POINT – COUNTERPOINT

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The Wisconsin Supreme Court’s July 14 determination that the cap on non-economic damages in medical malpractice cases was unconstitutional has generated a great deal of discussion from those who believe the court made the correct decision and those who are concerned about potential negative consequences. The Wisconsin Medical Society and the Wisconsin Academy of Trial Lawyers were among the groups that submitted amicus briefs in the Ferdon case. The lawyers who helped author those briefs shared their thoughts on the court’s decision.

Wisconsin Medical Society

The Wisconsin Supreme Court’s decision in Ferdon v. Wis-consin Patients Compensation Fund striking down the statutory cap on medical malpractice noneconomic damages is troubling. By concluding that the $350,000 statutory cap violates the equal protection clause of the Wisconsin Constitution, the court failed to give credence to — or even recognize — the historical and statutory context of the cap. Even more disturbing, however, are the serious problems that Wisconsin’s medical liability and health care systems will face because of the decision.

The statutory cap, enacted in 1995, was not an isolated provision. Rather, it was one component of our state’s comprehensive medical liability system. In 1975, the Wisconsin Legislature confronted a looming health care crisis. Concerned with the size and number of medical malpractice lawsuits in Wisconsin, rising insurance premiums, and the effect of the lawsuits and premiums on Wisconsin’s health care system, the Legislature enacted comprehensive medical malpractice liability legislation to deal with the crisis.

The Wisconsin medical liability system, found in Chapter 655, requires that Wisconsin health care providers make contributions to the Injured Patients and Families Compensation Fund (the "Fund") and guarantees payment from the Fund for medical malpractice judgments, including full payment of economic damages. In an effort to control the most intangible portion of medical malpractice liability, the legislature placed a $350,000 limit, adjusted annually for inflation, on noneconomic damages to ensure the Fund could cover all judgments without charging health care providers exorbitant rates. Without the cap, the remainder of the medical liability system may not be as healthy as it has been in the past.

Concerns About Removal

The removal of the cap on noneconomic damages likely will cause Wisconsin to experience the medical liability crisis that caused the Legislature to create the comprehensive medical liability system in the first instance. Indeed, without a cap on noneconomic damages, Wisconsin likely will not be able to escape the medical liability crisis that continues to affect much of the country. According to data from the American Medical Association, 20 states are currently experiencing a crisis, characterized by considerable increases in medical liability premiums and significant reductions in patient access to health care, as physicians flee those crisis states to practice in states with reasonable medical liability reform. Many other states are near crisis, while Wisconsin has been one of only five states that has remained stable, due in large part to the cap on noneconomic damages combined with the creation and maintenance of the Fund.

Unfortunately, because of the court’s decision in Ferdon, the ability of patients in Wisconsin to obtain quality, accessible health care may be placed in jeopardy. States such as Illinois and Oregon whose medical liability caps on noneconomic damages were removed, saw medical liability premiums rise dramatically. According to published articles, a Chicago area obstetrician/gynecologist paid $104,000 in 2002 for $1 million per claim and $3 million aggregate coverage, while a similar Wisconsin specialist paid slightly over $25,000 that year. Within three years after Oregon lost its cap on noneconomic damages, medical liability premiums rose by nearly 80 percent. In crisis states, experienced physicians have chosen to retire or elected to stop performing high-risk procedures such as delivering babies. Many have moved to other states with more favorable medical liability climates — like Wisconsin.

Anticipated Increases

Now that the noneconomic damage cap has been lifted, Wisconsin physicians anticipate that medical liability insurance rates and Fund assessments will increase significantly as insurers adjust rates to reflect the projected increase in litigation, larger noneconomic damage awards and higher settlement costs. Wisconsin physicians facing these increased risks and costs might choose the same path as physicians in Illinois and other crisis states, by retiring, limiting or discontinuing practice in high risk areas and leaving the state. Some physicians who moved to Wisconsin to escape the medical liability crisis in other states are already considering the possibility of moving to a state that is not at risk of entering the medical liability crisis.

As the health care needs of baby boomers increase, and rural communities in various states struggle to recruit specialists and general practitioners, Wisconsin cannot afford to have its citizens’ access to health care diminish. Losing physicians would have a serious impact on patients throughout the state, but most significantly in rural communities that are now underserved.

The Ferdon decision will not be the final word on Wisconsin tort reform. It is imperative that the Wisconsin Legislature restore the balance between access to health care for all patients and noneconomic damage awards in medical liability cases. The Wisconsin Medical Society and other health care partners will work collaboratively with legislators to secure legislation that places appropriate limits on damages in medical liability cases, to ensure that Wisconsin does not become a medical liability crisis state.

