Medical Malpractice News

Do Damage Caps Work?

Tags: , , , , , , , | Comments: 0 | August 5th, 2016

Cap icon. Cap symbol. Baseball cap icon isolated. Vector illustration

In the world of tort reform caps, or statutory limits on non-economic damages in malpractice cases, are one of the oldest and most common approaches.  However, these caps are also one of the most controversial methods of reigning in what many see as out of control  and unbridled liability awards.  We’ve talked about some of those issues before here and here and here.

But this week we want to ask a different question.  In light of a recent case in Florida (a state that has a comparatively very low cap on non-economic damage caps), and others like it, the question becomes, do these caps work?  Do they actually lower or significantly limit payouts (regardless of whether this is deemed to be a good thing or not), or do they just encourage the actors involved to settle in arbitration with the dollars moved from one column to another?

In the Florida case mentioned above, a hospital accepted responsibility for the untimely death of a young pregnant woman.  The hospital entered into binding arbitration with the family under which non-economic damages are capped at $250,000 in Florida, yet the result of which was a $4.3 million dollar award to the family of the deceased woman.  As one of the claimant’s attorneys said herself, “Given the unfair cap on non-economic damages, our primary goal in this case was to creatively build a credible and legal case for the amount of the family’s economic losses as a result of Patricia’s death.”

It seems possible that in this case there was a certain amount of number shifting to keep everyone as satisfied as was possible.  In other words, were there not a cap on non-economic damages maybe the economic damages claimed would have been less than $4,000,500, but non-economic damages claimed, and likely awarded, would almost certainly have been much more than $250,000.  So the question arises, did the caps actually limit the liability incurred by the hospital?

According to Robert Kelley, whose firm represented the family, yes they did.  He noted that he had threatened or promised, depending on how you wish to take it, the hospital by putting them on notice that were they to appeal the arbitration panel’s award his firm would cross-appeal, and in doing so would challenge the constitutionality of the damage caps.  Mr. Kelley also claimed that “On a level playing field this would be a ten million dollar case, or more. The hospital better be careful what it asks for.”

So, the claimants’ attorneys say that yes, the damage caps, to their chagrin, do in fact have an impact, and that they effectively kept their client from getting a much bigger award.  But of course this is strategic, too.  A claimant never wants to look enthusiastically please about what you are awarded.  That’s bad negotiating.  One expects all parties in these matters to begrudgingly accept what they think is the best outcome they can hope for.

But one has to wonder if the fear that a claimant might seek to have the caps overturned isn’t a motivating factor for doctors and hospitals to agree to some of the dollar shifting we talked about earlier and accept a higher payout than they would otherwise, simply because it is a known risk vs. the unknown risk of potentially have the caps deemed unconstitutional and thrown out.

In the end it’s hard to know what kind of impact these damage caps are having, but it seems likely that their tenuous nature, and the fact that they have been thrown out in multiple jurisdictions may be leading to a new normal wherein very large judgements are still being handed down, the numbers are just categorized differently, and physicians and hospitals accept it because the alternative is just as risky and scary if not more so.

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