Florida's Statutory Cap on Non-Economic Damages Deemed Unconstitutional

After reviewing the factual record and procedural history, the Florida Supreme Court quoted the relevant language of Florida Statute ' 766.118(2), the state's statutory cap on wrongful death noneconomic damages based on medical malpractice claims, as follows:

Limitation on noneconomic damages for negligence of practitioners. ' (a) With respect to a cause of action for personal injury or wrongful death arising from medical negligence of practitioners, regardless of the number of such practitioner defendants, noneconomic damages shall not exceed $500,000 per claimant. No practitioner shall be liable for more than $500,000 in noneconomic damages, regardless of the number of claimants.

In Florida, noneconomic damages refer to nonfinancial losses that include pain and suffering, physical impairment, mental anguish, and loss of capacity for enjoyment of life.

The Florida Constitution provides, in its Equal Protection Clause, that “all natural persons, female and male alike, are equal before the law.” A 1946 decision of the Florida Supreme Court held that “the constitutional right of equal protection of the laws means that everyone is entitled to stand before the law on equal terms with, to enjoy the same rights as belonged to, and to bear the same burdens as are imposed upon others in a like situation.”

According to the court in McCall , unless a suspect class or fundamental right protected by the Florida Constitution was implicated by the challenged provision, the rational-basis test would apply to evaluate an Equal Protection challenge. Under this test, a state law must bear a rational and reasonable relationship to a legitimate state objective, and could not be arbitrarily or capriciously imposed.

Multiple Claimants

Signaling the analysis that would follow, the McCall court stated “the test for consideration of equal protection is whether individuals have been classified separately based on a difference which has a reasonable relationship to the applicable statute, and the classification can never be made arbitrarily without a reasonable and rational basis.”

Measured by this standard, the majority found that ' 766.118 violated the Equal Protection Clause of the Florida Constitution because it imposed unfair and illogical burdens on injured parties when an act of medical negligence gave rise to multiple claimants. In such circumstances, the court determined that “medical malpractice claimants do not receive the same rights to full compensation because of arbitrarily diminished compensation for legally cognizable claims.” The court further found that the statutory cap did not bear a rational relationship to the stated purpose that it purported to address, namely the “alleged medical malpractice insurance crisis in Florida.”

Continuing its analysis, the majority found that the plain language of the Act irrationally impacted multiple claimants/survivors differently and far less favorably than cases in which a single claimant/survivor remained. Similarly, the statutory cap “extracted an irrational and unreasonable cost and impact when, as in this case, the victim of medical negligence left behind a large family, all of whom have been adversely impacted and affected by the death.” In this case, the damages suffered by Mrs. McCall's parents were determined to be $750,000 each, and the damages to her surviving son were established at $500,000. Applying the statutory cap, however, the Federal District Court reduced the damages so each claimant would receive only half of their prospective damages.

The court observed that if Mrs. McCall had been survived only by her son, he would have been entitled to recover the full amount of his non-economic damages. Criticizing application of the statutory limit, the court observed that “the cap delineated in ' 766.118 limited the recovery of a surviving child (and surviving parents) simply because others also suffered losses. In the larger context ' the greater the number of survivors and the more devastating their losses are, the less likely they are to be fully compensated for those losses.”

Other States

The court then reviewed decisions by several state supreme courts that also struck down similar caps on non-economic damages. Decisions from the Supreme Courts of Illinois and New Hampshire were relied upon for their analysis of the manner in which similar statutory limitations operated to discriminate against claimants who suffered the most grievous injuries, “while benefitting the tortfeasor and/or the insurance company.” Based upon this analysis, the Florida Supreme Court held 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.'”

'Invalidating a Statute'

The Florida Supreme Court then turned to a chapter in its analysis that not only separated it from the “concurring in result” decision filed by Justice Barbara J. Pariente, but is also expected to be widely quoted in future appellate submissions. Stating that it could not responsibly undertake “the drastic step of invalidating a statute” without a comprehensive equal protection analysis, the McCall majority turned to consideration of the facts and circumstances surrounding the challenged statute and the subject matter it addressed. In this regard, the court found that the alleged medical malpractice crisis, if it ever existed in Florida, was no longer a linchpin capable of sustaining the statutory cap against constitutional attack.

