Judge Uncaps Med Mal Caps

It’s always nice to see Courts take sane approaches to the insurance industry’s ongoing efforts to eliminate medical malpractice as a legal claim in America.

In a November 14, 2007 article, the Chicago Tribune notes that the “controversy over limits on medical malpractice awards was ignited again after a Cook County judge on Tuesday struck down a 2-year-old state law that capped compensation to victims, a measure that had created a friendlier environment for doctors and health-care institutions and their insurers.

At issue is the state’s system of legal accountability for health-care providers. Doctors and other supporters have argued for years that rising professional insurance costs, fueled by skyrocketing jury awards, are driving physicians out of business and compromising patient care.

Attorneys for personal-injury victims and consumer groups say that caps on jury awards in medical malpractice cases strip patients of their right to seek redress in court.

Illinois lawmakers have tried to strike a balance for years but have been overruled by the courts on three occasions.

Cook County Circuit Judge Diane Larsen decided that caps on malpractice awards violated the Illinois Constitution’s “separation of powers” clause, in effect ruling that the legislature can’t interfere with the right of juries and judges to determine fair damages. Her ruling falls in line with a 1997 Illinois Supreme Court decision that overturned a 1995 law implementing caps on personal-injury cases.

Defense lawyers said they plan to appeal Larsen’s decision. Because she found a law unconstitutional, an appeal will go directly to the state Supreme Court.

The law imposed a cap on so-called non-economic damages in medical malpractice lawsuits, which juries award for things like pain and suffering. The limit is $500,000 in the case of individual doctors and $1 million for hospitals. There is no ceiling on economic damages that cover lost wages and the costs of medical care.

Caps created competition

Largely because of the caps and other reforms that were part of the law, the state’s insurance market for medical liability has gotten more competitive. There are now at least a dozen malpractice carriers in Illinois, more than double the number from two years ago.

That has led to lower insurance rates for some doctors, in particular obstetricians, who have been especially hit hard by rising malpractice costs. Although rates vary from doctor to doctor and insurer to insurer, the average annual premium for an obstetrician in Cook County is about $125,000, down from about $200,000 or more before the legislation, according to Medicus Insurance Co. of Austin, Texas.

Insurance carriers were not prepared to say Tuesday’s ruling would lead to a return to higher rates, saying they believed Larsen’s opinion could be overturned by the Supreme Court. But carriers like Medicus say they came into Illinois because of legislative reform, caps and additional disclosures by carriers already doing business here.

“What is pretty clear is that rates have stabilized under tort reform,” said Sheldon Davidow, president of Medicus, which began offering coverage this year and now covers more than 350 doctors. “If caps are removed, there is ultimately going to be a reassessment.”

Medicus said the ruling was not enough to sway it to reconsider doing business in Illinois but doctors will be watching closely how it plays out.

“While I can tell you with certainty that we are going to stay in the state,” Davidow said, “without the tort reforms, I am not sure that all the doctors will.”

In a statement, the American Medical Association, the nation’s largest physician group, said Tuesday’s decision could hurt patients. “Today’s ruling to strike down the medical liability cap in Illinois is a step backward for Illinois’ patients and physicians as it once again puts patients’ access to care in jeopardy.”

Plaintiffs’ lawyers criticized the AMA for trying to scare consumers into supporting the caps.

“This is a campaign of fear that is being used across the country,” said Bruce Kohen, president of the Illinois Trial Lawyers Association. “It’s the same pressure they used to get the flawed law passed.”

Surviving court challenges

A number of states, including California, have passed caps on medical malpractice damages that have survived court challenges. In Texas, the cap law was approved on a voter referendum.

Personal-injury lawyers vowed to challenge the 2005 Illinois law as soon as it was enacted. The law was the third attempt by lawmakers to limit damages in civil suits since the 1970s. The first placed a $500,000 cap on all damages, including economic, in medical malpractice cases. The next attempt in 1995 included caps on pain and suffering in all civil actions, not just medical malpractice cases.

In 2005, legislators crafted a narrowly focused bill that limited non-economic awards just in medical liability cases.

Since the law’s passage, plaintiffs’ lawyers have been waiting for a test case. The first was filed last year on behalf of a Abigaile LeBron, a 13-month-old girl who suffered a severe brain injury during birth. The suit charged Gottlieb Memorial Hospital in Melrose Park, her doctor and nurse with negligence. An attorney for the hospital said his client is disappointed with the ruling.

Two other cases that challenged the law were filed, and all three suits were consolidated before Larsen in relation to the constitutional issue. The courtroom battle has drawn high-power attorneys, including Theodore Olson, the former U.S. solicitor general, who is representing the Illinois State Medical Society and its affiliated insurance company in the issue.

For more information on this subject, please refer to Medical Malpractice and Negligent Care.