In negotiating a high-low agreement in the medical malpractice context, there are any number of issues to consider, including whether a settlement pursuant to such an agreement is reportable to the National Practitioner Data Bank (“NPDB”), whether to waive post-trial motions and the right to appeal, how to deal with comparative fault, taxation of costs, and a hung jury.

Generally speaking, a high-low agreement is a contract used to limit liability for the defendant but guarantee some recovery for the plaintiff.  The concept is that a defendant, wishing to avoid the potential for an excessive verdict, desires to cap the damages at a tolerable level.  A plaintiff, wishing to avoid the possibility of no recovery, seeks to preserve some minimum damage award.  The parties negotiate a floor and ceiling for the damage award.  If the verdict is below the floor, the plaintiff is assured of recovering the negotiated minimum.  If the verdict is above the ceiling, the defendant will pay no more than the negotiated maximum.  If the verdict is between the floor and the ceiling, the plaintiff’s recovery is that amount.         

High-low agreements, if properly structured, are a potential way to side-step the reporting requirement to the NPDB.  If a payment is made to a plaintiff at the low end of a high-low agreement and after a finding of no liability for the defendant-doctor at trial, the NPDB Guidebook states that the payment need not be reported to the NPDB.  In such a situation, the payment is not for the benefit of the doctor in settlement of a malpractice action.  Rather, it is made pursuant to an independent contact between the plaintiff and the doctor’s insurer.  Thus, in order for the low-end payment to be exempted from the reporting requirements, the jury must have made a liability determination at trial.  If payment is made after a jury finds liability on the part of the doctor, the payment must be reported.

However, note that the applicable Nebraska statutes and regulations state that a report to DHHS must be made when a professional liability claim results in an adverse judgment, settlement, or award, including settlements made prior to suit in which the patient releases any professional liability claim against the doctor.  See Neb. Rev. Stat. § 38-1,125(1)(c)(iii) and 172 NAC 5-003.01(4).  What impact do these laws have on the reportability of a settlement reached pursuant to a high-low agreement?  There is no Nebraska caselaw addressing this issue.  But because the NPDB has specifically addressed the reportability of a low-end payment where there is a finding of no liability, such a payment is likely not reportable. 

In my next article, we will examine a few other issues relating to high-low agreements.