The Doctor’s Advocate | First Quarter 2013
Team Effort Leads to Success in Michigan
Throughout 2012, The Doctors Company worked on behalf of Michigan physicians to pass legislation to strengthen the state’s medical liability statutes, including the cap on noneconomic damages. The Doctors Company worked closely with the Michigan State Medical Society (MSMS) to draft and lobby for a suite of bills collectively called the Patients First Reform Package. This cooperative effort by The Doctors Company, the MSMS, and our lobbying and advocacy association, the Michigan Insurance Coalition (MIC) succeeded in passing two of the bills in the package, including a bill to reinforce the noneconomic damages cap and another bill to clarify the statute of limitations and the calculation of prejudgment interest. On January 9, 2013, Governor Rick Snyder (R) signed Senate Bills 1115 (Roger Kahn–R) and 1118 (Joe Hune–R), repairing significant erosion by court decisions to Michigan’s medical liability reforms.
Although Michigan has had a statute limiting noneconomic damages since 1993, subsequent court rulings have weakened the reform. In Thorn v. Mercy Memorial Hospital, 281 Mich. App. 644 (2008), the Court of Appeals of Michigan ruled that the reform statutes, known together as the Revised Judicature Act, did not prevent a plaintiff from claiming the loss of household services as economic damages not subject to the cap. The Supreme Court of Michigan declined to review the decision, in essence upholding the appeals court ruling. SB 1115 amends the act to explicitly provide that loss of household services, loss of society and companionship, and loss of consortium are noneconomic damages subject to the cap.
In Nation v. WDE Electric Company, 454 Mich. 489 (1997), the Supreme Court of Michigan overruled the appellate court and held that when the legislature enacted section 6306 of the act controlling calculation of future damages reduced to present cash value, since it did not specify that interest be compounded annually, it must have intended that simple interest be used. The result has been confusion among lower courts in calculating awards and larger payouts using simple interest. SB 1115 adds section 6306(a) to the act to specifically require that interest, compounded annually, be used in reducing future damages to present cash value.
SB 1115 also specifies the order in which the components of an award should be calculated; this is commonly known as “set offs.” The order is important because the final amount due to the plaintiff depends in part on the order in which the calculations are made. For example, the court must reduce the damage award before applying interest.
SB 1118 amends a section of the act dealing with letters of authority issued to a personal representative suing on behalf of a deceased person. The prior statute of limitation allowed the representative of a person who dies within the period allowed for bringing suit to bring an action any time within two years after letters of authority are issued; it did not qualify which letters or which representative might receive the benefit of the extension of the time to sue.
In Carmichael v. Henry Ford Hospital, 276 Mich. App. 622 (2007), the appeals court was not concerned that the same personal representative had received subsequent authorization, and it allowed the period of limitation to start over with another two years for the second set of letters. The amendment provides that the two-year limit runs from the issuance of the first letters of authorization only.
SB 1118 also provides that, in a medical malpractice action, prejudgment interest is calculated on the amount of the judgment not including costs and attorney fees incurred during the time before a judgment is issued.
We are proud of the contribution made by The Doctors Company toward the enactment of these bills. Our efforts included grassroots support, lobbying, and arranging for a defense attorney and medical liability expert to help draft the bill and testify before the legislature. As always with legislation of this significance, success depends on teamwork and coalition-building. In this case, the passage of these bills is a credit to the collaboration between the Michigan State Medical Society, the Michigan Insurance Coalition, and The Doctors Company. We look forward to continued success working with our partners on behalf of physicians in Michigan and around the nation.