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Discussion of med mal caps intensifies

Legislator prepares cap bill

A state legislator is getting ready to introduce legislation that would reestablish caps for noneconomic damages in medical malpractice cases. The governor vetoed an earlier attempt to put caps back in place after the Supreme Court found the existing cap statute unconstitutional in a decision released last July.

Rep. Curt Gielow (R-Mequon) hopes to draw enough bi-partisan support for a bill he plans to introduce within the next week that a gubernatorial veto would not be a problem.

"I’m hoping to get some Democratic support for the level of $750,000 as a flat cap. And get some Democratic support so the governor will be inclined to believe that this is adequate," Gielow said in an interview.

Gielow headed a task force which created an earlier bill (AB 766), which would have set caps for noneconomic damages in medical malpractice cases at $450,000 for adults and $550,000 for children. Last fall, the state Legislature passed the bill with a 64-30 vote in the Assembly and a 19-14 vote in the Senate.

On Dec. 2, Gov. Jim Doyle vetoed that bill indicating that the level was unreasonably low and would not withstand Supreme Court review in light of the court’s Ferdon decision.

"The court has already struck down a $445,775 cap," Doyle noted in a message to the Assembly. "Passing what is virtually the same cap — $450,000 — and including a nominal increase for persons under age eighteen does not represent a serious effort to address the concerns of the Wisconsin Supreme Court.

Doyle acknowledged that he believed a cap could be established that would withstand Supreme Court review, but it needed to have a rational basis. The governor "encouraged all the interested parties on all sides of this issue to get together and figure out a responsible and lasting solution that has a real chance of being upheld by the Wisconsin Supreme Court."

When reviewing AB 766, Doyle had referenced a report he received from University of Wisconsin Law School Professor Walter J. Dickey. That report outlined the positions of Chief Justice Shirley S. Abrahamson’s majority decision in Ferdon v. Wisconsin Patients Compensation Fund, 701 N.W. 2d 440 (Wis. 2005), and Justice N. Patrick Crooks concurrence. Crooks observed that noneconomic damage caps in medical malpractice cases could be constitutional if they were not unreasonably low. The court indicated there needed to be a rational basis for the level of caps.

Dickey’s report stated, "It is quite clear that AB 766 suffers from the exact same constitutional defects as the statutory predecessor struck down in Ferdon under the state Equal Protection clause. AB 766 at most half-heartedly attempts to address only one of the several constitutional problems of its predecessor, and clearly fails in that attempt."

Gielow said he believed that the committee had reviewed the issue and shown a rational basis for the levels that AB 766 would have established. The committee looked at what other states had done in terms of caps and found that half a million dollars was the midrange of caps.

The bill Gielow is working on would look at the upper range of cap amounts that the committee had contemplated. He would not want to see the amount go beyond $750,000.

"If you go beyond $750,000, according to the actuarial study, the loss is significant in terms of the effectiveness in stabilizing the medical liability climate. Certainly, at $1 million and higher it’s the same as not having a cap at all," he said.

Gielow views the bill he is drafting as a middle ground for the two sides in the cap debate. He hopes to draw some support from Democrats in the state Senate. The 19-14 vote on AB 766 followed party lines.

"We need to get something back in place. The circumstance of the Dane County jury award of a few weeks ago is a crack in the dam of what I think can happen here if we don’t bring some surety back to the system," Gielow said.

– Tony Anderson

An $8.4 million jury verdict in a Dane County medical malpractice case has served as a flashpoint in the discussion of caps for noneconomic damages. Approximately half of the jury award covered economic damages, the other half was for pain and suffering.

Last summer, the Wisconsin Supreme Court struck down the state’s caps on noneconomic damages. Those caps, established in 1995 at $350,000, had risen to $410,332 at the time of the court’s analysis. The court’s 4-3 decision in Ferdon v. Wisconsin Patients Compensation Fund, 701 N.W. 2d 440 (Wis. 2005) found the caps unconstitutionally violated the state’s Equal Protection doctrine.

