Wisconsin lawmakers OK $750,000 tort cap

Physicians support the bill, passed by a veto-proof margin, but trial lawyers fight the legislation.

By Amy Lynn Sorrel — Posted March 27, 2006

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Wisconsin physicians hope that the second time is the charm in their fight to bring noneconomic damage caps back to their state. The Legislature this month overwhelmingly passed a measure setting a $750,000 limit on such awards.

The vote came just three months after Gov. Jim Doyle vetoed a $450,000 cap approved by legislators.

The medical community and lawmakers rallied behind the new bill, which would not adjust the award limit for inflation. The cap would be reviewed every two years by the board that approves fee adjustments to the state's Injured Patients and Families Compensation Fund.

"We feel good about this bill, and we think because it passed by a significant margin in both houses that it's a strong indication of consensus across the state to ensure access to care," said Mark Belknap, MD, Wisconsin Medical Society president.

Physicians' efforts to reinstitute caps started after the Wisconsin Supreme Court struck down the state's 10-year-old noneconomic damages limit last July. The court ruled that the prior $445,775 ceiling was arbitrarily set and violated plaintiffs' equal protection rights because it was too low. Doyle rejected the first bill to bring back caps, because he believed it would not meet the court's standards.

The medical community and lawmakers expect Doyle's stamp of approval this time. The new legislation passed with more than a veto-proof two-thirds majority in both the Assembly and the Senate.

"It's obviously a strong statement by the Legislature, but the governor wants to get a legal opinion because he doesn't want to sign [the bill] if it's certain to be overturned by the court," said Doyle spokesman Dan Leistikow. The deadline for signature is April 15.

"Judicial nullification" by the courts has been a long-standing battle for lawmakers trying to enact liability reforms to preserve access to care.

"The major issue is the authority of the legislature to develop policy in this area," said Sherman Joyce, president of the American Tort Reform Assn., which supports state liability reforms. Wisconsin is a "clear case of the Supreme Court overreaching."

Courts in at least 11 states have overturned caps as unconstitutional, according to a September 2005 report by the American Medical Association.

"The question we had to ask was what is the best, lowest number that will survive constitutional scrutiny while still providing the stability we need," said Mark Grapentine, WMS senior vice president of government relations.

To determine an effective cap, the medical society and the Wisconsin Hospital Assn. commissioned an actuarial study. The bill was reviewed by former Supreme Court Justice William Bablitch and professor Gordon B. Baldwin, a University of Wisconsin, Madison, constitutional law expert.

From the study, Grapentine said, the WMS concluded a $750,000 cap would help provide the predictability necessary to stabilize insurance premiums, which, according to the medical society, rose 5% for 2006.

In his analysis, Baldwin said the new cap "is rational and reasonable and will overcome [the Wisconsin court's] objections on equal-protection and right-to-jury-trial grounds."

Grapentine said the court's 4-3 July decision hints that justices might have been willing to vote differently if the proposed cap had been higher.

While physicians expressed reservations about the bigger cap, the medical society called it critical to preserving access to care in Wisconsin. The AMA, which supports a federal $250,000 noneconomic damages ceiling, lists Wisconsin as one of six states with a stable liability climate. But doctors say that could change if damage limits are not restored.

The bill's passage came on the heels of an $8.4 million verdict, including $4.2 million in noneconomic damages, by a Dane County jury in February. This was the largest award in a medical liability case since caps were wiped out.

"We are having trouble recruiting physicians," Dr. Belknap said.

In addition to insurance premiums, Grapentine explained, Wisconsin doctors also must pay into the state Injured Patients and Families Compensation Fund, which helps physicians pay medical liability awards that exceed $1 million. The fund approved a 25% increase in rates this year, the medical society stated.

Republican Sen. Scott Fitzgerald, one of the bill's chief sponsors, said the recent jury award played a role in the new bill's passage.

To curb future court challenges, the Legislature recently passed a tort reform bill that proposes a constitutional amendment to allow jury award caps. State residents eventually will vote on the amendment, he said.

Trial lawyers dispute arguments that limits would reduce medical liability insurance rates or affect whether physicians remain in states to practice.

The Wisconsin Academy of Trial Lawyers was not available for comment, but in a public statement urged Doyle to veto the new measure, because it discriminates against "the most seriously injured victims of medical negligence." The group indicated that it would challenge the cap in court if it were to pass.

Trial lawyers and consumer advocate groups agree with the Supreme Court's original findings that "no rational basis" exists for caps.

The cyclical nature of the insurance industry is responsible for rate fluctuations, which have stabilized, said Joanne Doroshow, executive director of the Center for Justice and Democracy, a civil justice advocacy group. "This emphasizes again that it's not the jury verdicts or the tort system in the first place that drives rates up," Doroshow said.

Doctors disagree and say Wisconsin's system worked for a long time. Before the court's 2005 decision, the prior cap withstood constitutional challenges. Eager to return to a stable environment, doctors are ready to push lawmakers to override a Doyle veto if necessary. "We simply cannot wait until 2007," Grapentine said.

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Chain of events

Wisconsin doctors have been fighting to restore caps on noneconomic damages in medical liability cases after the state Supreme Court struck down the existing cap last year.

1995: Wisconsin enacted a $350,000 cap, regularly adjusted for inflation.

July 2005: Wisconsin's cap stood at $445,775. In Ferdon v. Wisconsin Patient Compensation Fund, the Wisconsin Supreme Court ruled 4-3 that the cap was a violation of the state constitution's equal protection clause because it was too low.

December 2005: Gov. Jim Doyle vetoed a bill passed by the Legislature that would have established a $450,000 cap for adults and $550,000 for minors. Doyle said the limits would not meet the Supreme Court's standards. The Legislature did not muster the necessary vote to override the veto.

March 2006: The Legislature passed a bill that would establish a $750,000 cap with no adjustment for inflation. This time, the measure passed with more than a two-thirds majority vote -- enough to override a veto. Doyle has until April 15 to sign the legislation.

Sources: American Medical Association; American Tort Reform Assn.

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