Caps under fire: The fight for medical liability reform
■ At least seven states face court battles that could impact medical liability damages caps.
By Alicia Gallegos — Posted April 4, 2011
Family physician Joseph Selby, MD, remembers vividly the white coat rally in 2001, when West Virginia doctors took to the state capitol to fight for medical liability reform. Unlike past rallies with smaller turnouts, a sea of white covered the capitol floor.
Now, 10 years later, the Morgantown, W.Va., doctor watches anxiously as the reform he and fellow physicians strived so hard to pass risks being upended.
The Supreme Court of Appeals of West Virginia heard arguments in March in a case challenging the constitutionality of the state's $250,000 noneconomic damages cap, which increases to $500,000 for certain injuries. A ruling is expected this year.
West Virginia is among several states whose legislatures passed tort reform in the past decade but now face cap challenges. At least seven states have cases pending in appellate and state supreme courts. In one of those states, Mississippi, two cases are challenging the $1 million noneconomic damages cap in civil cases. The rulings could affect the state's $500,000 medical liability cap.
In recent years, noneconomic damages caps have experienced success and defeat in court. The Georgia Supreme Court in 2010 found the state's $350,000 cap unconstitutional. The Missouri Supreme Court the same year ruled in favor of retaining Missouri's cap. The Illinois Supreme Court declared unconstitutional the state's cap of $500,000 in 2010.
Some experts say the legal challenges are a concerted effort by anti-reform advocates to undermine reforms passed in the last few decades. Others argue that the court battles run in cycles, with cases heading to higher courts every few years.
"We knew this was coming," Dr. Selby said of West Virginia's legal challenge. "The pendulum is swinging. It swings in our direction, and then it swings back the other way."
It was standing room only in the West Virginia University College of Law courtroom on March 8, as attorneys, students and community members gathered to hear MacDonald v. City Hospital Inc. Justices were at the school to use the medical liability lawsuit as a teaching tool.
The case stems from a trial court ruling that awarded $1 million to James MacDonald for a muscle condition he developed from medications prescribed by internist Sayeed Ahmed, MD, according to the lawsuit. Dr. Ahmed claimed no wrongdoing. Jurors awarded $500,000 to MacDonald's wife for disruption of marital relations caused by the injury.
A trial judge reduced MacDonald's award to $500,000 based on the state's noneconomic damages cap. His wife's award was rendered null. The MacDonalds appealed.
Dr. Selby attended the high court's hearing on behalf of the West Virginia State Medical Assn. The man leading the charge against the cap was Robert S. Peck, who has become synonymous with the battle against tort reform. The attorney and president of the Center for Constitutional Litigation, a Washington, D.C., law firm, has been involved in many cases, including those in Georgia, Illinois and Kansas.
More cases seem to be making it to a state's high court, Peck said, and getting them there means finding the "appropriate plaintiff." He said, "An appropriate plaintiff is someone who is not so desperate they need their compensation immediately."
Arguments against caps have not changed much, Peck said, but they have grown more sophisticated.
In the MacDonald case, Peck argued that the state's cap discriminates between patients with minor medical injuries and those with severe injuries. Although people with minor injuries can receive full compensation for noneconomic damages determined by a jury, more seriously injured patients get only a fraction, Peck said.
In 2001, West Virginia's high court upheld the state's cap, which was then $1 million. In its opinion, the court said if the cap were lowered, the state could "run into serious constitutional problems." In 2003, the state Legislature lowered the amount to $250,000/$500,000.
Medical liability claim frequency in the state has plummeted since the most recent reforms were established, said Evan Jenkins, executive director of the West Virginia State Medical Assn. Claims filed in 2008 were about 52% lower than the 2001 claims, according to a 2009 West Virginia Insurance Commissioner's report.
Liability premiums for physicians are much lower, Jenkins said, and a record number of doctors is seeking licensure in the state.
