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The Indiana Medical Malpractice Act's damages cap -- Time for a raise?

When the Indiana Medical Malpractice Act was enacted in 1975, one of its most notable features was the hard cap it placed on an injured patient's right to recovery. No matter how badly injured the patient was by the malpractice; no matter how much income the patient lost as a result of the malpractice; and no matter how many medical bills the patient incurred as a result of the malpractice, the most that the patient could recover as a result of the malpractice was $500,000.

Since the Malpractice Act's passage, the damages cap has been raised twice -- to $750,000 in 1990 and to $1.25 million in 1999. The cap remains at $1.25 million today.

While at first glance the increase from $500,000 to $1.25 million seems substantial, that first glance is deceiving. In reality, malpractice victims today under the $1.25 million cap are far worse off than malpractice victims were in 1975 under the $500,000 cap. The reason, of course, is inflation.

The $500,000 cap in 1975 would be more than $1.95 million today if the cap had merely kept pace with inflation. This discrepancy is even more alarming when you consider that one of the primary components of most medical malpractice claims is the recovery of medical expenses. Health care inflation has routinely exceeded the general inflation rate by significant margins.

The damages cap imposed by the Malpractice Act when it was enacted in 1975 was arbitrary and unjust. The fact that the cap places even less value on patients injured by malpractice today is a tragedy.

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