Developments in Indiana Law

Medical Malpractice Contingency Fee Cap On Recovery From Patient's Compensation Fund Does Not Limit Attorney Fee Award Under Adult Wrongful Death Act

By: J. Richard Moore

In Indiana Patient's Compensation Fund v. Holcomb, decided August 26, 2014, the Indiana Supreme Court held that although a plaintiff attorney's fee may not exceed 15% of any award from the Indiana Patient's Compensation Fund, this limitation does not apply to an award of attorney fees under the Adult Wrongful Death Act---even where that award comes from the Patient's Compensation Fund.

Indiana medical malpractice claims against "qualified providers" are capped at $250,000. However, additional recovery up to $1,000,000 is available to the plaintiff from the Indiana Patient's Compensation Fund. Under Indiana Code §34-18-18-1, a plaintiff's attorney fee on claims paid from the Patient's Compensation Fund may not exceed 15% of the compensatory award.

In Holcomb, the plaintiff's wrongful death claim against a nursing home was settled on terms that permitted the plaintiff to seek additional damages from the Patient's Compensation Fund. As the plaintiff's decedent had no surviving spouse or dependent next of kin, plaintiff's wrongful death claim was governed by the Adult Wrongful Death Statute, which permits recovery of final medical, funeral and burial expenses and up to $300,000 for loss of love, society and companionship. The Adult Wrongful Death Act also permits the plaintiff to recover attorney fees and costs associated with pursuing the death claim.

Because of the cap on general compensatory damages and the undisputed nature of the claimed out of pocket expenses, the plaintiff in Holcomb and the Patient's Compensation Fund quickly resolved those two components of the claim. They could not agree, however, on the attorney fee component. The Patient's Compensation Fund took the position that by virtue of the statutory fee cap of 15%, the plaintiff could not receive an attorney fee award of more than 15% of the other compensatory damages. The plaintiff contended that no such limitation applied, and presented evidence based on hours worked and a proposed hourly fee to support a claim for attorney fees well in excess of 15% of plaintiff's compensatory damages.

The Indiana Supreme Court sided with the plaintiff. The Court held that the 15% limitation was not a damage cap, but merely a cap on the attorney's fee. The Court stated, " This limitation, however, is not a matter for determination in the litigation of a plaintiff's claim against the Fund, but rather in the course of resolving the plaintiff's attorney's claim for fees from his or her client." The Court further held, "The Fee Cap Provision applies only to cap the fees that the plaintiff's lawyer may charge his or her client as to the award the client receives from the Fund, but it does not lessen the Fund's liability to a claimant."

This holding begs the question of the distinction, if any, between the "Fund's liability" for attorney fees and the actual fees a plaintiff's attorney is allowed to charge. The holding also paves the way for a windfall to the plaintiff: A plaintiff's total award from the Fund may now be inflated by an attorney fee claim that exceeds 15% of the plaintiff's compensatory damages; the attorney will only be permitted to actually collect up to 15% of the total award; and the plaintiff will keep the other 85%, including 85% of the amount awarded for attorney fees. That remaining 85% represents neither actual compensatory damages nor amounts paid to compensate the plaintiff's attorneys. It is free money to the plaintiff.

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