Since the Ferdon decision, supporters of caps for noneconomic damages have raised concerns about the negative effect their elimination would have on the state’s medical climate. Opponents of the cap praised the decision for allowing juries to decide the appropriate award for pain and suffering rather than leaving it in the hands of legislators.

A Jan. 31 jury verdict in Jessica Greenfield v. Physicians Ins. Co. of Wisconsin Inc., et al. has energized those discussions. Observers indicated the verdict’s effect on discussions comes as no surprise.

“It was expected that the first large verdict after the caps were removed would spark renewed debate,” said University of Wisconsin Law School’s Gordon Baldwin, a professor emeritus who taught constitutional law.

Pain and Suffering Award

In the Greenfield case, a jury determined a physician was negligent when performing surgery in 2000 which left the 33-year-old’s stomach and small intestine paralyzed. She must rely on a feeding tube to eat and drink. Of the total award, $4.25 million was given for pain and suffering.

Daniel A. Rottier, president of the Wisconsin Academy of Trial Lawyers, represented Greenfield. Rottier, of Habush Habush & Rottier S.C., said this case is a strong example of why the state should not cap noneconomic damages.

Greenfield has been hospitalized 21 times in the 5 ½ years since her surgery and has made 80 emergency room visits, Rottier explained. On top of that is the fact that she experiences extreme pain and during the next projected 49 years of her life, she is expected to be hospitalized 180 times and make 700 emergency room visits, he said.

“Her entire life is disrupted by this; she is on feeding and liquid tubes 12 hours per day,” Rottier said. “It’s just absurd to take the handful of cases where the pain and suffering is so extreme and artificially cap those.”

Bruce A. Schultz, of Coyne, Schultz, Becker & Bauer SC in Madison, represented Physicians Ins. Co. of Wisconsin. Schultz could not be reached for comment on the case.

Ferdon Removed Cap

Those who would like to see a cap reinstated have raised concerns about the effect Wisconsin’s lack of cap would have on the state’s medical climate. In Ferdon, the majority decision, authored by Chief Justice Shirley S. Abrahamson, determined the existing statute to be a violation of the state’s Equal Protection doctrine. The court found that the statute unfairly distinguished between those who suffer more than the capped amount and those who suffer less.

Abrahamson wrote, “[N]o rational basis exists for treating the most seriously injured patients of medical malpractice less favorably than those less seriously injured.”

The court also found that there was no rational basis for the level at which the Legislature set the caps. In his concurrence, Justice N. Patrick Crooks indicated that damage caps on noneconomic damages could be constitutional, but that the existing cap was unreasonably low; therefore, it denied the plaintiff’s constitutional right to a trial by jury.

Justice David T. Prosser Jr. dissented, indicating he did not believe the court had applied a rational basis test to the statute. He objected to the breadth of the decision, noting that damage caps will always under compensate those who have suffered the greatest damages.

Medical Practice Concerns

After the Supreme Court issued its Ferdon decision, Wisconsin Medical Society General Counsel Ruth Heitz expressed concerns about the potential for Wisconsin to become on of the American Medical Association’s crisis states.

“We initially had that concern when the decision came out in the Ferdon case and, if anything, our feeling in that regard has intensified, given the most recent jury verdict in the case of Greenfield,” Heitz said during an interview last week.

“When we look at states where they have lost their caps on noneconomic damages, many of the states have gone into crisis where insurance premiums have soared, in some cases seemingly exponentially. In some instances physicians cannot afford to pay the malpractice or medical liability insurance premiums at all, so they retire early. Some physicians leave the state.”

Heitz and other supporters of a cap have pointed to a number of potential problems. They point to concerns about increased insurance costs, the potential for more litigation from cases that might not have been brought if the recovery for noneconomic damages were limited and the possibility of physicians deciding to leave or choosing not to come if they perceive the environment in Wisconsin to be unfavorable.

“I think the long-term ramifications are that we may have difficulty attracting quality physicians and keeping quality physicians,” said Michael P. Crooks of Peterson, Johnson & Murray S.C. The Civil Trial Counsel of Wisconsin president warned about potential long-term ramifications of continuing without caps.

