Attorney Fee Cap Does Not Reduce Patient Compensation Fund Liability

A nursing home resident died and her daughter, as personal representative of her mother's estate, commenced an adult wrongful death medical malpractice action against the nursing home. The action alleged negligent care by the nursing home, a qualified health care provider under Indiana's Medical Malpractice Act (MMA). The estate settled its claim against the nursing home for $250,000, the maximum liability of the health care provider under the MMA.


The estate then filed a petition to determine the amount of excess damages due to the estate from the Indiana Patient's Compensation Fund (PCF) pursuant to Indiana Code section 34–18–15–3. The estate and the PCF quickly reached an accord as to an itemized list of most of the estate's damages recoverable under the Adult Wrongful Death Statute (AWDS), Indiana Code § 34–23–1–1, but left the attorney fee component of damages for determination by the court. The PCF paid the estate $101,166.89 to settle these damages. The estate argued that the PCF should pay an additional $50,440 for attorney fees.


The PCF did not dispute the reasonableness of this amount but did argue that the 15% limit on attorney fees imposed by the MMA, see Indiana Code § 34–18–18–1 (the “Fee Cap Provision”), should be judicially expanded to directly apply to the PCF and to limit its liability on a basis unrelated to the specific attorney fee claim. The Fee Cap Provision, states as follows:


"When a plaintiff is represented by an attorney in the prosecution of the plaintiff's claim, the plaintiff's attorney's fees from any award made from the patient's compensation fund may not exceed fifteen percent (15%) of any recovery from the fund. Indiana Code § 34–18–18–1."


Following a hearing, the Marion County Superior Court entered judgment accepting the estate's position and ordered the PCF to pay the estate $50,440 as the PCF's remaining liability for excess wrongful death damages. The Indiana Court of Appeals reversed and remanded.


On appeal, the PCF argued that, in an action to recover for the wrongful death of an adult, the Fee Cap Provision should be construed and applied such that the PCF should not be required to pay to a claimant an amount for attorney fees that exceeds the 15% Fee Cap Provision. The PCF requested that the court reduce the trial court's award to the estate from $50,440 to $17,852.98. The estate responded that the plain, clear, and unambiguous language of the Fee Cap Provision merely limited what an attorney could charge a claimant from a recovery of excess damages from the PCF, and does not limit or even address the assessment of attorney's fees as a damage caused by a tortfeasor; and does not address the calculation of excess damages payable by the PCF.


The Supreme Court of Indiana reversed the appellate court and affirmed the judgment of the trial court. The court held that, as a matter of first impression, the fee cap provision of the MMA did not reduce the PCF's liability to an AWDS claimant.


The fee cap provision of the MMA did not reduce the PCF's liability to an AWDS claimant. Reasonable attorney fees and litigation expenses incurred in the prosecution of an action under the AWDS are an element of damages. The fee cap provision applied only to cap the fees that a plaintiff's attorney could charge his or her client as to the award the client received from the fund, but did not lessen the PCF's liability to a claimant.


The Supreme Court of Indiana reversed the appellate court and affirmed the judgment of the trial court ordering the PCF to pay the estate the total amount of its attorney fees.


See: Indiana Patient's Compensation Fund v. Holcomb, 2014 WL 4212690 (Ind., August 26, 2014) (not designated for publication).