Louisiana liability cap upheld; trials still ahead

Louisiana's 32-year-old award cap in medical liability cases remains in place -- for now.

The state Supreme Court in February breathed some life back into the law that an appeals court in September 2006 struck down as setting an unconstitutionally low cap. The lower court said the $500,000 total damages limit, excluding future medical expenses, is worth only $160,000 in today's dollars.

The high court ruled that the question of whether the value of the cap unfairly burdened patients' access to recovery was never brought up in the lower courts and therefore could not be decided. So justices sent the two cases challenging the award limit back to the 3rd Circuit Court of Appeal and instructed the lower court to decide them on the original issues raised, whether the cap:

• Violates patients' due process rights by predetermining the amount they can recover.
• Violates the constitutional separation of powers and the authority of the courts by allowing the Legislature to decide an award limit.
• Is an unconstitutional special law that applies only to medical liability cases.

Doctors praised the high court ruling and remain confident in the validity of the cap, which has withstood several constitutional challenges. Doctors say the award limit has helped stabilize medical liability insurance rates.

"It is vital, especially in light of so many physicians leaving after Katrina," said Amy J. Phillips, director of the Louisiana State Medical Society's Dept. of Legal Affairs. "The cap makes doctors more secure and more likely to stay."

Louisiana is one of eight states that the American Medical Association has declared to have a steady medical liability climate.

Phillips said the Supreme Court ruling preserves the damage cap for now and likely will delay a decision for another year or two as these cases, or others, wind their way back up to the Supreme Court. Also positive for physicians, she said, is that justices declined to give guidance as to whether the cap violates other parts of the state's constitution.

No date has been set for a rehearing in the 3rd Circuit Court of Appeal.

Gearing up for the fight ahead, the Louisiana State Medical Society is poised to file a friend-of-the-court brief supporting the cap once the issue reaches the high bench again.

But some attorneys said the state Legislature could beat the Supreme Court to the punch and decide before then that the cap needs to be increased. The appeals court had said it believed the cap would need to stand at $1.6 million or $1.7 million to be meaningful to today's plaintiffs.

"The 3rd Circuit has sent a strong message that it's best left to the Legislature to readdress the cap, and it is likely to be revisited in 2008," said Nadia M. de la Houssaye, an attorney representing the Louisiana Patient's Compensation Fund, a defendant in the two cases before the high court.

She noted that the appeals court did not declare the entire cap unconstitutional but addressed only the dollar amount.

In a dissent to the 2006 appeals court opinion, judges pointed out that the Supreme Court upheld the award limit in 1992, saying it did not discriminate against patients who had been severely injured. Justices in 1992 found that the state's Medical Malpractice Act set up the patient compensation fund along with the cap to ensure that injured patients were guaranteed compensation.

"It's critical to be able to recover from a solvent entity, and in many states where they don't have caps, plaintiffs may be awarded large sums of money but not be able to collect on it," de la Houssaye said.

Doctors who contribute to the fund are responsible for paying the first $100,000 of a judgment and the fund covers the remaining $400,000, with no limit on future medical expenses.

The act protects patients and doctors by providing a recovery as well as a structure that makes insurance affordable to doctors practicing in the state, de la Houssaye added.

But plaintiff attorney Oliver Schrumpf, who represents the patients in both cases contesting the cap, maintains that the state constitution expressly prohibits any legislative interference with the judicial process.

"My clients never got an opportunity to go to the Legislature 30-some years ago and present their case," Schrumpf said. "If the Legislature can call the shots on what the outcome of a case is going to be, we don't have any remedy."

By declining to address the cap, he said, the Supreme Court likely tossed the "political football" back to lawmakers.