What You Should Know About Limits On Medical Malpractice Compensation

When a medical malpractice attorney discusses a case with a client, among the first concerns that need to be discussed is whether there might be limits on how much compensation is recoverable. Some states impose limits on recoveries of certain types, and there may be limits on the policy, too. Here are three things you should know about these limits.

Not All States Impose Them

Several states' supreme courts have ruled statutory limits unconstitutional. That doesn't mean an insurance policy won't have limits, but it does mean people in those states won't be legally limited to a specific amount.

Only Non-Economic Damages Are Ever Limited

Economic damages are always fully recoverable. If it cost you $5 million in medical work to achieve maximum physical recovery, you will always have the right to try to financially recover that full $5 million, regardless of which state the malpractice occurred in.

When a medical malpractice lawyer talks about the possibility of a limit, they're almost always talking about non-economic damages. These are things like emotional trauma, pain and suffering, and loss of enjoyment of life. Most states that impose statutory limits have caps between $250,000 and $1.5 million. However, some allow recoveries against multiple parties, possibly making it easier to recover more compensation if several doctors, clinics, or hospitals were involved.

Limits Based on the Defendant's Policy

As is the case with limits on other forms of insurance, an insurer may elect to limit its settlement offer to whatever the maximum amount the doctor or institution paid for. Typically, this isn't a problem in states with statutory limits because defendants have usually purchased policies that max out their coverage to whatever the limits are.

Claimants have a handful of options if a settlement hits the limits imposed by an insurance policy. They can simply accept the settlement and move on, a potentially difficult choice if they're facing massive medical bills.

A claimant might also elect to sue and pursue a higher amount. If this happens, the insurer will still only pay the maximum offered by the policy. However, you may be able to seek compensation directly from the doctor or institution. If the defendant loses, they'll be allowed to make payment arrangements.

In a case of extreme resistance to payment, you would be able to ask a judge to ask for a lien against the defendant's assets. Likewise, if they declare bankruptcy, you would likely be at the front of the line among the creditors.