On The Case

Damages caps in medical cases do not lower costs, improve care: Wisconsin appeals court

(Reuters) - On Wednesday, an intermediate appeals court in Milwaukee ruled that Wisconsin’s $750,000 cap on non-economic damages in medical practice suits is unconstitutional because it denies catastrophically injured patients equal protection. The opinion, written by Judge Joan Kessler for a panel that also included Judges Kitty Brennan and William Brash, upholds a jury award of $16.5 million to Ascaris Mayo and her husband, Antonio, Mayo lost all of her limbs to a septic infection that, according to the jury, her emergency room doctor and physician’s assistant diagnosed but failed to warn her about.

The appeals court could have concluded just that the state’s 15-year-old damages cap was unconstitutional as it applied to the Mayos, who have suffered grievously from – and responded courageously to – shortcomings in the health care Ascaris received. (That is, in fact, how Judge Brash said he would have decided the case.)

But the majority looked back at the Wisconsin legislature’s justifications for the damages cap, which was enacted in 2005, after the state Supreme Court struck down a previous $350,000 cap as unconstitutional. The appeals court found insufficient evidence that the $750,000 cap has accomplished what lawmakers intended. So even under the lenient rational basis standard of review, the majority said, there’s simply no good policy justification for a law that effectively punishes the most severely injured patients in Wisconsin.

That analysis, of course, contradicts conventional tort reform wisdom, which holds that capping medical malpractice damages will ultimately improve health care by insulating doctors and lowering costs associated with “defensive” treatment. Just last month, the U.S. House of Representatives passed a bill to cap damages for pain and suffering at just $250,000 in cases involving healthcare provided or subsidized by the federal government.

The rationale for such caps, as the Wisconsin decision explained, is multipronged. Limiting exposure to malpractice damages awards is supposed to improve access to health care by encouraging doctors to stay in the state. Caps presumably provide predictability, reducing insurance risk and allowing insurers to charge lower malpractice premiums. And patients supposedly benefit because doctors aren’t frightened into ordering unnecessary tests and procedures merely to protect themselves from frivolous malpractice claims.

The Wisconsin legislature specified those goals when it enacted the $750,000 cap, citing a plethora of studies suggesting the restriction would resolve a purported crisis in medical malpractice litigation. Appellate briefs in the Mayo case from the Wisconsin Patients Compensation Fund (a trust that pay settlements and judgments exceeding defendants’ primary malpractice insurance limits) and the state’s hospitals and physicians argued that the cap has accomplished exactly what lawmakers intended.

The appellate majority disagreed. “The record before us does not support a finding that the legislative objectives … are promoted in any way because the amount of the noneconomic damages cap is $750,000,” the court said. There is “no demonstrably consistent” proof that doctors are likelier to continue practicing in states with damages caps, the opinion said. In fact, according to the opinion, “Data demonstrates that many states with no caps on noneconomic damages actually have higher physician retention rates than Wisconsin.”

Data also indicate, according to the opinion, that non-economic damages caps “may actually increase the risk to patient safety,” rather than improving care by obviating “defensive” medicine. Besides, the majority said, medical professionals in Wisconsin already know they’re exposed only to the limits of their insurance coverage, since the state fund covers judgments exceeding the limits of their insurance. “This lack of uninsured personal liability would logically appear to remove any incentive to practice ‘defensive medicine,’” the appeals court said. “The evidence in the record does not rationally support the conclusion that the cap reduces defensive medicine costs.”

Moreover, the opinion suggested, there’s just no indication of an ongoing medical malpractice crisis in Wisconsin. After a 2013 uptick in malpractice suits, attributable to a spate of claims against a pediatrician accused of sexually abusing patients, there were only 84 cases filed in state court in 2014, according to an amicus brief in the Mayo case from the Wisconsin Association for Justice. The amicus brief pointed out that in 2014, Florida’s Supreme Court struck down a similar damages cap in McCall v. United States, after concluding that if there was ever a tidal wave of malpractice litigation, it has subsided.

The message of both the 2014 Florida decision and Tuesday’s ruling from Wisconsin is that damages caps place the burden of solving a probably illusory problem on the already bowed shoulders of horrendously injured patients – those so severely injured that judges and juries believe they deserve hundreds of thousands of dollars in compensation for their pain and suffering. I sure hope the U.S. Senate considers these decisions before it votes on the House bill to cap malpractice damages.

I left phone messages for the Mayos’ lawyer, Daniel Rottier of Habush Habush & Rottier, and the fund’s lawyer, Roisin Bell of Bell Giftos St. John, but didn’t hear back.