Patterico's Pontifications

2/5/2010

Illinois Supreme Court Overturns Cap on Medical Malpractice Damages

Filed under: Health Care — DRJ @ 10:17 pm



[Guest post by DRJ]

At A Brief History, Mike K. notices a New York Times report that the Illinois Supreme Court has thrown out caps on “pain and suffering” in medical malpractice cases. From the New York Times:

“In a 4-to-2 ruling, the Illinois court wrote that the legislature, in enacting the 2005 law, violated the state Constitution’s separation of powers clause by imposing decisions that should be reserved for judges and juries. The law established caps of $500,000 for non-economic damages in verdicts against doctors and $1 million in cases against hospitals.

The decision armed opponents of such provisions with fresh ammunition, and held a particular sting for the American Medical Association, which has its headquarters in Chicago.”

Mike K. also has some predictions regarding how this might impact medical practice in Illinois. It will also be interesting to see if it impacts health care reform in Washington.

— DRJ

43 Responses to “Illinois Supreme Court Overturns Cap on Medical Malpractice Damages”

  1. I think it’s pretty obvious what will happen to the cost and availability of medical care. The legal reasoning, as pointed out at the Chicago Tribune link, which panned it as a disastrous decision, below is also suspect.

    “February 4, 2010

    The Illinois Supreme Court on Thursday threw out a sound law passed by the General Assembly in 2005 to protect health care in this state. The court threw out a sound law that has worked. The court threw out a sound law and essentially told the state’s lawmakers: Don’t even bother to try this again.

    This is a disastrous decision.

    It declares that caps on medical malpractice awards violate the state constitution’s separation-of-powers clause. The caps limited noneconomic damages, such as pain and suffering, to $500,000 in claims against doctors and to $1 million in claims against hospitals.

    The Legislature acted appropriately in response to a crisis. Malpractice costs were skyrocketing in Illinois because insurers were afraid to do business here. They were afraid of runaway jury verdicts. They also knew that more than 20 states had some caps on damages, making those states much safer places to do business.

    Malpractice premiums in Illinois were particularly egregious for doctors in riskier specialties such as obstetrics and neurosurgery. As a result, doctors were leaving, particularly doctors in rural areas. They couldn’t afford to practice in their communities. That made it more difficult for patients to find the care they needed.

    The 2005 law eased the crisis. Malpractice premiums declined. The exodus of doctors stopped.

    But now the law has been declared unconstitutional. Watch out for what happens now……..”

    http://www.chicagotribune.com/news/opinion/editorials/ct-edit-medmal-20100204,0,5948924.story

    daleyrocks (718861)

  2. Oh good. I was hoping we would have an object lesson as to why tort reform is a good idea…

    Scott Jacobs (d027b8)

  3. Scary that there can be places in the US with worse government than CA. Although with the Ill. record for sending governors to prison perhaps it should be a relief that the other branches are just as messed up.

    Soronel Haetir (0f70fc)

  4. i’m gonna go way out on a limb here with a few predictions:

    jury awards will go up.

    malpractice rates will go up.

    insurance companies will cancel existing policies and refuse to write new ones, abandoning the market completely.

    doctors will either curtail their practices, retire or leave the state, reducing the quality of health care for the general public.

    the MFM will be unable to discover why any of these events occur and call for governmental intervention.

    redc1c4 (fb8750)

  5. I understand how tort reform can reduce medical malpractice insurance rates.

    However, many of the talking heads tout tort reform as a way to slow the rise of health care costs. Is there any evidence that shows that health care costs have risen more slowly in states with limits on medical malpractice damages than in those without limits?

