Non-economic damages caps
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Non-economic damages caps are controversial tort reforms to limit (i.e., "cap") damages for intangible harms such as severe pain, physical and emotional distress, disfigurement, loss of the enjoyment of life that an injury has caused, including sterility, physical impairment and loss of a loved one, etc. These are, collectively, referred to as hedonic damages.
Non-economic damages compensate injuries and losses that are not easily quantified by a dollar amount. Also known as quality-of-life damages, this compensation covers the family of victims who have died, or severely injured victims.
Efficacy of caps
Many states have debated, passed legislation or amended their constitutions to create such caps. Former President George W. Bush proposed a nationwide $250,000 cap in medical malpractice cases. In the area of medical malpractice, tort reform advocates claim that insurance premiums would decrease, both making medical care more affordable and eliminating a disincentive for doctors to practice. In contrast, critics contend that high medical malpractice insurance rates are a result of the cyclical nature of the insurance industry, lack of competition, mismanagement of reserves and a decline in investment income. Recent data has indicated that medical malpractice rates are generally no longer rising. In 2011, data pooled from the industry by the publication Medical Liability Monitor indicated that medical malpractice insurance rates had declined for four straight years. The decrease was seen in both states that had enacted tort reform and in states that had not, leading actuaries familiar with the data to suggest that patient safety and risk management campaigns had had a more significant effect.
There are further disputes over if these caps would reduce overall medical costs for patients at all. A study by the U.S. Congressional Budget Office published in 2004 found that “Malpractice costs account for less than 2 percent of health care spending." However, tort reformists cite other possible effects of limiting tort liability, such as reducing the extent to which physicians practice “defensive medicine” and preventing widespread problems of access to health care.
Non-economic damages are the only compensation a jury can provide for the injury itself, as opposed to reimbursement of out-of-pocket expenses such as the plaintiff's lost wages, medical bills, and legal fees. This type of compensation is especially important for people who do not work outside the home, like the elderly, children, and homemakers. The "worth" of a homemaker's work inside the home is not easily measured by a dollar amount, and would only be compensated through non-economic damages.
Tort reform supporters argue that it is difficult for juries to assign a dollar value to these losses with the guidance they are normally given. They state that there is no basis for non-economic damages, and uncapped non-economic damages violate the equitable principles of justice by being inherently quite random, because different juries will always come to different results. Because of the highly charged environment of personal injury trials, they fear some unbounded non-economic damage awards. In Ernst v. Merck, a Texas Vioxx products liability case, the jury issued a verdict of $24 million in compensatory damages, which includes non-economic damages, for a widow of a 59 year old triathlete who died from arrhythmia, or an irregular heartbeat that could have been prevented had Merck provided warnings about the drug. Tort reform supporters point out the widow had not been married a long time, and suggest this award was excessive.[dead link]
In contrast, opponents of tort reform contend that jurors should assess damages on a case-by-case basis and that damages should not be arbitrarily capped by a legislature.
Constitutionality of caps
Right to trial by jury
Opponents of caps on damages argue that caps on the amount of damages jurors can award violate the right to a trial by jury. Because tort law has historically been a question of state law, states have the power to establish a constitutional right to a trial by jury in civil cases. Historically, juries have decided both the question of liability and the question of how much damages to award in tort cases, subject to instructions on the law by a judge. Several state appellate courts that have considered the issue have struck down damages caps as a violation of state constitutions.
Separation of powers
Some tort reform supporters, such as the conservative Federalist Society, have criticized such decisions as a violation of the concept of separation of powers.
In contrast, critics of caps contend and state courts have held that legislatures violate the principle of separation of powers when they attempt to impose arbitrary damage caps on juries, who function as part of the judicial branch of government. In Best v. Taylor Machine Works, the Illinois Supreme Court ruled that a $500,000 cap on non-economic damages functioned as a "legislative remittitur" and invaded the power of the judiciary, in violation of the separation of powers clause. The court noted that courts are empowered to reduce excessive verdicts where appropriate in light of the evidence. The cap, however, reduced damages by operation of law, without regard to the specific circumstances of the case.
Equal protection and special legislation
In 2005, a Wisconsin court ruled that a $350,000 cap on non-economic damages in medical malpractice cases violates the state's equal protection guarantee. In Ferdon v. Wisconsin Patient's Compensation Fund, the court ruled that there was no rational relationship between the objectives identified by the legislature that were intended to prevent a medical liability crisis in Wisconsin and treating people with more severe injuries and higher non-economic damage awards different from people with lower non-economic damage awards.
The Illinois Supreme Court found in the 1997 case Best v. Taylor Machine Works found that a $500,000 cap on noneconomic damages was (in addition to serving as a "legislative remittitur") special legislation that made an arbitrary distinction between those who sustained major noneconomic damages in a single tort versus multiple tortious actions and between those that suffered minor amounts of noneconomic damages versus amounts about the $500,000 cap (such as a plaintiff who becomes permanently disabled).
In the 2010, case Lebron v. Gottlieb Memorial Hospital, the Illinois Supreme Court ruled that Section 2-1706.5 of Public Act 94-677, which placed caps on non-economic damages in medical malpractice actions, violated the separation of powers clause in the Illinois Constitution and was therefore facially invalid. Additionally, because Public Act 94-677 contains an inseverability provision, the entire Act was held void and invalid in its entirety.
- Rising Insurance Premiums? Yes and No. Medscape Medical News, October 5, 2011.
- "Merck Wins Appeal of First VIOXX(R) Case to go to Trial". PR Newswire on behalf of Merck. Retrieved 7 May 2012.
- Leonard W. Schroeter. "The Jurisprudence of Access to Justice: From Magna Carta to Romer v. Evans via Marbury v. Madison". Schroeter, Goldmark & Bender. Retrieved 7 May 2012.
- See Ferdon ex rel. Petrucelli v. Wisconsin Patients Compensation Fund, 284 Wis.2d 573, 701 N.W.2d 440, July 14, 2005
- "Illinois Supreme Court Strikes Down Statutory Cap on Non-Economic Damages in Medical Malpractice Actions". The National Law Review. Troutman Sanders LLP. 2010-02-16. Retrieved 2012-01-09.