Reviewing the history of ' 766.118, the McCall court observed that the Florida legislature considered Florida to be in the midst of a medical malpractice insurance crisis “of unprecedented magnitude,” marked by an increase in medical malpractice liability insurance premiums and the departure of physicians from active practice, especially those who refused to perform high-risk procedures. Stating that they were not required to accept the findings of the legislature, the majority found that the existence of a medical malpractice crisis was not fully supported by the data available to the Florida legislature and indeed was contradicted by “authoritative government reports.” Among the factors cited by the majority were:

• The number of physicians in both metropolitan and non-metropolitan areas had increased, not decreased, since 2003;
• In a 14-year study of cases that resulted in payments of $1 million or more, only 7.5% involved a jury trial verdict;
• In a national study between 1991 and 2003, judgments at trial accounted for only 4% of all malpractice payments; and
• A report by the United States General Accounting Office stated that reports of physician departures in Florida “were anecdotal, not extensive, and in some cases determined to be inaccurate.”

Overall, the McCall court concluded that the legislative finding of a bona fide medical malpractice crisis, undermining the access of state residents to appropriate health care, was “dubious and questionable at the very best.”

No Rational Relationship

The court also found that the available evidence failed to establish a rational relationship between a limitation upon noneconomic damages and alleviation of the purported malpractice crisis. For example, the majority opinion cited reports that failed to establish a direct correlation between damage caps and reduced malpractice premiums. Data acquired from 1991 through 2002 indicated that the median medical malpractice premiums paid by physicians in three high-risk specialties rose by 48.2% in states with damage caps, but at a slower rate of 35.9% in states without such caps. Furthermore, among states with statutory caps on damages, less than 11% experienced static or declining medical malpractice premium rates following the imposition of statutory limitations. By way of contrast, among the states without such limitations on damages, 18% experienced static or declining medical malpractice premiums.

The court also concluded that it would not necessarily accept the proposition that insurance companies would lower their insurance premiums in response to tort reform. Rather, relying upon decisions from the Oklahoma and Texas Supreme Courts, the McCall court questioned whether savings that resulted from reforms such as damages caps did no more than simply increase insurance company profits. Citing a decision of the Texas Supreme Court, the majority questioned whether in the context “of persons catastrophically injured by medical negligence, it is unreasonable and arbitrary to limit their recovery in a speculative experiment to determine whether liability insurance rates will decrease.” The McCall majority stated that it “completely agreed with and adopted the position of the Supreme Court of Texas” in this respect.

No Justification for Cap

Finally, the court turned to the current status of medical malpractice litigation in Florida and concluded that no rational basis existed to justify the continued application of the noneconomic damages cap provided in ' 766.118. Among the factors guiding this decision was a 2011 Physician Workforce Report, which found that in 2010, there were 254 active physicians for every 100,000 people in Florida, a number higher than 28 other states. At the same time, more than 59% of active physicians who completed medical school in Florida remained in that state to practice. Only three other states retained a higher percentage of medical students.

Significantly, the Office of the State Court's Administrator reported that medical malpractice filings in Florida had decreased significantly since 2003-04. Citing a decrease of more than 60%, the McCall majority noted that insurance companies' payments of non-economic damages also decreased more than 25% over the same time period.

Accordingly, the court concluded that even if there had been a medical malpractice crisis in Florida in years past, the current data established that it had subsided and no rational basis currently existed to sustain the statutory cap on noneconomic damages. The majority opinion concluded:

At the present time, the cap on noneconomic damages serves no purpose other than to arbitrarily punish the most grievously injured or their surviving family members. Moreover, it has never been demonstrated that there was a proper predicate for imposing the burden of supporting the Florida legislative scheme upon the shoulders of the persons and families who have been the most severely injured and died as a result of medical negligence. Health care policy that relies upon discrimination against Florida families is not rational or reasonable when it attempts to utilize aggregate caps to create unreasonable classifications. Accordingly, and for each of these reasons, the cap on wrongful death noneconomic damages in medical malpractice actions does not pass constitutional muster.

