Unconstitutional BY CAROL J. MILLER 1 & JOSEPH WEIDHAAS 2. Carol J. Miller Missouri State University. Joseph Weidhaas Johnson, Vorhees & Martucci

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1 Medical Malpractice Non Unconstitutional BY CAROL J. MILLER 1 & JOSEPH WEIDHAAS 2 Carol J. Miller Missouri State University Joseph Weidhaas Johnson, Vorhees & Martucci The constitutionality and efficacy of medical malpractice damage caps has been a subject of controversy for many years. In 2012, the Supreme Court of Missouri struck down the cap on noneconomic damages in medical malpractice claims in Watts v. Lester E. Cox Medical Centers 3 because the cap violated the right to trial by jury protected by the Missouri Constitution. 4 This article first recognizes the adoption of med-mal caps, explores the evolution of constitutional arguments regarding med-mal caps, and then finally discusses whether a rational basis exists for the caps and whether the caps otherwise constitute good public policy. Caps on Noneconomic Damages in Missouri Caps on noneconomic damages 5 have existed in more than half the states. 6 Noneconomic damages are defined under Missouri law as damages arising from nonpecuniary harm including, without limitation, pain, suffering, mental anguish, inconvenience, physical impairment, disfigurement, loss of capacity to enjoy life, and loss of consortium[.] 7 The Missouri legislature first adopted medical malpractice noneconomic damage caps in 1986 and significantly amended the application of those caps in 2005 as part of a tort reform movement that limited the options and damages available to injured plaintiffs. In 1986, the Missouri legislature placed a cap on medical malpractice noneconomic damages at $350, The cap was originally adjusted for inflation and per occurrence. 9 The inflation-adjusted cap in 2005 was $579, In 2005, the cap was amended to reinstate the original $350,000 amount as a hard cap with no inflation adjustment and without regard to the number of occurrences of malpractice or number of defendants. 11 The practical effect of the 2005 amendment was to reduce the cap amount by 40 percent relative to the buying power of 2005-adjusted dollars. 12 Before the 2005 amendments, 13 the cap applied per defendant 14 instead of per injury. Since 2005, the single cap has protected any individual or entity, or their employees or agents that provide, refer, coordinate, consult upon, or arrange for delivery of health care services[.] 15 Respondeat superior was modified to extend only to the health care provider s employees and not to other agents in medical negligence cases. 16 The 2005 cap also instituted the one cap regardless of the number of acts of negligence, 17 rather than a cap per occurrence (as had been the case before 2005). 18 Furthermore, a spouse did not get a separate cap for consortium. 19 When these modifications on the noneconomic cap and punitive damage caps 20 are coupled with other 344 / Journal of the MISSOURI BAR

2 economic Caps factors that allow introduction of evidence that alters the calculation of economic damages, 21 the typical result is a substantial reduction in damages recoverable by persons injured by medical negligence. Challenges to Constitutionality of Medical Malpractice Caps on Noneconomic Damages Noneconomic caps have been challenged principally on six grounds: (1) access to courts, 22 (2) right to trial by jury, 23 (3) due process, 24 (4) separation of powers, 25 (5) privileges and immunities, 26 and (6) equal rights and opportunities. 27 Access to the courts is guaranteed in Missouri Constitution art. 1, 14, which provides: That the courts of justice shall be open to every person, and certain remedy afforded for every injury to person, property or character, and that right and justice shall be administered without sale, denial or delay. In the 1979 case of State ex rel. Cardinal Glennon Memorial Hospital v. Gaertner, 28 the Supreme Court of Missouri struck down a pretrial procedure requiring the plaintiff to submit the claim to a professional liability review board prior to filing. The first major challenge to noneconomic damage med-mal caps occurred in Adams v. Children s Mercy Hospital in The Adams 30 Court characterized the noneconomic damage cap as permissible modification of the common law rather than a procedural barrier to access to the courts. 31 In so ruling, the Court held that this constitutional provision does not guarantee that common law [rights] will remain immune from legislative [statutory] limitation. 32 Adams applied a rational basis test, concluding that the legislature could rationally believe that the cap on noneconomic damages would work to reduce the aggregate... damages awards... and, thereby reduce malpractice insurance premiums paid by health care providers. 33 While the Adams Court 34 acknowledged that the Missouri Constitution provides that the right of trial by jury as heretofore enjoyed shall remain inviolate, 35 it held that the jury completed its constitutional task when it assessed liability and then determined damages. 36 Since the cap was not applied until after the jury has completed its constitutional task, the cap did not infringe upon the right to a jury trial. 37 In short, the Court held a plaintiff had the right to a jury determination of damages, but not a right to the actual jury award because the jury s determination could be reduced by an arbitrary cap. Watts v. Lester E. Cox Medical Centers 38 was the definitive challenge to the cap on noneconomic damages in medical malpractice cases in In Watts, the Supreme Court of Missouri struck down s medical malpractice noneconomic damage caps for violating the Missouri Constitution s right to trial by jury. 39 The Court overruled Adams to the extent that it holds that the section caps on noneconomic damages do not violate the right to trial by jury. 40 November-December 2013 / 345

