David Fish from Fishponds sued the NHS after he was left with bruising and bloodshot eyes after the incident in March 2008 at Bristol Children's Hospital. His wife Beverley also suffered a black eye.
The couple had been stopped from leaving the hospital with their baby daughter Ellie-Suzanne after she had undergone surgery on her stomach.
The baby had been born just 23 weeks into Beverley's pregnancy in September, 2007. Weighting just 589 grams (1lb 4oz ) she was given only a 10 to 15 per cent chance of survival, and needed to undergo stomach surgery six months after her birth.
When Mr and Mrs Fish were told by the consultant in charge of her care that they could take Ellie-Suzanne home after her operation, they attempted to leave the hospital, but were stopped by security guards after another consultant deemed her not fit enough to be removed. The assault is then alleged to have occurred.
Speaking to his local paper, Mr Fish said he and his wife had been told by a doctor on the ward that they could take Ellie home overnight and then bring her back in the morning.
"It would have been the first time she had ever come home, or out of hospital," he said, "We spoke to the doctor there and he said it was absolutely fine and we could take her home now so we got everything up together. When we walked out we saw the security guards coming up but thought nothing of it."
Mr Fish, 47, says that they were then stopped by the four guards and were subsequently injured in the confrontation which followed. The police were called, and photographs were later taken of the injuries the couple received.
Mr and Mrs Fish were cautioned for a public order offence, and after admitting they swore at the time of the alleged assault were forced to spend the night in cells.
They were then prevented from seeing their daughter for two weeks, and had to send friends and relatives in to visit her, before signing an agreement to allow them monitored access to Ellie.
Mrs Fish, 42, said when she first saw her face after the incident, she could not believe it – she says her bridge was knocked out of her mouth and her face was black for months afterwards.
A spokeswoman for the city centre hospital trust said: "The NHS Litigation Authority has settled Mr Fish's civil claim for personal injury against University Hospitals Bristol NHS Foundation Trust as a result of an incident in March 2008."
The happy news is although Ellie still requires oxygen overnight, and has other health needs, she has confounded medical expectations by walking, talking and going to mainstream school.