The Medical Malpractice System and the Payment of Future Medical Damages: On Life Support Elsewhere, Resuscitated in Louisiana
| Author | Sarah R. Levin |
| Pages | 955-982 |
Special thanks to Edward Richards, Bill and Cheryl Levin, the editors, and all family and friends for endless support (and revisions).
Page 955
Bill and Cheryl entered the hospital looking forward to the birth of their first child. During labor that night, hospital staff noticed that the baby's heart rate slowed significantly during contractions. They called Cheryl's obstetrician (OB/GYN) at home, who ordered that levels of Pitocin, a drug used to quicken the labor process, be increased. Throughout the night, though, the baby's heart rate continued to slow, and hospital staff called the doctor again. The doctor did not come to the hospital.
When the doctor arrived the next morning, she performed a Cesarean Section on Cheryl. The newborn, named Laura, required oxygen to revive her. A CAT scan revealed that she sustained substantial brain damage due to lack of oxygen during the delay in her delivery. The jury in the subsequent medical malpractice trial awarded Bill and Cheryl $2.7 million to pay for Laura's future medical care.1 This seemed like more than enough until their attorneys took $900,000 in contingency fees. Now they do not have enough money to pay for the care Laura will need for the rest of her life. What will they do?
On September 27, 2006 the Louisiana Third Circuit Court of Appeal found that the statutory cap on medical malpractice damages is too low to properly compensate victims.2 While the case has since been vacated and remanded, the court was correct, because the $500,000 cap, which is still in effect but has lost two- Page 956 thirds of its value since being enacted more than thirty years ago,3is inarguably Draconian. However, what the court did not note is that Louisiana balances the seeming inequity of the low cap with a unique system for the payment of future medical damages (commonly known as "future medical"). Future medical damages comprise the cost of all future medical care necessitated by medical malpractice.4 Louisiana offsets the low cap with the Patient's Compensation Fund, which compensates malpractice victims better than the standard tort scheme. In Louisiana, Laura's parents would not have to worry about how to pay for her lifetime of expensive future care.
This paper will demonstrate why the Louisiana system for the payment of future medical damages is superior to others. Part II gives a brief overview of the medical malpractice system and how it generally handles damages. Part III exposes the negative consequences of the traditional method for paying future medical, with an emphasis on inadequate compensation to victims. Part IV explains the relevant portions of the current medical malpractice law in Louisiana and explains its system for paying future medical damages. Part V evaluates this system. The evaluation demonstrates how the system solves many of the inadequacies revealed in Part III. Part VI concludes that while it has its own unique caveats, the Louisiana system for the payment of future medical damages surpasses others in its compensatory abilities and is therefore more just for patients.
Generally, private physicians and other healthcare providers are legally required to maintain professional liability insurance that will cover them in the event of an unfavorable medical malpractice verdict.5 A typical policy for physicians will pay malpractice Page 957 victims a maximum of $1 million per claim, and pay out up to $3 million in total claims per year.6 Some healthcare providers choose to supplement this primary layer insurance policy with excess layer coverage to insure them in a situation where a malpractice judgment exceeds the primary layer limit.7 The insurance companies that provide primary and excess insurance are usually private commercial carriers, though the number of physician-owned mutual insurance companies has increased in recent years.8
In order to maintain their medical malpractice insurance, providers must pay an annual fee called a premium. Medical malpractice premiums are a function of the degree of risk in the physician's specialty and the expected costs of litigation in the provider's geographic practice area.9 Most insurance companies do not base their premiums on individual experience ratings (the number of claims against the healthcare provider) because such ratings are too difficult to calculate accurately.10 Instead, insurance companies will refuse to provide coverage for those healthcare providers who have had numerous claims against them.11
Once a medical malpractice judgment of liability is rendered, the victim is entitled to damages. Medical malpractice damages include compensatory and punitive damages.12 Compensatory damages are broken down into economic and non-economic damages. Economic damages include lost wages, rehabilitation expenses, past medical expenses, and future medical care Page 958 expenses,13 which are the focus of this paper. As mentioned above, future medical expenses are those necessitated by medical malpractice.14 For instance, like other brain-injured babies, Laura will probably need future medical care in the form of twenty-four hour monitoring and a feeding tube, among other things.15 Non- economic damages are awarded for pain and suffering, physical impairment, inconvenience, anguish, marital loss, and disfigurement.16
"Traditionally, awards are made in one lump-sum payment, even when the amount awarded is intended to cover future medical expenses and lost earnings."17 While most do not, some states mandate that damages rising above a statutorily designated amount must be paid in periodic payments over time.18 For example, Colorado law mandates that all future medical awards above $150,000 must be paid in periodic payments.19 Some argue that periodic payments are better for malpractice victims. They assert that periodic payments help ensure that money needed for future medical expenses remains available.20
The majority of states do not address the payment of future medical damages in a maximally effective way. As noted above, they are usually lumped under the general category of economic damages.21 This lack of special treatment is becoming more and more of a problem because damage awards continue to rise, and "it Page 959 is clear that the rising value of payouts has been caused by an increase in economic damages, not awards for [non-economic damages like] pain and suffering."22 In fact, awards for future medical care are rising at a faster rate than total damages.23 Since future medical damages make up such a large proportion of awards, the general failure to address the issue has several dangerous consequences, especially-and most importantly-for patients. The most glaring examples of these consequences are in the area of obstetrics and gynecology, particularly in Florida in the 1970s and 1980s.
The consequences of inefficient systems for the payment of future medical damages are highly intertwined for all those in the healthcare system, but especially physicians and private medical malpractice insurers. There are two basic, unfavorable effects on insurers that in turn affect physicians. First, insurance companies must raise their premiums. Since "awards drive premiums,"24insurance companies raise the annual premiums they charge in order to keep up with claims payouts,25 or leave the state medical market altogether.26 In response to high claims payouts, Florida's private medical malpractice insurers raised their premiums for OB/GYNs by 395 percent between 1980 and 1986.27 In 1986, Page 960 OB/GYN premiums were $59,537.28 Such a premium rise places a financial strain on physicians. This strain may be so large that medical students "opt out of high-risk specialties"29 and doctors relocate to states with lower premiums.30 Additionally, physicians may choose to retire early to avoid the costs associated with malpractice insurance.31
The second effect of large future medical awards is that private insurers may be forced to leave the medical market and stop writing malpractice policies altogether.32 As mentioned above, sometimes insurers cannot keep up with increasingly high economic damages awards.33 Between 1970 and 1975, over twenty private medical malpractice insurers left the Florida market as a result of high claims payouts, making it difficult for doctors to find coverage.34
Deficient systems for the payment of future medical damages have the dangerous consequence of unjustly leaving malpractice victims inappropriately compensated. Often, those patients who have been hurt the most by malpractice and need the most care do not get it because of the limits private malpractice insurers place on claims payouts.35 These limited amounts must be enough to pay for all financial consequences of the malpractice, including lost earnings and complete medical care.36 Often, verdicts that would exceed insurers' limits are settled for the maximum allowable amounts. For instance, a commonly...
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