The actor and his wife, Kimberley, reached the settlement against Cedars-Sinai Medical Center for the accidental overdose of newborns Thomas and Zoe, who were mistakenly given a near-fatal amount of blood thinning drug Heparin and spent days battling for their lives.
Quaids twins have since recovered but Quaid insists this mistake could have been avoided if a better system for marking medicines was in place.
The hospital bosses have been fined $25,000 by California regulators after concluding the failure of staff at the Los Angeles Medical Center to follow their own procedures resulting in incorrect doses of the drug being administered to both Quaid's infants and as well as other children.
The documents state Cedars-Sinai is not admitting wrongdoing as part of the settlement.
Documents show the Quaids sued drug maker Baxter Healthcare Corp. in Illinois over the drug's packaging, but that case has been dismissed. The petition filed Monday indicates Baxter may also sue Cedars-Sinai, which administered too much Heparin to several patients in November 2007, including the Quaids' twins.