/ Blog/ How Does Indiana’s Medical Malpractice Cap Work?
Do you know how medical malpractice awards are handled in Indiana? The question probably hasn’t crossed your mind very often. You might think that medical malpractice awards can be unlimited, and that when malpractice is determined the doctor and his or her insurance company pay the claim. But in fact, neither of those things is true: claim amounts have an absolute cap, and physicians and their insurers only pay part of each claim.
These limitations have been in place for several decades and were intended to create a fair system that protects both health care practitioners as well as patients and their families. Most of those who understand the system feel that it works – most of the time. However, some argue that there have been situations where those who need the most help have been let down by the system.
In 1975, Indiana imposed a cap on medical malpractice awards. It was the first state to do so (34 have followed). The idea behind the cap was that the best interests of everyone would be served if doctors knew they would not be ruined by excessive malpractice awards, while at the same time patients knew that they would be guaranteed compensation for successful claims because the State would step in. Funded by a fee on malpractice insurance, the State created the Patient’s Compensation Fund (PCF), a new mechanism to cover the expense of large claims. The PCF is funded by a surcharge on insurance paid by physicians and hospitals.
The cap on any single damage award, which has been raised since 1975, is limited to $1.25 million. When a large amount is awarded – over $250,000 – the physician is only responsible for the first $250,000. After that, the PCF pays up to $1 million more, to the statutory cap of $1.25 million. In addition, no physician has to pay more than $750,000 in total claims in a single year; above that cumulative amount, the PCF steps in to pay up to $1 million per case.
But is the cap always a good thing? Some think not. Take the case of an Indiana child left disabled for life after medical errors led to her premature birth in 2003. A medical expert at trial testified that the lifetime costs for her care would likely be between $8 million and $10 million. In 2013, a jury awarded the family $15 million. Because of the medical malpractice cap, that amount was reduced to only $1.25 million.
The difference in costs and payments, in this case millions of dollars, is critically important to some of those harmed. The family has sued the state hoping to overturn the cap, and a verdict might be reached in state court later this year. Even though Indiana’s cap has been in place for over 40 years, there is precedent: similar cap laws in Illinois and other states have been ruled unconstitutional and overturned.
Some Indiana law makers have concerns about the current law, or at least about the current cap amount. A bill had been making its way through the legislature earlier this year which would have raised the cap to $1.65 million. However, it was unexpectedly withdrawn, and no further action is expected this session. In the meantime, because of several recent large multi-plaintiff settlements, the PCF has paid out more than anticipated in recent years and has already announced that it will raise the surcharge rates significantly in 2016 (more than 4% for physicians and over 11% for hospitals).
Wilson Kehoe Winingham understands medical malpractice cases. If you or a loved one has been the victim of a medical error, medical negligence, or another harmful event, you may be entitled to recover damages for the cost of care and rehabilitation, lost wages, and other expenses. Give us a call at 317-920-6400 or contact us online for a free consultation. We’ll discuss your situation and let you know what options you have.
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