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The Impact of Caps on Non-Economic Damages on the Defense of Medical Malpractice Cases

Tags: | Comments: 0 | November 11th, 2010

Non-Economic Damages – The Nature of the Debate

Perhaps no other issue in the debate about medical malpractice liability over the last decade or more has engendered more discussion than the wisdom and impact of limitations (i.e caps) on the amount of recoverable damages in medical malpractice claims. Most of the debate centers on state legislatures passage of limits on non-economic damages; that is, the category of damages we often refer to as “pain and suffering.” In addition to pain and suffering, however, non-economic damages also include grief, and the loss of companionship, counsel, advice, and emotional support. These are distinct from economic damages, which typically include lost wages, medical and hospital bills, special equipment and/or therapy, funeral expenses, and financial support. Most states do not impose caps on economic damages.

Currently, over 30 states have statutory caps on non-economic damages. Some of these caps apply to all personal injury claims, and some are limited to medical malpractice claims. The amounts of the caps differ from state to state. The lowest damages caps are in the $250,000 range; the highest are $1,000,000. Some caps vary according to the claimed injury. Some caps have automatic escalators; others don’t. Some caps apply per injured person; others apply per healthcare provider. Some caps apply to reduce verdicts that exceed the statutory cap; others apply so that the jury knows the applicable caps as they deliberate.

The Case for Caps on Pain and Suffering

The case for caps on non-economic damages is that statutory limits on recoverable damages creates a predictable measure of potential exposure in a medical malpractice claim, leading to a stable and affordable professional liability insurance market, and a hospitable environment for physicians to practice. Caps on non-economic damages preserve a patient’s right to pursue a significant, albeit limited, recovery for this component of damages. California and Texas are examples of large states where caps on non-economic damages have proved to be effective contributors to a stable professional liability insurance market, and a less hostile place to practice medicine.

Opposition to Damage Caps

On the other hand, the lawyers who represent patients in medical malpractice claims have waged legal and political campaigns against caps on damages, sometimes with success. For instance, the courts in Georgia and Illinois recently struck down statutory caps on non-economic damages. Missouri’s Supreme Court recently deferred the question until a later case. The courts typically invoke state constitutional grounds to strike down damage caps. Most state constitutions have “open courts” and “equal protection” clauses that are subject to interpretation by the courts in those particular states. The lawyers who pursue medical malpractice claims argue that damage caps are designed to discourage the filing of claims with limited recovery potential for the patient after the deduction of the lawyer’s contingent fee and litigation expenses rather than truly limit recoverable damages.

Practical Questions for Physicians Facing Medical Malpractice Claims

What does all this mean to the physician facing a medical malpractice claim? The answer is maybe nothing and maybe a lot. If the claim involves significant economic damages, a limitation on non-economic damages may have little relevance to an assessment of exposure. Cases that would fall into this category would be birth trauma, disabling neurologic injuries, and some wrongful death claims. In cases where the bulk of damages are non-economic, a limitation of non-economic damages may, for all intents and purposes, be the total amount of the exposure. An illustration here might be a case involving a stillbirth. While certainly emotionally traumatic to the family, a claim such as this may involve de minimus economic damages.

An assessment of the potential value of a medical malpractice claim should be part of the data a physician and his/her insurance company uses to make an intelligent decision on whether to take a claim to trial. The presence of damage caps assists that process considerably. Without statutory damage caps, the physician facing a medical malpractice claim is subject to an educated guess, based on the venue and results in other cases, about a potential non-economic damage award. It would definitely be in the physician’s best interests to know if the state in which he/she practices has statutory caps on damages, and that the caps have overcome legal challenges.