    Ira (28a423)

  6. if malpractice rates are lower, higher risk fields will have more practitioners, increasing supply and thereby helping containing costs. also, getting pts into seeing the specialist sooner can reduce costs as well.

    lower malpractice costs will also encourage more people to practice medicine in general and to stay in practice longer, with similar results.

    basic supply and demand.

    redc1c4 (fb8750)

  7. Ira,

    After reading this speech by Sen. John Cornyn on the impact of tort reform in Texas, it sounds like reform increased the quality of care more than lowered costs — because health care providers use the money they save on lawsuits and insurance premiums to increase the number of physicians, expand specialty care, improve facilities/equipment, and increase charity services. Cornyn also references two studies that he says supports a link between tort reform caps and health care costs but I haven’t looked them up. Here’s what he said:

    Defensive medicine, by one account, increased health care costs by up to 9 percent a year. That is according to Mark McClellan and Daniel Kessler, economists whose names you may recognize. Another study by PricewaterhouseCoopers put the annual cost of defensive medicine at $230 billion a year.

    DRJ (84a0c3)

  8. The public needs to decide whether they want more doctors, or more lawyers.

    TheNewGuy (114368)

  9. As someone from a family with a history of producing lawyers, we need more doctors. But I have a conflict of interest.

    DRJ (84a0c3)

  10. As DRJ will recall, Texas went through this same drill twenty-odd years ago. But via Proposition 12 in 2003, the citizens of Texas reallocated power back to the Legislature. Prop 12 amended the Texas state constitution to explicitly permit statutory caps of the sort that a then markedly pro-plaintiff Texas Supreme Court (a/k/a the “Sixty Minutes Court”) had ruled violative of the Texas state constitution in 1988.

    It’s still early (in actuarial terms) to draw conclusions about the long-term results, but the interim results — in terms of lower malpractice rates and fewer doctors fleeing the jurisdiction — have been pretty much what the tort reform forces projected as likely benefits.

    That’s precisely the kind of result that Congressional Dems and President Obama don’t want to recognize in the current health-care debate. At a very minimum, any federal health care legislation should at least permit states those states, like Texas, who are experimenting with tort reform solutions to continue to reap the benefits of those policies, and not penalize us with the excessive costs of those states (like Illinois) who aren’t. And although it offends my commitment to federalism, I might be persuaded that comprehensive tort reform at a federal level could be justified as part of a federal health care reform package.

    Beldar (f123d6)

  11. And although it offends my commitment to federalism, I might be persuaded that comprehensive tort reform at a federal level could be justified as part of a federal health care reform package.

    Especially if it’s coupled with removal of restrictions against interstate health insurance policies.

    Plus, the point of having each state act as a laboratory for new ideas is to see which ones work. I submit there’s been enough experimentation with tort reform that we can say it has an overall beneficial impact. That doesn’t rule out future tinkering but the general concept works.

    DRJ (84a0c3)

  12. Amend the Ill. Constitution. Problem solved.

    The Legis. has twice passed bills, so it shouldn’t be impossible to engage the amendment process.

    shipwreckedcrew (3d3fb8)

  13. So judges have ruled that the legislature can have no check on the authority of judges… isn’t that called judicial tyranny?

    tehag (1b4709)

  14. Our judges get elected and the maximum term is ten years.

    nk (db4a41)

  15. *longest* term

    nk (db4a41)

  16. I don’t believe in caps but I do believe in PROFESSIONAL JURIES.

    Technically incompetent judges and juries should not be involved in these matters.

    HeavenSent (ae267e)

  17. Well it just goes to show that judges will pad the pocket books of their fellow ambulance chasers.

    But don’t worry, if Obummer gets his way, and were to pass single payer, the doctors would be working for the US govt. then. If that happens, you can damn wll bet that they would be immunized against lawsuits then, which would allow the death panels the libturds so desperately want.

    I can just imagine the conversations that would occur. Govt Health Panel (aka DeathPanel), Doctor, you say the patient is 69yoa and needs a hip transplant?”

    Doctor, “Yes, that is correct.”

