Opinion ID: 852563
Heading Depth: 2
Heading Rank: 1

Heading: Indiana's Medical Malpractice Act.

Text: The MMA, which is applicable to acts of malpractice occurring after June 30, 1975, see Ind.Code § 34-18-1-1, set up a system under which health care providers meeting qualifications set forth in the act (Qualified Provider) would enjoy certain benefits, including a limitation on liability. For an act of malpractice occurring after June 30, 1999, the total amount recoverable for an injury or death is now capped at $1,250,000. See Ind.Code § 34-18-14-3(a)(3). A Qualified Provider's liability for an occurrence of malpractice is now limited to $250,000. See Ind.Code § 34-18-14-3(b). Any remaining amount due from a judgment or settlement is to be paid from the Fund. See Ind.Code § 34-18-14-3(c). The MMA limits a lawyer's recovery to 15% of the amount the client recovers from the Fund, see Ind.Code § 34-18-18-1, but it specifies no limit on attorney fees recovered from the amount a client receives from a Qualified Provider. In addressing early constitutional challenges to the MMA, this Court noted the Legislature's perception of a health care crisis brought on, in substantial part, by providers' inability to obtain adequate malpractice insurance coverage at reasonable prices. According to the Legislature's appraisal, these conditions implicated the vital interests of the community in the availability of the professional services of physicians and other health care providers. . . . With these judgments as its basis the Act created voluntary state-sponsored liability insurance for doctors and other health care providers, created a patient compensation fund, took measures to prevent injuries to patients through the negligence of health care providers, and subjected negligence claims against health care providers to special controls limiting patient remedies. Johnson v. St. Vincent Hosp., Inc., 273 Ind. 374, 379-80, 404 N.E.2d 585, 590 (1980). One challenge in Johnson was to the 15% cap on the lawyer's recovery from the amount a client receives from the Fund. This Court found no constitutional infirmity. The legislative purpose of this restriction is to prevent attorneys representing plaintiffs from receiving inordinately large fees where contingent fee arrangements have been made. We recognize that plaintiffs' attorneys frequently and energetically make arduous efforts on behalf of their clients in return for fees which cannot accurately be characterized as inordinately large. However, this Court has also noted that abuses of the contingent fee contracts have occurred and that parties aggrieved by clearly excessive arrangements will receive the protection of the courts. Contingent fee contracts are sanctioned by the Code of Professional Responsibility so long as the fee is reasonable. In this case we examine the limitation imposed upon attorney fees for constitutional purposes alone. We find that there is a direct relationship between the limitation upon recovery and the limitation on attorney fees. The total amount recoverable by the injured patient was limited. The limitation on attorney fees follows naturally as a means of protecting the already diminished compensation due claimants from further erosion due to improvident or unreasonable contracts for legal services. The specific limitation implanted by the Legislature does not seem to be one which will seriously impede the ability of the injured patient to employ effective counsel. It does not effect at all the enforceability of contracts made regarding fees to be paid from the first $100,000 [now $250,000] of recovery, as that amount is not received from the compensation fund. However, contracts providing for fees in excess of the limitation on awards from the compensation fund are not enforceable. The limitation will in practice result in legal fees ranging between about 20% to 35% of the total recovery. As a general proposition fees at this level are commonly considered reasonable in tort litigation. Id. at 402, 404 N.E.2d at 602-03 (citations omitted, emphasis added). The Disciplinary Commission argues that the fee on the amount from the Fund is limited to 15%, and the fee on the recovery from the provider is limited to a reasonable fee on that amount. If that were the case, assuming the fee on the amount from the provider is larger than 15%, as the total recovery increases, the fee becomes a smaller percentage of the total. The 20%-35% range described in Johnson indicates that the Court assumed a contingent fee of 40% on the amounts recovered directly from the client, and 15% on the amounts recovered from the Fund. On that assumption, applying the limits of recovery in place at the time Johnson was decided, the maximum total recovery of $500,000 would produce a fee of 15% of $400,000 plus 40% of $100,000. That is $60,000 plus $40,000, which is precisely 20% of $500,000. At the other end of the percentage scale, a total recovery of $125,000, of which only $25,000 would come from the Fund, would produce a fee of $40,000 plus $3,750, which is precisely 35% of $125,000. The same assumption underlies our opinions in In re Benjamin, 718 N.E.2d 1111 (Ind.1999), and Stephens I. In neither of those proceedings was the matter directly addressed, however, and in Benjamin the fee was unreasonable even if, as ITLA argues, a 40% fee is often reasonable, and can be calculated as 15% on the Fund recovery, plus whatever percentage of the recovery from the provider is required to produce a fee of 40% of the total recovery.