California Supreme Court to Review Malpractice Cap Law Again

December 12, 2014

California's $250,000 cap on noneconomic damages in medical malpractice cases, designed to deter frivolous lawsuits and prevent excessive jury awards, faces a new threat after surviving one roughly a month ago.

On November 25, the California Supreme Court agreed to hear a case challenging the 1975 law called the Medical Injury Compensation Reform Act (MICRA). California physicians enamored with MICRA have reason to worry: Similar laws in eight other states have not survived high court scrutiny.

The decision by California's supreme court to review MICRA came on the heels of an unsuccessful effort to weaken the law at the polls. On November 4, California voters defeated a ballot proposition that, among other things, would have adjusted the $250,000 cap to account for inflation since the law's passage, boosting it to $1.1 million.

Supporters of the ballot measure, primarily trial lawyers, made the same argument that the plaintiffs in the state supreme court are mounting: The cap on compensation for pain and suffering, they contend, violates the constitutional right to a trial by jury, which should have the power to set these noneconomic damages.

MICRA critics also said that the law penalizes victims of malpractice who have little if any lost wages they can recover as economic damages. These parties, which include children, seniors, and minimum wage workers, are unlikely to find a lawyer to take their not-so-frivolous cases when all they can hope to receive is $250,000 for pain and suffering, the argument goes.

MICRA supporters won at the ballot box with their message that increasing the cap to $1.1 million would encourage more lawsuits and boost healthcare costs through higher jury awards and malpractice premiums, along with more defensive medicine, an argument disputed by some legal experts. Measured by dollars, their message was louder than that of their opponents. An alliance of pro-MICRA groups, which included the California Medical Association (CMA) and the state hospital association, spent almost $54 million in 2014 (through October 18) to defeat the ballot measure compared with almost $8 million in campaign expenditures by ballot backers.

Table 1. Will California Join the Malpractice Cap Graveyard?

States Where State Supreme Courts Have Overturned Limits on Noneconomic Damages Size of Cap Year of State Supreme Court Decision
Florida $500,000a 2014
Missouri $350,000 2012
Georgia $350,000 2010
Illinois $500,000 2010
Alabama $400,000 2003
Oregon $500,000 1999
Washington Sliding scale 1989
New Hampshire $875,000 1980, 1991

aPer claimant. Maximum of $1 million under certain circumstances.

Source: American Medical Association

Physician Found Negligent in Paraplegic Case

The California Supreme Court will hear pro and con arguments on MICRA when it considers the 11-year-old malpractice case of Hughes v. Pham.

In November 2003, Trent Hughes injured his spinal cord while driving an off-road vehicle in the desert, according to a case summary by a California appellate court. He experienced severe back pain and could not move his feet. Hughes was helicoptered to a hospital in Palm Springs, California, where he was seen by Christopher Pham, DO, the neurosurgeon on call. Dr Pham waited 2 days until he operated on Hughes. Court records state that Dr Pham justified the delay with the belief that Hughes would become a paraplegic regardless of the surgery's timing, even though his patient was still moving his legs when he arrived at the hospital.

Hughes did become a paraplegic, losing bladder, bowel, and sexual function in the process. He sued the hospital and Dr Pham in a state district court, arguing that prompter surgery would have prevented his injury from progressing irreversibly as far as it did. His wife Lisa Hughes sued for lack of consortium. The couple settled with the hospital for $3 million, leaving Dr Pham as the sole defendant.

A jury ruled in favor of the Hughes. It awarded $4.6 million in economic damages and $2.8 million in noneconomic damages to Trent Hughes and $1 million in noneconomic damages to his wife. In accordance with MICRA, the judge reduced each party's noneconomic damages to $250,000.

The Hughes' appealed the judge's action to a state appeals court, which upheld the lower court's enforcement of MICRA. The Hughes then took their case one level higher to the state supreme court.

It is not the first time California's high court has deliberated on MICRA. In 1985, the court upheld the law in another malpractice case in which noneconomic damages were whittled down to $250,000. The court ruled that the California General Assembly has the power to limit civil damages as long as its action "is rationally related to a legitimate state interest." In the case of MICRA, the court said, lawmakers were trying to reverse the rising cost of malpractice insurance, which was threatening to curtail the availability of medical care in the mid-1970s. In the face of sky-high premiums, many physicians thought they would be forced to raise their fees, move out of state, quit the profession, or practice without insurance, according to a history of MICRA on the CMA website.

A Convoluted Path Forward

California is among 29 states that cap noneconomic or total damages in medical malpractice suits, according to the American Medical Association. In some of those states, the courts had struck down a cap as unconstitutional, only for lawmakers to pass a new bill.

In eight states, however, supreme courts have overturned damage caps, and those rulings remain in effect. The latest state to flip this way is Florida, which did so earlier this year.

The path toward a decision in Hughes v. Pham in the California Supreme Court is convoluted. Before it hears that case, the court will rule in another MICRA case — Rashidi v. Moser — on the matter of reconciling a pretrial settlement made by one malpractice defendant and a jury award against another defendant. Specifically, should the portion of the settlement attributable to noneconomic damages offset, and thus reduce, what the jury awarded in noneconomic damages?

Valerie Nannery, the attorney for Trent Hughes, told Medscape Medical News that her client's case poses that same question, because the $3 million pretrial settlement with the hospital factored into the final court-awarded damages. In addition, her clients are asserting two constitutional claims: that MICRA usurps a jury's role in setting damages and that it violates the separation of powers by allowing lawmakers to make judicial decisions.

The California Supreme Court, Nannery said, could send the Hughes case back to the appellate level for reconsideration in light of its ruling in Rashidi. There are two other possibilities: the court could dismiss the Hughes case after its Rashidi decision, or it could review the constitutional questions raised by her client.

CMA spokesperson Molly Weedn told Medscape Medical News that the California Supreme Court is focused on the pretrial settlement issue in Hughes and "has not expressly agreed to review MICRA's constitutionality."

"Time and time again, the courts have upheld the constitutionality of the [MICRA] cap on noneconomic damages, including in the case of Hughes v. Pham," Weedn said.

Nannery counters that the high court did not expressly say what it would not review in Hughes v. Pham, either.

"The court could have denied review of the constitutional issues, as it did in the Rashidi case, but it did not do that," Nannery said. "We are hopeful that the court will order briefing on these critically important constitutional issues that the court has never addressed."

Nora Engstrom, a professor at the Stanford Law School in California who specializes in tort law, said she cannot predict what her state supreme court will do in Hughes v. Pham. However, Engstrom, who favors either repealing or relaxing the $250,000 cap, has an opinion on what the court ought to do.

"A strong claim can be made that the question of MICRA's compatibility with California's right-to-trial provisions merits careful consideration, and a clear answer, by the state's highest court," Engstrom told Medscape Medical News.

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