The Aftermath

The Florida Justice Association estimated, following the announcement of the McCall decision, that more than 700 malpractice cases were pending statewide that would potentially be impacted by this ruling. The damages caps in issue were originally promoted in 2003 by then-Governor Jeb Bush, who was actively supported by Florida physicians, hospitals and insurance companies. At the time, proponents of the legislation argued that doctors were either leaving Florida or stopping high-risk procedures to avoid exposure to significant malpractice claims. Responding to the Supreme Court's decision, the Florida Medical Association continued to support damages caps, contending that the improved economic climate helped reduce malpractice insurance premiums.

More broadly, the trial bar's American Association for Justice has reported that seven states prohibit some or all damages caps, another eight have now had medical malpractice damages caps declared unconstitutional by courts, and six have court challenges pending. In those jurisdictions with such appellate decisions pending, commentators expect renewed efforts to challenge legislative findings in the same manner that succeeded in McCall.

Michael D. Brophy , a member of this newsletter's Board of Editors, is a partner with Goldberg Segalla LLP, practicing out of the firm's Philadelphia office.

Two years passed from the time the Florida Supreme Court heard oral arguments in Estate of McCall v. United States of America, 2014 Fla. LEXIS 933 (Fla. Mar. 13, 2014), until announcement of its decision on March 13, 2014. During that time, multiple parties filed amicus curiae briefs on both sides of the case, developing an appellate record that reflected a broader controversy on which numerous appellate courts had reached markedly different conclusions. To review, Mrs. McCall was a military dependent who died in childbirth. The constitutionality of limits on medical malpractice awards, one of the benchmarks of conservative tort reform, had divided state and federal courts across the country.

Dissenting in the McCall decision, Chief Justice Ricky Polston cited decisions in the Third, Fourth, Fifth, Sixth, Ninth and Eleventh Circuits that upheld limitations on noneconomic damages in medical malpractice cases against equal protection challenges. Joining this group were state court rulings from California, Michigan, Missouri, Virginia and West Virginia. Standing with the McCall ruling in Florida are precedential decisions in Georgia, Illinois and Washington, among others. The McCall court had ample precedent on which to base its decision, but the course taken by the majority decision advanced significantly beyond the boundaries established in previously reported cases.

The Court's Analysis

After reviewing the factual record and procedural history, the Florida Supreme Court quoted the relevant language of Florida Statute ' 766.118(2), the state's statutory cap on wrongful death noneconomic damages based on medical malpractice claims, as follows:

Limitation on noneconomic damages for negligence of practitioners. ' (a) With respect to a cause of action for personal injury or wrongful death arising from medical negligence of practitioners, regardless of the number of such practitioner defendants, noneconomic damages shall not exceed $500,000 per claimant. No practitioner shall be liable for more than $500,000 in noneconomic damages, regardless of the number of claimants.

In Florida, noneconomic damages refer to nonfinancial losses that include pain and suffering, physical impairment, mental anguish, and loss of capacity for enjoyment of life.

The Florida Constitution provides, in its Equal Protection Clause, that “all natural persons, female and male alike, are equal before the law.” A 1946 decision of the Florida Supreme Court held that “the constitutional right of equal protection of the laws means that everyone is entitled to stand before the law on equal terms with, to enjoy the same rights as belonged to, and to bear the same burdens as are imposed upon others in a like situation.”

According to the court in McCall , unless a suspect class or fundamental right protected by the Florida Constitution was implicated by the challenged provision, the rational-basis test would apply to evaluate an Equal Protection challenge. Under this test, a state law must bear a rational and reasonable relationship to a legitimate state objective, and could not be arbitrarily or capriciously imposed.

