Study Questions Whether Med-Mal Caps on Only Non-Economic Damages Reduce Total Awards

A new study raises questions about medical liability reform initiatives premised on the assumption that caps on awards for non-economic damages in medical malpractice cases will reduce total jury compensatory awards.

The analysis of the efficacy of caps on non-economic damages in medical liability cases shows that awards for non-economic damages — pain and suffering, physical impairment, disfigurement, marital losses, anguish, and inconvenience — do not significantly and systematically reduce overall awards to plaintiffs. In fact, limiting non-economic damages may be contributing to a rise in economic damage — lost wages, medical expenses (past and future), rehabilitation expenses, and other financial costs.

The study, by Columbia Law School Associate Professor of Law Catherine M. Sharkey, is to be published in the “N.Y.U. Law Review” in May and is supported by the Project on Medical Liability in Pennsylvania, a project of The Pew Charitable Trusts.

Sharkey’s survey of the cap reforms across the 50 states indicates that most caps address the non-economic portion of damages while leaving economic damages uncapped. Conventional wisdom holds that caps on non-economic damages will systematically reduce medical malpractice awards. In an analysis of approximately 550 jury verdicts from 22 states, however, Sharkey found that medical malpractice cases in which very large awards were given —- and often sustained after post-trial and appellate review —- in states that enforce caps on non-economic damages often include a high component of economic damages.

Sharkey’s analysis found that the severity of injury is a key determinant of overall compensatory damages awards: the more severe and permanent an injury, the greater the effect on a plaintiff’s recovery of compensatory damages.

The more surprising discovery was that caps on non-economic damages — when controlling for the independent effects of severity of injury as well as myriad litigation, state law, and county demographic variables—have little to no effect on the size of overall compensatory damages in litigated cases.

According to Sharkey, economic compensatory damages in medical malpractice cases might be much more malleable, and subject to inflation, than conventionally depicted. Attorneys, experts, jurors, and courts play critical roles in enabling large awards for economic damages when forced to limit non-economic damages, she added.

“As attorneys, jurors, and courts accumulate experience with caps —- some of which have been in place for decades, others of which are brand new —- they may adapt new strategies for establishing damages,” Sharkey writes. For example, “by formulating expansive theories of economic loss, lawyers —- and the experts whom they hire -— may expand the boundaries of the category of economic damages.” Such strategies may find a receptive audience in jurors, who tend to blur what the law often treats as sealed categories of economic and non economic damages and often have a basic sense of the total amount of damages that a plaintiff should receive.

Sharkey asserts that the potential increase in unrestricted economic damages when non-economic damages are restricted raises larger policy questions about the intended and unintended consequences of caps. Policy makers might respond in very different ways. If legislatures become convinced that both economic and non-economic damages threaten stability and predictability in the medical malpractice realm, they might enact total compensatory damages caps. Conversely, recognition of the unintended “crossover effect” between economic and non-economic damages might lend weight to arguments in favor of the futility and unfairness of caps.

The full report is available at http://medliabilitypa.org/