Earlier this year, the Center for Justice and Democracy at New York Law School took a comprehensive look at compensatory damages caps by state. Not surprisingly, while few states limit damages in general torts, personal injury and product liability cases, the majority of states have some cap on medical malpractice awards. Why the difference?
Insurance and medical associations lobby for limits on awards focusing on convincing the public and legislatures that high awards are driving up insurance rates and forcing doctors to leave the profession or alter their practice. Big awards also get significant publicity giving the perception that every award is large. As a result, 30 states have some kind of cap on damages in these cases. There is some data to back up claims by both sides in this issue, but it is a complicated matter. Some research shows that “involvement in a claim is strongly related to burnout, depression, and suicidal ideation” among physicians and the perceived threat of malpractice claims can “perpetuate the practice of defensive medicine and risk aversion which imposes a significant financial burden on the healthcare system.” However, many of these claims are legitimate malpractice. Other research seems to indicate that insurance rate hikes and malpractice payouts are not correlated. According to a working paper by the Congressional Budget Office, “[c]hanges to malpractice liability laws … have an ambiguous potential effect on overall health care spending (and the federal budget). Some providers may respond by performing fewer procedures that were undertaken mainly to avoid liability, whereas other providers may pursue more risky procedures and patients.”
Damages can be difficult to determine particularly in the case of non-economic damages, such as those awarded for permanent disability, mutilation, trauma, loss of a limb, blindness, sexual or reproductive harm and other types of pain and suffering and emotional distress. Economic damages are more easily established. They compensate plaintiffs for medical bills, lost income, loss of earning capacity, rehabilitation, household services, and out-of-pocket costs. As a result, states are more likely to limit non-economic awards. Currently, only 6 states have a total cap on medical malpractice awards encompassing economic and non-economic damages (although some exempt future medical care). However, 24 states cap non-economic damages. Of the remaining states, 8 of them passed legislation which was subsequently found unconstitutional and have not revised and passed new laws to date.
What does this mean for litigators? Medical malpractice caps are unlikely to go away and may expand. While attorneys cannot change this, when it comes to proving or defending against claims, it is important to have the right expert witnesses to testify as to the severity of the injury, long-term prognosis and impact on the plaintiff’s life.
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