Multiple Claimants

Signaling the analysis that would follow, the McCall court stated “the test for consideration of equal protection is whether individuals have been classified separately based on a difference which has a reasonable relationship to the applicable statute, and the classification can never be made arbitrarily without a reasonable and rational basis.”

Measured by this standard, the majority found that ' 766.118 violated the Equal Protection Clause of the Florida Constitution because it imposed unfair and illogical burdens on injured parties when an act of medical negligence gave rise to multiple claimants. In such circumstances, the court determined that “medical malpractice claimants do not receive the same rights to full compensation because of arbitrarily diminished compensation for legally cognizable claims.” The court further found that the statutory cap did not bear a rational relationship to the stated purpose that it purported to address, namely the “alleged medical malpractice insurance crisis in Florida.”

Continuing its analysis, the majority found that the plain language of the Act irrationally impacted multiple claimants/survivors differently and far less favorably than cases in which a single claimant/survivor remained. Similarly, the statutory cap “extracted an irrational and unreasonable cost and impact when, as in this case, the victim of medical negligence left behind a large family, all of whom have been adversely impacted and affected by the death.” In this case, the damages suffered by Mrs. McCall's parents were determined to be $750,000 each, and the damages to her surviving son were established at $500,000. Applying the statutory cap, however, the Federal District Court reduced the damages so each claimant would receive only half of their prospective damages.

The court observed that if Mrs. McCall had been survived only by her son, he would have been entitled to recover the full amount of his non-economic damages. Criticizing application of the statutory limit, the court observed that “the cap delineated in ' 766.118 limited the recovery of a surviving child (and surviving parents) simply because others also suffered losses. In the larger context ' the greater the number of survivors and the more devastating their losses are, the less likely they are to be fully compensated for those losses.”

Other States

The court then reviewed decisions by several state supreme courts that also struck down similar caps on non-economic damages. Decisions from the Supreme Courts of Illinois and New Hampshire were relied upon for their analysis of the manner in which similar statutory limitations operated to discriminate against claimants who suffered the most grievous injuries, “while benefitting the tortfeasor and/or the insurance company.” Based upon this analysis, the Florida Supreme Court held 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.'”

'Invalidating a Statute'

The Florida Supreme Court then turned to a chapter in its analysis that not only separated it from the “concurring in result” decision filed by Justice Barbara J. Pariente, but is also expected to be widely quoted in future appellate submissions. Stating that it could not responsibly undertake “the drastic step of invalidating a statute” without a comprehensive equal protection analysis, the McCall majority turned to consideration of the facts and circumstances surrounding the challenged statute and the subject matter it addressed. In this regard, the court found that the alleged medical malpractice crisis, if it ever existed in Florida, was no longer a linchpin capable of sustaining the statutory cap against constitutional attack.

Reviewing the history of ' 766.118, the McCall court observed that the Florida legislature considered Florida to be in the midst of a medical malpractice insurance crisis “of unprecedented magnitude,” marked by an increase in medical malpractice liability insurance premiums and the departure of physicians from active practice, especially those who refused to perform high-risk procedures. Stating that they were not required to accept the findings of the legislature, the majority found that the existence of a medical malpractice crisis was not fully supported by the data available to the Florida legislature and indeed was contradicted by “authoritative government reports.” Among the factors cited by the majority were:

• The number of physicians in both metropolitan and non-metropolitan areas had increased, not decreased, since 2003;
• In a 14-year study of cases that resulted in payments of $1 million or more, only 7.5% involved a jury trial verdict;
• In a national study between 1991 and 2003, judgments at trial accounted for only 4% of all malpractice payments; and
• A report by the United States General Accounting Office stated that reports of physician departures in Florida “were anecdotal, not extensive, and in some cases determined to be inaccurate.”

Overall, the McCall court concluded that the legislative finding of a bona fide medical malpractice crisis, undermining the access of state residents to appropriate health care, was “dubious and questionable at the very best.”

