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Medical Malpractice Act Amended

By William Ramsey

The Indiana legislature recently amended the Medical Malpractice Act ("MMA") to, among other things, increase the statutory limit on damages that a plaintiff may recover in a medical malpractice case. On its face, this change may sound like a blow to the healthcare community. But although medical malpractice insurance premiums will undoubtedly go up because of these increased limits, the recent amendments to the MMA are actually a net positive for healthcare providers. And even with these amendments, Indiana remains a great place to practice medicine.

Background of the MMA

Indiana's legislature passed the MMA in 1975 to address substantial concerns regarding the increased costs of medical malpractice insurance premiums, which in turn led to more expensive medical care for Indiana citizens. The MMA includes two fundamentally important provisions. The first requires plaintiffs pursuing medical malpractice claims to first bring the claims before a medical review panel made up of three healthcare providers, before filing their case in an Indiana state court. Although patients could, and still can, bring medical malpractice claims in a state court even if a medical review panel concludes that the provider did not act negligently or cause a plaintiff's injury, these panels act as an important tool for assessing medical malpractice claims: they keep some cases that should not be filed out of court and help facilitate the settlement of other cases.

Another important aspect of the MMA is the statutory limit on damages a medical malpractice plaintiff can recover. When first passed, the MMA limited a plaintiff's total recoverable damages to $500,000 and limited the amount of an individual provider's liability to $100,000. These numbers increased periodically, as the legislature amended the MMA to keep up with inflation. Prior to the recent amendments, the last change to the cap went into effect in 1999 and set the limits of recovery at $1.25 million, with an individual provider's maximum liability at $250,000. Plaintiffs with claims that were worth more than an individual provider's limit could recover the balance, up to the statutory total limit, from the Indiana Patient's Compensation Fund, an entity established by the MMA that is funded by surcharges added onto healthcare providers' medical malpractice premiums. The recent amendments, which go into effect in July, 2017, will increase the total cap on damages to $1.5 million, an increase of $250,000, and will increase the amount an individual provider can be held liable to $400,000, an increase of $150,000. In 2019, the cap on total damages will go up to $1.8 million, and the cap for individual providers will go up to $500,000.

Constitutional Challenges to the MMA

Since enactment of the MMA, attorneys who represent medical malpractice plaintiffs have challenged it, particularly the limits on damages, under a theory that the limits on damages violate the Indiana Constitution's provision allowing all citizens access to the courts. The Supreme Court has upheld the MMA against these challenges. See, e.g., Johnson v. St. Vincent Hospital, 273 Ind. 374, 404 N.E.2d 585 (1980). However, the Court's most recent decision discussing the constitutionality of the MMA's damages cap, Plank v. Community Hospitals of Indiana, Inc., 981 N.E.2d 49 (2013), suggests that, in the appropriate case and on a sufficient showing of changed circumstances since the MMA's enactment, the Court could find the MMA's damages limitations unconstitutional. This opinion has led to fear that, given the right case, the Supreme Court could completely eliminate the protection for Indiana healthcare providers.

This fear was not fanciful; other state supreme courts have found limits on damages unconstitutional. For example, Illinois has struck down attempts by the legislature to limit statutory caps on damages. Should the Indiana Supreme Court declare the MMA's limit on damages unconstitutional, the result would be increased medical malpractice premiums, increased risk to healthcare providers' personal assets, increased cost in medical expenses to Indiana citizens, and the loss of an important recruiting tool for Indiana health organizations. This threat has led some prominent healthcare institutions to support attempts to increase the cap on damages. The simple fact is that an increased cap significantly decreases the chances that the cap will be held unconstitutional. Clearly, from the medical community's perspective, a slightly higher cap is significantly better than no cap.

Indiana Compared to Other States

Even with the increases to the MMA's cap on damages, Indiana remains an attractive place to practice medicine. Indiana is one of the few states with a cap on total recoverable damages, and it still provides the procedural tool of a medical review panel, which is not available in all states. The cost of doing business is significantly lower in Indiana than in other states, including our neighbor to the west, Illinois, where medical malpractice insurance premiums dwarf those paid by Indiana healthcare providers. This health-friendly climate allows large institutions as well as smaller providers throughout the state to recruit and retain top talent. Having a high number of quality healthcare providers practicing in our region and throughout the state inherently leads to a better level of healthcare for all Indiana citizens.

While some bristled at the idea of the caps on damages increasing even slightly and opposed the amendments, others undoubtedly still believe the increases do not go far enough or that there should be no limits at all on damages. The recent amendments to the MMA were likely a necessary concession and recognition that the current caps, which had not been raised in fifteen years, needed to be modified. Making these amendments and keeping the caps, albeit increasing them, ultimately benefits the health industry and citizenry as a whole. Most importantly, the modifications should not adversely affect Indiana organizations' ability to recruit top talent to practice medicine in our state.

If you have questions about the Medical Malpractice Act or need assistance with a medical malpractice issue contact William Ramsey or a member of Barrett McNagny's medical malpractice team. 

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