    Govt Health Panel Death Panel, Well he’s too old to live anyway. Euthanize the bastard.”

    peedoffamerican (7783d2)

  18. violated the state Constitution’s separation of powers clause by imposing decisions that should be reserved for judges and juries

    I know that is a quote from the NYT and may not “do justice” to the legal arguments involved, but by this standard one could say that whenever the legislature makes a law with penalties the judges don’t like, the judges get to overrule. “I don’t care what the statute for being cruel to your dog says; forcing your dog to eat only generic dry dog food is a crime I say! Ninety days in the county jail eating only dry raw oats!!

    I don’t spend energy looking at number crunching, but I assume if the risk and cost of litigation went down then malpractice rates would go down and physician overhead would go down.

    But I think whenever the main goal is making health care cheaper you are trying to achieve contradictory goals at the same time. The least expensive health care will never be the best health care, just as the cheapest car on the lot will never be the best car on the lot. If one is concerned about access to health care as a human “right”, having more doctors in practice is one part of the solution. Making conditions for practicing more attractive will be incentive for more doctors. Back in the 80’s many thought the rising costs of health care were primarily due to having too many doctors who needed to keep busy making money, so there was strong control over medical school enrollments. An ideal example of wrong diagnosis leading to wrong treatment.

    There will always be a need for more good lawyers, just like more good doctors, and more good just about anything. Unfortunately, there will always be an oversupply of lawyers and doctors and just about anything that will cause problems for all with narrow minded short-term interest.

    MD in Philly (d4668b)

  19. Well he’s too old to live anyway. Euthanize the bastard.”

    It would be more along the line of “69 years old? He won’t be able to enjoy the new hip enough to make the expense worth it. Give him pain killers for the pain, and send him home.”

    Scott Jacobs (d027b8)

  20. What I find troubling is the Court’s decision that limiting non-economic damages is a separation of powers violation. Shouldn’t non-economic damages that are sufficiently egregious be punishable as a criminal matter? Which would clearly be in the purview of the legislative branch to define…looks to me as if the Court is the party in violation of a separation of powers.

    EW1(SG) (edc268)

  21. #15 nk:

    *longest* term

    Aw, considering that it is Illinois, I liked your first phrasing better. 😉

    EW1(SG) (edc268)

  22. Scary that there can be places in the US with worse government than CA.

    Haven’t you heard the latest? The primaries were held last week, and the new winner on the Dem side for Lt. Governor has been accused in the past of holding a knife to his ex – wife’s throat in a steroid rage, had a girlfriend on the side who was an admitted prostitute, and spent over $2 million of his own money in order to win, even though he was in court last month because he was way behind in his child support payments.

    Of course, our local MSM completely missed this entire story (wonder why?), and our current Dem Governor had no idea (yeah, riiiight) that this guy’s past record was so sordid.

    Awesome!

    Dmac (539341)

  23. Shouldn’t non-economic damages that are sufficiently egregious be punishable as a criminal matter?

    What? Where do you get this idea?

    Does anyone have a link to any studies that show what verdicts (re: non-economic damages) were before these caps and after? I know it’s easy to view caps as an easy solution, but it’s only because caps are easy to explain, not necessarily because there is a correlation between caps and savings on litigation.

    I mean, does anyone really think there are potential plaintiffs out there who are saying “well, yesterday, when we could only recover half a million dollars in noneconomic damages, this case wasn’t worth pursuing. But now it is!”
    I know how expensive medical malpractice litigation can be, but the number of cases where a cap would make a difference between a case being pursued or not has to be statistically insignificant.

    Likewise, I’d like to see what juries were awarding on the back end for noneconomic damages before caps.

    Linus (e0c249)

  24. “The law established caps of $500,000 for non-economic damages in verdicts against doctors and $1 million in cases against hospitals.”

    Just on the other thread we were talking about how tort reform was about punitive damages — but as we see here it is not. It is often about non-economic damages.

    So lets sort this out: if grandma is in the hospital, with no income and costing you money, what do you think your ‘economic damages’ are if their negligence kills her? Negative. She had no income potential and was actually costing you money. Your only recovery here would be non-economic. So the legislature here tried to set a cap on all of our grandmom’s life. That’s what tort reform is about.

    imdw (842182)

  25. “Shouldn’t non-economic damages that are sufficiently egregious be punishable as a criminal matter?”

