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Damage Cap Case Analysis

The two most significant questions raised by the decision are whether any damage cap can survive constitutional scrutiny, and whether other provisions of Chapter 655 governing medical malpractice can.

The majority opinion and the concurrence repeatedly claim that the decision is limited to the $350,000 noneconomic damage cap for medical malpractice, but there is little in the actual reasoning of the court’s opinion that would permit the case to be distinguished in any future attack on a damage cap.

Had the decision been decided on right to remedy grounds, rather than equal protection grounds, the decision would be easier to distinguish. Medical malpractice cases are complex, expensive to prosecute, and difficult to prove. Many cases that are objectively meritorious go unprosecuted as a result. The court could have found this a reason that the potential of large noneconomic damage awards is necessary to prevent meritorious cases from going without remedy.

Only the two-justice concurrence expressed this view, however. Because the majority opinion is based on equal protection grounds, it will be far more difficult to distinguish.

Any damage cap will limit the damages that those most severely injured can recover, while allowing those lesser injured to recover full damages; that is the essence of any damage cap.

The court also noted the very few Wisconsin jury verdicts that exceed the cap, and that only four of the 23 trials in 2004 resulted in any plaintiff recovery as a reason why the cap is unnecessary. However, this reasoning uses flawed logic.

Suppose the cap were as high as $350 million; there would be no verdicts over the cap. If it were only $350, all damage awards would exceed the cap. The majority’s reasoning — because so few verdicts exceed the cap, the cap is unrelated to a legitimate legislative purpose — make it more difficult for a cap to pass muster the higher it is. An enormous cap of $350 million would appear unconstitutional using this reasoning, while the paltry $350 cap would appear reasonable.

The reasoning also fails to understand the economic incentives at work in settlement.

If both plaintiff and defendant are of the opinion that a jury would award damages greater than the cap, then the case should never go to trial, but should settle for an award at or near the cap; there is no incentive for either party to take the case to trial.

Only if the plaintiff and defendant differ on either whether liability will be found, or in their estimate of the damages, will a case go to trial. This explains the high number of defense verdicts — cases are not being tried because of a dispute in the amount of damages, but because of disagreements over duty, or negligence, or causation.

This is a pattern that should hold true whenever any damage cap is in effect. Unless the plaintiff wants to make a constitutional challenge to the cap, there is no reason to try a case when both parties value the damages at an amount higher than the cap.

Where damage caps are present, they operate similar to an insurance policy with too little coverage. When a penniless tortfeasor in an automobile accident only has $50,000 of liability coverage, and damages are agreed to be $100,000, the defendant insurer will settle for the maximum. The case will not go to trial, but that settlement does not mean a jury would not award far more if given the opportunity; it is instead an acknowledgement that it would.

Similarly, the paucity of verdicts greater than the cap does not mean juries would not award amounts greater than the cap; it only means there is no reason for those cases to go to trial. Thus, all damage caps are subject to attack using the same reasoning as that employed in the case at bar.

This case will surely be mined by plaintiffs attorneys and defense attorneys in challenges to other damage caps. Defense attorneys will find many examples of the court stating its decision is very limited; but plaintiffs’ attorneys will find much more in the court’s reasoning to extend it. Defense attorneys may find it more useful to attack the economic analysis than to try to distinguish it.

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Med mal damage cap violates constitution

On the second question, other provisions of Chapter 655 are subject to attack in light of the decision, as well. In Aicher v. Wisconsin Patients Comp. Fund, 2000 WI 98, 237 Wis.2d 99, 613 N.W.2d 849, the court upheld the statute of repose for actions by minors against challenges based on equal protection, due process, and the right to remedy.

In its equal protection discussion, the court wrote, "Whether the perception a malpractice crisis was inflated or illusory make little difference because the perceived crisis led the Legislature to make a policy determination about the costs of health care." Aicher, 613 N.W.2d at 867-868

In the case at bar, however, the court has effectively found that the malpractice crisis was inflated or illusory. The underpinnings of Aicher have thus been unmoored, and any provision that limits the rights of an injured party is subject to attack, notwithstanding the majority’s protestations to the contrary.

– David Ziemer

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David Ziemer can be reached by email.

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