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Court rules on medical malpractice excess damages issue

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The Indiana Court of Appeals has ruled on an issue of first impression, adopting recent guidance from the state’s highest court to decide that evidence relating to medical malpractice liability can be introduced in determining damages even after someone enters into a settlement with the healthcare provider on that underlying claim.

A unanimous decision came in a Marion Superior suit today in Stephen W. Robertson, Indiana Commissioner of Insurance as Administrator of the Indiana Patient’s Compensation Fund, et al. v. B.O., a minor, by his parents and next friends, Lisa and Kevin C. Ort, No. 49A04-1009-CT-528.

The case stems from a February 2004 complaint with the state’s Department of Insurance under the Indiana Medical Malpractice Act, alleging negligence by Lutheran Hospital of Indiana during the labor and delivery of a child, B.O., born in February 2007. The suit claimed the hospital failed to adequately monitor the baby’s condition and didn’t timely respond to persistent changes in his fetal heart rate that indicated fetal distress. Though not diagnosed with any abnormalities after his birth or during the first years of his life, at age 4 he was diagnosed with a mild form of cerebral palsy. The case alleged the diagnosis was a result of the negligence that occurred at birth.

A medical review panel found Lutheran Hospital hadn’t met the standard of care, but determined the “conduct complained of was not a factor of the resultant damages.” The hospital settled with B.O. in October 2006 under an agreement that allowed access to the Patient Compensation Fund – which at the time allowed for a $650,000 cap from the fund. B.O. filed this action in June 2007 seeking that statutory maximum in excess damages, and the fund brought in expert witnesses to argue that the birth conduct wasn’t related to the cerebral palsy. Both parties disputed whether that should be allowed in the damages portion, since the underlying medical malpractice claim had been settled on liability.

A Marion Superior judge in April 2010 granted partial summary judgment for B.O. on grounds that the fund’s expert witness testimony couldn’t be introduced. But on interlocutory appeal, the Court of Appeals panel reversed that ruling and remanded for further proceedings based on state statute and new guidance from the Indiana Supreme Court in recent years.

The state’s Medical Malpractice Act detailed in Indiana Code 34-18-15-3 says in part that the court can consider “the liability from the health care provider’s liability as admitted and established” when approving a settlement or determining any amount to be paid from the patient’s compensation fund.

The court cited Atterholt v. Herbst, 907 N.E.2d 528 (Ind. 2009), which re-evaluated some of the precedent on this topic and held that the fund may introduce evidence of a claimant’s pre-existing risk of harm if it’s relevant to establishing the amount of damages – “even if it is also relevant to the liability issues that are foreclosed by the judgment or settlement.”

The panel noted that health care providers in Indiana may settle medical malpractice claims for a multitude of reasons, such as concerns over the complexity of the case that might make it difficult for a jury to understand the issues or the costs of defending a malpractice action, and that can’t be held against them when the damages aspect is being considered.

“Holding otherwise would force health care providers to litigate the compensable nature and extent of the alleged injury in the underlying action or forfeit the Fund’s ability to present such evidence in calculating the amount of excess damages, if any, recoverable in the secondary action against the Fund,” the court wrote.

 

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