3 Naython Watts was born with [disabling] brain injuries 41 that subjected him to seizures and still inhibited him from feeding and caring for himself as a 6-year-old child. A malpractice action was filed against the hospital and doctors for negligent prenatal care and delivery. 42 The jury returned a verdict of $4.8 million that included $1.45 million in noneconomic damages. 43 In accordance with , the trial court reduced the noneconomic damages to $350, Watts appealed, arguing that the cap on noneconomic damages violated several provisions of the Missouri Constitution, including the right to trial by jury. 45 In striking down the cap on noneconomic damages, the Supreme Court of Missouri took an originalist s view of the rights guaranteed under the Missouri Constitution. In a 4-to- 3 decision written by Chief Justice Richard Teitelman, 46 the Court concluded that there was no history of damage caps at the time the trial by jury guarantee was included in the Missouri Constitution and that the constitutionality of caps cannot be inferred from the checkered case history regarding judicial remittitur. 47 The Court held that the cap on noneconomic damages in medical malpractice cases was: unconstitutional to the extent that it infringes on the jury s constitutionally protected purpose of determining the amount of damages sustained by an injured party. Such a limitation was not permitted at common law when Missouri s constitution first was adopted in 1820 and, therefore, violates the right to trial by jury guaranteed by article I, section 22(a) of the Missouri Constitution. 48 This section of the Constitution provides that the right of trial by jury as heretofore enjoyed shall remain inviolate. 49 Blackstone s Commentaries recognized medical negligence and noneconomic damages as part of the common law of England; and Missouri s territorial laws at the time Missouri joined the Union extended jury trials to all civil cases of more than $ The Court concluded that since a plaintiff was entitled to a jury trial for noneconomic damages in a medical negligence claim in 1820, the plaintiff is entitled to a jury trial today. 51 Because the right is inviolate, it should be pure or free from change that blemishes the right, so imposition of a statutory cap would be unconstitutional. 52 Watts cited similar conclusions in Alabama, Florida, Oregon and Washington. 53 The Washington Court held that when you start to put limitations on [the jury s ability to find damages], you have, in fact, invaded the province of the jury and have not preserved the right to a trial by jury inviolate. 54 The majority concluded that the reasoning in Adams was flawed because the decision: (1) misconstrue[d] the nature of the right to trial by jury[,] (2) allowed a legislative limitation on damage caps that was an impermissible legislative alteration of the Constitution[,] (3) misapplied the federal civil penalty analysis of Tull v. United States 55 to state common law damages, and (4) failed to distinguish Virginia s constitutional language from Missouri s in holding that the right to trial by jury was not compromised by damage caps. 56 To allow the jury to assess damages and then to cap those damages pays lip service to the form of the jury but robs it of its function. 57 Judge Mary Russell s dissenting opinion in Watts viewed the majority s rejection of the cap as a wholesale departure from the unequivocal law of this state and leaps into a new era of law. 58 From her perspective, the Court impermissibly secondguessed whether damages caps are good policy (the province of the legislature). 59 She concluded that [t]he right to jury trial does not limit the legislature s authority to determine what the elements of damages shall be. 60 Furthermore, she paralleled constitutional language in Nebraska, Idaho, Ohio and Maryland, where courts have upheld statutory damage caps (using reasoning similar to Adams) despite constitutional language holding the right to trial by jury inviolate. 61 Vestiges of the med-mal cap may remain in Missouri, however, to the extent that an earlier 2012 decision in Sanders v. Ahmed 62 still applies the cap to wrongful death suits. In a 5-2 decision, the Supreme Court of Missouri upheld the constitutionality of the cap on noneconomic damages, reasoning that the cap on a statutorilycreated claim such as a wrongful death claim was constitutional because the General Assembly may create causes of action and prescribe their remedies. 63 Rather than addressing the broader issue of the constitutionality of the caps generally, Sanders concluded that [t]he legislature has the power to define the remedy available if it creates the cause of action. 64 Judge George Draper III dissented in Sanders, foretelling the result in Watts. The dissent reasoned that because [t]he Missouri Constitution states, [t]hat the right of trial by jury as heretofore enjoyed shall remain inviolate and inviolate means unchanged, it was impossible for the right to a trial by jury to remain inviolate when a statutory limit requires the reduction of the jury s verdict regardless of the particularized 346 / Journal of the MISSOURI BAR

4 facts of each case. 65 Judge Draper believed the constitutional right to trial by jury applies to all civil actions, irrespective of whether they originate in common law or are created by the legislature. 66 Watts did not expressly overrule Sanders. To treat similarly situated claims differently based on whether the injured party survives, however, raises an equal protection clause argument. The substance of the malpractice allegation is the same, except that death is a more severe consequence. The next constitutional challenge may address whether the legislature can abolish a common law right to which the fundamental, inviolate right to trial by jury attaches. The 2013 failed legislative attempt in House Bill 112 would have abolished common law medical malpractice suits by modifying the language of 1.010, RSMo, and then substituted a statutory cause of action for malpractice claims against medical providers. 67 Proponents believed that the Sanders rationale would allow them to reinstate the $350,000 noneconomic damage cap on the new statutory medical malpractice cause of action. St. Louis University Law School Dean and former Supreme Court Chief Justice Michael Wolff averred that such bills have an uphill climb as far as the constitution s concerned. 68 If the legislature can retroactively abolish this common law right to bring a medical malpractice claim, other fundamental rights guaranteed in the Missouri Constitution could be similarly jeopardized. Alternative Approaches to the Medical Malpractice Problem At least 35 states have some limitations on malpractice damages[,] of which have capped noneconomic damages in med-mal cases. 70 Challenges to the constitutionality of such caps have met with varying results. States striking down medical malpractice caps include Missouri, Alabama, Georgia, Illinois, New Hampshire, North Dakota, 71 Oregon, 72 Washington and Wisconsin. 73 Such caps have been upheld in California, Colorado, Florida, Idaho, Indiana, Kansas, Louisiana, Maryland, Michigan, Nebraska, New Mexico, Ohio, South Dakota, Texas, Virginia, and West Virginia. 