State Limits on Medical Liability Damages

December 1, 2008

4 Min Read
State Limits on Medical Liability Damages

Although the rising costs of liability for patients injured while undergoing medical treatment have become an issue throughout the United States, each state has taken its own direction when enacting legislation to handle liability-related issues. Following are some examples of how damage caps have been implemented in key states.

California. As policymakers in state and federal government consider solutions to the growing cost of resolving medical malpractice claims, they often look to the California experience as a model. In 1975, California passed the Medical Injury Compensation Reform Act (MICRA) to reign in malpractice claim costs. The law limits noneconomic damages for medical malpractice actions at $250,000, but it does not limit the amount of economic damages. While defendants are proportionally liable for noneconomic damages, they are jointly liable for economic damages. An interesting aspect of MICRA is that the jury can award the plaintiff any amount, and a judge later reduces the award to meet the requirements of the cap. (There is no requirement that juries be told about caps, but lawyers may do so.)

A study by RAND Corp. (Santa Monica, CA), a nonprofit research organization, found that total awards were reduced on average by 55% when noneconomic damages were capped. “When their awards were reduced, the plaintiffs in these cases typically lost many hundreds of thousands of dollars,” according to RAND.1

Texas. In 2003, the Texas Legislature passed sweeping medical malpractice tort reforms, and Texas voters approved a ballot measure that validated the reforms in a constitutional amendment. For actions filed as of September 1, 2003, noneconomic damages are limited to a total of $250,000 per claimant for all doctors and other individual healthcare providers. Noneconomic damages are limited to $250,000 per claimant from each hospital or healthcare institution, and a total of $500,000 if there is more than one healthcare institution. The caps are higher in instances resulting in wrongful death, but the total of economic and noneconomic damages are limited to $1.6 million in those cases.

Government-run hospitals have more limited liability because Texas law caps total damages against local governments to $100,000 for each person and $300,000 for each single occurrence of bodily injury or death. (For municipal corporations, the limits are $250,000 for each person and $500,000 for each single occurrence of bodily injury or death).

In Texas, defendants found to be less than 50% liable only have to pay damages in proportion to their degree of fault, but defendants more than 50% at fault are jointly liable for all damages.

New Jersey. New Jersey does not limit medical malpractice noneconomic damages, but it does cap punitive damages. However, New Jersey law limits the liability of nonprofit hospitals to $250,000. The law covers directors, officers, trustees, and volunteers but not individual employees or physicians who treat patients at the hospitals. This has the effect of making both physicians and medical device manufacturers a bigger target for plaintiffs, even when a nonprofit hospital was at fault.

Florida. In 2003, Florida lawmakers passed tort reforms that capped noneconomic damages at $500,000 for healthcare practitioners and $750,000 for facilities. Limits to damages against emergency room doctors are lower. Florida also limits noneconomic damages in medical malpractice cases to $250,000 in arbitration, and $350,000 if the plaintiff refuses to arbitrate.

In Florida, the problem for medical device manufacturers and their insurers is compounded by a tort system that has gone awry in certain counties, and a ‘bad-faith' statute that makes the decision to defend against a claim a high-risk proposition. The American Tort Reform Foundation (Washington, DC) consistently rates South Florida as a ‘judicial hellhole,' because frivolous lawsuits and runaway jury verdicts are all too common there.2 If a defendant and its insurance carrier don't make a settlement offer close to what the lawsuit demands, they often find themselves facing accusations of bad faith. A medical device manufacturer that loses a bad-faith case may find itself in a situation where its corporate assets are exposed, not just the limits of its insurance policy.

References

1. “Changing the Medical Malpractice Dispute Process: What Have We Learned From California's MICRA?” [research brief, online] (Santa Monica, CA: Rand Corp., 2004); available from Internet: http://www.rand.org/pubs/research_briefs/RB9071/index1.html.

2. Judicial Hellholes, 2008–2009 (Washington, DC: American Tort Reform Foundation, 2008); available from Internet: www.atra.org/reports/hellholes/report.pdf.

© 2008 Canon Communications LLC

Return to MX: Issues Update.

Sign up for the QMED & MD+DI Daily newsletter.

You May Also Like