Florida Supreme Court decision on on non-economic damages cap
In March 2014, the Florida Supreme Court ruled (SC11-1148) that the cap on non-economic
damages violates the equal protection clause of the state constitution.
The plaintiffs in the case were the surviving child and parents of 20 year old Michele
McCall, who died following the birth of her son in February, 2006. Since McCall
was part of a military family, she was treated by Air Force medical personnel. Therefore,
the case was first brought before a federal court. The federal court determined
that the non-economic damages in the wrongful death suit should be awarded in the
amount of $2 million. However, the court reduced the amount to $1 million because
of Florida’s cap on non-economic awards.
The family appealed the case and the 11th U.S. Court of Appeals in Atlanta ruled
that Florida’s cap on damages did not violate the U.S. Constitution. The court determined
that the Florida Supreme Court should decide whether or not the decision violated
the State Constitution.
The case was first heard by the Florida Supreme Court in 2012. After a lengthy review,
the court’s determination was released on March 13, 2014. By a 5-2 vote, the Court
ruled that the cap on non-economic damages violates the equal protection clause
of the state constitution (Article I, Section 2).
In the case in question, the survivors were McCall’s child and her two parents.
If the total award had gone to the child, he would have received the entire $1 million.
However, since there were three plaintiffs, the child would receive only a portion
of the amount due him.
The impact of this ruling could be far reaching. The decision paves the way for
more lawsuits with larger awards given. There is a delicate balance between medical
malpractice insurance rates and the cap on damages. With little or no cap, the awards
tend to be much higher, which creates a chain reaction.
Chain Reaction
With no cap on damages, insurance carriers risk greater losses. If this happens,
it could cause a need for these carriers to increase their rates. Without increasing
rates, the carrier could potentially face negative business results. If this happens
for too long, the carrier might be forced to take desperate measures which could
potentially go as far as choosing not to insure doctors from Florida.
The chain reaction does not stop there though. If rates increase, some healthcare
providers would inevitably increase the cost of services performed for their patients
in order to recoup that cost. Another option they may consider is moving their practice
to a different state entirely. Effectively, by eliminating the cap on damages, medical
malpractice insurance rates come full circle and the cost is pushed onto the ordinary
citizen looking for quality healthcare. It’s a catch 22 really: maintain the cap
(which in some cases has been found unconstitutional on a state by state basis),
or eliminate the cap and pay a higher cost for medical malpractice insurance and
the services rendered by those healthcare practitioners.
Effects on Specialties
As many people know, the scope of healthcare is vast, ranging from family practitioners
and CRNA’s, all the way to neurosurgeons and the assistants they employ. The problem
posed by the elimination of the cap on damages is further magnified when looking
at the situation from a per specialty basis.
Individual specialties may not be singled out, but a particular carrier could decide
to increase their rates by 5% across the board in Florida. The effect will be felt
on a per specialty basis when it comes to that increase on your premium. A 5% increase
on a nurse practitioner paying $500 is not nearly the same as the increase on an
OBGYN paying $30,000. These numbers are arbitrary of course, but depending on your
specialty, you may want to consult with your broker in the event that there is an
increase. There may be other options available to you that weren’t in the past.
On a year to year basis, carriers tend to make small adjustments in what types of
specialties that they will actively want to write, and they will offer discounts
and incentives to attract more of that particular specialty. A number of factors
contribute to these nuances in medical malpractice insurance rates, so your broker
will be the best equipped to approach the market on your behalf.
Going bare in light of this court decision
The March ruling to eliminate the cap on damages further complicates matters as
it pertains to doctors in Florida who choose to “go bare” (meaning not carry medical
malpractice insurance). Does it change Florida’s existing laws for doctors who opt
to go bare? No, but the stakes are higher.
Paying for a claim out of pocket can be painful at any level, but without a damage
cap, the financial consequences can be quite drastic. Consider the March ruling:
The court had originally awarded $2 million in damages, but then reduced it to $1
million due to the cap that was in place at the time. A difference of $1 million
is a large sum for anyone regardless of your specialty or even if you are in the
healthcare industry for that matter.
If you have a spare $2 million that you want to spend on a malpractice claim, by
all means, go bare. But for those of us who don’t have those extra zero’s in our
bank accounts, “going bare” is widely considered an ill-advised move.
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