Sometimes the lowest bid can prove very expensive. A jury in Nevada levied $500 in punitive damages against the health insurance company, UnitedHealth Group. The punitive damages stemmed from an incident where a doctor's clinic infected at least nine patients with hepatitis C during endoscopy procedures in 2007. The jury had previously awarded $24 million in compensatory damages in the case.
This medical malpractice case is unusual in that the insurer, UnitedHealth Group, was sued along with the doctor. The injured patients argued that United Healthcare accepted a low-bid contract from the doctor responsible for the infections, even though they had been warned that the doctor "sped through" procedures and placed his patients at risk for hepatitis, AIDS, and other blood-borne diseases. The doctor wanted to make as much money as possible by "processing" a many patients as possible.
The injured patients infected with hepatitis had asked the court for $1 billion in punitive damages, but the $500 million award is seen as "precedent setting." The jury split the punitive damage assessment between Health Plan of Nevada with $270 million in damages and Sierra Health Services, owing $230 million.
Punitive damages are designed to punish wrongdoing by companies. In 2011, UnitedHealth Group had revenues of $101.8 billion, and generated $5.1 billion in profit. In medical malpractice cases, if punitive damage awards are not significant, they are unlikely to change behavior by the company, meaning other patients remain at risk for unsafe medical practices.
As much as they need compensation, a strong motivation among victims of medical malpractice is to force the doctors and hospitals that caused their injuries to change their practices. Punitive damages are one method to drive that message home.