Tort reform is a popular idea that is touted as an effective wayto reducehealthcare costs. Needless to say, nobody wants doctors and insurance companies to be burdened by frivolous lawsuits, and everyone has heard of juries awarding outrageously large damage awards. As a result, a number of state legislatures have passed laws limiting the amount of non-economic damages that a jury may award to a plaintiff. But could it be unconstitutional to place caps on medical malpractice awards?
A recent decision by the Illinois Supreme Court overturned that state’s medical malpractice law, which imposed caps on damages awarded to plaintiffs. 1 As the national debate on healthcare reform continues, LeBron vs. Gottlieb Memorial Hospital may help us understand why one form of tort reform may not be the solution to our problems.
Arguments For and Against Tort Reform At first glance, tort reform may seem like one simple solution to the multiple healthcare cost concerns. However, there are many important issues and unintended consequences involved. There are powerful interests on both sides of the debate, and important separation of powers issues that must be weighed. Both sides of the debate have some very good arguments.
There are many forms of tort reform that can be used to attempt to deal with the cost and availability of healthcare. Legislatures may act to modify joint-and-several liability, change the collateral-source
rule, enhance the state’s oversight of physicians and ability to discipline physicians, increase the state’s oversight of medical liability insurance carriers, reduce the number of non-meritorious medical malpractice actions, encourage physicians to provide voluntary services at free medical clinics, encourage physicians and hospitals to continue providing health care services in a particular state, encourage physicians to practice in areas where there is a shortage of providers, or limit the noneconomic damages awarded by juries.
In general, proponents of caps on noneconomic damages argue that the legislature, as the most democratic branch of government, has the ability to pass legislation on behalf of the citizens that places caps on jury awards to plaintiffs in medical malpractice matters. This legislation is considered necessary because large jury awards increase the cost of medical malpractice insurance for doctors and hospitals. 2 The increase in doctors’ medical malpractice insurance has caused some physicians to leave their state for a better financial situation, limit services, or retire early. This is particularly so among neurosurgeons and obstetricians who have much higher malpractice insurance premiums than other specialists. The resulting shortage of doctors causes problems for patients whose access to care is then limited. 3 The cost of healthcare to patients is also increased because doctors must practice defensive medicine, ordering arguably unnecessary tests, imaging, referrals, consultations, and hospitalizations out of the fear of being sued later if they do not. 4
Additionally, the “transaction costs” of the system, such as the cost of litigation, is too high. Some losses, such as for pain and suffering and loss of consortium, are not easily valued and can in some cases lead to unpredictable and extravagant judgments. Furthermore, juries tend to be biased against large corporate defendants in favor of individual plaintiffs in tort suits. Applying a ceiling to the amount of noneconomic damages that can be awarded by juries, they argue, limits those errors and biases. Also, because the expected value of the total award is capped, the expected benefit of a medical malpractice lawsuit to the plaintiff is lower (unless economic or punitive awards increase to offset the restriction), and thus the number of lawsuits filed may be reduced. 5
Those opposed to caps on noneconomic damages argue that a statute that places caps on damages violates the separation of powers between the branches of government, in effect ruling that the legislature can not interfere with the right of juries and judges to determine fair damages. It is within the powers of a judge to reduce verdicts that appear to be too large. Thus, a statute which takes this power away from a judge is unconstitutional. Also, plaintiffs who have been harmed by medical errors have the right to full and fair compensation, and it is wrong to blame the plaintiff for large jury awards. Rather, it is insurance reform that is needed to spur competition and keep physicians and hospital malpractice premiums low (such as more competition among insurance companies), not the limitation on a plaintiff’s damages.
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