No Rational Relationship

The court also found that the available evidence failed to establish a rational relationship between a limitation upon noneconomic damages and alleviation of the purported malpractice crisis. For example, the majority opinion cited reports that failed to establish a direct correlation between damage caps and reduced malpractice premiums. Data acquired from 1991 through 2002 indicated that the median medical malpractice premiums paid by physicians in three high-risk specialties rose by 48.2% in states with damage caps, but at a slower rate of 35.9% in states without such caps. Furthermore, among states with statutory caps on damages, less than 11% experienced static or declining medical malpractice premium rates following the imposition of statutory limitations. By way of contrast, among the states without such limitations on damages, 18% experienced static or declining medical malpractice premiums.

The court also concluded that it would not necessarily accept the proposition that insurance companies would lower their insurance premiums in response to tort reform. Rather, relying upon decisions from the Oklahoma and Texas Supreme Courts, the McCall court questioned whether savings that resulted from reforms such as damages caps did no more than simply increase insurance company profits. Citing a decision of the Texas Supreme Court, the majority questioned whether in the context “of persons catastrophically injured by medical negligence, it is unreasonable and arbitrary to limit their recovery in a speculative experiment to determine whether liability insurance rates will decrease.” The McCall majority stated that it “completely agreed with and adopted the position of the Supreme Court of Texas” in this respect.

No Justification for Cap

Finally, the court turned to the current status of medical malpractice litigation in Florida and concluded that no rational basis existed to justify the continued application of the noneconomic damages cap provided in ' 766.118. Among the factors guiding this decision was a 2011 Physician Workforce Report, which found that in 2010, there were 254 active physicians for every 100,000 people in Florida, a number higher than 28 other states. At the same time, more than 59% of active physicians who completed medical school in Florida remained in that state to practice. Only three other states retained a higher percentage of medical students.

Significantly, the Office of the State Court's Administrator reported that medical malpractice filings in Florida had decreased significantly since 2003-04. Citing a decrease of more than 60%, the McCall majority noted that insurance companies' payments of non-economic damages also decreased more than 25% over the same time period.

Accordingly, the court concluded that even if there had been a medical malpractice crisis in Florida in years past, the current data established that it had subsided and no rational basis currently existed to sustain the statutory cap on noneconomic damages. The majority opinion concluded:

At the present time, the cap on noneconomic damages serves no purpose other than to arbitrarily punish the most grievously injured or their surviving family members. Moreover, it has never been demonstrated that there was a proper predicate for imposing the burden of supporting the Florida legislative scheme upon the shoulders of the persons and families who have been the most severely injured and died as a result of medical negligence. Health care policy that relies upon discrimination against Florida families is not rational or reasonable when it attempts to utilize aggregate caps to create unreasonable classifications. Accordingly, and for each of these reasons, the cap on wrongful death noneconomic damages in medical malpractice actions does not pass constitutional muster.

The Aftermath

The Florida Justice Association estimated, following the announcement of the McCall decision, that more than 700 malpractice cases were pending statewide that would potentially be impacted by this ruling. The damages caps in issue were originally promoted in 2003 by then-Governor Jeb Bush, who was actively supported by Florida physicians, hospitals and insurance companies. At the time, proponents of the legislation argued that doctors were either leaving Florida or stopping high-risk procedures to avoid exposure to significant malpractice claims. Responding to the Supreme Court's decision, the Florida Medical Association continued to support damages caps, contending that the improved economic climate helped reduce malpractice insurance premiums.

More broadly, the trial bar's American Association for Justice has reported that seven states prohibit some or all damages caps, another eight have now had medical malpractice damages caps declared unconstitutional by courts, and six have court challenges pending. In those jurisdictions with such appellate decisions pending, commentators expect renewed efforts to challenge legislative findings in the same manner that succeeded in McCall.

Michael D. Brophy , a member of this newsletter's Board of Editors, is a partner with Goldberg Segalla LLP, practicing out of the firm's Philadelphia office.