    Criminal punishment wouldn’t recompense the victim. Plus it may require more culpability than negligence.

    imdw (e6c812)

  26. ^calls politicians it doesn’t agree with pedophiles. Never apologizes.

    Poor Cupcake.

    Dmac (539341)

  27. Those judges have done to Illinois what labor unions — not to mention inept upper management at GM and Chrysler — did to Michigan.

    A lot of ambulance chasers will now want to move their homes and offices to that part of the midwest. Therefore, expect Illinois to become even bluer, more liberal, more pro-Democrat-Party, more corrupt.

    Mark (411533)

  28. Comment by EW1(SG) — 2/6/2010 @ 7:40 am

    I meant before they have to stand for reelection;
    more specifically, it’s two years for associate judges; six years for circuit judges; and ten years for appellate court and supreme court justices.

    nk (db4a41)

  29. It is interesting that the IL Supremes used as a hook to hang this decision the theory that it prevents judges from reducing unreasonable awards for “pain & suffering”…
    As if that (reductions) has ever happened in IL previously.

    The voters’ contempt for these ignoramussi should know no bounds.

    AD - RtR/OS! (a61dac)

  30. However, many of the talking heads tout tort reform as a way to slow the rise of health care costs. Is there any evidence that shows that health care costs have risen more slowly in states with limits on medical malpractice damages than in those without limits?

    Comment by Ira

    California is a low cost state, according to the Dartmouth Atlas, but it is also the origin of the first HMOs which have a large market share. It was also one of the first states with contracting between doctors and insurance companies. Those are confounding factors.

    The biggest effect this will have is with migration of physicians out of the state. That was the driving force of the reform. Doctors’ gross incomes are down the past 25 years as Medicare has cut reimbursement. They can no longer afford to pay high premiums. You can see the effect in the disappearance of many national medical conventions. Doctors don’t go away to meetings like they did 30 years ago. Now they do on-line CME.

    There are now shortages of some specialties and this will accelerate the shifting of docs to lower cost states.

    Mike K (2cf494)

  31. I should have added that caps on non-economic damages are a way for insurance companies to estimate costs and that stabilizes the premium. Grandma shouldn’t be worth much more than $1.5 million to the family unless she was really a scintillating conversationalist.

    Mike K (2cf494)

  32. The voters’ contempt for these ignoramussi should know no bounds.

    These same voters that you don’t trust on a jury? Or are these different voters? There are logically consistent reasons to be in favor of tort reform–let’s try and stick to those.

    Linus (e0c249)

  33. I am pretty sure that if the Illinois legislature wished, it could take the tort of medical malpractice away from the common law and make it statutory, as it has done with wrongful death, structural work act, landlord-tenant, etc. However, as long as it remains a common law tort, most piecemeal legislation such as here will be scrutinized as interfering with the judicial process.

    nk (db4a41)

  34. It’s been more than fifteen years since I dealt with med mal (defense) but I think a CP case is “worth” about $11 million in Cook County where a wrongful death coupled with a survivor action would be worth maybe $3 million.

    nk (db4a41)

  35. where a wrongful death coupled with a survivor action would be worth maybe $3 million

    For example, if the baby had been electrocuted by a faulty incubator.

    nk (db4a41)

  36. Touching upon what Mike K. has said, a “tail” (that’s insurance for a retiring physician) for a family practitioner, not an OB/GYN, in Illinois, is $60,000.00 because the statute of limitations is the age of majority plus two years. Never mind leaving, nobody wants to get in because it costs too much to get out.

    nk (db4a41)

  37. Linus wrote (#23 — 2/6/2010 @ 8:15 am):

    I know how expensive medical malpractice litigation can be, but the number of cases where a cap would make a difference between a case being pursued or not has to be statistically insignificant.