74 Approaches have varied from state to state, as legislatures (and courts) have tried to reduce medical malpractice litigation, halt the rise in health care insurance premiums, and minimize liability for health care providers. Strategies have also included abrogating the collateral source rule, shortening statutes of limitations, imposing limitations on attorneys fees, requiring greater specificity in jury verdicts, modifying res ipsa loquitur rules, altering common law claims, and even tightening medical licensing standards. 75 Some states and providers attempt to deny access to courts with arbitration provisions. 76 An Obama administration proposal that would limit or immunize malpractice liability exposure of doctors who follow clinical practice guidelines has been criticized in part because guidelines developed by insurers may be more likely to place insurers interests ahead of good patient care. 77 Missouri has adopted various approaches to limit malpractice claims or restrict damages. More than 30 years ago, the Supreme Court of Missouri struck down screening panels (as a prerequisite to access to the courts) for violating the injured party s right to access the courts. 78 Missouri presently requires a health care affidavit specifying that a qualified health care provider acknowledges that the sued provider failed to provide reasonable care and that such failure was a cause of the damages asserted in the lawsuit. 79 A single cap applies per injury, rather than per defendant with 2005 reform. 80 In Watts, the Supreme Court of Missouri upheld statutory provisions allowing periodic payments of future damages owed, but remanded the case for a reevaluation of what portion of the damages should be as a lump sum and what portion could be periodic. 81 Several unsuccessful measures were introduced in the Missouri legislature s 2013 session to counter the Watts decision. A House Joint Resolution would have amended Missouri s Constitution to cap noneconomic damages in medical malpractice cases at $350,000, subject to voter approval. 82 Although pain and suffering are difficult to quantify because they cannot be measured precisely, another legislative proposal would have increased the burden of proof on plaintiffs seeking noneconomic damages to a clear and convincing standard. 83 Another House bill purported to abolish common law medical malpractice claims and replace them with a statutory cause of action against health care providers, 84 after which statutory limits on damages would be imposed. The legislature has continued to adopt forfeiture of noneconomic damages in other contexts (such as recovery by an uninsured motorist). 85 A Medical Malpractice Problem, Not a Litigation Problem As a result of medical malpractice, an estimated 250,000 people die nationally every year. 86 Half of those deaths are due to emergency room errors. 87 Some research suggests that [as high as] one-fourth of patients have adverse events from hospital visits. 88 Ten years ago, the nonpartisan Congressional Budget Office estimated that 181,000 November-December 2013 / 347

5 severe injuries [attributable to medical negligence] occurred in U.S. hospitals[,] 89 so it appears that the problem has become worse during the past decade as numerous measures have impeded recovery by injured parties. 90 In Missouri, nearly one-third of malpractice claims involve surgical errors, followed by 18.7 percent based on allegations of improper or untimely diagnosis, and 13.2 percent involving falls or injuries during transport. 91 Since one-third of claims allege surgical errors, and doctors are more likely to make such errors in the late hours of a long shift, 92 operating room scheduling that forces doctors to operate in excessively long shifts jeopardizes good medical care (even if it helps with efficiency of hospital operations). Johns Hopkins patient safety researchers estimate that surgeons in the United States leave foreign objects such as a sponge or a towel inside a patient s body after an operation 39 times a week, perform the wrong procedure on a patient 20 times a week, and operate on the wrong body site 20 times a week. 93 Improvements in medical practices could reduce the incidents that lead to medical malpractice claims. Better training and supervision of medical residents, better reporting of errors with mandatory reporting requirements, better shift transfer protocols, and imposition of meaningful penalties on doctors who engage in unsafe medical practices are necessary to bring down the incidents of medical malpractice. 94 The Obama administration is testing a prototype for a national mechanism for patients to report medical mistakes and unsafe medical practices, 95 although the doctor-specific Public Use File of the National Practitioner Data Bank (the database of doctor malpractice and disciplinary cases that was created in 1986) has been pulled off the Web. 96 Citing a National Association of Insurance Commissioners study, the American Medical Association found that indemnity losses nationally in 2011 were $3.6 billion and defense costs were $2.5 billion. 97 According to the Physician Insurers Association of America, the median indemnity payment on settled claims was $187, According to the Missouri Department of Insurance, Financial Institutions & Professional Registration (DIFP) Medical Malpractice Report, the median payment in a med-mal claim in Missouri since 2005 is about $100, The average award per claimant was $248,422 in 2011, 100 however, due primarily to two large awards of $9.6 million. Large damage awards are most likely in claims where the injury involves: quadriplegia ($1.9 million), failure to diagnose or treat meningitis ($2.3 million), cerebral palsy ($1.6 million), and paraplegia ($1 million). 101 DIFP data concludes that only a small percent of people harmed by medical malpractice incidents make claims. 102 In 2011, the number of pending claims reached a low of 1,822, with only 1,572 new claims reported. 103 Of the pending claims that were eventually paid in 2011, 99.4 percent were settled before trial, with the remaining resolved in a plaintiff s favor after a trial. 104 Data from the DIFP showed that very few medical malpractice cases are tried. Of those, there were few cases where jury awards exceeded the cap; jury verdicts greater than the cap primarily involved the most severely harmed malpractice victims. The total number decreased from 723 in 2007 to 511 in 2011 (a nearly one-third decline) for claims resulting in payments. 105 The small number and size of most awards is at odds with the argument that large medical malpractice damage verdicts are a major reason for the rise in health care costs or premiums in Missouri. In the following table, the DIFP 2011 Medical Malpractice Report illustrates the annual number of medical malpractice trials and the average noneconomic damages awards: 106 Caps proponents believe that too many medical malpractice claims are frivolous, pointing to the statistics showing that only 154 judgments were entered for the plaintiffs following a trial in Missouri in medical malpractice cases between 2003 and the end of 2011, compared to 703 defense verdicts. 108 The 18 percent verdict in favor of the injured party in Missouri is higher than the 10 percent national average. Harvard researchers concluded that 348 / Journal of the MISSOURI BAR

