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Four Arguments for Eliminating Medical Malpractice Caps

A recent court decision in Florida and an upcoming ballot initiative in California are among the most recent skirmishes in the ongoing fight over tort reform in medical malpractice cases.

In general, the movement known as “tort reform” encompasses proposals to make it more difficult for injured people to file a lawsuit or obtain a jury trial once a suit is filed.

A focal point in the tort reform movement is the placing of caps, or limits, on what juries may award plaintiffs in medical malpractice cases.

New York is one of only 15 states with no form of medical malpractice cap. As the Washington Post reports, medical malpractice lawsuits paid out more in New York last year than in any other state in the country.

New York’s rejection of medical malpractice lawsuit damages caps is positive for people who have been seriously injured. We believe more states should join New York and Pennsylvania, which also has no medical malpractice cap, and the growing number of states that have struck down existing law regarding limits on jury awards.

Here are four arguments that are being made by many across the country who are seeking to eliminate medical malpractice caps:

1. Medical malpractice caps may be unconstitutional.

In Florida, the state’s Supreme Court said in a 5-2 decision that the cap on wrongful death non-economic damages adopted in 2003 violates the state constitution’s equal protection clause.

Justice R. Fred Lewis wrote that the law “has the effect of saving a modest amount for many by imposing devastating costs on a few” by unconstitutionally discriminating against “those who are most grievously injured, those who sustain the greatest damage and loss, and multiple claimants.’’

Others have objected to limits on damage awards on the grounds that they violate the right to trial by jury. They have suggested that setting award amounts by legislation represents an unconstitutional alteration of the jury’s role.

2. Caps hurt patients.

At least, that’s what the Cato Institute says. Ensuring that any damages paid in a medical malpractice claim cannot exceed a specified amount “reduces medical professional liability insurers’ financial incentives to reduce [medical] malpractice risk,” writes Shirley Svorny, a professor of economics at California State University, Northridge.

Much of the protection patients enjoy now from negligent behavior by medical providers is due to pressure by insurers who foot the bill for damage awards. Caps remove the incentive to manage risk in the health care system and may “make health care that much riskier for all of us,” the professor says.

3. Caps are only for insurance companies’ benefit.

It’s pretty simple: if an insurance company pays out less for claims, it makes more money. But an American Association for Justice (AAJ) study found that in states with medical malpractice caps, insurance company profits rose by 24 percent.

States with medical malpractice caps do not have lower physicians’ insurance premiums or health care premiums, both of which are routinely promised by tort reform advocates.

“This is and always was the true driver behind medical malpractice caps: insurance company profits,” the AAJ says.

4. Limits on damages are unnecessary.

David A. Hyman of the University of Illinois College of Law and Charles Silver of the University of Texas at Austin School of Law argue in a July 2014 DePaul Law Review article that even in states that have not adopted medical malpractice caps, screening panels or other obstacles to lawsuits, the volume of medical malpractice litigation has steadily declined over several years.

They write:

“Between 2001 and 2012, we found a 50 percent decline in claim frequency [paid claims per 1,000 physicians] in states that did not have a cap in effect during this period, compared to a 62 percent decline in states that adopted caps during the 1990s, and a 47 percent decline in states that adopted caps during the 1970s and 1980s. Thus, for reasons that have nothing to do with tort reform, we are seeing fewer paid medical malpractice claims, even as health care spending and treatment intensity rise inexorably.”

As we wait to hear what happens in Florida, California and other states where medical malpractice caps are being challenged, these four arguments will be important to keep in mind.

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