Background: Although state surrogate laws are the most common way surrogate decision makers are identified, no studies have been conducted to determine physician understanding of these laws or how these laws are utilized during clinical practice. The purpose of this study is to better understand how surrogate decision-making laws function in practice. Methods: A cross-sectional survey of 412 physicians working in Indiana hospitals was conducted between November 2014 and January 2015 to determine physicians’ knowledge of Indiana’s surrogate decision-making law and physicians’ approaches to hypothetical cases using the law in clinical practice. Results: Fewer than half of physicians (48%) were able to correctly identify all legally allowable surrogate decision makers. Of those physicians who knew the law, nearly all of them (98%) indicated that they would violate the law during clinical practice by allowing nonlegal surrogates such as grandchildren to make medical decisions. Conclusions: A majority of physicians endorse relying on surrogates who have strong ties to the patient but are not legally allowable in Indiana. It is possible that these decisions reflect sound ethical reasoning even though they are illegal. Due to the narrow construction of some state surrogate decision laws, physicians may be placed in the position where they must either choose to follow medical ethical principles or the law. To alleviate these issues, state surrogate decision laws need to be amended to include a broader list of surrogates, such as extended family and close friends.