Parameters:
(1) amount that the claimant is willing to settle for
(2) amount that the claimant and attorney will get if s/he win the case
(3) probability of the claimant winning the case = probability of the physician losing the case
It is assumed that the claimant gets nothing if the case is lost; however, the claimant's attorney may be out the cost of pursuing the claim. Of course the claimant will only receive a meager fraction of the money if the claimant's attorney wins.
calculated value =
= (probability of the claimant winning) * (amount that the claimant and attorney will get)
If the calculated value is greater than the settlement value, then the insurance company may opt to push for a settlement.
percent at decision point =
= 100 * (settlement amount) / (lost case amount)
An additional factor to consider will be the number of years that the physician will be practicing. This will determine how much the insurance company can make back from the physician by raising the insurance premium.