6 portraits of a malpractice system that is stricken with frivolous litigation are overblown. 109 Studies by other academics generally concede that there is no evidence indicating [frivolous suits] are a serious problem, especially since 85 percent of judges do not believe that frivolous suits are a serious problem. 110 A key reason why frivolous suits are unlikely is because of the high costs of bringing a meritless claim. Plaintiffs lawyers work on contingency fees and advance expenses in their cases and, thus, have very little incentive to take on weak cases, 111 especially since costs of losing cases cannot be recouped. 112 Studies show that plaintiffs lawyers concentrating in medical malpractice routinely reject 80 percent or more of the requests for representation they receive. 113 One study that evaluated how medical malpractice plaintiffs attorneys screen cases concluded that: Cases with modest expected damages (less than $50,000) or an imminent or expired statute of limitations were declined routinely. 114 With damage caps in place, it makes it more difficult for attorneys to afford to take legitimate cases, as not only is the potential award automatically reduced, but the economic damages may not be high enough to exceed the expected value of the case (keeping in mind the cost of litigation). 115 An affidavit of merit is an additional procedural safeguard that protects against frivolous malpractice cases in Missouri. Within 90 days of filing a petition, the affidavit filed with the court must state that there is a written opinion of a qualified health care provider maintaining that the defendant health care provider failed to use such care as a reasonably prudent and careful health care provider would have under similar circumstances and that such failure was a cause of the plaintiff s damages. 116 Cases are regularly reviewed by independent physicianexperts to assess the merits of the case before a suit is filed. Many requests for representation [are] rejected when the reviews [come] in. 117 Although cap proponents argue that the loss of caps will cause doctors to flee the state in reaction to Watts, and that health care costs will rise, doctors in Missouri increased from 19,260 in 1997 to 21,249 in before the more stringent features of damage caps were adopted. In 2003, the U.S. Government Accountability Office released a study concluding that many of the reported provider actions [of reducing services] were not substantiated or did not affect access to health care on a widespread basis. 119 By 2012 the number of licensed physicians in Missouri increased to 23,337, 120 but studies have not attributed that slow but steady increase to medical malpractice reform. Fears that doctors flee states lacking caps on medical malpractice noneconomic damages are unfounded. Texas adopted a $250,000 cap on noneconomic claims in The pre- and post- Hyman Study reported in the Social Science Research Network concluded that although the raw number of physicians increased after caps were imposed (primarily in the immediate aftermath of Hurricane Katrina), the rate of increase in Texas of active, direct patient care physicians per capita was actually lower after caps were implemented. Professor-authors from the law schools at the University of Illinois, University of Texas-Austin and Northwestern University observed that: There is no evidence that the number of active Texas physicians per capita is larger than it would have been without tort reform. Any effect of tort reform is too small for us to measure, against the background of other, larger forces affecting physician supply, both in Texas and nationally. This non-result is consistent with other studies, most of which find that statelevel tort reforms increase physician supply modestly, if at all. Our finding also offers a counterpoint to the multi-state studies that do report significant effects by showing that tort reform will not necessarily improve access to care in any given state, even one which undergoes dramatic reform. 122 The Hyman Study also critiqued other studies looking at differencein-differences (DiD) research designs and found one even had a negative coefficient for damages after the caps were adopted and that two had coefficients in the 0-1 percent positive range. Another study did predict a 3.3% increase (with more licensures and fewer retirements), but it did not control for pre-reform state trends. 123 Ultimately, the Hyman Study concluded that despite the claims of reform proponents, there is no evidence that tort reform materially affected the supply of DPC physicians, primary care physicians, high-risk specialists, or physicians practicing in rural areas. These findings are generally consistent with prior multi-state studies of the relationship between tort reform and physician supply. Physician supply appears to be primarily driven by factors other than liability risk, including population trends, location of the physician s November-December 2013 / 349

