By Dr. Ken Broda-Bahm:
As a response to the perception of escalating jury awards in medical cases, a number of states have turned to legislative caps on noneconomic damages or overall damages. At last count, that preference for legislative limits on verdict amounts applies to all but 15 states (Alabama, Arizona, Arkansas, Connecticut, Delaware, Iowa, Kentucky, Minnesota, New Hampshire, New York, Pennsylvania, Rhode Island, Vermont, Washington, and Wyoming and the District of Columbia). All the rest have gone the way of caps. But the question is, do caps work? Should physicians, hospitals, and insurers be breathing a sigh of relief if their state has said "no" to runaway verdicts? The answer might surprise you. An analysis of trends in medical liability awards in high-risk jurisdictions and across the country (available here as a PDF download) was recently released by the Beazley Group underwriting company, and the report indicates that severe verdicts are increasing fastest in those states that have implemented damages caps. Pointing to California and Maryland as two tort reform states where verdict severity is still increasing significantly, the data also shows that the increase in verdict value is not limited to the worst venues, but is occurring in what have been seen as the safer venues as well.
Does that mean that caps are no good? Not necessarily, and I'll take a closer look at the data below. But what it does mean is that caps are not, and were never, a foolproof insurance against escalating jury awards. That is due to the fact that, even as caps might reduce the overall caseload by making some cases less attractive to plaintiffs and their lawyers, they can increase the average value of those that remain by weeding out the low value cases. In addition, a motivated jury can still circumvent caps by loading up on those categories that are not subject to legislated limits, such as the uncapped economic damages. This post takes a look at the Beazley report and shares some thoughts on what methods, other than caps, defendants have for preventing runaway medical verdicts.