What is the situation regarding legal liability for medical treatment in Germany?

Regarding the liability for any medical treatment activity, we have to look separately at what kind of claims could be raised.

• Claims for unsatisfactory results of treatment. ( "I spent a lot of money on the doctor and the hospital, but all their activities were to no avail. My cancer disease was not cured - or my left breast is still smaller than the right one.")
  For such claims, the legal system in Germany offers no legal grounds. The treatment contract, which is made between the hospital (or the doctor) and the patient does not entitle the patient to any guaranteed results. The contract only obliges the hospital or the doctor, to treat the patient according to up-to-date medical standards. But there will never be any contractual obligation to ensure a certain result.
• Claims for personal injury. As medical treatment is administered mostly by human beings, it is never possible to exclude the risk of any mistakes happening during treatment. A mistake could be, that the operation team forgets a medical instrument inside the patient' s body, or that the nurse gets the medication for patients mixed up, and causes serious health problems to a patient. Also, if the treatment was not given according to the state of the art, or a necessary diagnostic procedure was forgotten, that would be considered a mistake.
  For such cases, the legal system in Germany provides a number of claim possibilities. However, the claimant has to prove that a mistake was made, and that someone is personally liable for this mistakeL Liability can be based on intent or negligence, and even slight negligence can lead to full personal liability for all the financial damages that arise from the mistake. In principle, the claimant can demand to be restituted into a position as if the mistake had not occured (i. e. repair of damages). If that is not possible (e.g. the wrong leg was amputated), the financial consequences (treatment costs, reduced ability to work etc) have to be covered.
  However, the German system focusses more on the material damages. Immaterial damages, like compensation for pain, shock or emotional distress, are not considered as important and the sums of money which are awarded by courts for these reasons are low compared to, for example the United States.

For both types of liability, the hospitals and their doctors of course have their liabilty insurances. So the claims are not really dealt with by the hospital. The insurance companies decide, when they admit liability and offer payments or when they seek justice by court decision. And here also, there is a noteable difference to the situation in Germany: Most civil liability cases are really decided by the courts, and negotiated settlements are less frequent.