POINT
- COUNTERPOINT
Ferdon
v. Wisconsin Patients Compensation Fund
July
27, 2005
The
Wisconsin Supreme Court’s July 14 determination that the cap on non-economic
damages in medical malpractice cases was unconstitutional has generated a great
deal of discussion from those who believe the court made the correct decision
and those who are concerned about potential negative consequences. The Wisconsin
Medical Society and the Wisconsin Academy of Trial Lawyers were among the groups
that submitted amicus briefs in the Ferdon case. The lawyers who helped author
those briefs shared their thoughts on the court’s decision.
Wisconsin
Medical Society
The
Wisconsin Supreme Court's decision in Ferdon v. Wis-consin Patients Compensation
Fund striking down the statutory cap on medical malpractice noneconomic damages
is troubling. By concluding that the $350,000 statutory cap violates the equal
protection clause of the Wisconsin Constitution, the court failed to give credence
to — or even recognize — the historical and statutory context of the
cap. Even more disturbing, however, are the serious problems that Wisconsin's
medical liability and health care systems will face because of the decision.
The
statutory cap, enacted in 1995, was not an isolated provision. Rather, it was
one component of our state's comprehensive medical liability system. In 1975,
the Wisconsin Legislature confronted a looming health care crisis. Concerned with
the size and number of medical malpractice lawsuits in Wisconsin, rising insurance
premiums, and the effect of the lawsuits and premiums on Wisconsin's health care
system, the Legislature enacted comprehensive medical malpractice liability legislation
to deal with the crisis.
The
Wisconsin medical liability system, found in Chapter 655, requires that Wisconsin
health care providers make contributions to the Injured Patients and Families
Compensation Fund (the "Fund") and guarantees payment from the Fund
for medical malpractice judgments, including full payment of economic damages.
In an effort to control the most intangible portion of medical malpractice liability,
the legislature placed a $350,000 limit, adjusted annually for inflation, on noneconomic
damages to ensure the Fund could cover all judgments without charging health care
providers exorbitant rates. Without the cap, the remainder of the medical liability
system may not be as healthy as it has been in the past.
Concerns
About Removal
The
removal of the cap on noneconomic damages likely will cause Wisconsin to experience
the medical liability crisis that caused the Legislature to create the comprehensive
medical liability system in the first instance. Indeed, without a cap on noneconomic
damages, Wisconsin likely will not be able to escape the medical liability crisis
that continues to affect much of the country. According to data from the American
Medical Association, 20 states are currently experiencing a crisis, characterized
by considerable increases in medical liability premiums and significant reductions
in patient access to health care, as physicians flee those crisis states to practice
in states with reasonable medical liability reform. Many other states are near
crisis, while Wisconsin has been one of only five states that has remained stable,
due in large part to the cap on noneconomic damages combined with the creation
and maintenance of the Fund.
Unfortunately,
because of the court's decision in Ferdon, the ability of patients in Wisconsin
to obtain quality, accessible health care may be placed in jeopardy. States such
as Illinois and Oregon whose medical liability caps on noneconomic damages were
removed, saw medical liability premiums rise dramatically. According to published
articles, a Chicago area obstetrician/gynecologist paid $104,000 in 2002 for $1
million per claim and $3 million aggregate coverage, while a similar Wisconsin
specialist paid slightly over $25,000 that year. Within three years after Oregon
lost its cap on noneconomic damages, medical liability premiums rose by nearly
80 percent. In crisis states, experienced physicians have chosen to retire or
elected to stop performing high-risk procedures such as delivering babies. Many
have moved to other states with more favorable medical liability climates —
like Wisconsin.
Anticipated
Increases
Now
that the noneconomic damage cap has been lifted, Wisconsin physicians anticipate
that medical liability insurance rates and Fund assessments will increase significantly
as insurers adjust rates to reflect the projected increase in litigation, larger
noneconomic damage awards and higher settlement costs. Wisconsin physicians facing
these increased risks and costs might choose the same path as physicians in Illinois
and other crisis states, by retiring, limiting or discontinuing practice in high
risk areas and leaving the state. Some physicians who moved to Wisconsin to escape
the medical liability crisis in other states are already considering the possibility
of moving to a state that is not at risk of entering the medical liability crisis.
As the
health care needs of baby boomers increase, and rural communities in various states
struggle to recruit specialists and general practitioners, Wisconsin cannot afford
to have its citizens' access to health care diminish. Losing physicians would
have a serious impact on patients throughout the state, but most significantly
in rural communities that are now underserved.
The
Ferdon decision will not be the final word on Wisconsin tort reform. It is imperative
that the Wisconsin Legislature restore the balance between access to health care
for all patients and noneconomic damage awards in medical liability cases. The
Wisconsin Medical Society and other health care partners will work collaboratively
with legislators to secure legislation that places appropriate limits on damages
in medical liability cases, to ensure that Wisconsin does not become a medical
liability crisis state.