    With due respect, you’re completely wrong about this. The issue isn’t whether a case would be “pursued or not,” but how the caps affect perceived “reasonable settlement values,” as a result of which, pretty much 100% of person injury cases are affected by the caps.

    To follow this, you first have to thoroughly understand the role of plaintiffs’ personal injury lawyers: They gamble their time through contingent fees, rather than billing by the hour, and they typically advance the out-of-pocket costs of the litigation as well. Even though the canons of ethics nominally require that decisions whether to accept or reject settlement offers (either pre- or post-verdict) be left to the clients, the clients naturally rely very heavily on their recommendations. In my experience contingent fee lawyers are quite shrewd about whether to invest more of their time and money, and unlike the situation in hourly rate cases, there’s no incentive at all — indeed, there’s a huge disincentive — to stretch a case out beyond the point at which the lawyer believes he’s achieved what subjectively appears to him to be an acceptable return on his investment. The contingent fees make the lawyers more than mere gladiators; they become (subject in theory to ethical boundaries) at least quasi-principals in their own right along with their clients, and they often have practical decision-making power over settlement decisions.

    As for that return on investment, and specifically, as for when — quite subjectively — a settlement offer is “enough,” that depends very heavily how the lawyer believes the case would fare if tried to a conclusion (including all appeals). Only a few percent of cases go to verdict, much less through all appeals. But for the vast majority (way more than 90%) of the cases that settle before trial, the few cases that don’t settle, and that instead do go at least to trial court verdict and judgment, set the benchmarks by which the subjective valuations of all the other cases are estimated. Indeed, those benchmarks’ influence extends all the way down to determining which prospective cases do and don’t get filed; they (roughly and subjectively) define what kinds of cases aren’t worth the contingent fee lawyers’ time and investment of expenses.

    There’s always a chance of an outright loss; indeed, quite often that’s the single most probable result. But that doesn’t mean that the case lacks any and all “settlement value.” Rather, a case with even a 10% or 20% chance of winning on liability is going to have some settlement value — and how much will then depend on what the likely damages award will be.

    Thus, the contingent fee lawyer’s subjective evaluation of a case’s “settlement value” is always heavily affected by his expectations regarding what the total award will likely be — including both economic and non-economic elements of damages — if he wins. When making that estimation, the lawyer will probably consider both the “realistic” version of a good result — often using such rules of thumb as to guestimate that pain and suffering damages aren’t likely to exceed more than three times the plaintiff’s medical bills. To use a baseball metaphor, most “wins” at the plate are either walks or singles, so much of your estimation of the value of a case is predicated on that modest but still solid and valuable result. But every plaintiffs’ personal injury lawyer, including every plaintiffs’ medical malpractice lawyer, will also consider, and factor into his calculation of the case’s “settlement value,” a “home run” scenario — one where everything goes right, the jury is extremely angry at the defendant and in complete sympathy with the plaintiff, and is trying to “send a message” to similar defendants.

    Defense lawyers engage in exactly the same subjective calculus in making recommendations to their clients (typically sophisticated malpractice insurance companies) how much to offer in settlement at every stage of the litigation.

    The simple fact is that most of the “home run” potential for a personal injury case comes from non-economic damages like pain and suffering, mental anguish, and disfigurement. Economic damages — past and future lost wages and past and future medical bills — may still involve subjective elements in their future components, but they are at least susceptible to objective proof (projecting past trends into the future, usually using life expectancy tables).

    Based on first-hand anecdotal experience here in Texas after the Legislature successfully imposed caps on non-economic damages, I can guarantee you that they have, in fact, driven down the perceived “settlement value” of essentially all personal injury cases, including those that objectively had only a slight chance of ever generating a “home run” situation. And they’ve most affected the cases with the thinnest or most speculative proof of injuries (i.e., the cases where the claimed non-economic damages make up a larger share of the case’s value than its economic damages).

