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Credit or Setoff from Non-Healthcare Settlement Should Be Deducted from Total Case Value, Not Statutory Cap, in Indiana Medical Malpractice Cases

The Indiana Court of Appeals recently reversed a trial court’s grant of summary judgment for a healthcare provider in a medical malpractice case which was based upon a motorist’s prior settlement with the Plaintiff and the Indiana Medical Malpractice Act’s cap on damages. In Batchelder v. Indiana Univ. Health Care Associates, Inc., the Plaintiff filed a lawsuit against a healthcare provider arising out of a radiologist’s failure to diagnose her late husband’s unstable cervical spine fracture which he suffered in a motor vehicle collision with another driver. After settling the motor vehicle case for $1.25 million, the Plaintiff filed a medical malpractice lawsuit against the healthcare provider as a joint tortfeasor with joint and several liability for the death of her husband.

The healthcare provider filed a motion for summary judgment arguing that the Plaintiff could not recover any more money because she had already received $1.25 million arising from her husband’s death, which was, at the time, the cap of damages set forth by the Indiana Medical Malpractice Act. The Plaintiff, on the other hand, argued that the $1.25 million-dollar setoff from her settlement with the motorist should be deducted from the total amount of damages, which she valued between six and ten million dollars, as opposed to the Indiana Medical Malpractice Act’s cap on damages. Without any determination of the total amount of damages in the case, the trial court granted summary judgment in favor of the healthcare provider applying the $1.25 million settlement setoff to the Indiana Medical Malpractice Act’s $1.25 million cap on damages.

The Indiana Court of Appeal reviewed prior decisions and Indiana’s “one satisfaction” principle in joint and several liability cases, which provides that courts should credit the funds received from a defendant against amounts recoverable from other co-defendants. In Palmer v. Comprehensive Neurologic Services, P.C., the Indiana Court of Appeals previously upheld a trial court’s judgment of $0 for a plaintiff after a jury awarded $375,000 to the plaintiff against a medical provider where the plaintiff had previously received more than $375,000 from non-healthcare providers. Similarly, in Indiana Dept. of Ins. v. Everhart, the Indiana Supreme Court upheld a $1 million-dollar judgment against the Indiana Patient’s Compensation Fund where the trial court found the Plaintiff’s total damages were $3.15 million and where the Plaintiff had already received $2.15 million from a non-healthcare provider and the underlying medical providers.

In reversing the trial court in this case, the Indiana Court of Appeals noted that in the Palmer and Everhart decisions the total value of the case, or the entirety of the damages, had already been decided by the jury or trial court before the settlement setoffs were applied by the trial court. However, in this case, no determination had been made with regards to the total value of the case or whether the $1.25 million settlement with the at-fault driver made the Plaintiff whole. The Court found that, assuming the case had a total value between six and ten million dollars, the $1.25 million-dollar settlement by the at-fault driver left more than $1.25 million in uncompensated damages, which could be collected from the healthcare provider and the Indiana Patient’s Compensation Fund. The Court reasoned there was no risk of the Plaintiff receiving a double recovery because even with $1.25 million from the at-fault driver and $1.25 million from the healthcare provider and the Indiana Patient’s Compensation fund, such would still be less than the Plaintiff’s “one satisfaction” for the damages caused by the collision and medical malpractice.

You can read the full Batchelder opinion here.

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