Posted On January 31, 2023

How Medical Malpractice Settlements Work

Medical malpractice lawsuits are often resolved through settlement agreements rather than civil court trials. Negotiations between plaintiffs and defendants determine how medical malpractice settlements work and how fair monetary payments are awarded to injury victims.

What Is Medical Malpractice?

Medical malpractice is defined as the improper or reckless care of a patient by a medical professional. The scope of medical malpractice includes medical care received from hospitals and clinics, doctors, nurses, surgeons, dentists, pharmacists, and other types of healthcare workers.

According to the law, medical professionals owe their patients a certain duty of care that protects them against harm, injury, and death caused by acts of medical negligence. Medical malpractice occurs when medical institutions or medical professionals fail to exercise reasonable care while patients are under their care.

Medical statistics suggest approximately 12 million patients undergoing medical care in the United States each year suffer some type of health complication, illness, injury, or disability due to medical malpractice. 

Common causes of preventable adverse health events include the following:

  • Misdiagnosis or missed diagnosis of a medical condition
  • Improper testing procedures and readings
  • Surgical errors
  • Prescription and medication errors
  • Defective medical equipment
  • Failure to provide follow-up exams and treatments

When patients suffer health complications, illnesses, and injuries caused by medical malpractice, they have a right to pursue legal actions through medical malpractice lawsuits to recover compensation for their damages. A medical malpractice case is usually handled by a medical malpractice attorney in the state where the patient’s injuries occur.

What Damages Can You Recover in a Medical Malpractice Claim?

If a medical malpractice claim is successful, a patient can be awarded economic damages, non-economic damages, and punitive damages.

Economic Damages

Economic damages are paid for injuries with damages that can be calculated in monetary terms. Such compensation will often include payments for the patient’s medical expenses, rehabilitation and therapy expenses, and lost wages due to the loss of a job or inability to work due to his/her injuries. 

If the patient suffers a temporary or permanent disability, damages may also include expenses for mobility aids, transportation equipment, and home-based healthcare.

Non-Economic Damages

Non-economic damages are difficult to calculate in monetary terms. Non-economic damages are paid for a patient’s physical pain and suffering, mental anguish, inability to pursue normal activities, effects of long-term disabilities, loss of enjoyment of life, and loss of consortium. 

These types of damages can vary significantly from patient to patient, so assigning monetary value is usually complicated.

Punitive Damages

Under certain conditions, punitive damages may be awarded to patients. Punitive damages are awarded solely to punish the responsible party who caused the injury. Damages are awarded when a hospital or medical professional’s negligent actions, omissions, or egregious contact cause the patient’s health problem or injury.

The Process for Medical Malpractice Settlements

Many medical malpractice cases proceed to court trials. However, the majority are resolved through a medical malpractice settlement process. Therefore, it is essential to understand how medical malpractice settlements work. 

Medical malpractice court cases can be complicated because medical malpractice lawyers must show proof of the following: 

  1. A medical duty of care
  2. An existing doctor-patient relationship
  3. Improper medical care caused the patient’s injuries
  4. The patient’s injuries resulted in damages.

Unlike many personal injury lawsuits and settlements, those associated with medical malpractice cases are recorded in a database. Anyone can find out if a specific doctor has ever been sued for medical malpractice, if the doctor has ever paid a settlement to a plaintiff, and how much money was paid.

There are numerous databases and state reporting systems that track medical malpractice settlements, so the level of confidentiality is very low. Since this has a significant impact on the cost of a medical professional’s malpractice insurance, doctors have a say in settlement agreements and payment awards.

Doctor’s Approval of a Medical Malpractice Settlement

Unlike personal injury settlements for car accidents and slip-and-falls, a medical malpractice settlement must usually be agreed upon by the responsible medical professional named in the case before the settlement becomes final. In some cases, medical professionals may choose to go to court rather than agree to a settlement. 

Doctors choosing to go to court is often related to the risk of grossly inflated insurance premiums or the risk of being dropped by their insurance carrier. Due to public records on medical malpractice claims and steep increases in malpractice insurance, some doctors are willing to take the risks of going to court.

