Over the course of the last year, the Indiana legislature, pushed in part by lawyers and health care providers alike, have examined and considered changes to Indiana’s Medical Malpractice Act, Ind. Code § 34-18-1-1 et. seq. (the “MMA”).
In its most simplistic form, the MMA provides that, other than for a few specific exceptions, a claim for medical malpractice cannot proceed in trial court against a “qualified” health care provider until a medical review panel consisting of three independent health care providers reviews the claim and issues an opinion as to whether or not they believe malpractice was committed. One of the major exceptions to presenting a claim to a medical review panel is a “bottom threshold” of damages. Currently, I.C. § 34-18-8-6 allows a plaintiff to bypass the medical review panel if they are seeking total damages of not more than $15,000.00.
For claims that do proceed through the medical review panel, the MMA limits damages a plaintiff may recover for an act of malpractice to $1,250,000.00. Of that amount, $250,000.00 is to be paid by the health care provider or its insurer and the additional $1,000,000.00 is paid from Indiana’s Patient’s Compensation Fund.
In general, a health care provider becomes “qualified” by providing proof of insurance of at least $250,000.00 in professional liability coverage (the provider’s limit) and paying a surcharge to the Indiana Department of Insurance which manages the Patient’s Compensation Fund. Surcharge rates are set by the Indiana Department of Insurance and are actuarially determined based in part on the relative exposure a health care provider has on the fund. Thus, a health care provider whose practice is in a traditionally high risk area, such as obstetricians and neurologists who perform surgeries, will have higher surcharge rates than a family practitioner.
Among the changes being proposed include an increase in the limits on damages, which have not been raised since the late 1990’s; a mechanism within the statute that would allow the limits on damages to adjust for inflation/cost of living; an increase up to $75,000.00 in the bottom threshold required for direct access to the courts; allowing the courts to penalize defendants for unduly delaying the panel process; and putting a limit on attorneys fees that could be collected from any settlement/judgment proceeds.
Most recently, State Senator Brent Steele, R-Bedford, who originally sponsored a bill last session to amend the MMA, announced that lawyers, state officials and health care providers were close reaching an agreement on the proposed changes. Those changes would almost certainly include in increase in the total limit on damages which has found some support from all sides.
While an increase in the limits on damages seems to be a certainty, whether accomplished through agreement or through the legislative process, what is unclear, at this time, is if any increase in the total limit on damages would also include an increase on the limit the health care provider or its insurer must pay prior to a plaintiff accessing the Patient’s Compensation Fund. An increase in both of these limits will surely hit health care providers two fold.
First, an increase in the limits that must be paid by the health care provider or its insurer should also require those providers to purchase policies of insurance to cover them at those higher limits. Naturally, the cost of a professional liability policy to as much as $400,000.00 per occurrence (which was proposed in last year’s legislative session) as opposed to the current $250,000.00 limit, will cost the health care provider significantly more. Likewise, an increase in the total amount that may be recovered from the Patient’s Compensation Fund will also result in a significant increase in the annual surcharge rates charged to the providers as well. When all is said and done, health care providers could be looking at significant increases in the costs to be insured as “qualified” health care providers who are afforded the protections of the MMA.
A fine balance must be considered when examining any potential increase in the cost of insurance to health care providers. One of the fundamental purposes of the MMA was to keep the cost of insurance down. This in turn results in lower health care costs in the state, allows greater access to healthcare in the state and improves the quality of health care in the state as the best and brightest physicians are drawn and retained in part because the cost of their insurance is low.
On the flip side, there has been a growing trend in Courts throughout the nation to overturn any limit on the recovery for medical malpractice claims. While Indiana health care providers may cringe at the thought of increased insurance rates, the increase in costs for increased limits will pale in comparison to the increase in insurance costs if there were no limits at all.
Indiana finds itself at a crossroad when it comes to the handling of medical malpractice cases. What path is chosen will surely have a big impact the provision of health care in Indiana and how its residents are compensated when that health care is not provided within reasonable standards. While this battle has been played out in other states in “winner take all” court proceedings, it’s refreshing to know that the best and the brightest from all sides, both plaintiffs and defendants, are diligently working to resolve these issues in the best interests of all involved.
© Riley Bennett Egloff LLP
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