legislature is considering a law that will give hospitals more power to shield evidence of errors. This bill - SB 5666 - will give hospitals virtual immunity because it will allow them to reach out and hide all evidence of any wrongdoing.

Hospitals are supporting this measure as a way for them to properly conduct their internal investigations and improve safety for all patients. What it surely will do is take away a patient and families’ right to know what happen to them, and give them little to no civil recourse because there would be no evidence that could be uncovered to prove the wrongdoing.

Lawyers of civil justice, particularly those affiliated with the Washington State Association for Justice, are fighting this bill vigorously. These are the lawyers, like us, who represent the interests of patients and others injured as a result of the negligence of others including hospitals. Without transparency, those injured people will never get justice.

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The Importance of Causation

Posted Monday, March 25, 2013 by Gene Moen

Many potential clients who contact us about a case emphasize that, in their case, the medical negligence was clear or egregious. Of course, proving that a medical provider was negligent is the first step in a case. But the second step - proving causation - is often the more difficult burden to meet. In every medical negligence case, the claimant has the burden of proving that a particular act or acts of negligence caused a specific harm. In many medical negligence cases, the initial condition or harm was present before the negligence, and the claim is that the provider failed to diagnose it, thus delaying treatment.

A common example is a delay in diagnosing cancer. The cancer was present before the provider missed signs and symptoms (such as by misreading a mammogram or overlooking a lump). When the cancer is finally diagnosed, it is claimed that the delay in diagnosis and treatment allowed the tumor to grow to a different size or stage and thus caused damage, i.e., required more extensive treatment and/or worsened the prognosis. The longer the delay, the better the chance or proving that it caused the damages. In many cases, however, the negligence becomes provable only as the signs and symptoms become more obvious, and by that time it may be that the delay is too short to allow proof of damages caused by the delay.

Proving causation is often more difficult because physicians are loath to testify about what might have happened with earlier diagnosis or treatment. To them, it is inherently speculative to express causation opinions in answer to a hypothetical question. In some cases, there is a body of statistics that can help in that process. For example, there are extensive breast cancer studies showing how the various stages of a tumor impact prognosis (usually expressed in terms of five-year survival). In many other instances, that body of statistics is absent. For example, there is less statistical evidence to support a claim that a four-hour delay in diagnosing an epidural spine infection resulted in the patient’s paralysis, or that initially missing an abdominal aortic aneurysm resulted in the patient’s death.

All medical negligence cases require that all three elements - negligence, causation, and damages - require expert medical testimony. The difficulties and cost of obtaining that expert testimony is one of the reasons why many attorneys do not take on medical/legal cases.

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