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									                       Settlement Evaluation through a Telescope vs. a Microscope:
                        Settlements and the Practitioner’s Professional Reputation
                                         Written by Bryan D. Pollard, J.D.,
                         Wilson, Elser, Moskowitz, Edelman & Dicker LLP, Dallas, Texas

        “If I settle, how will the settlement impact me professionally?” – A question frequently asked by
physicians when they are faced with a decision about whether to settle a medical malpractice lawsuit. Also, the
more general the physician’s practice, the more concerned the physician might be with settling a lawsuit. Though
a settlement might not adversely impact a physician’s license, the physician might find that hospital credentialing
committees, certification boards, and health insurance panels might obtain and make use of information on a
physician’s malpractice settlement history. The more general the physician’s practice, the more competitive the
market, and a settlement report might make the physician less competitive in that market.
        Attorneys and other risk professionals often focus their efforts on evaluating the risk of pursuing a case
through trial and the possible range of verdicts a physician might face when taking the case to trial. However,
settlements might also pose some risk to physicians when they are evaluated by their peers. All risks should be
weighed by physicians, their legal counsel, and their insurance carrier to determine the best course of action
when faced with making a decision on settlement. An understanding of what information will be available
regarding the settlement can be very helpful during this evaluation.
        This article will summarize how settlements and civil court judgments are reported both to the Texas
Medical Board (TMB) and the National Practitioner Data Bank (NPDB) and how these reports might impact a
physician professionally. In addition to state licensing boards, hospitals, health maintenance organizations
(HMOs), preferred provider organizations (PPOs), group practices, nursing homes, rehabilitation centers,
hospices, renal dialysis centers, and free-standing ambulatory care and surgical service centers (hereinafter
“health care entities”) can make use of settlement or judgment information to scrutinize a physician’s
professional society memberships and clinical privileges.

                                              TEXAS MEDICAL BOARD
        State Reporting Requirements. An insurance carrier is required to submit a report to the Texas Medical
Board of any complaint or petition filed on behalf its insured. TEX. OCCUP. CODE §§160.052, 160.053; 22 TEX.
ADMIN. CODE §176.2. The insurer is also required to report the final resolution of the case to the Board. 22 TEX.
ADMIN. CODE § 176.2. This would include any settlement made, any dismissal of the case, or any judgment
entered. 22 TEX. ADMIN. CODE §§ 176.1.
         Therefore, no matter the outcome, the final action must be reported. If a summary judgment was
secured from a court dismissing the case in the physician’s favor, it would be reported. Conversely, if a jury were
to find that the physician was negligent and the court entered judgment on the jury’s finding, this judgment and
the jury’s finding would be reported. This would be the case even if the judgment was appealed, though the fact
that the judgment was being appealed would also be reported.
         Availability of Reports: The Board does not review the competency of a physician based on lawsuits filed
against the physician unless three or more lawsuits are filed against that physician in a five year period. TEX.
OCCUP. CODE §§164.201; 22 TEX. ADMIN. CODE § 176.8. When a physician is sued three or more times in a five
year period, the Board reviews the physician’s competency just as if a complaint had been made to the Board.
Id. Complaint information is not released to health care entities upon request except those complaints resolved
by a disciplinary order by the Board, or by agreed settlement. TEX. OCCUP. CODE §§154.054. However, the Board
does post its decision on the doctor’s competency in this regard on-line in the physician’s profile. 22 TEX. ADMIN.
CODE § 173.1. Therefore, the Board’s decision on physician’s competency would be posted to the general public.
As for judgments, the Board also posts on-line any medical malpractice claim against the physician for which the
physician was found liable, a jury awarded monetary damages to the claimant, and the award has been
determined to be final and not subject to further appeal. Id.
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        Interpretation of Settlement Reports: Generally, settlement information reported to the Board from a
particular case is not considered by the public or by health care entities. In short, any settlement reached with
the plaintiffs would not be information released by the Board. Even if the physician is sued three times or more
in the same five year period, health care entities would not receive this information unless the Board either
entered a disciplinary order against the physician or reached an agreed settlement with the physician on the
“complaint” resulting from the three or more lawsuits. Otherwise, the only vehicle from which health care entities
would obtain knowledge of a settlement of this circumstance would be through the federal database (see below).
        Interpretation of Judgment Reports: A physician who receives an adverse jury verdict which is either not
appealed or appealed unsuccessfully will have that information publicly posted on-line by the Texas Medical
Board. This information would of course also be available to health care entities. Health care entities and the
pubic could interpret an enforceable judgment against the physician from a jury’s finding of negligence to be a
credible decision that the physician committed malpractice in that instance.

                                      NATIONAL PRACTITIONER DATA BANK (NPDB)
        Federal Reporting Requirements. An insurance carrier paying a settlement in a medical malpractice
action is required to report that information to the NPDB. 42 U.S.C.A. §§ 11131, 11134. This federal
requirement supersedes any confidentiality provisions in settlement agreements or by court order. Further, the
information that must be reported is the amount paid by the carrier for the benefit of the insured, even if no
apportionment of liability was or can be made by the insurer, unlike the Texas reporting requirements.
        Availability of Reports: The NPDB is the more likely source of information to health care entities when
evaluating a physician for privileges or certification. The NPDB is available to health care entities and state
licensing boards. 42 U.S.C.A. § 11137(a). A hospital is actually required to check the NPDB for information
whenever a practitioner is applying for privileges at least once every two years. 42 U.S.C.A. § 11135.
        Interpretation of Settlement Reports: Federal law directs that payment in settlement of a medical
malpractice claim "shall not be construed as creating a presumption that medical malpractice has occurred." 42
U.S.C.A. 11137(d); 45 C.F.R. §60.7. Additionally, as long as the report is under 2,000 characters in length, more
elaborate commentary on the categories of “Associated Legal and Other Issues” and “Outcome” can be included
in the NPDB report. This commentary could include an estimate of additional legal fees and expenses likely to be
accrued if the case were taken to trial to confirm that the settlement was made as a business consideration more
than any admission of liability.
        Interpretation of Judgment: A presumption of responsibility is prohibited with regard to a settlement.
However, when a case is taken to trial and a verdict is rendered against a physician, then there is a presumption
of responsibility on the part of the physician. Also, the physician might be liable for amounts exceeding the policy
limits and any payment from the carrier in partial or complete satisfaction of the judgment would have to be
reported. More importantly, the reporting would reflect a finding against the physician by a jury and the reporting
would reflect a payment on a judgment as opposed to a settlement.

        Placing the facts of your case in front of a jury, not necessarily of your peers but a random sampling of the
public, can be a gamble. However, at least a jury is admonished by a judge not to let bias, prejudice or sympathy
play a part in their deliberation. The same safeguards that courts provide in a jury’s civil deliberation do not
necessarily arise in the context of a health care entity’s use of or interpretation of action taken on a case, often
with even less information about the case.
        The broader use of reported settlements and their judgment information by health care entities and the
public should be considered by physicians and their physician’s advisors when evaluating options in the context
of settlement negotiations. The risk of health care entities adversely using settlement information might
sometimes outweigh the risk of putting a strong, defensible case to trial. However, physicians should always rely
on the advice of legal counsel, consider their own professional standing and business circumstances, and
consider the needs of their practice to help them make this determination.


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