Bypassing Damage Caps

By Alex Stein

Damage caps are widespread. A typical cap provision precludes medical malpractice victims from recovering more than a specified sum for pain, suffering and other noneconomic harms. These caps vary between $250,000 (as in California that might soon increase its cap by a referendum) and a $1,500,000-$500,000 scale (as in Florida). Some state supreme courts (e.g., Georgia, Illinois, and Wisconsin) voided the caps as unconstitutional, but many others (e.g., Alaska, California, Louisiana, Mississippi, Nebraska, Ohio and West Virginia) have upheld their constitutionality. In a few states (e.g., Florida and Texas), statutory caps had to be corrected to secure their alignment with state constitutions.

Damage caps are controversial.  Some people believe that they help contain the costs and secure the affordability of medical care. Others believe that caps shortchange malpractice victims and weaken the deterrence of malpractitioners. People falling into the first group generally support tort reforms. People falling into the second group ardently oppose those reforms. For my middle-way position—that supports procedural tort reforms that block away unsubstantiated malpractice suits, while opposing damage caps and other substantive tort reformssee here.

The plaintiffs bar expectedly tries to bypass the caps: see Catherine Sharkey’s important article that identifies the “crossover” dynamic: Facing caps on their clients’ noneconomic recovery, patients’ attorneys boost and vigorously pursue their clients’ claims for economic damages with the jurors’ blessing and approval.

Another, relatively recent, way of bypassing the cap is splitting the “occurrence” or “event” of medical malpractice into several events or occurrences. When successful, this strategy doubles, or more than doubles, the recoverable compensation amount.

For example, the plaintiff’s attorneys in a Missouri case, Scott v. SSM Healthcare, St. Louis, 70 S.W.3d 560 (2002), have persuaded the court that “occurrence” refers to a single act, or instance, of medical malpractice. As a result, two separate acts of malpractice, committed by two different doctors at the same hospital, have doubled the plaintiff’s compensation amount for his noneconomic harm: the plaintiff was awarded $1,056,000 instead of a single statutory amount of $528,000. The court rejected the defendant’s interpretation of “occurrence” as referring to the plaintiff’s total damage.

A few weeks ago, the “occurrence” issue was decided by the Supreme Court of Pennsylvania: Kinney–Lindstrom  v. Medical Care Availability and Reduction of Error Fund, — A.3d —-, 2013 WL 4410996 (Pa. 2013). Pennsylvania’s Medical Care Availability and Reduction of Error Act of 2002 limits an aggrieved patient’s recovery to $1,000,000 per “occurrence” of medical malpractice. This limit was set for payments coming from the government’s fund that supplements the primary insurance coverage of participating healthcare providers.

The plaintiff was a mother of twins who suffered serious injuries as a result of a doctor’s prenatal neglect: failure to diagnose and treat the plaintiff’s infection while she was pregnant with the twins. The fund conceded that the doctor was negligent, but argued that this negligence amounted to a single occurrence, which should cap the plaintiff’s compensation at $1,000,000.  The plaintiff, for her part, argued that she and her twins had suffered from two occurrences of medical malpractice; and so she should recover $2,000,000 (following the jurors’ assessment of the twins’ injuries at $13,150,000).

The Court rejected the plaintiff’s effect-based interpretation of “occurrence” (favored by the defendant in the abovementioned Missouri case). The Court also rejected the argument that “occurrence” should be construed broadly in order to expand an aggrieved patient’s entitlement to compensation. Based on the legislative language and history, the Court adopted the cause-based interpretation under which a single act of malpractice constitutes one “occurrence” even when it injures multiple victims.

In the case at bar, the plaintiff argued that she and her twins are entitled to a $2,000,000 compensation even under the “cause” approach. Specifically, she claimed that her evidence demonstrated that the “twins were subjected to different infectious organisms at different times, which the doctor discretely failed to diagnose and treat.” According to the plaintiff, there were two separate occurrences of medical malpractice that caused distinct injuries to each twin.

The Court remanded the case with instructions to adjudicate the plaintiff’s claim under the “cause” approach.

Remarkably, Florida statute, West’s F.S.A. § 766.118, settles the “occurrence” issue by capping “the total noneconomic damages recoverable from all [defendants] regardless of the number of claimants.” In my opinion, this provision can still be challenged on constitutional grounds.

From a deterrence perspective, the Missouri-Pennsylvania approach seems preferable. As far as compensation is concerned, because cap amounts generally undercompensate victims, courts will do well to interpret “occurrence” in a way that increases the deserving victim’s compensation.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.