Malpractice Caps: Turning Lawyers away, and Hurting victims
by Anayat Durrani
Establishing caps on lawyer fees and non-economic on lawyer fees and non-economic damages in an effort to reform the tort system.
"Caps on non-economic damages hurt the most injured, especially women and children," said Paul J. Zwier, a professor at Emory Law School and one of the nation's most distinguished professors of advocacy and skills training. "While high wage earners will continue to get huge awards, those low wage earners, like stay-at-home moms, can be injured by market actor negligence and not get a full, jury-awarded compensation for those injuries."
Mr. Zwier said that the reason lawyers turn away these clients is that their cases will not be worth pursuing because the recovery "won't justify the time and expense in bringing the negligent party to justice." Lucinda Finley, Raichle Professor of Law at the State University of New York at Buffalo Law School agrees and said the decision by lawyers to refuse these types of cases because of the cap laws is understandable. She said medical malpractice cases are costly and time consuming and require expensive expert testimony.
"In a case with obvious negligence and causation, in other words a meritorious case, but where the injury is not associated with high economic loss, so that most of the damages will be awarded as non-economic loss, the cap can mean that it will cost more to pursue the case than the amount that ultimately can be recovered by the plaintiff, even without factoring in attorney's fees," said Ms. Finley.
Ms. Finley added that not only do caps discriminate against women and the elderly by depriving them of their damages, but the discriminatory effect of caps is made even worse because it makes it harder and less likely that these victims will be able to obtain lawyers to provide them access to the civil justice system.
Beginning in the 1970s, states began addressing the malpractice crisis through enactment of caps on pain and suffering. California's 1975 Medical Injury Compensation Reform Act was enacted when the state was facing an insurance crisis and limits both the fees that a plaintiff's attorney may charge and jury awards for non-economic damages, which are capped at $250,000. A major effect of the law was to make plaintiffs' lawyers accept more of the cost of the litigation. MICRA has served as a national model, and at least 27 other states have adopted similar restrictions. During the presidential election, voters in Florida, Nevada, Oregon, and Wyoming decided whether caps should be placed on awards for pain and suffering in medical malpractice cases.
The American Medical Association, a supporter of tort reform, has been a strong proponent of federal legislation to limit malpractice awards. President George W. Bush supports a House-passed bill that would put into effect a nationwide $250,000 cap on non-economic damage awards. Doctors' groups believe malpractice premium costs in California's cap provide a model for long-term tort reform. They argue that excessive malpractice premiums are forcing them out of business and that caps on damage awards are necessary to keep down medical malpractice insurance premiums. However, the American Insurance Association admitted in 2002 that "the insurance industry never promised that tort reform would achieve specific premium savings."
Ms. Finley said that study after study shows that caps on medical malpractice awards, while hurting the severely injured, do not lower malpractice premiums. "Caps do not lead to reductions in insurance premiums for doctors; there is no evidence to support any claim that they do or will lead to reduced premiums," Ms. Finley said, citing a major report issued by the federal General Accounting Office in late August 2003. "Spikes in insurance premiums are caused much more by market and investment cycles in the insurance industry and insurance-industry underwriting and reserve policies than by any trends in the tort system, as numerous studies have concluded."
Trial lawyers and many consumer groups have advocated stricter controls on insurance companies and more adequate regulation of negligent physicians rather than limiting the rights of the injured. They said that any increases in medical malpractice premiums are the results of medical errors, insurance industry failures, and a changing economy.
"Where states have enacted these caps they have had almost no effect on insurance premiums. It certainly doesn't require federal protection. It is a case of the rich and powerful blaming the helpless in an attempt to get even more protection," Mr. Zwier said. "If a taxicab driver is negligent and injures someone when driving and needs to pay for the harm the driver causes, why shouldn't a doctor have to do the same?"
Lawyer and consumer groups also said juries should decide how much an injured patient deserves rather than politicians funded by large campaign contributors from the insurance industry.
"We trust juries to decide life-and-death issues. It is our Seventh Amendment right. Why don't we trust them to fairly award non-economic damages?" said Mr. Zwier. "I believe it is because of a propaganda effort by insurance companies to cover their bad investments and to scare future jurors with myths about runaway and giveaway juries."
A study conducted by the RAND Corporation's Institute of Civil Justice in Santa Monica, CA, found that the 1975 California Medical Injury Compensation Reform Act (MICRA) has reduced the damages that doctors and their insurers are ordered to pay in medical malpractice lawsuits by 30 percent. The study, which reviewed 257 plaintiff verdicts in California malpractice trials from 1995 through 1999, also showed that compensation to injured patients declined by 15 percent. Caps on economic damages were imposed in 45 percent of cases won by injured patients. Those with the highest-percentage loss as a result of caps on non-economic awards were often those with injuries that greatly reduced their quality of life but resulted in small economic damages such as lost wages.
"Caps are unfair to victims because it penalizes those who are injured the worst," said Michael D. Green, a professor at Wake Forest University School of Law in North Carolina. "Our law and procedure on damages permits far too much variance in damages awards for non-economic loss, but caps are a very poor way to address that problem."
Researchers also found that the sliding scale on plaintiffs' attorney fees imposed by MICRA has had a major effect on the participants in these cases. The law prohibits attorneys from charging more than 40 percent of the first $50,000 of any recovery, 33 percent of the next $50,000, 25 percent of the next $500,000, and 15 percent of any amount over $600,000. Researchers found that the effects of award caps and attorney fees limits, combined, reduced by 60 percent the amount collected by plaintiffs' attorneys, with the sliding-fee scale having more of an impact on those fees than the damage cap.
The report said the high cost of preparing malpractice cases and the dual effects of caps on attorney fees and award caps would have resulted in a "significant shift" in the types of malpractice cases an attorney may agree to take on. Researchers added that MICRA has "changed the playing field" for defendants, plaintiffs, and attorneys on the selection of which malpractice claims are litigated in California, where plaintiffs lose nearly eight out of every 10 cases that are taken to trial.
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