Ruth
M. Heitz, General Counsel, Wisconsin Medical Society
Timothy
J. Muldowney and Jennifer L. Peterson, LaFollette Godfrey & Kahn, wrote an
amicus brief on behalf of the Wisconsin Medical Society
Wisconsin
Academy of Trial Lawyers
In
the Supreme Court's recent decision in Ferdon, justice was finally uncapped for
severely injured victims of medical malpractice. After a decade of existence,
the Wisconsin Supreme Court, in a 4-3 decision, held that the cap on noneconomic
damages in medical malpractice cases violated the constitutional right of Matthew
Ferdon to be treated equally under the law. The majority opinion is a scholarly,
exhaustive, and well-reasoned opinion that recognizes that our courts are not
merely a "judicial rubber stamp" for legislative enactments but, rather,
play an integral role in the enforcement of the law, with the obligation to "probe
beneath the claims of the government" to determine whether there is a rational
basis behind the law. Ferdon at par. 77. For lawyers in Wisconsin, it is a reaffirmation
of the fact that we are members of a branch of government that occupies a position
equal to that of the legislative and executive branch.
"A
court need not, and should not, blindly accept the claims of the legislature."
Ferdon at par. 77. With this principle in mind, the court opted to apply not a
meaningless, toothless version of the rational basis test but, rather, "rational
basis with teeth" in its constitutional analysis of Wisconsin cap on noneconomic
damages in medical malpractice actions.
Legislative
Objectives
Giving
proper deference to the Legislature, the court identified the stated "objectives"
behind the cap. These objectives have been part of the mantra of the tort reform
movement for the last 30 years: (1) caps are necessary in order to reduce malpractice
insurance premiums; (2) caps are necessary in order to ensure the economic viability
of the Patient's Compensation Fund; (3) caps are necessary in order to control
the costs of healthcare in Wisconsin; and (4) caps are necessary in order to encourage
health care providers to continue to practice medicine in Wisconsin.
In
its attempt to determine whether there exists any rational relationship between
the institution of a $350,000 cap on damages for the most severely injured in
our society and these identified legislative "objectives," the court
did not rely on hyperbole, anecdotal evidence or the conclusory statements of
interests groups that many times motivate legislative enactments. Instead, the
court relied upon the facts and the reality of not only the experience of other
states with damage caps but also the Wisconsin experience with medical malpractice
caps over the past twenty years. When the truth finally saw the light of day in
the chambers of the Wisconsin Supreme Court, it became apparent that the various
legislative objectives behind the cap on non-economic damages in medical malpractice
actions are supported by evidence that is at worst nonexistent and at best weak
and inconclusive.
Objectives
Not Jeopardized
Since
the release of the court's opinion on July 14, many politicians, pundits and talking
heads have adopted a "chicken little" attitude with regard to the future
of our justice system in Wisconsin by arguing that all types of legislation restricting
an injured party's right of recovery are now in jeopardy. Clearly that stretches
the holding of Ferdon beyond the realm of reason. Those legislative enactments
that are rationally related to actually achieving a legitimate government objective
are not in jeopardy.
Those
that are not so related may very well be subject to challenge. That is the way
our judicial system should work. As Justice Crooks notes in his concurring opinion,
damage caps "can satisfy the requirements of the Wisconsin Constitution."
Ferdon at par. 189. The law imposing such caps, however, must be rational.
A similar
attitude has been adopted with respect to the future of Wisconsin's health care
system, with some arguing that we are heading for skyrocketing insurance rates,
increasing healthcare costs and a rush of physicians headed for the border. In
evaluating the validity of the predictions from these profits of doom, one need
only look to our sister state of Minnesota, where, without caps, they have experienced
none of these "doomsday" scenarios.
Negligible
Impact
The
statistics regarding the financial viability of the Wisconsin Injured Patients
and Families Compensation Fund outlined in the majority opinion when compared
to the number of successful malpractice actions litigated in Wisconsin courts,
both before and after the institution of the cap, indicate unequivocally that
the impact of the Ferdon decision on the overall healthcare system in Wisconsin
will be negligible. The greatest impact of the Ferdon decision will be on those
who suffer the worst injuries at the hands of a negligent physician. Victims of
serious malpractice will no longer be woefully under-compensated for their life-altering
loss. This is an accomplishment that should be applauded, not criticized, by those
of us who strive for fairness in our judicial system and, more importantly, those
who strive for quality healthcare in Wisconsin.
Robert
L. Jaskulski, Habush Habush & Rottier, helped write an amicus brief for the
Wisconsin Academy of Trial Lawyers.
