Damage caps may need to be pled

Listen to this article

“There might be harm in a case such as this if for example a plaintiff had some leeway in classifying damages as economic rather than noneconomic, or if knowledge that noneconomic damages were unavailable would have induced her to devote less effort to proving up such damages and more to proving her economic damages. This by the way is a powerful argument for regarding a damages cap as an affirmative defense.” Hon. Richard A. Posner Seventh Circuit Court of Appeals

The Seventh Circuit suggested on June 24 that any applicable cap on damages may need to be pleaded in federal court as an affirmative defense in the answer to a complaint.

Eleven-year-old Davita Carter, whose father is a Marine veteran and is entitled to treatment at government expense, had surgery at Bethesda Naval Hospital in Maryland to correct severe scoliosis of the spine.

The surgery left her a paraplegic, and she brought suit for medical malpractice under the Federal Tort Claims Act in the Central District of Illinois, where she lives.

Carter filed her complaint in March 2000 and the government’s answer, which did not mention the damages cap, was filed in May. Eventually, Carter learned that the government planned to invoke Maryland’s damage cap on noneconomic damages, and in November 2001, about six weeks before the trial, asked the judge to rule that the cap was inapplicable, but he declined.

The district judge granted summary judgment for Carter on the issue of liability and then conducted a bench trial on damages that resulted in a finding that the plaintiff had sustained $3.4 million in economic damages (past and future medical expenses plus lost future earnings) and another $15.5 million in noneconomic damages (permanent disability, disfigurement, physical and emotional pain and suffering, and loss of enjoyment of life).

Consistent with its earlier ruling, however, the judge reduced the award for noneconomic damages to $530,000, the maximum allowed under Maryland law. Carter appealed, but the court of appeals affirmed, in a decision by Judge Richard A. Posner.

Governing Law

The court first held that Maryland law, which contains the noneconomic damage cap, applies, rather than Illinois law, which does not. Under 28 U.S.C. 1346(b), the Act authorizes the imposition of tort liability on the federal government “under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.”

“[T]he law of the place where the act or omission occurred,” has been interpreted to mean the entire law of the place, and the court concluded that the damage cap is a substantive rule of law, and thus, the Maryland cap applies.

Forfeiture

The court then held that the government did not forfeit the damage cap by failing to plead it as an affirmative de-fense in its answer to the complaint.

The court noted that there is a split between the circuits whether a limitation on damages is an affirmative defense that must be pleaded in the answer pursuant to Fed.R.Civ.P. 8(c). In Taylor v. United States, 821 F.2d 1428, 1433 (9th Cir. 1987), the court held that a damage cap need not be pleaded as an affirmative defense, while in Simon v. United States, 891 F.2d 1154, 1157 (5th Cir.1990), a
nd Jakobsen v. Massachusetts Port Auth-ority, 520 F.2d 810, 813 (1st Cir. 1975), the courts held that they should.

The court acknowledged that a cap on damages is only a partial defense, but found this not dispositive. The court reasoned, “that is true of any defense that is limited to the amount of damages, and in that respect it is no different from comparative negligence, which clearly is an affirmative defense.”

The court also acknowledged that whether a cap on damages will operate as an affirmative defense is contingent on the amount of damages sought and awarded, something which a plaintiff is not required to set forth in the complaint.

The court decided that it need not resolve the conflict, however, because it concluded that, even if a damage cap can be forfeited, the failure to plead it as an affirmative defense forfeits the defense only if the plaintiff is harmed by the failure, which it found Carter was not.

	Links Seventh Circuit Court of Appeals Related Article Case Analysis

The court added, “There might be harm in a case such as this if for example a plaintiff had some leeway in classifying damages as economic rather than noneconomic, or if knowledge that noneconomic damages were unavailable would have induced her to devote less effort to proving up such damages and more to proving her economic damages. This by the way is a powerful argument for regarding a damages cap as an affirmative defense. (cites omitted).”

However, Carter did not argue either form of prejudice, instead arguing that had she known of the defense earlier, she would have devoted more time to developing an alternative ground for getting around the cap, specifically, equitable estoppel.

Carter contended that she could have had the surgery done at a local nonfederal hospital at government expense, in a jurisdiction without a damage cap, but was steered to Bethesda in Maryland by the government.

The court rejected the argument, however, finding that, even if the government violated a legal duty to her by failing to advise her parents of the local-treatment option, the remedy would not be to estop the government from asserting the damage cap in a malpractice action. Accord-ingly, the court affirmed.

Click here for Case Analysis.

David Ziemer can be reached by email.