“I think it has the potential to be a very serious situation,” Cooks said. “I think there were medical malpractice cases in the past that were not filed as a result of the caps or that were settled prior to litigation as a result of the caps, which plaintiff’s counsel would now be more apt to take a run at without the caps in place.”

Cases Filed

A review of cases listed at the Wisconsin Circuit Court Access (WCCA) Web site showed 120 medical malpractices cases were filed during the last six months of 2005. The Ferdon decision came down in July 2005. A review of that same six month period one year earlier showed that 94 medical malpractice cases had been filed. Overall, there were 240 medical malpractice cases filed in 2005, compared with 219 in 2004.

In the Ferdon decision, Abrahamson observed that only four out of the 23 medical malpractice trials in 2004 resulted in any plaintiff recovery. Of the jury decisions in medical malpractice cases since 1995, observers have noted that about 10 would have exceeded the cap for noneconomic damages.

Rottier said it’s premature to get overly concerned about the effect operating without caps might have until there is hard data to support the dire predictions of those supporting caps. He challenged the idea that doctors would leave when Wisconsin is the only state to provide unlimited protection for any amount of a medical malpractice verdict that would exceed $1 million.

Compensation Fund

The state’s Injured Patients and Families Compensation Fund kicks in any time a medical malpractice verdict exceeds $1 million in economic and noneconomic damages. Physicians are required to carry malpractice insurance of $1 million per occurrence up to $3 million annually. The state’s Patients Compensation Fund covers any amount in excess of $1 million.

Physicians pay assessments to the fund annually at a rate between $859 for general practice physicians who are not obstetricians and who do not perform surgery. The annual assessment rises through three additional levels to a top fee of $5,154 for n
eurosurgeons and ob-gyn surgeons.

Heitz acknowledged that the fund’s existence makes Wisconsin different from other states. However, she expressed concerns about additional demands on the fund drawing down its reserves and leading to increased assessments to support the fund.

According to a 2004 report, the Patients Compensation Fund had about $741 million in reserve. Financial reports for 2005 projected a surplus of about $25 million, according to Fund Director Theresa Wedekind. She observed that the fund is financially sound.

In fiscal year 2004, the fund paid out $19.5 million and one year earlier, it paid out $22.1 million. During the four years in the early 1990s when there were no caps in place, Wedekind said the fund paid an average of $38 million each year. However, she noted that an actuarial report projected that the fund should be prepared for a potential draw of $80 million in a given year without caps.

This summer, the fund assessments will go up 25 percent, Wedekind said, noting that was only due in part to elimination of the caps. In recent years the fund actually had been reducing the assessments.

“In five of the last six years, our fees had gone down over 50 percent. So even with this increase, we are quite a bit below where we were,” Wedekind told the Wisconsin Law Journal.

At this point, Wedekind said the fund is “actuarially sound.”

“The fund will be here. … I want people to understand — we do have the money; we will pay the claims. We have well over $700 million in assets,” Wedekind said.

What is Next?

Looking toward the future, Rottier said he would like to see people wait one to two years to see how things really shake out compared with the predictions being made.

“I think we will find what we found before, that there will be some isolated incidents, but that’s the way the system should work. Wisconsin will continue to be a socially conservative place where very few claims are brought, not only because of attitudes but because the health care is good,” Rottier said.

Crooks said he did not believe that waiting to establish new caps was a good idea. He opposed the idea because of concerns about the way physicians would perceive Wisconsin if it did not have caps. Allowing that perception to become entrenched would only make it harder to overcome down the road.

“I think it is a problem that we should address sooner rather than later. I’m not sure what benefit waiting would be in terms of the overall goal of attracting quality health care,” Crooks said.

A state legislator is preparing to introduce legislation that would reestablish a cap for noneconomic damages in medical malpractice cases. Last December, the governor vetoed an earlier piece of legislation that would have reestablished caps.

Tony Anderson can be reached by email.

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