Insurance companies that handle medical malpractice claims put a lot of effort into how medical malpractice settlements work because they can lose a lot of money. In addition to official requirements, many insurance companies have unofficial policies that favor trying medical malpractice cases in civil court rather than paying out high settlement awards because they know how medical malpractice settlements work.

Medical malpractice cases are difficult to win in court due to required court regulations and evidence. When cases go to trial, the case must follow a specific legal process that includes screening and selecting jurors, collecting witness statements, presenting evidence, calling expert witnesses to testify, and presenting opening and closing arguments. Court trials are often costly and time-consuming, leading many victims of medical malpractice to choose to settle before going to trial.

Medical malpractice insurance is a high-stakes game, and insurance companies usually want to promote the perception that they are not flexible on payouts to injury victims. When a settlement process for medical malpractice takes place, approval is required from all negotiating parties. Additionally, when a case involves a minor, it is necessary to obtain approval from a court. This prevents quick settlements that are designed to provide large payouts, rather than providing for long-term financial needs of the injured party.

Medical Malpractice Laws in Indiana

If you reside in Indiana, there are important things you should know about medical malpractice claims regulated by state laws.

Medical Review Panel

In Indiana, plaintiffs filing medical malpractice lawsuits are required to appear before a Medical Review Panel before the case can proceed to trial. The panel is made up of one attorney and three healthcare providers; however, the attorney does not have a vote. 

The medical review panel’s decision is not binding. Rather, the panel issues a report based on a review of pertinent evidence, such as medical charts, imaging or lab test results, and witness testimony. The report will contain the panel’s opinion regarding whether the defendant did or did not fail to uphold the appropriate standard of care.

Based on the medical review panel’s report, medical malpractice victims may choose to go forward with their claims or not. The decision issued by the panel, while not final, can be admitted as evidence in court.

Statute of Limitations 

The state of Indiana imposes a two-year statute of limitations on medical malpractice lawsuits. It does, however, allow some exceptions, such as for minors under the age of six-years-old. Minors under the age of six have until their eighth birthdays to initiate claims for healthcare provider negligence.

When medical malpractice victims file proposed complaints with the Indiana Department of Insurance, it tolls the statute of limitations. This action temporarily stops the clock on the statute of limitations for up to 90 days after the claimant receives the review panel’s decision. 

How To Collect Your Settlement

How medical malpractice settlements work involves two steps – reaching a settlement agreement with the medical professional and his or her insurance carrier or obtaining a court verdict, and filing a petition for additional compensation from the Indiana Patient’s Compensation Fund. 

Limits on Damages

In Indiana, damage caps are placed on all medical malpractice lawsuits. The amount of the damage cap depends on the date that the medical malpractice occurred.

For cases that occurred between July 1, 2017, and June 30, 2019, the damages cap is $1.65 million. In these cases, the healthcare provider must pay the first $400,000 of any damage award. 

For cases that occurred on or after July 1, 2019, the damages cap is $1.8 million, and the healthcare provider must pay the first $500,000 of any damage award. 

Damages caps placed on all Indiana medical malpractice claims include the following:

  • Past and current medical expenses
  • Future medical expenses
  • Loss wages
  • Loss of current and future earning capacity
  • Emotional distress

Petitioning the Indiana Patient’s Compensation Fund

If the damages suffered exceed those that the healthcare provider must pay, medical malpractice victims can petition the Indiana Patient’s Compensation Fund to request payment of the difference. The fund may provide payment for the difference between the amount the healthcare provider must pay under state law and the damages agreed to or awarded by the judge or jury. 

Medical malpractice plaintiffs should note, however, that the Indiana Patient’s Fund, if their petitions are approved, only pays up to the state’s damage caps. 

How medical malpractice settlements work is that the Indiana Patient’s Fund only contributes to payouts if the involved medical provider maintains professional malpractice coverage and pays the fund surcharge.