7 residency, job opportunities within the physician s specialty, lifestyle choices, and demand for medical services, including the extent to which the population is insured. For some physicians, malpractice insurance rates and the risk of being sued may be important factors. But for many physicians, other factors matter more. 124 The portion of the gross domestic product dedicated to health care costs rose from 7.2 percent of GDP in 1970 to 17.9 percent in In 2010, the [United States] spent $2.6 trillion on health care. 126 Even after many states imposed caps on medmal noneconomic damages, health care costs continued to rise. Although the Affordable Care Act 127 includes provisions that address the costs and efficiency of the health care system, [c]oncerns about rising health care costs and affordability of health care continue, and health care costs are still projected to rise faster than national income for the foreseeable future. 128 Cap supporters attribute medical malpractice claims to rising healthcare costs, but a national study showed that the direct cost of malpractice accounts for less than two percent of total national healthcare costs. 129 Thus, even a reduction of 25 to 30 percent in malpractice costs would lower health care costs by only about.4 to 0.5 percent, and the likely effect on health insurance premiums would be comparably small. 130 Health care costs and consumer health care premiums have continued to rise. According to a Kaiser Family Foundation study, the average premiums for individual coverage rose 8 percent in 2011; premium increases have been between three [to] 1 % per year since 2000, while changes in workers earnings [have been] 2 to 4%. 131 Medicare costs and premiums for private health insurance in Texas, however, rose faster than the national average since the Texas noneconomic damages cap was passed in 2003, 132 while insurance payouts have decreased due to the caps. 133 The following table illustrates the profitability of the medical insurance industry in Missouri based on data from the Missouri DIFP 2011 Medical Malpractice Report. 134 Insurance companies profits have escalated in Missouri in the past five years, despite a reduction in medical malpractice premiums. 135 During the sluggish economy, insurance companies in Missouri had a return on net worth of 23.5 percent in 2011 (according to the National Association of Insurance Commissioners formula). 136 The national Affordable Care Act addressed this reality in part by requiring insurance companies to refund a portion of insurance premiums if 85 cents of each premium dollar for large group plans was not spent on medical services (or 80 cents per dollar for consumers). 137 [E]laborate models that account for changes in physician behavior suggest caps might increase or have no impact on premiums[.] 138 Public Citizen, a nonprofit consumer advocacy group, issued a 2011 report in which it found that medical liability caps make care less available and more expensive in addition to preventing patients from being fully compensated for damage caused by negligent doctors. It concluded that insurance companies and doctors are the ones who most benefit from malpractice caps; 139 but the quality, access and affordability of patient care have not improved with caps. Conclusion In Watts, the Supreme Court of Missouri ruled that caps on noneconomic damages in common law medical malpractice claims violate Missouri s constitutional guarantee of trial by jury. Where out-of-pocket costs are low, there is a disincentive for attorneys to take cases, especially when noneconomic damages and punitive damages are capped. Missouri already has an affidavit requirement to serve as a gatekeeper against claims that lack merit. Caps on damages have increased insurance company profits, but have not improved care. Stricter regulation of the insurance companies is necessary to ensure that premiums are used primarily to cover claims. 140 In addition, improvements need to be made within the medical profession to assure that the cases of negligence giving rise to medical malpractice claims are minimized. As Roger Johnson, plaintiff s attorney in Watts, averred, There is no legitimate reason for the degradation or outright 350 / Journal of the MISSOURI BAR

8 elimination of fundamental freedoms so that negligent actors may avoid accountability for the full cost of their misconduct. 141 Endnotes 1 Carol J. Miller is an attorney who holds the position of Distinguished Professor at Missouri State University, where she has taught business law since She is currently the national president of the Academy of Legal Studies in Business. She earned her J.D. (1978) and M.B.A. (1984) from the University of Missouri-Columbia, and bachelor s degrees from UMC and Northwest Missouri State University. She was a law clerk for Missouri Supreme Court Chief Justice June Morgan. 2 Joseph Weidhaas is an associate attorney at Johnson, Vorhees & Martucci. He is a graduate of Saint Louis University and the University of Missouri-Kansas City School of Law (2009). He served as a staff member of the UMKC Law Review, legal intern for Judge Scott O. Wright of the United States District Court, Western District of Missouri, and as judicial clerk for Judge Nancy Steffen Rahmeyer of the Missouri Court of Appeals, Southern District S.W.3d 633 (Mo. banc 2012). 4 Mo. Const. art. I, 22(a). 5 In contrast, economic damages cover pecuniary losses, including medical expenses, lost wages and lost earning capacity ( (1), RSMo Supp. 2013). 6 U.S. House of Representatives, Committee on the Judiciary, Reconciliation Submission Pursuant to Section 201 of H.Con.Res. 112, 112th Congress (April 27, 2012), available at judiciary_final.pdf. 7 Section (7), RSMo Supp Section , RSMo Sections and , RSMo Stephanie K. Jones, Missouri Supreme Court Strikes Down Non-Economic Damage Cap, Insurance Journal (Aug. 2, 2012), midwest/2012/08/02/ htm Mo. Legis. Serv Because the 2005 adjusted-for-inflation cap was not adopted, cap supporters argument may be that the $350,000 cap in 1986 dollars was too high. See Mo. Dep t of Insurance, Medical Malpractice Limits; available at (last visited Nov. 4, 2013). 13 In Klotz v. St. Anthony s Med.Ctr., 311 S.W.3d 752 (Mo. banc 2010), the Supreme Court of Missouri ruled that the new cap did not apply to plaintiffs whose injuries arose prior to the effective date of the 2005 law, but did not address the broader question concerning the constitutionality of the damage cap. 14 Section , RSMo Supp Section (1), RSMo Supp See Paul J. Passanante & Dawn Mefford, The Effect of Tort Reform on Medical Malpractice, 61 J. Mo. Bar 236 (2005). 17 Section , RSMo Supp See Scott v. SSM Healthcare St. Louis, 70 S.W.3d 560 (Mo. App. E.D. 2002); Cook v. Newman, 142 S.W.3d 880 (Mo. App. W.D. 2004). 19 Section , RSMo Supp Analysis of the enforceability of punitive damages is beyond the scope of this article. Caps also were placed on punitive damages, but they apply per defendant. Section , RSMo Supp limits punitive damages to no greater than $500,000 or [f]ive times the net amount of the judgment awarded to the plaintiff against the defendant. Punitive damages can exceed the cap if the defendant is convicted of a felony arising out of the acts or omissions that were the subject of the plaintiff s pleadings or if the plaintiff was the State of Missouri. Punitive damages are intended to punish or deter willful, wanton or malicious misconduct ( , RSMo Supp. 2013), including the conscious disregard for the health or safety of others. See Smith v. Brown & Williamson Tobacco Corp., 275 S.W.3d 748, 813 (Mo. App. W.D. 2008). 