Medical malpractice.

• Author: Penhallegon, John R.
• Position: The latest developments of interest to defense counsel

DEFENSE counsel seek to limit damages, to protect against purely subjective "fear" claims and to be alert to the creation of new statutorily based causes of action. There are recent developments in those three areas.

Limiting damages

Statutory damage caps continue to receive attention as tort reform is debated on both the state and national level. While the fate of federal legislation is uncertain at this stage, state damage caps have prevailed in more than half the states that have enacted some form of cap in an effort to reduce staggering malpractice insurance premiums and to ensure the availability of insurance in medical malpractice cases.

The enactment of damage caps, however, does not provide for much certainty, as many of the statutory caps have been subject to constitutional challenges. With the tide of these challenges now ebbing, efforts are moving toward finding loopholes in the statutory language so that the cap is found not to apply either to all or part of an award.

Descant v. Administrators of the Tulane Educational Fund(8) presents such an attempt. The Louisiana Supreme Court rejected the plaintiffs' argument that the availability of excess general liability coverage, which provided coverage for medical malpractice liability beyond the $500,000 statutory limitation, must be held to supplement the $500,000 allowable recovery. The court had recently upheld the constitutionality of the statutory cap, and the focus of the cap's opponents naturally shifted to other possible means of undermining it.

The Louisiana cap essentially limits an eligible health care provider's liability to $100,000. Any additional liability, which is paid by the a state agency, the Louisiana Patient Compensation Fund, is further limited to $500,000. Creating the loophole that gave rise to this particular litigation, however, was Louisiana's direct action statute. This statute permits an injured person to bring an action for damages directly against the insurer of a health care provider instead of, or even in addition to, the insured health care provider. Based on the direct action statute, the plaintiffs argued that they had a separate cause of action against the excess insurer, which was not subject to the statutory limitation applicable to health care providers.

The court rejected this argument, holding that the direct action statute created a procedural right of action against an insurer wherever there exists a substantive right of action against the...