The $190 million settlement between the Johns Hopkins Hospital and thousands of patients of a former gynecologist accused of secretly recording them was built on a simple truth: The longer the litigation continued, the less money the plaintiffs would receive from the hospital’s insurance policies.
With “standard” insurance policies, the cost of legal defense is separate from any amount paid out for a claim. But Hopkins opted for what are known as “wasting policies,” meaning the defense costs come out of the available insurance, lawyers involved in the case said Monday during a news conference to announce the settlement.
“So for every dollar spent by the defense on paying lawyers and experts, it comes out of the available funds” for the plaintiffs, said Jonathan Schochor, chairman of the team representing the patients in the class-action lawsuit. “Can you imagine how much would be spent to try these cases?”
As many as 8,000 patients of Nikita Levy are estimated to be part of the settlement, which was given preliminary approval Monday by Judge Sylvester B. Cox in Baltimore City Circuit Court. It is believed to be the largest single case of sexual abuse by one doctor and the largest single payout for one doctor’s actions.
The insurers were not named.
A hearing in the case is scheduled for Sept. 19, while any patients of Levy who still have not registered to be part of the settlement can do so through Nov. 14, said Schochor, of Schochor, Federico & Staton P.A. in Baltimore. (The suit is a mandatory class-action, meaning prospective plaintiffs do not have the option of suing on their own.)
“We are very pleased to make this announcement, but our clients continue to be distraught,” Schochor said. “This is the beginning of a long healing process.”
Donald L. DeVries Jr., a lawyer for Hopkins, said the settlement will not affect the hospital’s operations. He called Levy’s actions a “colossal breach of trust to his patients and to Hopkins.”
“This has shaken the Hopkins system,” said DeVries, of Goodell, DeVries, Leech & Dann LLP in Baltimore.
Levy worked at Hopkins from 1988 until Feb. 8, 2013, when the hospital terminated his employment after being alerted to Levy’s possible misconduct. Police found 10 file servers’ worth of photos and videos among his possessions. Schochor said all of the images will be destroyed.
Levy’s victims include 62 minors, said Howard A. Janet, vice chairman of the legal team and a partner at Janet, Jenner & Suggs LLC in Baltimore County.
Levy committed suicide less than two weeks after he was fired and days before two groups totaling 2,500 women filed multimillion-dollar class-action lawsuits against the hospital over his conduct.
Schochor called the settlement amount “a moving target,” with the $190 million figure determined by plaintiffs’ insurance experts.
Lauri E. Cleary, a Bethesda lawyer whose clients include insurance underwriters, said wasting policies in general provide insurers with a cap on expenses in a lawsuit, which is particularly helpful in “high-risk areas of liability” such as professional malpractice.
But there is a risk, she added, assuming state insurance laws and regulations allow such policies in the first place.
“It seems like a good idea for insurers to cap their liability, but it can lead to some conflict issues between the parties, counsel and primary and excess insurers,” said Cleary, a principal with Lerch, Early & Brewer Chtd., who was not involved in the Hopkins settlement. “It gets rather complicated and has generated separate litigation.”
For the insured, a wasting policy can also provide a cap for litigation costs but the risk of running out of insurance money before reaching a settlement or going to trial, she said.
“Who would [the plaintiffs] go after when the insurance runs out?” she said.
As for how the $190 million will be divided, Schochor said each plaintiff will be evaluated by a forensic psychologist who has previously interviewed all of the plaintiffs. Once evaluated, the plaintiff will be placed in one of four categories for damages, Schochor said, without elaborating on the categories.
The settlement amount also will include attorneys’ fees, although Schochor did not say how much the plaintiffs’ lawyers will collect.
The case is Jane Doe No. 1, et al., v. The Johns Hopkins Hospital, et al., Baltimore City Circuit Court, No. 24-C-13001041.