Jury Awards Revisited

Wall Street Journal

Mega-dollar jury awards are a focalpoint in the battle for tort reform.Runaway juries are awarding plaintiffs9-figure settlements in malpractice cases,the argument goes, driving up insurancepremiums and putting America's physicians,especially those in high-risk specialtieslike obstetrics and neurosurgery,in a critical financial bind. But behindthe multimillion-dollar headline numberslies a less forbidding reality, accordingto a recent article.Many plaintiffs settle for far lessthan what the jury awards them, mostlyto save time and do away with theuncertainty of the appeals process.

Often, plaintiffs sign a high-lowagreement, which limits a defendant'sdamages even before the jury returns theverdict. A high-low agreement guaranteesa payment even if the jury findsagainst the plaintiff, but caps any damagesettlement at a preset level, no matterhow large the jury award might be.Although confidentiality clauses in mostsettlements make it hard to find out howmany cases are settled for less than thejury award, some estimates peg the numberof jury verdicts that are downsized inpost-trial negotiations at almost50%. Most of the time, malpracticecases never even get to a jury, and whenthey do, the jury rules for the plaintiff inlittle more than one of four cases.

In dollar terms, only 4% of the morethan $4-billion annual medical malpracticepayments come as a result of juryverdicts. Tort reform proponents admitthat huge headline-grabbing awardsdon't always reflect the final payment toa plaintiff, but they argue that suchawards become a benchmark for similarcases and raise the stakes for future malpracticesettlements.