Malpractice: States take aim at caps

October 21, 2005

The high court in Wisconsin has tossed out that state's award limit. Will courts in other states do the same?

Frustrated over their repeated failure to get a federal medical malpractice bill passed-this year is likely to be no different-proponents of tort reform have had to content themselves with victories in state legislatures, especially as a way of establishing limits on noneconomic damages.

In 2005, Georgia, Illinois, and South Carolina passed new cap legislation, bringing to 25 the number of states with similar laws. State lawmakers also passed a variety of other tort reforms during this year's sessions.

In light of the Wisconsin ruling and other legal actions, how vulnerable are state efforts to limit noneconomic awards? And what strategies will defenders use to save existing caps or establish new ones?

Wisconsin cap flunks "rational basis test"

The decision overturning Wisconsin's malpractice cap grew out of the obstetrical case of Matthew Ferdon. During delivery, Matthew suffered an injury that left his right arm partially paralyzed and deformed. Despite surgeries, occupational therapy, and the prospect of additional interventions down the road, experts concluded that Matthew's right arm would never function normally.

The child's mother and father and his guardian filed suits against the delivering doctor, the hospital where the birth took place, and, as required by law, the Wisconsin Patients Compensation Fund, established in 1975 "to provide excess medical malpractice coverage" to the state's doctors and other healthcare providers. (In 2003, the PCF was renamed the "Injured Patients and Families Compensation Fund.")

The jury found the delivering doctor negligent and awarded Matthew $700,000 in noneconomic damages-slightly more than $10,000 a year for his 69-year life expectancy-and $403,000 for his future medical expenses.

Following the verdict, the fund asked the circuit court to reduce the $700,000 award to $410,322, which at the time reflected the amount permitted under the state's inflation-adjusted cap. It also asked that all but $100,000 of the award for future medical expenses be placed under its control. The circuit court granted both requests, and each was upheld on appeal.

The plaintiffs then asked the Supreme Court of Wisconsin to review the court of appeal's decision on noneconomic damages, paying particular attention to the constitutionality of the 1995 law on which it rested. (The court's decision about the boy's future medical expenses wasn't challenged.) To make their case, representatives for Matthew offered up a whole smorgasbord of constitutional challenges. Ultimately, the court relied on only one of these-the question of whether the state's cap violated the equal protection guarantees of the Wisconsin Constitution.

Before it could decide this, however, the high court first had to answer another question, one typically asked in certain equal protection cases: Does the law establishing the mandatory cap affect individuals within the state differently without a rational basis for doing so? If Yes, that would be reason enough for the court to find the law unconstitutional; if No, the mere fact that the law may affect individuals differently-provided that it doesn't abridge one of their fundamental rights or involve a "suspect classification," such as race-wouldn't be reason enough for the court to find it unconstitutional, and the court of appeals decision would stand.