    To extend the baseball analogies: If you raise the ballpark fences to 250 feet tall, you’ll going to eliminate home runs, and the absence of home runs is going to affect every team’s scoring averages. Some players — the home run hitters who strike out a lot and can’t hit a sacrifice bunt to save their lives, but who could semi-reliably jack one out of the park — are suddenly in much less demand. But they aren’t the only ones affected by the higher fences. The higher fences will change the entire game.

    Beldar (56c848)

  38. Linus,
    A couple of major problems pre cap. First, there was no upper limit.No telling how wild a jury would be.Secondly , a strong ability to seek certain venues where juries were likely to decide to help the plaintiff with other peoples’ money A good first approximation would be the number of docs staying in state for high risk areas. Ob certainly isn’t a highly technical field (sorry Dad), but it is high risk There was a constant bleeding of OB gyns to neighboring states. This will resume.It’s ghoing to be harder to get surgeons to take trauma call, and neuros to open practice post graduating.

    corwin (69a4c5)

  39. And most juries are sympathetic to the claimant’s case, because after all, the money comes not from them, but from the evil profit making insurance companies.

    peedoffamerican (cadcec)

  40. #28 nk:

    I meant before they have to stand for reelection;

    Oh, I know…I just thought your original wording had much more potential for fun.

    EW1(SG) (edc268)

  41. #23 Linus:

    What? Where do you get this idea?

    My point is simply that this decision doesn’t affect economic recompense, which as Beldar explains is more easily evaluated objectively.

    If a scenario arises where the jury feels there is a need to punish a defendant, or to make an example of them because their errant behavior was so egregious that the maximum civil award under a cap is insufficient, wouldn’t we rather see that punished as a criminal matter?

    After all, the cap on awards most likely arose because the community represented by the legislators felt that individuals were taking advantage of and gaming the system to win what must have seemed like outlandish awards. The caps therefore represent a consensus of what value the community feels should be placed on damages above and beyond the merely economic expenses suffered.

    If those caps are then insufficient to punish someone guilty of a behavior so vile that the community as a whole finds it reprehensible, shouldn’t the legislature then codify that into the criminal code~thereby preserving the values of the community in both cases?

    Either way, it strikes me as a legislative matter, not a judicial one. I think the Illinois Supreme Court could be accused of violating the very clause that they have ruled the legislature to have violated.

    EW1(SG) (edc268)

  42. Criminal punishment wouldn’t recompense the victim.

    It isn’t about recompense for the victim.

    It’s about punishing a wrongdoer.

    EW1(SG) (edc268)

  43. Punitive damages are for punishing an egregious defendant.

    I think a CP case is “worth” about $11 million in Cook County

    Cerebral palsy has been shown to be intrauterine in origin and have nothing to do with birth trauma in over 90% of cases but it is still a huge cost generator for OBs. And did pretty well for John Edwards. The fetal monitor has increased the rate of c-section tremendously because it shows a lot of fetal distress that nobody ever knew was happening but I don’t think it has affected rates of CP. CP is mostly due to vascular accidents during fetal life.

    I did a lot of expert witness work for over 30 years and testified for both plaintiffs and defendants. The reason most jury verdicts are for the doctors is because insurance companies settle almost all meritorious cases. The cases that go to trial are almost all either grey area cases where the lawyer is hoping for a jackpot or a greedy plaintiff who won’t settle. It is a very rare doctor who won’t settle and insists on trial.

    I’m also sorry to say that the quality of lawyering has a great deal to do with the outcome. I have seen amateur med mal lawyers screw up a case that was winnable. In one case, I told the defense lawyers that I could testify that the care was within the standard of care prior to 3 PM on the day the patient died. If I was asked a question about events after 3 PM, I would sink the defense. I suggested they get someone else. They said, “We are OK with that. This guy doesn’t know enough to ask that question.” That’s how confident they were.

    They were right. He had an expert who led him astray. I had a similar experience in New York City one time but that time I was the plaintiff expert.

    Mike K (2cf494)


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