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The Doctor’s Advocate | Fourth Quarter 2015
Government Relations Report
The Doctor’s Advocate | Fourth Quarter 2015


Government Relations Report
 
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Damage Caps and Equal Protection: Two States, Two Views

by Hal Dasinger, Vice President, Government Relations

Hal Dasinger

In more than 30 states, legislatures have placed limits on noneconomic damages in medical liability lawsuits. Maintaining those limits is a constant battle requiring both advocacy before sitting legislators and campaign support for candidates likely to defend existing reforms.

At the same time, opponents of reform statutes frequently challenge those limits in state courts, trying to get appellate courts to undo the laws when the legislatures will not. This column will compare recent decisions in California and Florida involving similar challenges to damage limitations.

In Chan v. Curran, 237 Cal. App. 4th 601 (Cal. App. 1st Dist. 2015), the California appellate court reviewed constitutional challenges to the Medical Injury Compensation Reform Act (MICRA) and concluded that MICRA did not violate the rights to equal protection and jury trial, and that changing MICRA was properly a job for the legislature. The California Supreme Court denied review, ending the challenge.

In Estate of McCall v. United States, 134 So. 3d 894 (Fla. 2014), the Florida Supreme Court heard similar arguments challenging that state’s limit on noneconomic damages. It ruled that the cap violated the right to equal protection and went on to find fault with the legislature’s reasoning in enacting the cap. The court invalidated the cap in wrongful death cases and set the stage for invalidating the limit in all medical liability actions.

McCall

The McCall case came to the Florida Supreme Court by way of federal court. A patient who had received medical care as a dependent of a member of the U.S. Air Force died, and her family sued the physician in federal court. Noneconomic damages were reduced from $2 million to $1 million because of Florida’s cap. On appeal, the federal circuit court held that Florida’s cap did not violate the U.S. Constitution but referred the matter to the Florida Supreme Court to decide whether it violated Florida’s own constitution with regard to equal protection, the right to a jury trial, and the separation of powers between the legislative and judicial branches of government.

The standard test for an equal protection challenge is known as the “rational basis” test. Florida’s constitution, like the U.S. Constitution and those of most states, guarantees each person the right to equal treatment under the law. By limiting noneconomic damages, statutes like MICRA or Florida’s Section 766.118 treat plaintiffs and defendants in medical liability actions in a way that differs from the way other plaintiffs and defendants are treated. In order to survive a constitutional challenge, defenders of the limit on damages need to show that the statute has a rational relationship to a legitimate state interest.

In McCall, the court paid some attention to the fact that, in this case, there were multiple claimants, whose aggregated noneconomic damages exceeded the limit and were reduced. Of greater concern to supporters of the cap is the court’s assertion that the legislature had no rational basis for enacting the limit in the first place.

The court evaluated the stated reasons for passing the law—the increasing frequency and severity of malpractice claims, the cost and availability of insurance, and the decreasing access to care—and determined, first, that the legislature was wrong to conclude there was ever a malpractice crisis and, second, that even if the crisis had been real, there is no logical relationship between the crisis and a statute limiting noneconomic damages. The court went on to say that even if the crisis had been real, and if a cap had been a logical way to address the problem at the time, it was no longer justified, as the crisis has subsided. Having decided that the cap failed the rational basis test, the court found it violated the right to equal protection and declined to answer the remaining questions about the right to jury trial and the separation of powers.

Chan

Many of the same constitutional issues raised in McCall were part of the attack on MICRA in the appeal of Chan v. Curran. A patient died following surgery, and her family sued. Noneconomic damages were reduced by the trial court as required by MICRA. The plaintiff appealed, challenging the cap as a violation of the rights to equal protection and a jury trial. The plaintiff also argued that whatever the validity of the MICRA statutes when enacted, the rationale for the laws no longer exists.

California’s courts have repeatedly—and recently—declined to substitute their own fact-finding for that of the legislature the way the McCall court did. The Chan opinion reiterates the view that correct rational basis analysis does not reexamine market data to decide whether the legislature’s action was the best available, or even justified by the facts at hand. The court does not have to agree with the legislature’s actions. The standard is whether there is a plausible reason for the statute.

The plaintiff urged the appeals court to disregard prior California decisions upholding MICRA against equal protection challenges, arguing that changed circumstances made the law archaic. The court rejected this argument, comparing it to attacking a rent control ordinance as obsolete on the grounds that rents have stabilized.

The plaintiff also cited the McCall decision, arguing that other state courts have ruled that damage caps bear no rational relationship to controlling insurance costs. In response to this, the Chan court pointed out that many states, including California, have upheld damage caps.

One Florida appellate court has already ruled on noneconomic damage limits in cases outside the wrongful death context. In North Broward Hospital District v. Kalitan, 2015 Fla. App. LEXIS 9969 (Fla. Dist. Ct. App. 4th Dist. July 1, 2015), Florida’s Fourth District Court of Appeals reversed a trial court’s decision reducing a jury award of noneconomic damages as required by the cap. The appeals court ruled:

Although Defendants attempt to distinguish the caps in wrongful death cases from those in personal injury cases, and there are clear distinctions, McCall mandates a finding that the caps in section 766.118 personal injury cases are similarly unconstitutional. To conclude otherwise would be disingenuous.

Already, the McCall decision has resulted in more and bigger wrongful death claims being filed, with 2015 losses attributable to this decision in the tens of millions of dollars. Applying the decision to all medical liability actions will undoubtedly worsen this impact in the years ahead.

 

The Doctor’s Advocate is published by The Doctors Company to advise and inform its members about loss prevention and insurance issues.

The guidelines suggested in this newsletter are not rules, do not constitute legal advice, and do not ensure a successful outcome. They attempt to define principles of practice for providing appropriate care. The principles are not inclusive of all proper methods of care nor exclusive of other methods reasonably directed at obtaining the same results.

The ultimate decision regarding the appropriateness of any treatment must be made by each healthcare provider in light of all circumstances prevailing in the individual situation and in accordance with the laws of the jurisdiction in which the care is rendered.

The Doctor’s Advocate is published quarterly by Corporate Communications, The Doctors Company. Letters and articles, to be edited and published at the editor’s discretion, are welcome. The views expressed are those of the letter writer and do not necessarily reflect the opinion or official policy of The Doctors Company. Please sign your letters, and address them to the editor.

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