Ruth M. Heitz, General Counsel, Wisconsin Medical Society

Timothy J. Muldowney and Jennifer L. Peterson, LaFollette Godfrey & Kahn, wrote an amicus brief on behalf of the Wisconsin Medical Society

Wisconsin Academy of Trial Lawyers

In the Supreme Court’s recent decision in Ferdon, justice was finally uncapped for severely injured victims of medical malpractice. After a decade of existence, the Wisconsin Supreme Court, in a 4-3 decision, held that the cap on noneconomic damages in medical malpractice cases violated the constitutional right of Matthew Ferdon to be treated equally under the law. The majority opinion is a scholarly, exhaustive, and well-
reasoned opinion that recognizes that our courts are not merely a "judicial rubber stamp" for legislative enactments but, rather, play an integral role in the enforcement of the law, with the obligation to "probe beneath the claims of the government" to determine whether there is a rational basis behind the law. Ferdon at par. 77. For lawyers in Wisconsin, it is a reaffirmation of the fact that we are members of a branch of government that occupies a position equal to that of the legislative and executive branch.

"A court need not, and should not, blindly accept the claims of the legislature." Ferdon at par. 77. With this principle in mind, the court opted to apply not a meaningless, toothless version of the rational basis test but, rather, "rational basis with teeth" in its constitutional analysis of Wisconsin cap on noneconomic damages in medical malpractice actions.

Legislative Objectives

Giving proper deference to the Legislature, the court identified the stated "objectives" behind the cap. These objectives have been part of the mantra of the tort reform movement for the last 30 years: (1) caps are necessary in order to reduce malpractice insurance premiums; (2) caps are necessary in order to ensure the economic viability of the Patient’s Compensation Fund; (3) caps are necessary in order to control the costs of healthcare in Wisconsin; and (4) caps are necessary in order to encourage health care providers to continue to practice medicine in Wisconsin.

In its attempt to determine whether there exists any rational relationship between the institution of a $350,000 cap on damages for the most severely injured in our society and these identified legislative "objectives," the court did not rely on hyperbole, anecdotal evidence or the conclusory statements of interests groups that many times motivate legislative enactments. Instead, the court relied upon the facts and the reality of not only the experience of other states with damage caps but also the Wisconsin experience with medical malpractice caps over the past twenty years. When the truth finally saw the light of day in the chambers of the Wisconsin Supreme Court, it became apparent that the various legislative objectives behind the cap on non-economic damages in medical malpractice actions are supported by evidence that is at worst nonexistent and at best weak and inconclusive.

Objectives Not Jeopardized

Since the release of the court’s opinion on July 14, many politicians, pundits and talking heads have adopted a "chicken little" attitude with regard to the future of our justice system in Wisconsin by arguing that all types of legislation restricting an injured party’s right of recovery are now in jeopardy. Clearly that stretches the holding of Ferdon beyond the realm of reason. Those legislative enactments that are rationally related to actually achieving a legitimate government objective are not in jeopardy.

Those that are not so related may very well be subject to challenge. That is the way our judicial system should work. As Justice Crooks notes in his concurring opinion, damage caps "can satisfy the requirements of the Wisconsin Constitution." Ferdon at par. 189. The law imposing such caps, however, must be rational.

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A similar attitude has been adopted with respect to the future of Wisconsin’s health care system, with some arguing that we are heading for skyrocketing insurance rates, increasing healthcare costs and a rush of physicians headed for the border. In evaluating the validity of the predictions from these profits of doom, one need only look to our sister state of Minnesota, where, without caps, they have experienced none of these "doomsday" scenarios.

Negligible Impact

The statistics regarding the financial viability of the Wisconsin Injured Patients and Families Compensation Fund outlined in the majority opinion when compared to the number of successful malpractice actions litigated in Wisconsin courts, both before and after the institution of the cap, indicate unequivocally that the impact of the Ferdon decision on the overall healthcare system in Wisconsin will be negligible. The greatest impact of the Ferdon decision will be on those who suffer the worst injuries at the hands of a negligent physician. Victims of serious malpractice will no longer be woefully under-compensated for their life-altering loss. This is an accomplishment that should be applauded, not criticized, by those of us who strive for fairness in our judicial system and, more importantly, those who strive for quality healthcare in Wisconsin.

Robert L. Jaskulski, Habush Habush & Rottier, helped write an amicus brief for the Wisconsin Academy of Trial Lawyers.