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Supreme Court Knocks Down Caps on Noneconomic Damages: What to do now?


Controversy swirled when the Florida Supreme Court ruled last month that the law limiting pain-and-suffering damages in medical malpractice cases is unconstitutional, effectively rejecting a debated change that lawmakers and then-Gov. Jeb Bush approved 14 years ago.

Jessica Hoehn of Danna-Gracey, the largest independent medical malpractice insurer in Florida, called the decision "the final nail in the coffin of tort reforms enacted in 2003."

"This Court action will hasten the anticipated hardening of the marketplace and doctors are sure to see higher prices for their coverage and fewer insurers bidding on their medical insurance (soon)," she said.

Justices were deeply divided on the ruling in the Broward County Case, with the four-member majority comprised of Chief Justice Jorge Labarga and Justices Barbara Pariente, R. Fred Lewis and Peggy Quince finding that caps on noneconomic damages violated equal-protection rights. They also disputed the notion that a malpractice insurance crisis exists.

"We conclude that the caps on noneconomic damages ... arbitrarily reduce damage awards for plaintiffs who suffer the most drastic injuries," they wrote. "We further conclude that because there is no evidence of a continuing medical malpractice insurance crisis justifying the arbitrary and invidious discrimination between medical malpractice victims, there is no rational relationship between the personal injury noneconomic damage caps ... and alleviating this purported crisis. Therefore, we hold that the caps on personal injury noneconomic damages ... violate the Equal Protection Clause of the Florida Constitution."

In the decision, dissenting justices Ricky Polston, Charles Canady and Alan Lawson balked at the majority overstepping its role. "It is the legislature's task to decide whether a medical malpractice crisis exists, whether a medical malpractice crisis has abated, and whether the Florida statutes should be amended accordingly," they wrote.

At the center of the much-debated case is dental assistant Susan Kalitan, who entered surgery in 2007 for carpal-tunnel syndrome and departed with a perforated esophagus resulting from tubes inserted into her mouth and esophagus during the administration of anesthesia. The 2008 lawsuit against the North Broward Hospital District and other defendants resulted in a jury award of $4 million in noneconomic damages. The amount was reduced to $2 million, based on caps in the law approved by state lawmakers and then-Gov. Jeb Bush in 2003.

Brian C. Lamb, a personal injury attorney with Martinez Manglardi PA, in Orlando, said "the net effect of the recent Supreme Court decision is ... nothing."

"This decision was based on two areas of reasoning," he explained. "First, the way the caps were defined in the statute, survivors in a wrongful death action in the same position could get radically different results based simply on the number of survivors that the victim of medical malpractice left behind. If they only had one survivor, that individual could get up to $1 million. If they had 10 survivors, then each individual would be limited to $100,000. The results were illogical under the cap and didn't treat all survivors equally. The Court held that this illogical unequal treatment of similarly situated survivors was unconstitutional."

Secondly, Lamb continued, the Court delved into great detail to review the reason for the caps.

"They determined that the caps were an inadequate way to address the crisis ... and the purpose of the cap statute wasn't rationally related to the stated purpose, to make medical malpractice insurance more affordable," he said. "The Court could find no empirical evidence that the caps had any effect in reducing the cost of medical malpractice insurance.

"Given the dual result of unfair treatment of similarly situated survivors and the fact that there was no relation between the caps and the cost of malpractice insurance, the Court struck down this limit on noneconomic damages in wrongful death cases."

In his dissent, Polston focused on what's typically referenced as "a rational basis test."

"Importantly, under the proper rational basis test, it is immaterial that the majority of this Court disagrees with the Legislature's evidence regarding whether there was a medical malpractice crisis in Florida," he wrote. "It is also immaterial that a majority of this Court questions whether the Legislature's policy choice of enacting a cap on noneconomic damages has resulted in insurance companies passing along savings to their physician customers."

Robert E. White Jr., senior vice president and regional operating officer of The Doctors Company in Jacksonville, noted the Court decision was mum on the constitutionality of the cap concerning non-wrongful death cases.

"This decision will significantly affect the tort climate in Florida, and it's expected that it will increase the frequency and severity of claims," he said.

Susan St. John, an attorney with Florida Healthcare Law Firm in Tallahassee, warned that medical malpractice insurance premiums "will climb fast now that damage award limits are off."

"It will be critical to re-evaluate medical malpractice coverage to ensure coverage is adequate," she emphasized. "Keep in mind that medical malpractice insurance may pay out the upper end of liability insurance. However, this may not fully satisfy a judgment entered by a court against a healthcare provider, business or entity. Unsatisfied judgments against an individual or entity will remain recorded in public records until satisfied."

Dan Reale, owner of Aviso Insurance LLC in Ruskin, said the Supreme Court's decision will further pressure insurers.

"Malpractice insurers have reported flat or negative earnings over the past few years, but held off from raising premium rates to maintain business volume," he explained,

pointing out that physicians are paying approximately 50 percent less in premiums than a decade ago. "We'll likely see smaller malpractice insurers fold, or be acquired by more established malpractice insurers who have weathered severe market changes."

5 Steps to Take Now
With more plaintiff attorneys returning their focus to medical malpractice cases because of the Florida Supreme Court's ruling on the 2008 Broward County case, doctors may need to consider revisiting ways to reduce risk in their medical practice.

  • Review insurance coverage and determine if the insurer is financially secure enough to last through some years of deteriorating financial results. "I predict many of the A.M. Best unrated insurers and small risk retention groups (RRGs) will fail in the next five years or be forced to sell to the larger insurers," said Jessica Hoehn of Danna-Gracey. "For those insured with captives and assessable RRGs, I recommend you seriously now consider switching coverage to the more financially stable carriers."

  • Consider increasing policy limits of liability since there are now no limits on noneconomic damages that can be awarded in Florida.
  • Get serious about risk management. "It works! Many insurers offer for free very comprehensive in-office assessments
    and a wide array of best practice recommendations, as well as astute articles on cutting edge ways to reduce your risk of being sued," she said.

  • Polish communication skills. "Poor skills lead to unhappy patients and lawsuits,' said Hoehn. "Remember that patients don't care how much you know until they know how much you care, as Sir William Osler so wisely said."

  • Review and update asset protection now, not after a lawsuit has been filed.
Source: Jessica Hoehn of Danna-Gracey, the largest medical malpractice insurance agency in Florida

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