Key Takeaways
- Medical malpractice lawsuit funding can cover your legal, medical and daily living expenses while you work on securing full compensation for your injuries.
- If your legal claim is strong enough, you can apply for medical malpractice lawsuit funding with your lawyer’s help. There’s no credit or employment check involved.
- You only repay medical malpractice lawsuit funds if you win a settlement. If you lose, you don’t owe your lender anything.
- Beware of companies offering medical malpractice lawsuit funding at high interest rates. Shop around for the best deal.
What Is Medical Malpractice Lawsuit Funding?
Medical malpractice lawsuit funding is a way to receive money from a malpractice lawsuit before winning in court or getting an out-of-court settlement. It comes from a third-party lender, not your attorney.
Your lawyer may be able to help you obtain the funding by guiding you through the process and informing you about firms that make these up-front loans. They can be very important, if you need money to meet your budgetary spending needs as your case proceeds.
Medical malpractice can leave you with lasting pain and other health complications. These problems can leave you unable to work the job you once had. Some people even die because of malpractice, leaving their families without the needed income they once provided. That’s why many victims of malpractice pursue compensation for their financial losses through a medical malpractice lawsuit.
Medical malpractice is a legal concept that refers to a situation where a healthcare professional, such as a doctor, nurse or other medical practitioner, fails to provide a standard of care that meets the standards of his or her profession and causes harm to a patient.
Thomas J. Brock, CFA®, CPAInvestment, Corporate Finance and Accounting ProfessionalThomas Brock, CFA®, CPA, is a financial professional with over 20 years of experience in investments, corporate finance and accounting. He currently oversees the investment operation for a $4 billion super-regional insurance carrier.
In 2022, 9,778 cases of malpractice were reported to the National Practitioner Data Bank:
- 1,882 of these resulted in settlements of less than $50,000.
- 1,400 resulted in settlements of $50,000 to $99,999.
- 2,276 resulted in settlements of $100,000 to $249,999.
- 1,813 resulted in settlements of $250,000 to $499,999.
- 1,517 resulted in settlements of $500,000 to $999,000.
- 708 resulted in settlements of $1 million to $1,999,999.
- 182 resulted in settlements of $2 million or more.
Many of these plaintiffs would not have been able to bring their cases to court without medical malpractice lawsuit funding.
How Medical Malpractice Lawsuit Funding Works
Medical malpractice lawsuit funding is available as pre-settlement funding and post-settlement funding. Pre-settlement funding covers immediate expenses like medical retreatment, while post-settlement funding gets you fast access to guaranteed settlement money you’ve won.
You must pay back your funding when you receive your settlement. If it’s a lump sum settlement, you must pay the full balance immediately. If you win a structured settlement, you can repay the money in smaller chunks over time.
If you lose your lawsuit, you’re usually not responsible for paying off your loan. This is called non-recourse funding. It’s a standard arrangement for third-party litigation funding.
Interest rates for medical malpractice lawsuit funding can vary significantly from lender to lender. Some states don’t allow third-party litigation funding companies to charge interest rates above a specific threshold, usually around 10%. It’s smart to approach multiple funding companies to see what rates and terms they offer.
Note that you usually must file a claim with your doctor’s malpractice insurance before starting a malpractice lawsuit. Lenders may be less likely to offer you the funding you need without proof that you took this step. If you’ve filed a claim and been denied, include that information about your claim in your funding application.
Types of Cases That Can Be Funded
You can fund any medical malpractice case with a medical malpractice lawsuit loan.
A case in which the following four statements are each true qualifies as medical malpractice:
- The doctor you are suing had a duty to care for you.
- That doctor did not provide proper care or was negligent in your care.
- The doctor’s negligence caused a negative health outcome.
- Your negative health outcome caused lasting physical, financial or emotional damage for which you should be compensated.
This can include anything from botched surgeries and prescription mix-ups to hospital-acquired infections.
If you aren’t sure if your case qualifies as medical malpractice, ask your lawyer about it. They will tell you if your case meets the four standards described above.
Qualifying & Applying for Medical Malpractice Lawsuit Funding
You may qualify for medical malpractice lawsuit funding based on the strength of the case and your expected settlement amount. Because you’re expected to repay the loan from your settlement money and not from your employment income, lenders often don’t require a credit check or employment verification.
To apply, contact the lending company of your choice and explain your case. It’s best to get your lawyer involved because an attorney can explain your case in more detail and tell the lender about your chances of winning.
You may need to provide a lender with medical documentation that supports your case. Documents can include X-rays, scans, test results, written statements from your doctor and other medical documentation.
How Medical Malpractice Lawsuit Funding Can Help You
Getting access to a medical malpractice lawsuit loan makes a financial difference to anyone affected by medical malpractice.
You can use the money to cover your legal expenses during your time in court, ensuring that you can continue fighting for as long as it takes for you to receive compensation. You can also use the money to cover medical and daily living expenses while you recover and wait for your settlement.
Medical malpractice lawsuit loans have a few notable downsides. Most lenders who offer this type of funding charge high interest rates, which will eat into whatever settlement money you eventually receive. Getting early funding also encourages some plaintiffs to reject reasonably sized settlements in hopes of getting a larger one later. This can make the court case drag on longer than necessary and cause legal costs to balloon.
For more information on medical malpractice lawsuits, contact legal aid or patient advocacy groups like the National Patient Advocate Foundation. These groups can answer your questions about medical malpractice lawsuits and help you initiate your own.
