MedMal Damages Caps

One of the things I love the most or hate the most — depending upon the day — about health law and policy is how we often approach subjects very indirectly. Take, for instance, medical malpractice insurance rates.

On July 31, 2012, the Missouri Supreme Court struck down  the statutory $350,000 limit on jury awards for pain and suffering (known as non-economic damages) in medical malpractice cases.  Missouri's damages cap had been in place since 2005 as part of a tort reform effort, ostensibly to control rising medical malpractice insurance rates. The court's holding relies on a view of the damages cap as infringing on the jury's "constitutionally protected purpose of determining the amount of damages sustained by an injured party."

So, there we have it — at least on the surface — the public good in keeping medical malprace rates reasonable stymied by the express language of the Missouri Constitution.  There is talk of a state constitutional amendment.

But, wait a minute.  How good are non-economic damages caps at controlling medical malpractice insurance rates — the explicit purpose of the cap?  

A glance at California may be instructive here as California has the oldest non-economic damages cap legislation in the country. In California, the answer is  "not so good."  A 2004 RAND report on California's MICRA statute showed that the real power of a non-economic damages cap is in capping  attorneys' fees. Fair enough, but not the explicit rationale for the cap. Indeed, the best evidence is that California's medmal insurance rates dipped after MICRA's passage but then continued to rise.  It was insurance system reform that may have made more of an impact of late and it is probably no accident that California's Insurance Commission, Dave Jones, only recently brokered a reduction in California's medmal insurance rates.

Has acknowledging the bad fit between the non-economic damgages cap and its espoused purpose caused Claifornia to repeal MICRA? Not yet. Has it slowed the passage of damages caps in other states? Not so you'd notice. Has it diverted much of the energy and thought that could go into genuine tort reform?  Spot on.

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