Unconstitutionality of Florida’s Medical Malpractice Caps

Published May 2014 by Ted Babbitt

 

McCall v. United States of America, 39 Fla. L. Weekly S104 (Fla. March 13, 2014) was a medical malpractice wrongful death decision which challenged the statutory cap on noneconomic damages contained within Fla. Stat. 766.118.  The case arose under the Federal Tort Claim Act arising out of the death of a woman survived by her parents and her son.  The Federal District Court awarded $2 million in total noneconomic damages but limited recovery to the $1 million set forth in Fla. Stat. 766.118(2) (Fla. Stat. 2005) which imposed a $1 million cap on wrongful death damages.

The Eleventh Circuit affirmed the application of the cap but certified the constitutional question to the Florida Supreme Court.  At 106, the Florida Supreme Court concluded that the cap on medical malpractice noneconomic damages violated the equal protection clause of the Florida Constitution.

Having carefully considered the arguments of both

parties and the amici, we conclude that section

766.118 violates the Equal Protection Clause of

the Florida Constitution under the rational basis

test.  The statutory cap on wrongful death

noneconomic damages fails because it imposes

unfair and illogical burdens on injured parties when

an act of medical negligence gives rise to multiple

claimants.  In such circumstances, medical

malpractice claimants do not receive the same

rights to full compensation because of arbitrarily

diminished compensation for legally cognizable

claims.  Further, the statutory cap on wrongful

death noneconomic damages does not bear a

rational relationship to the stated purpose that

the cap is purported to address, the alleged

medical malpractice insurance crises in Florida.

 

The Court relied upon its decision in St. Mary’s Hospital, Inc. v Phillipe, 769 So. 2d 961 (Fla. 2000).  That case was tried by this author and involved a previous permutation of the limitations imposed by the Florida Legislature on medical malpractice cases.  That case involved a woman who died leaving four surviving children and a husband with a purported cap of $250,000.00 per case rather than per claimant.  In McCall at 107, the Supreme Court cites Phillipe with authority as follows:

We clearly announced in Phillipe that aggregate caps

or limitations on noneconomic damages violate equal

protection guarantees under the Florida Constitution

when applied without regard to the number of claimants

entitled to recovery.  This inherently discriminatory

action and resulting invidious discrimination do not pass

constitutional muster.  We stated:

 

If we were to accept St. Mary’s contention

that the Legislature intended to limit

noneconomic damages to $250,000 per

incident in the aggregate, then the death

of a wife who leaves only a surviving

spouse to claim the $250,000 is not equal

to the death of a wife who leaves a

surviving spouse and four minor children,

resulting in five claimants to divide

$250,000.  We fail to see how this

                              classification bears any rational

                              relationship to the Legislature’s stated

                              goal of alleviating the financial crisis

in the medical liability industry.  Such

a categorization offends the fundamental

notion of equal justice under the law and

can only be described as purely arbitrary

and unrelated to any state interest.

 

Id. at 972 (emphasis supplied).

 

The equal protection violation identified in Phillipe is

evident in the present case.  The plain language of

this statutory plan irrationally impacts circumstances

which have multiple claimants/survivors differently

and far less favorably than circumstances in which

there is a single claimant/survivor and also exacts an

irrational and unreasonable cost and impact when,

as here, the victim of medical negligence has a large

family, all of whom have been adversely impacted

and affected by the death.

 

Opponents of medical malpractice caps on damages have long argued that imposing a penalty on victims of medical malpractice who are the most severely injured does nothing to stem frivolous lawsuits and subjects those least deserving of a penalty to an unfair burden in an effort to reduce insurance premiums by an insignificant amount.  In McCall, the Court does not shy away from this question.  At 107 the Court holds:

Section 766.118, Florida Statutes, has the effect of

saving a modest amount for many by imposing

devastating costs on a few – those who are most

grievously injured, those who sustain the greatest

damage and loss, and multiple claimants for whom

judicially determined noneconomic damages are

subject to division and reduction simply based upon

the existence of the cap.  Under the Equal Protection

Clause of the Florida Constitution, and guided by our

decision in Phillipe, we hold that to reduce damages

in this fashion is not only arbitrary, but irrational, and

we conclude that it “offends the fundamental notion

of equal justice under the law.”  Phillipe, 769 So. 2d

at 972; see also id. at 971 (“Differentiating between

a single claimant and multiple claimants bears no

rational relationship to the Legislature’s stated

goal of alleviating the financial crises in the medical

liability insurance industry.”).

