The Maryland Court of Special Appeals this morning issued its opinion in Maslow v. Vanguri. In this case, the court found that Plaintiff’s pursuit of an appeal after an adverse judgment forfeited the doctor’s insurance company’s obligation to pay her $250,000 that it owed to her as the result of a “high-low” settlement agreement that was reached by the attorneys during a medical malpractice trial.
The Facts of the Case
The genesis for this case was a medical malpractice action in Baltimore County. The plaintiff contended that surgery was performed – a vagotomy and antrectomy. This is a surgical procedure intended to reduce the frequency of stomach ulcers. On the 5th day of what was apparently a hard fought medical malpractice trial, a “high/low” agreement was reached. The parties and their malpractice attorneys agreed that, regardless of the jury’s verdict, the Plaintiff would receive a minimum $250,000 recovery but a $1,000,000 maximum. The parties put on the record and agreed in writing to the “high-low” agreement, which included a clause that the Plaintiff and the doctor would waive any right of appeal.
Let’s Talk High-Low Agreements
The purpose of a high-low agreement is the same as any other settlement. the parties want to limit risk, forgoing the possibility of a better outcome. Our clients have agreed to dozens of high-low agreements over the years because they want a guaranteed result and are willing to give up significant upside for that security. Are high-low agreements a good idea? It really depends on the case.
Usually, the problem with high-low agreements is that they are made on the fly in the middle of trial. This causes a lack of attention to detail. Who bears the costs? What if there is a mistrial? Are there any events that can void the high-low agreement? Does the defendant have to admit liability?
If there is a dispute, a high-low agreement is a contract. In Maryland, this means courts are going to be loathe to allow the introduction of extrinsic evidence. So it is critical to document the essential ingredients of the agreement.
Back to the Case
So, getting back to the case, the jury found in favor the doctor, finding that he did not breach the standard of care and that appellee had obtained appellant’s informed consent for the surgery. The jury also found that the Plaintiff was contributorily negligent. From the adverse verdict, appellant, pro se, filed a motion for a new trial, and in spite of the agreement, a notice of appeal. In the motion for a new trial, appellant claimed that the jury should have been permitted to review witness depositions, as had been requested, and that the court erred in its instruction to the jury. Baltimore County Circuit Court Judge Ruth Jakubowski denied the motion. Plaintiff proceeded with the appeal. The opinion does not mention what instructions to the jury were at issue. But at least with respect to the issue of whether the jurors should have been given the deposition transcripts, the Plaintiff had absolutely no chance on appeal. Maryland law is well settled on this point.
While the appeal was pending before the Maryland Court of Special Appeals, the insurance carrier, Princeton Insurance Company, offered to settle the case for $250,000 if the Plaintiff would drop the appeal. This was actually pretty generous if you ask me. After the appeal failed, she again sought to enforce the judgment. But the trial court found that the Plaintiff had materially breached the high-low agreement and, accordingly, permitted the insurer to rescind the agreement.
On appeal, the Plaintiff abandoned the argument that no appeal was permitted from the jury’s verdict. Instead, Plaintiff argued that her breach was not a material breach of the contract. Accordingly, she argued that the doctor’s insurance company was merely entitled to damages. The Court of Special Appeals disagreed, holding that after the jury returned its verdict, Plaintiff remained obligated to abide by her promise not to appeal. Plaintiff’s repudiation of the Agreement left the doctor free to pursue the remedy of rescission. So the plaintiff walks away from $250,000.
High-low agreements sometimes make sense because insurance companies are always concerned about “black swan” verdicts and will often overpay for the protection.