21 Additional modifications were adopted relative to the calculation of damages with modifications of the collateral source rule. Since 1987, evidence can be introduced to permit recognition that some other (nonidentified) person has paid some of the damages already ( , RSMo Supp. 2013). The 2005 reform created a provision judges have had difficulty administering that allows parties to introduce evidence of the value of medical treatment that was reasonable and necessary. Section , RSMo Supp Section raises the serious issue of why the amount of a defendant s liability for harm caused should be impacted by a plaintiff having health insurance. Further complicating the problem is the fact that the health insurer often has a right to subrogation or reimbursement of health benefits paid. Further, the jury members can be confused when they hear both numbers (charged and paid), as is the usual practice. M.A.I states: The existence or non-existence of any type of insurance, benefit, right or obligation of repayment, public or private, must not be considered or discussed by any of you in arriving at your verdict. Such matters are not relevant to any of the issues you must decide in this case. The instruction cannot be squared with the legislation that limits the collateral source rule. If the existence of insurance is not relevant, then the jury should not hear the amount paid by insurance companies for medical treatment, which leaves the jury with the impression in such a case that all medical bills are paid, an argument defense attorneys often try to make. 22 Mo. Const. art. I, 14 (open courts constitutional provision). 23 Mo. Const. art. I, 22(a). 24 Mo. Const. art. I, Mo. Const. art. II, Mo. Const. art. 1, Mo. Const. art. I, S.W.2d 107 (Mo. banc 1979) S.W.2d 898 (Mo. banc 1992). 30 Id. at 900. During her skin graft surgery operation, the 8-year-old child was given too much saline, causing her body to swell. After a doctor removed the endotracheal tube, the fluid-induced swelling closed [the child s] trachea [and n]o oxygen reached [the child s] brain for approximately six minutes. As a result, the child is cortically blind and brain damaged. The jury assessed the total damages in excess of $20 million dollars for medical negligence, including more than $13 million in noneconomic damages. The trial court reduced the judgment in accordance with the cap. 31 Id. at Adams, at Id. at S.W.2d 898. The Adams Court also upheld the statute allowing future damages to be paid in installments and the statute requiring [inclusion of a] percentage allocated for released parties when apportioning fault. Id. 35 Mo. Const. art. I, 22(a). 36 Adams at Id S.W.3d 633 (Mo. banc 2012). 39 Id. 40 Id. at Id. at Id. at Id. 44 Id. 45 Id. at n2. The Court declined to rule on the equal protection argument, the separation of powers assertion and the single subject requirements, restricting its ruling to the conclusion that the cap was a violation of the right to trial by jury. 46 Id. at Id. at 636, Id. at Mo. Const. art. I, 22(a) S.W.3d at Id. at Id. at Id. at Id. at 641 (citing Sofie v. Fibreboard Corp., 771 P.2d 711 (Wash. 1989)) U.S. 412 (1987). 56 Watts, 376 S.W.3d at November-December 2013 / 351

9 57 Id. at 642 (quoting Sofie, 771 P.2d at 721). 58 Id. at Id. at Id. at Id. at S.W.3d 195 (Mo. banc 2012). 63 Sanders, 364 S.W.3d at Id. at 203. The Court specifically went out of its way to state it need not decide whether Adams incorrectly stated the law as to common law causes of action to rule on Sanders. Id. 65 Id. at 214 (Draper III, J. dissenting). 66 Id. at H.B. 112, 97th Gen. Assemb., Reg. Sess. (Mo. 2013), available at billtracking/bills131/sumpdf/hb0112p.pdf. 68 Scott Lauck, Novel Bill Attempts to Restore Med Mal Caps, Mo. Lawyers Weekly, Feb. 11, 2013 at 1, Thomas Kaplan, Lessons for Albany on Malpractice Limits, N. Y. Times, March 24, 2011, available at com/2011/03/25/nyregion/25malpractice.html. 70 See generally, Jason A. Parson, Medical Malpractice Damage Caps: Navigating the Safe Harbors, 65 Wash. U. L. Q. 565 (1987); U.S. House of Representatives, Judiciary Committee, Reconciliation Submission Pursuant to Section 201 of H.Con.Res. 112, 112th Congress (April 27, 2012), available at uploadedfiles/judiciary_final.pdf,. 71 See Arneson v. Olson, 270 N.W.2d 125 (N.D. 1978). However, North Dakota passed another cap. ND Cent. Code & (2013). 72 The Oregon cap was upheld for wrongful death cases. Greist v. Phillips, 906 P.2d 789 (Or. 1995). 73 A new $750,000 cap was enacted after the Supreme Court of Wisconsin found a $350,000 cap unconstitutional in Ferdon v. Wisconsin Patients Comp. Fund, 701 N.W.2d 440 (Wis. 2005). 74 U.S. House of Representatives, Judiciary Committee, Reconciliation Submission Pursuant to Section 201 of H.Con.Res. 112, 112th Congress (April 27, 2012), available at house.gov/uploadedfiles/judiciary_final.pdf. 75 Jason A. Parson, Medical Malpractice Damage Caps: Navigating the Safe Harbors, 65 Wash. U. L. Q. 565, 565 (1987). 76 See, e.g., Allen v. Pacheco, 71 P.3d 375, 377 (Colo. 2003). 77 Ronen Avraham, A Market Solution for Malpractice, The N.Y. Times (March 28, 2011), available at com/2011/03/29/opinion/29avraham.html?re. 78 State ex rel. Cardinal Glennon Mem. Hosp. v. Gaertner, 583 S.W.2d 107 (Mo. banc 1979). 79 See , RSMo Supp / Journal of the MISSOURI BAR and Benedick v. SSM Cardiovascular, 380 S.W.3d 652 (Mo. App. E.D. 2012), wherein the Court of Appeals (Eastern District) upheld the dismissal of the claim for failure to file a timely health care affidavit. See also, Mike Trask, Medical Malpractice? Deceptive Marketing? Judges Hear Arguments, Missouri Lawyers Media (Sept. 20, 2012), molawyersmedia.com/blog/2012/09/20/ medical-malpractice-deceptive-marketingjudges-hear-arguments/, discussing the thenpending case of Benedick v. SSM Cardiovascular & Thoracic Services Inc. 80 Section , RSMo Supp Watts, 376 S.W.3d at , upholding , RSMo Supp H.J.R. 6, 97th Gen. Assemb., 1st Reg. Sess. (Mo. 2013), available at com/mo/text/hjr6/id/ (last visited Oct. 29, 2013). 83 S.B. 64, 97th Gen. Assemb., 1st Reg. Sess. (Mo. 2013), available at senate.mo.gov/13info/pdf-bill/intro/sb64.pdf. 84 H.B. 112, 97th Gen. Assemb., 1st Reg. Sess. (Mo. 2013), available at house.mo.gov/billtracking/bills131/biltxt/perf/ HB0112P.htm.pdf. 85 In the veto session, the legislature overrode Missouri Governor Nixon s veto of H.B. 339, 97th Gen. Assemb., 1st Reg. Sess., see , RSMo Supp. 2013, which declares that an uninsured motorist waives the right to collect noneconomic loss except in limited circumstances. 