 

The Court differentiated its decision in Mizrahi v. North Miami Medical Center, 761 So. 2d 1040 (Fla. 2000), a case in which the undersigned author appeared as amicus curiae.  That case tested whether the exception to the Florida Wrongful Death Act, which excludes medical malpractice victims from recovering on behalf of adult children was constitutional.  The Court held that it was because it involved an expansion of the legislatively created Wrongful Death Act rather than treating claimants with recognized rights differently as was the case in the statutory cap under review.  At 108, the Court states

Unlike Mizrahi, the statute under review here does not

address and expand a class of individuals eligible to

recover noneconomic wrongful death damages.

Instead, it treats similarly situated, eligible survivors

differently by reducing the damages awarded without

regard to the fault of the wrongdoer and based

solely upon a completely arbitrary factor, i.e., how

many survivors are entitled to recovery.

 

What is most significant about this opinion is that it does not shy away from the second prong of the rationale basis hurdle that legislation must overcome.  While the equal protection argument was the basis for determining that the statute unreasonably limited damages, the second prong of the test which asks whether the statute served a legitimate governmental purpose is highly significant with respect to any attempt by the Legislature to reimpose the cap on some basis that would pass constitutional muster.  The McCall opinion specifically challenged the conclusion of the Legislature that the cap was justified by a supposed medical malpractice insurance crises where doctors were leaving the state or retiring early or refusing to perform high risk procedures.  Citing government studies, the Court concluded that none of those conclusions were supported by the evidence.  In fact, the Court cited studies which have concluded that the so called crises was nothing more than an underwriting cycle in the insurance industry and that medical malpractice premiums were more related to how much income insurance companies were receiving from the stock market than they were from jury verdicts.

At Page 111, the Court concludes

Thus, even if section 766.118 may have been rational

when it was enacted based on information that was

available at the time, it will no longer be rational where

the factual premise upon which the statute was based

has changed.  It is for this reason that Florida courts

consider both pre- and post-enactment data in

assessing the continued rationality of the statute.

 

Having evaluated current data, we conclude that no

rational basis exists to justify continued application of

the noneconomic damages cap of section 766.118.

 

Having reached that conclusion under the current facts, it is hard to imagine how any cap imposed by the Legislature could survive constitutional scrutiny.  The lack of a rational basis applies not just to wrongful death actions but to every type of injury.  Any attempt to reenact caps in Florida has to face the conclusion of the Court at 112 as follows:

Finally, and perhaps most telling, is that the leading

companies selling medical malpractice insurance

in Florida are far from struggling financially.  The

2013 FLOIR Annual Report notes:

 

It is estimated that the Florida medical

malpractice line of business standing

alone generated a direct (before

reinsurance) return on surplus of

14.0% in 2012.  This return compares

very positively with the average

countrywide all-lines net return on

surplus for Florida’s leading medical

malpractice writers of 5.3% (down from

7.1% in 2011, but not far out of line

with market returns in 2012).  This

                              represents the ninth consecutive year

of profitability. . . .  Related financial

information in the report also suggests

that the leading malpractice carriers

                              as a class are financially strong.

 

*      *           *

Thus, even if there had been a medical malpractice

crises in Florida at the turn of the century, the current

data reflects that it has subsided.  No rational basis

currently exists (if it ever existed) between the cap

imposed by section 766.118 and any legitimate

state purpose.

 

This case not only declares the medical malpractice cap on noneconomic damages unconstitutional, but creates a seemingly impenetrable barrier to future legislative caps in the State of Florida.

 

NOTE:  You can find past copies of articles written by Mr. Babbitt on the Bar’s website under the Articles & Forms link.