LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 7050 NOTE PREPARED: Jan 4, 2022
BILL NUMBER: SB 394 BILL AMENDED:
SUBJECT: Medical Malpractice.
FIRST AUTHOR: Sen. Niemeyer BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: Medical Bills and Expenses: The bill provides that medical bills and medical
expenses incurred in connection with the alleged injury or death of a patient are excluded from the maximum
amount of damages that may be recovered in a medical malpractice action. It provides that recoverable
medical expenses incurred in connection with the injury or death of a patient due from a judgment or
settlement in a medical malpractice action shall be paid by the health care provider.
Health Provider Liability: It increases the amount that a health care provider is liable for in a medical
malpractice action from $500,000 to $600,000 after June 30, 2022.
Plaintiff’s Attorneys: The bill reduces the amount that a plaintiff's attorney may receive in a medical
malpractice action from 32% to 25% of any recovery after June 30, 2022.
Effective Date: July 1, 2022.
Explanation of State Expenditures: The Indiana Patients Compensation Fund will pay out a smaller
percentage of a claim, although the total claim amount payable from the Fund is not changed. However, by
providing for recovery of medical bills and expenses to be the responsibility of the health provider, a plaintiff
may receive additional compensation.
Additional Information - The total amount recoverable is up to $1.8 M, with the health provider responsible
for up to $500,000. The bill increases the provider liability by 20% to $600,000, which would reduce the
payment from the Fund. In CY 2019, the Fund paid $104.9 M in liability and $4 M in administrative costs
for 144 claims. The balance in the Fund on June 30, 2021 was $236.1 M.
SB 394 1 Explanation of State Revenues: The Fund surcharge for health providers could decrease in response to the
decreased share paid by the Fund. Health providers will have additional liability for medical bills and
expenses. To the extent that a health provider would purchase additional insurance beyond their contribution
to the Fund, the General Fund would receive additional revenue from either the adjusted gross income (AGI)
tax or the insurance premium tax. [The amount of premium to cover medical bills and expenses is unknown.]
Additional Information - Physicians pay a surcharge, depending on specialty and the hospital surcharge is
based on visits and function. In CY 2019, the Fund received $145.9 M in revenue from surcharge collections.
Explanation of Local Expenditures: Hospitals of local units could have increased liability in medical
malpractice.
Explanation of Local Revenues:
State Agencies Affected: Department of Insurance.
Local Agencies Affected: Local unit hospitals.
Information Sources: https://www.in.gov/idoi/files/2019-Annual-Report-FINAL.pdf;
https://www.in.gov/idoi/files/Bulletin-257-PCF-Surcharge-Rates-2021-2022-signed.pdf; State Auditor’s
Database.
Fiscal Analyst: Karen Rossen, 317-234-2106.
SB 394 2