Vital Sounds 2024, Quarter 1

Vital Sounds 2024, Quarter 1

Megaverdicts, Social Inflation, and You

February 29, 2024


Megaverdicts, Social Inflation, and You

February 29, 2024

By Tucker Poling, JD
General Counsel and Vice President of Claims

chaotic math symbols representing social inflation

Over the past decade, 41 states have reported medical malpractice verdicts of $10 million or more. These “nuclear” or “shock” verdicts have become more common in recent years.

Examples of Nuclear Verdicts in the Last 3 Years

1) A jury verdict for $111 million against a hospital in Minnesota in a case involving a young man who developed compartment syndrome following a soccer injury. Notably, $110 million of this verdict was for non-economic damages – commonly referred to as “pain and suffering.”

2) A $97 million verdict in Iowa City, Iowa, in which a plaintiff attorney targeted OBGYN healthcare providers and their clinic following a severe fetal brain injury, which caused the clinic to file bankruptcy.

3) A verdict of $27 million against an urgent care clinic in Des Moines, Iowa. The plaintiff attorney attacked healthcare providers who did not diagnose a case of meningitis in a patient who presented to the clinic with flu-like symptoms. Again, most of the money awarded in this verdict was for non-economic damages.

The Heavy Burden of the Plaintiff Litigation Industry

The overall cost of malpractice tort litigation to the healthcare system is hard to quantify but has been estimated to be between $50 and $150 billion annually. Healthcare providers and their liability insurers bear the initial brunt of these costs, but ultimately, these costs are borne by patients – in the form of higher healthcare costs, less access to quality healthcare, and the potential for poorer healthcare outcomes due to defensive medicine.  

The Role of Social Inflation

The shock verdict trend may be a symptom of a broader phenomenon called “social inflation.”  Insurers use the term “social inflation” to describe the rising costs of claims due to the interplay of complex societal factors, including those discussed below.

Advertising and public persuasion campaigns by the plaintiff litigation industry.

Plaintiff attorneys promote tort litigation and frame their marketing efforts in the language of social justice – though they usually leave out that a large portion of the “justice” ends up in their own pockets. Plaintiff attorney advertising has been increasing across the country. For example, between 2017 and 2021, attorney advertising in Kansas increased approximately 64% and exceeded $24 million.

Public desensitization to the value of money and persistent economic inflation.

In recent years, the public has been inundated with news that skews public perceptions of money: Elite athletes and corporate figures make 9- and 10-figure salaries. Billions of dollars in “free” money provided to businesses and individuals through public programs to address COVID disruptions. Fast food restaurants charging $18 for Big Mac meals. It’s unsurprising that some juries may now feel more comfortable awarding multimillion-dollar verdicts to someone who has suffered a serious injury or an unexpected catastrophic healthcare outcome.

Diminished person-to-person connections between patients and providers.

These diminished connections can be caused by changes in how patients utilize healthcare, changes in healthcare delivery models, and increased administrative burdens on providers that tend to reduce face-to-face time with patients. It’s much easier to blame and shame someone viewed as an anonymous service provider than someone viewed as a personally trusted professional.

Plaintiffs’ attorneys and a toxic incentive structure.

Plaintiffs’ attorneys make their profits from contingency fee agreements that require the injured client to hand over a large portion of any settlement or verdict to their lawyer – often 40-50%. And because the plaintiff attorney’s cut is taken after all litigation expenses are deducted, it’s not uncommon for the injured patient to receive only around 25% of the settlement or verdict.

Even though juries find most claims litigated by medical malpractice plaintiffs’ attorneys to lack merit if the claim goes to trial, these contingency fee agreements create incentives for plaintiffs’ attorneys to artificially extend litigation and drive up settlement demands. The rise of third-party litigation funding (a process by which hedge funds and other financiers invest in lawsuits in exchange for a percentage of any settlement or judgment) has further exacerbated this toxic incentive structure.

Good News for Kansas Providers

No nuclear verdicts in Kansas.

Kansas juries generally continue to be reasonable in assessing malpractice claims against healthcare providers. This is despite the best efforts of the plaintiffs’ litigation industry to drive up jury verdicts and settlement values, including their partially successful attempts to undermine the Kansas statutes designed to promote healthcare availability, such as statutory caps on excessive jury verdicts.

KAMMCO stands up for healthcare providers, and wins.

At KAMMCO, we’re not afraid to stand up to the plaintiff litigation industry by taking cases to trial rather than settling.  KAMMCO-insured healthcare providers have won approximately 90% of the medical malpractice cases that have gone to trial over the past decade, and the last ten jury trials of claims against KAMMCO-insured providers have resulted in a complete defense verdict in favor of the healthcare provider.

The KAMMCO approach to claims.

Some of the strategies and methods recently identified nationally as effective ways to deal with the new, more challenging malpractice claims environment are the same things that have been the hallmark of KAMMCO’s approach to claims for nearly 35 years.

KAMMCO remains vigilant in monitoring the national trend of excessively high monetary awards in medical malpractice claims. And we’re continuing to do our part by steadfastly defending accused healthcare providers and pushing back on the plaintiff litigation industry’s attempts to bully healthcare providers into feeding the litigation machine by paying settlements for non-meritorious claims.