86 Sanjay Gupta, More Treatment, More Mistakes, N.Y. Times, July 31, 2012, available at opinion/more-treatment-more-mistakes. html; John Bonifield & Elizabeth Cohen, 10 Shocking Medical Mistakes, CNN Health (June 10, 2012, 10:16 AM), com/2012/06/09/health/medical-mistakes/ (last visited October 30, 2013); U.S. Dep t of Health & Human Servs., Adverse Events In Hospitals: National Incidence Among Medicare Beneficiaries (Nov. 2010, OEI ), available at https://oig.hhs.gov/ oei/reports/oei pdf (80,000 Medicare patients suffer preventable adverse events that contribute to their deaths); see also Christopher P. Landrigan, et. al, Temporal Trends in Rates of Patient Harm Resulting From Medical Care, New Eng. J. Med., Nov. 25, 2010 (study published of a random sample of 10 North Carolina hospitals in the New England Journal of Medicine found that 18.1 percent of patients were injured in the hospitals during their care). 87 Ben Glass, Emergency Room Deaths Caused by Medical Malpractice, The Legal Examiner (Nov. 29, :32 AM), northernvirginia.legalexaminer.com/medicalmalpractice/emergency (citing a Health Grades, Inc. study and report in the J. Amer. Med. Ass n) (last visited Oct. 30, 2013). 88 Robert Pear, New System for Patients to Report Medical Mistakes, The N.Y. Times (Sept. 22, 2012), available at nytimes.com/2012/09/23/health/new-systemfor-patients-to-report-medical-mistakes. html?tnt 0=y. 89 Congressional Budget Office, Key Issues in Analyzing Major Health Insurance Proposals 151 (December 2008), available at files/cbofiles/ftpdocs/99xx/doc9924/ keyissues.pdf. 90 For comparison purposes, 30,296 people died in car crashes in the United States in NCSAData Resource, Fatality Reporting System (FARS) Encyclopedia, available at Main/index.aspx. 91 Dep t of Ins., Fin. Insts. & Prof l Registration (DIFP), 2011 Missouri viii (Nov. 2012), reports/medmal/documents/2011missourimed icalmalpracticereport.pdf. 92 Johns Hopkins Malpractice Study: Surgical Never Events Occur At Least 4,000 Times Per Year, John Hopkins Medicine, hopkinsmedicine.org/news/media/releases/ johns_hopkins_malpractice_study_surgical_ never_events_occur_at_least_4000_times_ per_year (last visited October 30, 2013). 93 Id. ( [R]esearchers estimate that 4,044 surgical events occur in the United States each year that should never occur.) 94 Id. 95 Pear, note Duff Wilson, Senator Protests Agency Decision to Remove Doctor Data Online, The N.Y.Times (Oct. 7, 2011, 8:51 PM), prescriptions.blogs.nytimes.com/2011/10/07/ senator-protests-agency-decision-to-removedoctor-data-online/ (last accessed Oct. 30, 2013). 97 American Medical Association, Medical Liability Reform Now! 6 (2013 ed), available at resources/doc/arc/mlr-now.pdf. 98 Id. 99 DIFP, 2011 Missouri Medical Malpractice Insurance Report iii (Nov. 2012), medmal/documents/2011missourimedical MalpracticeReport.pdf. 100 Id. at Id. at x, xi. 102 DIFP, 2011 Missouri Medical Malpractice Insurance Report viii (Nov. 2012), medmal/documents/2011missourimedical MalpracticeReport.pdf. See also, David A. Hyman & Charles Silver, Medical Malpractice Litigation and Tort Reform: It s the Incentives, Stupid, 59 Vand. L. Rev. 1085, 1090 (2006), (citing 1984 Harvard Medical Practice Study); A. Russell Localio et al, Relation Between

10 Malpractice Claims and Adverse Events Due to Negligence, 325 New Eng. J. Med. 245 (1991) (415 claims filed out of an estimated 27,179 cases of in hospital negligence in New York in 1984, meaning about 1.5 percent of those with claims filed claims). Few studies of this nature exist. 103 DIFP, 2011 Missouri Medical Malpractice Insurance Report viii, 16, 115 (Nov. 2012), medmal/documents/2011missourimedical MalpracticeReport.pdf. 104 Id. at 89; see also Scott Lauck, Report Cites Uncertainty for Med-mal Insurance, Mo. Lawyers Weekly, Dec. 17, 2012 at 1, DIFP, 2011 Missouri Medical Malpractice Insurance Report 18 (Nov. 2012), medmal/documents/2011missourimedical MalpracticeReport.pdf. 106 Id. at 6, 8-10; DIFP, 2010 Missouri 89 (Aug. 2011), Contribute%20Documents/2010Medical MalpracticeReport.pdf; DIFP, 2009 Missouri 95 (Aug. 2010), Contribute%20Documents/2009Medical MalpracticeReport.pdf; DIFP, 2008 Missouri 107 (July 2009), Contribute%20Documents/2008Medical MalpracticeReport.pdf; DIFP, 2007 Missouri 107 (Sept. 2008), Contribute%20Documents/2007Medical MalpracticeReport.pdf; DIFP, 2006 Missouri 107 (Sept. 2007), Contribute%20Documents/2006_Medical_ Malpractice_Report.pdf; DIFP, 2005 Missouri Medical Malpractice Insurance Report 105 (Sept. 2006), mo.gov/contribute%20documents/2005 MedicalMalpracticeReport.pdf; DIFP, 2004 Missouri Medical Malpractice Insurance Report 100 (Oct. 2005), mo.gov/contribute%20documents/2004_ Med_Mal_Rpt.pdf; DIFP 2003 Missouri 78 (not dated), Contribute%20Documents/2003_Medical_ Malpractice_Report.pdf. 107 This number includes judgments after appeal. 108 American Medical Association, Medical Liability Reform Now! (2013 ed.), mlr-now.pdf (last visited Oct. 30, 2013). 109 David M. Studdert, et. al, Claims, Errors and Compensation Payments in Medical Malpractice Litigation, 354 New Eng. J. Med. 19 (May 11, 2006). 110 David A. Hyman & Charles Silver, Medical Malpractice Litigation and Tort Reform: It s the Incentives, Stupid, 59 Vand. L. Rev. 1085, Hyman and Silver also note that most judges believe that frivolous lawsuits are a minor problem, according to a recent survey by the Federal Judicial Center. Id. (citing David Ruama & Thomas E. Willging, Report of a Survey of United States District Judges Experiences and Views Concerning Rule 11, Federal Rules of Civil Procedure, Federal Judicial Center 3 (2005) (Hyman and Silver note that the study found 85 percent of judges view frivolous lawsuits as either no problem, a very small problem, or a small problem ). 111 Id. at In addition, unlike every other business, plaintiff s lawyers outside the 9th Circuit are not allowed to write off ordinary and necessary expenses, specifically litigation expenses in successful contingency fee cases. Letter from George J. Blaine, Associate Chief Counsel of the I.R.S., to U.S. Sen. Charles Grassley, Ranking Member Committee on Finance (Aug. 30, 2010), available at gov/pub/irs-wd/ pdf (last visited Nov. 4, 2013). 113 Hyman and Silver, note 110 at 1102 (citing Herbert M. Kritzer, Risks, Reputations, and Rewards: Contingency Fee Legal Practice in the United States, (2004); Herbert M. Kritzer, Seven Dogged Myths Concerning Contingency Fees, 80 Wash. U. L.Q. 739, (2002); Herbert M. Kritzer, Contingency Fee Lawyers As Gatekeepers in the American Civil Justice System, 81 Judicature 22, 24 (1997). 114 Id. at Malpractice Laws by State, lawfirms.com/resources/medical-malpractice/ medical-malpractice-introduction/laws-bystate.htm (last visited Nov. 4, 2013). 116 Section , RSMo Supp This affidavit requirement was recently upheld in Benedick v. SSM Cardiovascular, 380 S.W.3d 652 (Mo. App. E.D. 2012). 117 Hyman & Silver at LaRae I. Huycke & Mark M. Huycke, Characteristics of Potential Plaintiffs in Malpractice Litigation, 120 Annals Internal Med. 792, 796 (1994). 118 Missouri State Board of Registration for the Healing Arts, Missouri Department of Insurance, Financial Institutions & Professional Registration Chart (on file with author). 119 U.S. Gov t Accountability Office, Medical Malpractice: Implications of Rising Premiums on Access to Health Care (Aug. 2003), assets/240/ pdf. 120 See note Tex. Civ. Prac. & Rem. Code November-December 2013 / 353

