American Journal of Law & Medicine

Evaluating New Hampshire's First-in-the-Nation Early Offer Alternative to Medical Malpractice Litigation

CONTENTS  I.   INTRODUCTION  II.  EARLY OFFER SYSTEMS ADDRESS THE SLOW, COSTLY, AND      INCONSISTENT NATURE OF THE EXISTING MEDICAL MALPRACTICE      TORT SYSTEM       A. Shortcomings of the Traditional Medical Malpractice         Tort System          1.  Compensation         2.  Deterrence       B. The Case for Early Offer Reform          1.  Compensation         2.  Deterrence  III. OVERVIEW OF NEW HAMPSHIRE'S EARLY OFFER SYSTEM      A. Finding and Purpose      B. The Early Offer Process  IV.  EVALUATING CONSTITUTIONAL CHALLENGES TO NEW HAMPSHIRE'S      EARLY OFFER SYSTEM       A. The Early Offer System and Equal Protection Claims          1.  The Right to Recover for Injury and Intermediate             Scrutiny         2.  Similarly Situated Medical Malpractice Victims         3.  Potential Discrimination Between Patient and             Non-Patient Claimants         4.  Potential Discrimination Against Medical Malpractice             Victims         5.  Distinguishing Between Different Types of Tort             Claimants         6.  Potential Benefits to Healthcare Provider             Tortfeasors       B. New Hampshire's Early Offer System, Due Process, and         Damage Determinations  V.   OPPORTUNITIES TO IMPROVE EARLY OFFER SYSTEMS TO ADDRESS      CONSTITUTIONAL CHALLENGES AND ADEQUATELY PROTECT      PATIENTS' RIGHTS       A.  Voluntariness and Timing in Early Offer Systems      B.  Noneconomic Damages      C.  Limiting Chilling Effects on Patient Decision-making  VI.  CONCLUSION 


Many states have enacted medical malpractice reforms, recognizing that their tort systems result in protracted litigation, high costs, and a large number of uncompensated victims. (1) One proposed reform, an "early offer" system, allows a medical provider to make a financial offer covering an injured patient's economic damages, which, if the patient accepts, precludes litigation. (2) However, if a patient rejects an offer, he will face a higher burden of proof at trial. (3) The early offer system seeks both to assure claimants receive prompt compensation for their economic damages, and to save insurers and providers litigation expenses and unreasonable damage payments. (4)

On June 27, 2012, the New Hampshire General Assembly overrode former Governor John Lynch's veto and established the country's first early offer payment system for medical malpractice claimants. (5) After a medical injury, patients may now request an early offer payment from their medical providers for economic damages. (6) The legislature sought to provide faster, more certain results and less costly recovery to those who use the early offer system. (7)

The early offer system is voluntary for both an injured patient and a medical provider. (8) An injured patient may choose to request an "early offer" from the medical provider, but if he or she seeks payment under the existing court system, the early offer system has no effect. (9) If an unrepresented injured patient requests an early offer, the medical provider must appoint a neutral advisor to assist the claimant. (10) After the claimant meets with a neutral advisor, he or she has five days to decide whether to proceed or withdraw from the early offer process, (11) If an injured patient proceeds under the early offer system and the medical provider declines to extend an early offer, the injured patient is flee to pursue other legal remedies. (12) If the medical provider extends an offer, the injured patient has three options: (1) accept the offer, (2) request a hearing to determine whether the early offer meets the law's requirements, or (3) reject the offer. (13) An injured patient who accepts an offer waives his or her rights to a judicial determination of damages and forgoes compensation for noneconomic damages such as pain and suffering. (14) Alternatively, an injured patient who rejects the offer may seek legal remedies after securing a bond for the amount of the provider's reasonable attorneys' fees and costs. (15) If a court later awards economic damages equal to or less than 125 percent of the amount of the offer, the injured patient must pay the medical care provider's attorneys' fees and costs. (16)

Early offer systems have great promise to encourage prompt and efficient payment of meritorious claims. (17) However, New Hampshire's early offer system might face challenges as a violation of the claimant's right to equal protection, to due process, or to a trial by jury on her damages. (18) While New Hampshire's early offer system is likely to pass constitutional muster, an analysis of the law highlights ways to modify New Hampshire's approach to better protect patients' rights. (19) Specifically, a fair early offer system must be voluntary, provide sufficient time for unrepresented claimants to decide whether to pursue an early offer, and limit the chilling effect that the bond requirements and "loser-pays" provisions have on a patient's decision to challenge an unfair offer.

