Wisconsin Supreme Court Finds $750,000 Cap On Medical Malpractice Noneconomic Damages Is Constitutional

In its opinion filed on June 27, 2018, the Supreme Court of Wisconsin (“Wisconsin Supreme Court”) held “the $750,000 cap on noneconomic damages in medical malpractice judgments and settlements is constitutional both facially and as applied to the [plaintiffs].”

History Of Wisconsin’s Cap On Noneconomic Damages In Medical Malpractice Cases

In 1975, in response to what was deemed to be a “medical malpractice crisis,” the Wisconsin legislature established a comprehensive system of guaranteed payments and controlled liability, and created the Wisconsin Injured Patients and Families Compensation Fund (“Fund”).

Under Wisconsin’s comprehensive system, each health care provider must maintain liability coverage of at least $1 million per claim and $3 million for all claims in a given policy year, Wis. Stat. § 655.23(4)(b)2, or qualify as a self-insurer, § 655.23(3)(a). In addition to maintaining liability insurance, health care providers are required to participate in the Fund by paying annual assessments. Wis. Stat. § 655.27(3)(a). The Fund pays medical malpractice claims in excess of the health care provider’s insurance coverage amount. Wis. Stat. § 655.27(1).

The Fund guarantees payment of 100 percent of all settlements and judgments for economic damages arising from medical malpractice. However, payments by the Fund for noneconomic damages are limited to $750,000 for each claim. 6 Wis. Stat. § 893.55(4)(d)1. So long as health care providers maintain the required insurance and annually contribute to the Fund, they are not personally liable for damages arising from medical malpractice. Wis. Stat. § 655.23(5).

“Noneconomic damages” are defined as “moneys intended to compensate for pain and suffering; humiliation; embarrassment; worry; mental distress; noneconomic effects of disability including loss of enjoyment of the normal activities, benefits and pleasures of life and loss of mental or physical health, well-being or bodily functions; loss of consortium, society and companionship; or loss of love and affection.” Wis. Stat. § 893.55(4)(a).

When the Fund was created in 1975, there was no cap on noneconomic damages. In 1986, the Wisconsin legislature capped noneconomic damages at $1 million. 1985 Wis. Act 340, §§ 30, 72. The initial cap expired on January 1, 1991. After the expiration of the 1986 cap on noneconomic damages, the cost of insurance for health care providers rose, as did health care costs. In response, the Wisconsin legislature again enacted a cap on noneconomic damages, this time setting the limit at $350,000. 1995 Wis. Act 10, §§ 5, 9.

The $350,000 cap remained in place until the Wisconsin Supreme Court concluded that it was unconstitutional, after which the Wisconsin legislature acted to impose the current $750,000 cap on noneconomic damages. 2005 Wis. Act 183, §§ 1, 7. The $750,000 cap remained in effect until the Wisconsin Court of Appeals held it unconstitutional in this case.

In the present case, the Wisconsin medical malpractice plaintiff developed sepsis due to an untreated infection, causing many of her organs to fail and all four of her limbs to develop dry gangrene that required amputation.

The Wisconsin medical malpractice jury found that neither defendant medical provider gave the plaintiff adequate information regarding alternate diagnoses and options for treatment of the alternate diagnoses. In addition to economic damages totaling $8,842,096, the Wisconsin medical malpractice the jury awarded noneconomic damages of $15,000,000
to the plaintiff and $1,500,000 to her husband (also a plaintiff).

After the verdict was issued, the Fund moved to reduce the jury’s noneconomic damage award to $750,000 as required by the cap. The circuit court held that the cap was not facially unconstitutional, but concluded that it was unconstitutional as applied to the plaintiffs on equal protection and due process grounds, relying on the prior Wisconsin Supreme Court decision.

The Wisconsin Court of Appeals affirmed the Wisconsin medical malpractice jury’s noneconomic damage award, concluding “that the statutory cap on noneconomic damages is unconstitutional on its face because it violates the same principles our supreme court articulated in [the prior Wisconsin Supreme Court decision], by imposing an unfair and illogical burden only on catastrophically injured patients, thus denying them the equal protection of the laws.”

Wisconsin Supreme Court Decision

The Wisconsin Supreme Court stated that generally, Wisconsin courts have employed two levels of scrutiny when addressing equal protection challenges. Strict scrutiny is applied to statutes that restrict a fundamental right, and is also applied to the regulation of protected classes. When strict scrutiny is applied, the statute must serve a compelling state interest; the statute must be necessary to serving that interest; and the statute must be narrowly tailored toward furthering that compelling state interest.