11 Ann , including a cap that limits noneconomic damages against physicians and other individual licensed health care providers to $250,000 (nominal, not adjusted for inflation) for all of these individuals together. A separate $250,000 (nominal) cap applies to each hospital or other licensed health care facility, with total noneconomic damages capped at $500,000 (nominal) for all health care facilities. Thus, the cap will be $250,000 (nominal) if there is one liable defendant, but can be as high as $750,000 (nominal) if there are multiple liable defendants. 122 David A. Hyman, et. al, Does Tort Reform Affect Physician Supply? Evidence from Texas 3 (June 14, 2012), available at https:// papers.ssrn.com/sol3/papers.cfm?abstract_ id= Id. at Id. at The Henry J. Kaiser Family Foundation, Health Care Costs: A Primer 1 (May 2012) available at kaiserfamilyfoundation.files.wordpress. com/2013/01/ pdf 126 Id. 127 The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (P.L ). 128 Kaiser study, note 125 at Congressional Budget Office, Limiting Tort Liability for Medical Malpractice (Jan. 8, 2004), available at cbofiles/ftpdocs/49xx/doc4968/ medicalmalpractice.pdf ; Congressional Budget Office, Medical Malpractice Tort Limits and Health Care Spending 11 (April 2006) available at gov/sites/default/files/cbofiles/ftpdocs/71xx/ doc7174/04-28-medicalmalpractice.pdf. Dep t of Health and Human Services, Office of the Inspector General, OEI , Adverse Events in Hospitals: National Incidence Among Medicare Beneficiaries iii (Nov. 2010), available at https://oig.hhs. gov/oei/reports/oei pdf. The annual cost of medical malpractice arising from adverse events to Medicare patients is $4.4 billion dollars. Id. 130 Congressional Budget Office, Limiting Tort Liability for Medical Malpractice (Jan. 8, 2004), available at cbofiles/ftpdocs/49xx/doc4968/ medicalmalpractice.pdf; Michael Morrill, Medical Malpractice Payments Hit Record Low Last Year, Public Citizen (July 11, 2012, 3:57 PM), blog/2012/07/medical-malpractice-paymentshit-record-low-last-year-new-public-citizenreport-finds-analysis-discr.html ( Health care costs rose again amid the decline in medical malpractice litigation debunking the claim that the litigation is tied to rising health care costs or that patients should expect dividends from reduced litigation, despite the fact that medical malpractice payments in 2011 were at their lowest level on record.); Congressional Budget Office, Medical Malpractice Tort Limits and Health Care Spending 10 (April 2006), available at gov/sites/default/files/cbofiles/ftpdocs/71xx/ doc7174/04-28-medicalmalpractice.pdf (estimating caps reduce premiums per physician by about 13 percent). 131 Kaiser study, note 125 at Tex. Cp. Code Ann (2003); A Failed Experiment, Health Care in Texas Has Worsened in Key Respects Since State Instituted Liability Caps in 2003, Public Citizen, (last visited Oct. 30, 2013). 133 Hyman study, note 102, showing Texas experienced a large drop in payouts and insurance premiums. 134 Dep t of Ins., Fin. Insts. & Prof l Registration, 2011 Missouri Medical Malpractice Insurance Report (Nov. 2012), medmal/documents/2011missourimedical MalpracticeReport.pdf. Premium Written is [t]he cost of coverage for the full policy term, reported as of December 31st of the year in which a policy is issued. Id. at xi. Premium Earned is [t]he dollar amount associated with the portion of the policy term that has elapsed by year end. Id. at xii. The DIFP explains the difference between premium written and earned this way: If a one-year policy is issued on July 1, 2006, at a cost of $1,000, at the end of the calendar year, the insurer will report $1,000 of written premium on their financial annual statement. However, only half of the policy term will have elapsed at year-end. Id. Thus, only $500, or one-half of the written premium amount, is reported as earned premium, in this example. 135 Dep t of Ins., Fin. Insts. & Prof l Registration, 2011 Missouri Medical Malpractice Insurance Report 6 (Nov. 2012), medmal/documents/2011missourimedicalmal practicereport.pdf. 136 Id. at I (Executive Summary); U.S. Gen. Accounting Office, GAO/HRD , Medical Malpractice: Six State Case Studies Show Claims and Insurance Costs Still Rise Despite Reforms (Dec. 1986) (citing a state study on the eve of Missouri s first med-mal cap that found claims and insurance rates continued to rise despite such reforms), available at assets/150/ pdf. 137 See 80/20 Rule Delivers More Value to Consumers in 2012, available at cms.gov/cciio/resources/forms-reports- and-other-resources/downloads/2012- medical-loss-ratio-report.pdf. See Herb Weisbaum, Affordable Care Act Means $1.1 Billion Insurance Rebate, NBC News (July 3, 2012, 7:43 a.m.), business/affordable-care-act-means-1-1-billioninsurance-rebate #. The U.S. Health and Human Services Department estimated that $1.1 billion in insurance refunds would be owed customers. 138 Kathryn Zeiler & Lorian E. Hardcastle, Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Systematic Review of Estimates and the Methods Used to Produce Them, Geo. Univ. L. Ctr. (2012), available at viewcontent.cgi?article=2140&context=facpub. 139 A Failed Experiment, Health Care in Texas Has Worsened in Key Respects Since State Instituted Liability Caps in 2003, Public Citizen, (last visited Oct. 30, 2013). 140 See 42 U.S.C. 300gg-18. The Affordable Care Act requires health insurers to refund portion of premiums if sufficient percentage is not used for patient care. The analogous approach would require malpractice insurers to refund a portion of premiums not spent defending or paying malpractice claims. 141 Roger Johnson, Damage Caps Stick Taxpayers with Tab, Springfield News- Leader, Feb. 21, 2013 at 5B. 354 / Journal of the MISSOURI BAR

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