Wisconsin damage cap doesn't cover all medical residents

An appellate court found that state law excludes residents in their first year; physicians say the Legislature didn't intend to leave out that one group.

By Tanya Albert amednews correspondent — Posted Jan. 17, 2005

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Wisconsin's first-year medical residents are facing the possibility that the state's cap on noneconomic damages doesn't protect them from large jury verdicts for pain and suffering.

A Wisconsin appellate court ruled that the law that establishes the state's limit requires that a health care provider be licensed to be covered.

The court said that doesn't include first-year medical residents who aren't fully licensed.

Under the ruling now on appeal to the Wisconsin Supreme Court, first-year residents would have to pay noneconomic damages that the jury awarded. The residents would not be covered by the Wisconsin cap on pain and suffering damages that now limits noneconomic damages to $423,000 even if the jury awards a higher amount.

The family who initiated the lawsuit against the then first-year resident says the way the law defines health care provider is as a licensed physician. They also argue there is no reason to believe it would hurt Wisconsin's health care system to interpret the law in that way.

But physicians say that if the ruling is allowed to stand, it will be harder to attract residents to train in the state, which is medical liability-friendly at present.

Wisconsin is one of six states that the American Medical Association lists as not showing any signs of the medical liability insurance crisis that is plaguing 20 other states where physicians are retiring early, leaving the state or eliminating high-risk procedures.

"Excluding first-year medical residents from the state cap undermines the stability of the Wisconsin medical liability system," said Donald J. Palmisano, MD, the AMA's immediate past president. "Residents look very carefully at the stable states ... and they put that in their evaluation of deciding where they will go."

Consequently, physicians say that it is critical that the Wisconsin Supreme Court overturns the lower court's verdict. The court has not yet set a date to hear the case, but friend-of-the-court briefs on behalf of the insurer and the physician have already been filed by the AMA/State Medical Societies Litigation Center, the Wisconsin Medical Society and the Wisconsin Hospital Assn.

If the ruling isn't overturned, first-year medical residents would be the only physicians or physicians-in-training not covered under Wisconsin's tort reforms. All medical students and residents beyond their first year are protected, said Mark L. Adams, general counsel for the WMS. "It just boggles our minds that this one year would not be covered," he said.

William M Cannon, the attorney representing the Phelps family, plaintiffs in the lawsuit against Physician Insurance Co. of Wisconsin and Matthew Lindemann, MD, disagrees with that assessment and says claims that reversing the decision would hurt health care in the state are off-point. "The statute defines a health care provider as a licensed physician," he said. "It is as simple as that."

Legislative intent

The Phelps argue the law is clear. "The Legislature decided not to put [first-year residents] in there," Cannon said. "First-year unlicensed residents are not covered by the cap."

But the Physician Insurance Co. of Wisconsin, Dr. Lindemann and organized medicine argue that lawmakers would have had no reason to exclude first-year medical residents. The AMA, WMS and WHA in their brief argue that the Legislature intended for the cap to apply to all individuals who provide health care services.

"To exclude first-year medical residents from the coverage of this system simply defies logic," the groups said in the brief. "The Legislature made a policy decision and created an exclusive system and remedy for bringing medical liability claims. As part of this comprehensive system, a plaintiff's economic damages were capped for claims brought against all 'health care providers' and all 'employees of health care providers acting within the scope of their employment and providing health care services.' "

"First-year residents clearly fit somewhere within that definition," the AMA, WMS and WHA said. "They are an integral part of the health care system and obviously perform 'health care services.' "

John S. Skilton, the attorney representing the Physicians Insurance Co. of Wisconsin and Dr. Lindemann, said physicians-in-training would find themselves in a catch-22 if the supreme court doesn't overturn the lower court decision. In order to get a medical license, doctors are training for a year without the full-fledged license. That one year without licensure is a requirement under state law.

"It's a very significant issue for any first-year resident," Skilton said. "I'm hopeful the court will see that the cap should apply."

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Case at a glance

Gregory G. Phelps et al. v. Physicians Insurance Co. of Wisconsin Inc. and Matthew Lindemann, MD

Venue:Wisconsin Supreme Court
At issue: Whether the state's cap on noneconomic damages covers first-year medical residents.
Potential impact: Physicians say if the noneconomic damages cap doesn't cover first-year residents, it will undermine the state's stable medical liability climate. Others argue that lawmakers did not intend to include first-year medical residents when they wrote the law.

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