Part II of this article draws on empirical research to demonstrate how early offer systems address the slow, inconsistent, and costly nature of the existing medical injury litigation system. Part III outlines New Hampshire's new early offer system. Part IV assesses potential constitutional challenges to New Hampshire's early offer system. Finally, Part V identifies opportunities to improve early offer systems to address constitutional challenges and to adequately protect patients' rights.



Critics of the current medical malpractice system assert that it requires reform. Determining fault and the value of pain and suffering in medical malpractice cases is complex, often resulting in slow, expensive legal battles fraught with uncertainty. (20) Consequently, critics argue that it fails to compensate injured persons fairly and to deter negligent medical care. (21)

1. Compensation

Many medical malpractice victims go uncompensated because they do not file claims, and victims who file claims are often undercompensated. (22) The majority of victims never file claims. (23) For example, a Harvard Medical Practice Study found that fewer than two percent of negligently injured patients in New York filed claims. (24) Other research reflects similar findings. (25) One expert in the field, Joanna Shepherd, found that insufficient damages and high litigation costs "force[] many [medical malpractice] attorneys to reject legitimate cases." (26) The difficulty of proving a breach of the standard of care or proving causation results in costly investigation, expert evaluation, and other litigation expenses. (27) Second, according to experts, negligently injured patients who file claims are only compensated between thirty-two and eighty-nine percent of what they should receive. (28) Thus, few malpractice victims file claims, and those who do are often only partially compensated.

Furthermore, protracted and costly litigation reduces malpractice victims' compensation. (29) Some medical malpractice claimants receive large awards, (30) but even those injured patients who recover often only receive payment after an average of four years. (31) Due to high litigation costs, forty to sixty percent of a victim's compensation pays litigation expenses and other transaction costs. (32) The current medical malpractice system fails to fairly compensate injured persons because many victims do not file claims, and those who do are undercompensated. (33)

2. Deterrence

The medical malpractice system might also fail to deter negligent medical care, a goal of states' medical malpractice systems. Shepherd maintains that the under-compensation of victims and the lack of a connection between doctors' premiums and past malpractice "blunt[s] incentives for the medical community to improve care." (34) On the other hand, fear of liability may deter doctors from performing certain procedures or encourage doctors to order unnecessary tests and treatment. (35) The key question is the net effect of mechanisms deterring negligent care. Overall, the medical liability system, including indemnity payments, administrative costs, and defensive medicine, amounts to $55.6 billion annually, or 2.4 percent of total healthcare spending. (36) Thus, the current medical malpractice system is costly and may inadequately deter negligence.


In 1982, Professor Jeffrey O'Connell proposed an "early offer" tort reform system that sought to encourage prompt settlement of tort cases. (37) Although early offer proposals differ, in general, a defendant may make a statutorily defined financial offer covering the injured patient's economic damages, which the patient may accept or reject. (38) If the defendant makes no offer, an injured patient may pursue normal tort remedies. (39) If the defendant extends an early offer and the injured patient accepts the matter is settled. (40) If a claimant rejects an offer, however, he is treated less favorably in court than if no offer had been made. (41)

Early offer principles appeared in proposed legislation as early as 1984. (42) For example, Congressman Richard Gephardt (D-MO) proposed national legislation that would have given healthcare providers and HMOs the option of offering payment to a claimant within 120 days of the injury. (43) Despite this early interest, however, New Hampshire became the first state to adopt an early offer system in 2012. (44) Other states, including New Jersey, have considered adopting early offer systems. (45) Both theory and initial empirical evidence suggest that early offer systems may reduce healthcare costs, but further investigation is needed to determine whether early offer systems promote fair compensation and deter negligent medical care.

1. Compensation

Early offer systems may benefit both claimants and defendants. O'Connell, using data on closed medical malpractice claims from the Texas Department of Insurance, compared the expected payments to claimants under O'Connell's early offer proposal to the payments under current Texas tort law. (46) O'Connell found that an early offer approach provides payments of claimants' economic losses more quickly. (47) An early offer system also lowers transaction costs, including attorneys' fees for both parties. (48) Such savings "could allow insurers to reduce premiums for malpractice insurance, thus enabling healthcare providers to reduce their fees." (49)

An early offer system also prompts compensation for economic damages, avoiding drawn-out litigation for uncertain payment. (50) If a claimant accepts an early offer, he or she must forgo noneconomic damages, which make up roughly two-thirds of current medical malpractice settlements and awards, but the claimant avoids the uncertainties of the current tort system and attorneys' fees. (51) Moreover, O'Connell maintains that early offer payees will receive compensation two years earlier than they would under the tort system. …

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