Published 7/1/2014
Wayne A. Johnson, MD

Recent Trends in State Medical Liability Reform

Currently, 31 states have legislation that places caps on noneconomic damages in medical liability lawsuits. Of these, six have caps on both economic and noneconomic damages. However, achieving tort reform on a state-by-state basis is both difficult and unpredictable.

For example, although noneconomic damage caps have been upheld in 16 states, they have been overturned as unconstitutional in 12 states. More than half (18) of the states that have enacted medical liability reforms have done so in the last 15 years and, according to the American Medical Association, many of these laws have not yet come under judicial review.

Recently, caps in Florida, California, Missouri, and Kansas have come under scrutiny in the courts. It is anticipated that more states will have to defend the constitutionality and amounts of their noneconomic caps.

In March 2014, the Florida Supreme Court ruled that the state’s cap on noneconomic damages for cases of medical malpractice wrongful death was unconstitutional. Under legislation passed and signed into law in 2002 by then Gov. Jeb Bush, noneconomic damages in medical liability cases were limited to $500,000; if the negligence resulted in death, the noneconomic damages were limited to $1,000,000.

Proponents had successfully argued that noneconomic caps would lower malpractice premiums, lower medical costs from defensive medicine, improve patient access to timely medical care, and create a legal environment that would not only attract more physicians to practice medicine in Florida but also slow the departure and early retirement of physicians. When the Florida Supreme Court overturned the legislation by a 5-2 vote, Judge R. Fred Lewis, writing for the majority, suggested that legislators created a crisis “that was not fully supported by the data.”

The court noted that the malpractice reforms did little to affect or stabilize malpractice premiums for physicians and other providers. It also stated that prior to the passage of the legislation, the number of physicians coming to Florida was increasing.

Jeff Scott, general counsel and director of legal and government services for the Florida Medical Association, disagreed with the court’s ruling and findings. “One needs only to look at the states with an effective cap in place, such as California and Texas, to see that malpractice rates are lower and that physicians moved to those states. For the court to question whether there was a medical malpractice crisis was absurd.”

California’s historic Medical Injury Compensation Reform Act (MICRA) of 1975 has long been considered model medical liability reform legislation with its $250,000 cap on noneconomic damages. However, in 2014 the law faces two challenges.

In Winn vs Pioneer Medical Group, a case pending before the California Supreme Court, the question is whether the same facts can be used to support both a medical negligence case under MICRA and enhanced remedies under the Elder Abuse Act. Previously, the appellate court found that while professional negligence and elder abuse are distinct and mutually exclusive, that did not mean that plaintiffs cannot allege that the same facts may prove both professional negligence and elder abuse and neglect. The court concluded that the jury should decide whether the defendant’s act was professional negligence or an egregious act of misconduct distinct from professional negligence.

In addition, a ballot initiative that will be voted on this fall will decide whether to increase MICRA’s $250,000 noneconomic cap by more than 300 percent to $1,100,000. Supporters of the initiative argue that the 1975 cap has not kept up with inflation. Opponents note that the change would create “a cash windfall for trial attorneys” because attorney fees are based on the size of the award.

During its 2014 legislative session, Missouri legislators again attempted to restore medical malpractice noneconomic damage caps that were overturned by the state Supreme Court in 2012.

The Missouri Supreme Court had ruled that legislation placing a $350,000 noneconomic damages cap on malpractice cases was unconstitutional because it denied claimants the right to a jury trial. Legislators have tried to pass a revised medical liability reform bill in both 2013 and 2014.

Proponents note that from 2005 to 2012, the legislation accomplished the goal of lowering physician malpractice premiums while improving patient access to care and increasing the size of Missouri’s physician community.

In Kansas, lawmakers voluntarily recommended legislation to increase the amount of noneconomic damages from $250,000 to $350,000. Senate Bill 311 was signed into law in April 2014. The Kansas Supreme Court upheld the constitutionality of the noneconomic damages limit in 2012, but recommended that the legislature consider increasing the amount to minimize the risk of a future reversal on the constitutionality of the caps.

The future will continue to bring both challenges and opportunities for medical liability reform on both the state and federal levels. In addition to caps on noneconomic damages, tort reforms may include safe harbors, health courts, and early disclosure and compensation programs.

Most advocates of state liability reforms cite improvements in patient access to care, decreases in defensive medicine, lower malpractice premiums, and increased numbers of physicians coming to their states. Unfortunately, trial attorneys, judicial reviewers, and some legislators will continue to fight against medical liability reform.

Numerous studies have estimated that the U.S. healthcare system would realize significant savings if federal tort reform were enacted. According to the Congressional Budget Office, tort reform would reduce annual healthcare expenditures by approximately $54 billion over a 10-year period—and this estimate does not even include private insurance and indirect cost savings.

As challenges to liability reform in various states arise, the American Association of Orthopaedic Surgeons (AAOS), through its Policy Action Fund, stands ready to assist. The fund provides grants to assist state orthopaedic societies in responding to medical liability challenges. For links to more information and the AAOS Position Statement on Liability Reform, see additional information below.

Wayne A. Johnson, MD, is the Diversity Advisory Board liaison to the AAOS Communications Cabinet and a member of the AAOS Now editorial board. He can be reached at waynejohnson525@gmail.com

Editor’s note: Articles labeled Orthopaedic Risk Manager (ORM) are presented by the Medical Liability Committee under the direction of Robert R. Slater Jr, MD, ORM editor. Articles are provided for general information and are not legal advice; for legal advice, consult a qualified professional. Email your comments to feedback-orm@aaos.org or contact this issue’s contributors directly.

Additional Information: