[Posted with permission of TRIAL (September 2005)
Copyright The Association of Trial Lawyers of America]

TRIAL / September 2005 / Volume 41, Issue 9

Wisconsin Supreme Court strikes down med-mal cap

The Wisconsin Supreme Court has found the state's $350,000 cap on noneconomic damages in medical malpractice cases unconstitutional. (Ferdon ex rel. Petrucelli v. Wis. Patients Comp. Fund, No. 2003AP988, 2005 WL 1639450 (Wis. July 14, 2005).)

"[T]he $350,000 ceiling adopted by the legislature is unreasonable and arbitrary because it is not rationally related to the legislative objective of lowering medical malpractice insurance premiums," Chief Justice Shirley Abrahamson wrote for the majority. Wisconsin joins 13 other states that have struck down caps as unconstitutional.

Plaintiff Matthew Ferdon was injured during his birth, leaving his arm partially paralyzed and deformed. He brought negligence claims against the doctor, the hospital, and the Wisconsin Patients Compensation Fund. (Health care providers pay annual premiums into the fund, and it covers medical malpractice claims that exceed primary insurance thresholds.) The jury awarded Ferdon $700,000 in noneconomic damages, and the fund moved to have the damages reduced to the cap of $350,000 (adjusted for inflation), which the appeals court allowed. The state supreme court overturned that decision and remanded the case to the trial court.

The court found that the cap violates the state constitution's equal protection guarantee because it creates classes of victims: fully and partially compensated victims, as well as those with and without family members whose damages also would be limited by the cap.

"Severely injured victims with more than $350,000 in noneconomic damages receive only part of their damages; less severely injured victims with $350,000 or less in noneconomic damages receive their full damages," Abrahamson wrote. "[T]he burden of the cap falls entirely on the most seriously injured victims of medical malpractice."

Also, because the total noneconomic damages "may not exceed the $350,000 limit for each occurrence, the total award for a patient's claim for noneconomic damages . . . and the claims of the patient's spouse, minor children, or parents for loss of society and companionship cannot exceed $350,000," the court held.

The constitution guarantees the right to a jury trial, "and there can be no more important aspect of a jury decision than the assessment of damages," said Merrick Domnitz, who delivered the oral argument for Ferdon. "While it is true that noneconomic damages, such as pain and suffering, are not susceptible to exact calculation, it is that exact fact that makes them perfect for a jury to determine."

Domnitz also pointed out that the cap made an unconstitutional distinction between people injured by medical malpractice and those harmed by other tortious conduct. "If my doctor runs me over with his car," damages are unlimited, he said. "But if that same doctor, utilizing a license to practice medicine . . . , visits the same injury upon me in the operating room, my noneconomic damages were, until Ferdon, limited to $350,000."

The court referred to a recent report by the Wisconsin Commissioner of Insurance on the impact of the 1995 act that adopted the cap, citing the report's statement that "no direct correlation can be drawn between the caps enacted in 1995 and current rate changes taking place in the primary market today."

In a dissenting opinion, Justice David Prosser suggested that the majority had misinterpreted the commissioner's report. "Upon reviewing validly enacted legislative acts, the court is supposed to recognize that it is the legislature's function, not the court's, to evaluate studies and reports," he wrote.

Justice N. Patrick Crooks, in a concurring opinion, left open the possibility that damages caps might be constitutional under certain circumstances: "[T]here must be a rational basis so that the legislative objectives provide legitimate justification, and the cap must not be set so low as to defeat the rights of Wisconsin citizens to jury trials and to legal remedies for wrongs inflicted for which there should be redress."

Crooks wrote that the legislature's history of setting caps "demonstrates arbitrariness and leads to a conclusion that a rational basis justifying the present cap was, and is, lacking." In the last 20 years, the state has gone from having no cap, to a cap of $1 million, to no cap, and then to the $350,000 cap.

Caps are "artificial creations of legislators led astray by the monied interests of the insurance industry," Domnitz said. "To blame the rising costs of health care on the malpractice system is to suggest that the tail wags not only the dog but his cousin the elephant as well." He noted that in the 10 years the cap was in place, only nine jury verdicts exceeded it.

After the Ferdon ruling, "lawyers can take on meritorious cases that may have earlier been rejected because the cap would dictate that the bottom-line recovery for the injured party would not justify the stress and the risk and the expense of what is always difficult litigation," Domnitz said. "In Wisconsin, health care providers win approximately 85 percent to 90 percent of the cases that go to trial."

The decision "is likely to have significant gravitational pull in other jurisdictions," said Robert Peck, president of the Center for Constitutional Litigation in Washington, D.C. "It focuses attention on the real effect of damages caps: making the most catastrophically injured victims of medical malpractice subsidize still-profitable insurers."

"As these unconstitutional caps are struck down state by state," Domnitz said, "and the public and the media begin to take note that there is little or no appreciable effect on the cost, the quality, or the availability of quality health care in America, our society will have taken a giant step toward the return of reason and constitutionality."

-Allison Torres Burtka