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 A TAILORED-CAP ON NON-ECONOMIC DAMAGES IN MEDICAL MALPRACTICE CASES By: John M. Pumphrey, Esquire The Medical Malpractice Crisis: A Brief Overview Almost everyone has heard about the "medical malpractice crisis" in Pennsylvania over the last few years. Moreover, many Pennsylvanians have witnessed first hand the unavailability of healthcare from both providers and institutions (i.e., a doctor leaving the state or a hospital closing down its labor and delivery unit). Whatever the cause or causes of the crisis, its linchpin is the inability of many Pennsylvania physicians to: (1) obtain medical malpractice insurance coverage; and (2) obtain it at an affordable price. When the availability and affordability of medical malpractice liability insurance is discussed, talk of a limit or a "cap" on non-economic damages is inevitable. Non-economic damages refer to damages that are intangible, and unlike lost wages or medical expenses, include damages that cannot simply be reduced to dollar amounts. Typically, a cap refers to the imposition of a single monetary limit on all forms non-economic damages. For example, in jurisdictions such as California, the maximum a plaintiff can receive for any and all non-economic damages is $250,000. Proponents of a cap feel that a cap can help entice medical malpractice insurance carriers to write policies in Pennsylvania. They argue that from an actuarial standpoint, a cap helps insurance carriers better predict expected profit and loss on medical malpractice policies. Thus, proponents argue that a cap creates a win-win-win situation: coverage is affordable; doctors stay in Pennsylvania and the patient’s freedom of choice is preserved. Opponents of a cap feel that a cap severely limits the recovery of those plaintiffs in medical malpractice cases who have been harmed as a result of the negligence of healthcare providers and whose loss cannot be measured in economic loss terms. They also argue that a cap will not materially affect rates, which are more a reflection of an insurance carrier’s return on its investments in the capital markets, rather than the actual profitability of its “retail” business (i.e., the amount of premiums collected versus the amount of losses incurred). Both views are more or less correct. However, the reality of the situation is that some middle ground must be reached so that we can have and continue to have available and affordable insurance for doctors and hospitals here in Pennsylvania. This article suggests for consideration an alternative, a “tailored-cap” as I call it. Specifically, instead of a single arbitrary limit that applies to all available forms of non-economic damages in a particular case, this alternative calls for the imposition of individual caps which are tailored to the individual forms of non-economic damages already recognized under Pennsylvania law. This option would help insurers better predict and calculate their exposure, while providing reasonable non-economic damage compensation to victims of medical malpractice. Non-Economic Damages In Pennsylvania Pennsylvania has multiple forms of non-economic damages which are applicable to medical malpractice actions. In death cases under the Wrongful Death Act and Survival Act, 42 Pa.C.S.A. § 8301, et seq., there are three recognized forms of recoverable non-economic damages:
which include, among other things, companionship); (2) loss of services to children (which includes compensation for guidance, tutelage and moral upbringing); and (3) pain and suffering (experienced by the decedent before death).
(2) pain and suffering; (3) embarrassment and humiliation (for degradation, inferiority and feelings that people have aversion or dislike); (4) disfigurement (which is observable to others); and (5) loss of enjoyment of life (the catch-all category which includes loss of any of the senses, inability to engage in avocations, hobbies, activities, inability to marry, inability to have children and a general absence if sense of peace or well being). A Tailored-Cap: Beyond "One Size Fits All" A tailored-cap takes into account each form of non-economic damages available under Pennsylvania law, but places a specific cap on each particular form. On a case by case basis, this cap is “tailored” to the evidence of each case. For example, using the arbitrary limit of $500,000 per damage claim, in a wrongful death and survival action in which the plaintiff can establish all available non-economic damages (loss of consortium, loss of services to children, and pain and suffering of the decedent), the tailored cap alternative allows for a maximum recovery of $1.5 million for all of these non-economic damages. If the plaintiff can only prove two forms of non-economic damages in such a case, then no more than $1 million can be recovered. If a plaintiff can prove only one form of non-economic damages, then only $500,000 can be recovered. Keep in mind, these capped non-economic damages, of course, do not include any economic damages provable by a plaintiff. Likewise, the tailored-cap allows for a potential recovery of $2.5 million of non-economic damages in a case in which the patient survives and can prove all five forms of available non-economic damages. Again, if a plaintiff is only able to prove two or three forms of non-economic damages, then only $1 million and $1.5 million, respectively, can be recovered. And again, these capped non-economic damages do not include economic damages provable by a plaintiff. For purposes of further analysis, what follows are three medical malpractice scenarios that demonstrate the tailored-cap approach with a cap in the amount of $500,000 chosen arbitrarily. Keep in mind, under California law for example, only $250,000 in non-economic damages would be available and recoverable in each case. Case One Conclusion The tailored-cap proposal is not offered as a solution for either side in the debate over caps on non-economic damages. It is also certainly not presumed to be a cure-all for the medical malpractice crisis in Pennsylvania. A cap in any form is just that -- an arbitrary limit on those non-economic damages that the law recognizes as compensable. In fact, the use of $500,000 may seem low to some, high to others. This figure was used to just show the tailored cap in effect. In fact, if the tailored cap approach were to be considered, I believe that each form of non-economic damages would need to be analyzed by our state legislature to determine the proper limit for each form, as some of the recognized non-economic damages may actually require higher limits than others. Ultimately, if a resolution of the medical malpractice insurance crisis cannot be accomplished without some form of cap on non-economic damages, then perhaps the tailored-cap is may be a reasonable option. As set forth above, Pennsylvania law already limits the type of non-economic damages that can be recovered in medical malpractice matters involving death or injuries to a patient. The tailored-cap proposal considers those non-economic damages specifically recognized under Pennsylvania law. It is an alternative to the conventional non-economic damage cap proposal and is intended to fairly compensate the injured and their families in accordance with the law while, at the same time, enhancing the ability of insurance companies to actuarially assess risk and to write medical malpractice coverage in Pennsylvania at an affordable rate for healthcare providers. Additionally, the tailored-cap, by allowing for a more streamlined evaluation of non-economic damages, potentially increases the likelihood of settlements. Finally, it also serves to aid in the determination of proper non-economic damage post-trial (i.e., through remittitur and addittitur). For more information please contact John M. Pumphrey, Esquire Copyright 2006 by Silverman Bernheim & Vogel - All Rights Reserved. << Back to Article Index |
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