People living with chronic disease are at an increased risk of developing psychological distress. Moreover, people living with chronic disease interact with healthcare institutions frequently and are, therefore, more likely to experience adverse medical events. Relatedly, institutional betrayal is an institution's failure to prevent and respond to harm experienced by the people they serve, whereas institutional courage may mitigate some of these harms. This study aims to understand how interactions in healthcare (i.e., adverse medical events, institutional betrayal, institutional courage) impact psychological outcomes. A case-control study was conducted with participants who were at least 18 years of age and living with and without chronic disease. Self-report questionnaires were administered to participants regarding healthcare experiences and mental health symptoms. Independent samples t-tests were conducted to compare people with and without chronic disease with regard to these experiences and symptoms. Hierarchical multiple regressions were run to determine if healthcare experiences predicted mental health symptoms. We found that people living with chronic disease reported significantly higher levels of depression, anxiety, trauma, institutional betrayal, and adverse medical events compared to people without chronic disease; however, people without chronic disease reported significantly higher levels of institutional courage compared to people with chronic disease. Moreover, institutional betrayal significantly predicted anxiety and trauma symptoms, but not depression symptoms. These results demonstrate the impact that healthcare institutions have on the well-being of their patients and highlight the need for better systems in responding to patient harm. Findings from this study could inform mental health treatment for populations with comorbid chronic disease and psychological distress.