"We think these facts put us in a very strong position and present a picture showing that reform works," he said.
Fight waged in Louisiana
While West Virginia doctors are fighting one challenge, two battles being waged in Louisiana could affect physicians there.
One case stems from a court verdict awarding more than $6 million to a family who alleged that their child had been diagnosed improperly by a nurse. The family challenged the award's reduction to $500,000 under the state's damages cap. The Louisiana 3rd Circuit Court of Appeal ruled the cap unconstitutional, and the case is now before the Louisiana Supreme Court.
In another case, Arrington v. Galen-Med Inc., the wife of William Arrington sued emergency physician Richard Samudia, MD, and Lake Area Medical Center after Arrington was treated in the emergency department for shortness of breath. Dr. Samudia allegedly prescribed medication for Arrington with instructions for the patient to follow up with his family physician. Three days later, Arrington died of an apparent heart attack. His wife sued, claiming negligence.
Court records show Dr. Samudia admitted to liability in the case. In 1999, he settled with the Arringtons for $100,000 -- the maximum physicians are liable under Louisiana's cap on total damages. The plaintiffs also received $500,000 from the Louisiana Patient's Compensation Fund, the maximum under the cap.
But Oliver J. Schrumpf, the Arringtons' attorney, argued that the award limit was unfair to patients and that $500,000 was not enough to cover the family's expenses.
An appellate court ruled the $500,000 cap unconstitutional. But the Louisiana Supreme Court overturned the decision and sent the case back to a lower court. The case will be re-examined in April, said Amy Phillips, Louisiana State Medical Society legal counsel.
Because Louisiana's cap was passed in 1975, cap opponents argue that the limit is outdated. They say the $500,000 amount has not kept up with inflation and should be closer to $1.6 million.
But Phillips said Louisiana's entire tort reform package is not being taken into account by critics. As part of the reforms, the state's Patient Compensation Fund pays for all future medical expenses for eligible patients until they die, she said. That means patients are well-compensated for years, she said.
Another argument against Louisiana's cap and others is that having a damages limit hinders the court's authority. Louisiana's Constitution prevents legislative interference with the judicial process, Schrumpf claims. If legislatures can determine damages instead of courts, injured parties have no remedy, he said.
Making a patient whole?
In Kansas, a legal challenge is being fought over a $250,000 noneconomic damages cap established in 1988 and upheld by the state's Supreme Court in 1990.
The case stems from a 2006 district court ruling that awarded $759,679 to a 28-year-old woman who had the wrong ovary removed during surgery. Obstetrician-gynecologist Carolyn Johnson, MD, acknowledged the mistake after a scan found the error, according to court records.
Of the total award, $400,000 went toward noneconomic damages, which a judge lowered to $250,000 based on the state's cap. The Kansas Supreme Court heard the case Feb. 18.
"It's the most focused [challenge] and certainly the most comprehensive and intense that we've had," said Jerry Slaughter, executive director of the Kansas Medical Society.
Because so much time has passed since the cap's creation, trial lawyers probably are pushing more cases to court in the hopes newer judges will be more favorable to their arguments, Slaughter said. William Skepnek, the plaintiff's attorney, said overturning the cap would protect citizens from the overly broad reach of government.
Opponents of damages caps say their motivation is keeping alive basic access to justice for all citizens. The purpose of going to court and being awarded compensation is to make an injured person whole, Peck said.
"We are confident that we're correct on the Constitution," he said. "We think more often than not, we will end up prevailing."
But other observers point to financial reasons for fueling the legal challenges. Lawyers can get up to 50% of plaintiff settlements, said Donald J. Palmisano, MD, an attorney and a former president of the AMA.
Jenkins, of the West Virginia State Medical Assn., hopes the latest legal battle in his state doesn't set back progress that has been made by reforms. "We are very fearful that we are one decision away from being pushed back into the crisis we saw a decade ago, where physicians were fleeing the state and [we had] an out-balanced liability system."