Medical Malpractice Funding in Tennessee

Tennessee health care liability actions must be filed within one year of accrual under Tenn. Code Ann. section 29-26-116(a)(1). Where the injury is not discovered within that year, the period runs one year from discovery, but a three-year statute of repose from the date of the negligent act applies regardless of discovery, subject only to fraudulent concealment and a retained foreign object, which allows one year from discovery with no repose. Two presuit requirements are strictly enforced. Under section 29-26-121, the plaintiff must give written notice to each provider at least 60 days before filing, including a HIPAA-compliant medical authorization; compliant notice extends the limitations and repose periods by 120 days. Under section 29-26-122, a certificate of good faith must be filed with the complaint stating that counsel consulted a qualified expert who believes there is a good faith basis for the claim; failure to file results in dismissal with prejudice. Tennessee courts require substantial compliance with the notice statute and strict compliance with the certificate statute.

Modified comparative fault with a 50 percent bar under McIntyre v. Balentine, 833 S.W.2d 52 (Tenn. 1992). A health care liability plaintiff whose fault is 50 percent or greater recovers nothing; below that, damages are reduced proportionally. Fault may be allocated to nonparties, and each defendant is severally liable for its own share. A defendant asserting comparative fault against a nonparty health care provider must file its own certificate of good faith under section 29-26-122(b).

Tennessee caps non-economic damages in health care liability actions under the general cap in Tenn. Code Ann. section 29-39-102, enacted in the Tennessee Civil Justice Act of 2011. The limit is $750,000 per injured plaintiff for all non-economic damages, rising to $1,000,000 for catastrophic loss or injury as defined in the statute: spinal cord injury resulting in paraplegia or quadriplegia, amputation of two hands, two feet, or one of each, third-degree burns over 40 percent of the body or the face, or wrongful death of a parent leaving a surviving minor child. The cap is applied by the court after verdict and is not disclosed to the jury. It does not apply where the defendant intended to inflict serious injury, intentionally destroyed records, was substantially impaired by alcohol or drugs, or was convicted of a felony for the conduct. The Tennessee Supreme Court upheld the cap in McClay v. Airport Management Services, LLC, 596 S.W.3d 686 (Tenn. 2020). There is no separate med-mal-specific figure; this general cap governs. Economic damages are not capped, and punitive damages are separately capped under section 29-39-104.

Prejudgment interest in Tennessee is discretionary under Tenn. Code Ann. section 47-14-123, which permits the court or jury to award it as an element of damages in accordance with the principles of equity, at any rate up to ten percent per year. Tennessee courts have generally declined to award prejudgment interest on unliquidated personal injury damages, and it is uncommon in health care liability actions. Post-judgment interest accrues under section 47-14-121.

Under Tenn. Code Ann. section 20-4-101, a health care liability action is filed in the county where the cause of action arose — ordinarily the county of the hospital or practice — or where an individual defendant resides. Claims against state-operated facilities and University of Tennessee medical centers are heard by the Tennessee Claims Commission under section 9-8-307, and claims against county hospital authorities proceed under the Governmental Tort Liability Act with its own damages limits.

Tennessee regulates consumer litigation funding under the Litigation Financing Consumer Protection Act, Tenn. Code Ann. §§ 47-16-101–110. A litigation financier may charge a consumer an annual fee of no more than 10% of the original amount provided — structured as a maximum yearly fee of $360 per $1,000 provided — for up to 3 years, charged only once per year per claim regardless of the number of transactions on that claim.

Why are the section 29-26-121 and 122 requirements the first thing a Tennessee funder reviews?

Tennessee courts dismiss health care liability claims for defective presuit notice or a missing certificate of good faith, and the certificate defect is fatal with prejudice. A claim that has cleared both gates has survived the most common procedural defense in Tennessee med-mal practice and can be underwritten on the merits.

The notice must go to each provider with a compliant HIPAA authorization, and courts scrutinize the authorization form closely. The certificate confirms that a qualified expert has already reviewed the records and found a good faith basis. Funders ask counsel for the notice package, proof of service, the certificate, and the status of any motion to dismiss under section 29-26-122.

How does the $750,000 cap shape a Tennessee advance?

Non-economic damages are capped at $750,000, or $1,000,000 for the narrow catastrophic categories in section 29-39-102, so the fundable value of a Tennessee health care liability claim rests largely on economic damages, which are uncapped, and on whether the injury fits a catastrophic category.

McClay settled the cap's constitutionality in 2020, so underwriting applies the figures as fixed. The catastrophic definition is specific — paraplegia or quadriplegia, double amputation, severe burns, or the death of a parent with a minor child — and most serious injuries fall outside it. The cap is not disclosed to the jury and is applied by the judge after verdict, so a large verdict is reduced to the applicable figure.

What does Tennessee's funding statute mean for a plaintiff choosing a funder?

The Litigation Financing Consumer Protection Act requires funders to be registered with the Secretary of State and bonded, gives the consumer five business days to rescind, and requires the attorney to acknowledge the contract. A plaintiff should confirm the funder's registration before signing any agreement.

The Act also prohibits referral fees to attorneys and bars foreign-adversary-affiliated funders, and it applies to any non-recourse advance to a Tennessee resident or party to a Tennessee dispute. The funder's agreement must meet these requirements. The Act does not alter the litigation itself; it governs the funding contract.