The Wisconsin Supreme Court stated that the plaintiffs in the present case do not contend that they have a fundamental right to payment of all damages awarded by the jury nor that the $750,000 cap on noneconomic damages discriminates against a suspect class. Therefore, strict scrutiny does not apply.

The more common level of statutory scrutiny is rational basis scrutiny, where statutes are upheld if there is any rational basis for the legislation. The basic test is not whether some inequality results from the classification, but whether there exists any reasonable basis to justify the classification. In an as-applied challenge to the damages limited by Wis. Stat. § 893.80(3), the Wisconsin Supreme Court concluded “that not all disparities are sufficient to sustain the contention of unconstitutionally disparate treatment.”

The Wisconsin Supreme Court stated that in its prior decision that found the then-$350,000 cap unconstitutional, it threw all of the principles of rational basis aside and created an intermediate level of review that it called “rational basis with teeth, or meaningful rational basis.”

In the present case, the Wisconsin Supreme Court overturned its prior decision, stating “[r]ational basis with teeth has no standards for application, usurps the policy forming role of the legislature and creates uncertainty under the law … [the prior decision] also creates new doctrine when it holds that ‘[a] statute may be constitutionally valid when enacted but may become constitutionally invalid because of changes in the conditions to which the statute applies. A past crisis does not forever render a law valid’ … There is no law to support this extraordinary declaration and we overrule it as well as ‘rational basis with teeth.'”

The Wisconsin Supreme Court stated that in its rational basis review, it considers not whether some inequality results from the classification, but whether there exists any reasonable basis to justify the classification. When there is no fundamental right or suspect class implicated by the legislative enactment, the statute must be sustained unless it is “patently arbitrary” and bears no rational relationship to a legitimate government interest. A statute is unconstitutional under rational basis scrutiny if the legislature applied an irrational or arbitrary classification when it enacted the provision.

The Wisconsin Supreme Court held that the legislature’s comprehensive plan that guarantees payment while controlling liability for medical malpractice through the use of insurance, contributions to the Fund and a cap on noneconomic damages has a rational basis. Therefore, it is not facially unconstitutional.

The Wisconsin Supreme Court further held that in an as-applied constitutional challenge, the challenger must prove beyond a reasonable doubt that as applied to him or her the statute is unconstitutional, and it will conclude that a statute has been applied in a constitutional manner if the application of the statute bears a rational relation to a legitimate legislative objective.

The Wisconsin Supreme Court stated that the plaintiffs have not presented any evidence that they were treated differently than others who are similarly situated – they focus their attention on themselves as opposed to analyzing whether they are treated differently than other similarly-situated persons. The Wisconsin Supreme Court stated that the plaintiffs were treated the same under the cap as any other persons for whom the jury has awarded noneconomic damages in excess of $750,000. The cap applies regardless of how much in excess of $750,000 the award; how drastic the injury suffered; the gender, age, or race of the plaintiff; or the extent of a health care provider’s culpability. Furthermore, the plaintiffs have not shown that the cap as applied to them is “arbitrary and not rationally related to a legitimate government interest.”

The Wisconsin Supreme Court held: “Because we conclude that the $750,000 cap on noneconomic damages established by Wis. Stat. § 893.55 has been applied in rational relation to legitimate legislative objectives, § 893.55 is not unconstitutional as applied to the [plaintiffs].”

A dissenting opinion stated: “Raising the cap by $400,000 does not fix the fundamental constitutional problems with the damage cap that the [prior Wisconsin Supreme Court decision] identified. The cap still makes the most severely injured bear the greatest burden in violation of equal protection … Equal protection guarantees that people similarly situated are treated similarly … Yet $750,000 damage cap singles out the most severely injured and treats them differently. It places the largest burden on them and guarantees that this specific, vulnerable class of injured patients will receive but a tiny fraction of the compensation due. Only those with the most catastrophic injuries will be denied a full and fair damages award … [in] the majority’s analysis, the [plaintiffs] will receive merely five percent of what a jury assessed was due for their noneconomic damages, while those less severely injured will get 100 percent. It makes no sense that those who are injured most get the least. This senseless and unequal result is compounded by the lack of a rational basis for the cap, rendering it unconstitutional.”

Source Mayo v. Wisconsin Injured Patients and Families Compensation Fund, 2018 WI 78.

If you or a loved one were harmed as a result of medical malpractice in Wisconsin or in another U.S. state, you should promptly find a medical malpractice lawyer in Wisconsin or in your state who may investigate your medical malpractice claim for you and represent you or your loved one in a medical malpractice case, if appropriate.

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This entry was posted on Sunday, July 1st, 2018 at 5:28 am. Both comments and pings are currently closed.

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