'Tis better to give than to receive: charitable donations of medical malpractice punitive damages.

• Author: Miller, Nicholas M.

"Virtue down the middle," said the Devil as he sat between two

lawyers.(1)

It is difficult on principle to understand why, when the sufferer by a

tort has been fully compensated for his suffering, he should recover

anything more. And it is equally difficult to understand why, if the

tortfeasor is to be punished by [punitive] damages, they should go to

the compensated sufferer ....(2)

Charity is the most noble of virtues .... [I]f one has charity

in this life, he has it completely and perfectly.(3)

1. INTRODUCTION

   As the story goes, in 1986, a Philadelphia jury awarded $1 million to a "spiritual advisor" who claimed, in a medical malpractice case, to have lost her psychic powers as a result of a negligently administered CAT scan.(4) In another case, a jury awarded $98.(5) million in punitive damages to the mother of an infant born a spastic quadriplegic because nurses did not quickly enough diagnose complications in the delivery.(5) In yet another case, a jury awarded a man $124,573,750 in punitive damages in addition to $3,047,819 in compensatory damages for the loss of his eye caused by a negligently administered injection.(6)

   We have all heard the stories. Medical malpractice awards are like a recurring dream with a bad theme: the system is out of whack.

   More specifically, the common perception is that punitive damages in medical malpractice claims contribute greatly to health care costs that have soared to crisis levels.(7) Regardless of whether these beliefs are well-founded,(8) concerns over punitive damages in medical malpractice claims have emerged to the forefront of political debate and the national agenda in the past decade.(9) For example, while discussing rising health care costs, President Clinton noted that "more people talk to me about their health care problems ... than anything else."(10) This support for tort reform formed the foundation of House Republicans' Contract with America and the Common Sense Legal Standards Reform Act vetoed by President Clinton.(11) A near-consensus has formed among average citizens that our tort system needs serious reform.(12)

   What is not so clear is who to blame for these seemingly out-of-control awards. All groups involved have received some criticism: doctors,(13) greedy plaintiffs,(14) the health care industry,(15) judges,(16) juries,(17) and lawyers.(18) Some critics blame everyone equally.(19) In a single column, one newspaper journalist blamed plaintiffs who receive "windfall" awards; "overly sympathetic juries" who grant "excessive awards; .... sharp lawyers" with "political clout" who think "the sky is the limit;" the "incomprehensible logic of bureaucrats;" the "vagaries of judges; .... powerful businesses" who get "special treatment;" lobbyists who peddle influence; and the entire tort system that resembles a "lottery" for all involved.(20)

   A continuum of responses has formed which addresses this perceived problem. A small minority of voices claim that the current status of the medical malpractice tort system functions adequately to address parties' needs.(21) According to one commentator, "the major malpractice problem continues to be malpractice."(22) Indeed, some recent studies provide evidence that, contrary to common perception, jury awards in medical malpractice cases are not excessive.(23) Furthermore, judges often quietly reverse or reduce well-publicized, seemingly excessive jury verdicts.(24) Other commentators have conceded that jury awards in medical malpractice cases somewhat favor plaintiffs but argue that the problem is not nearly as extreme as it has been portrayed.(25) Some scholars have recognized that supporters and critics of medical malpractice tort reform each have persuasive data supporting their respective positions.(26)

   From the large majority of voices that call for change, reform proposals vary greatly. Some claim that nearly any change would improve the current system because soaring costs have stifled and deterred medical technology advances.(27) Others advance reform because litigation costs become burden some even in successful defenses against medical malpractice.(28) Others advocate extreme measures. For example, in a slightly different context, one popular writer, Peter Huber, advocates "lawyerectomy."(29)

   More reasoned voices call for judicial or legislative action. Some believe that a major source of seemingly excessive awards is a weak-kneed judiciary(30) and encourage active use of the remittitur power of judges.(31) Supporters of legislative reform have for years advocated the British Rule of attorney fee-shifting as a deterrent to filing frivolous lawsuits and as an incentive to settlement before trial.(32) One interesting proposal that specifically addresses rising health care costs and the accompanying burden on the poor is to extend Good Samaritan acts to provide immunity to doctors treating indigents.(33)

   Two recent trends have emerged in medical malpractice legislative reform in an effort to address these seemingly excessive awards. First, many states have placed absolute caps on punitive damage recoveries.(34) Second, a growing number of states have enacted split-award statutes,(35) which place limits on the percentage of punitive damages the plaintiff can recover, with the remaining percentage passing to the state.

   The purpose of this Note is not to answer the question of how excessive medical malpractice and punitive damage awards are. Many highly respected scholars on different sides of the issue have spent large portions of their careers trying to resolve that issue without finding a common ground. This author does not boldly claim to provide an answer in this limited forum.

   This Note does, however, address a possible source of public frustration with the state of medical malpractice and punitive damages: the lack of a principled basis for the awards that juries give to the victims. The perception among many average citizens is that all the parties involved--plaintiffs, lawyers, doctors, hospitals--try to get their proverbial piece of the pie.(36) This Note demonstrates that this perception of the medical malpractice tort system has some validity because current treatment of punitive damages does not serve the goals of the civil system. This Note also offers charitable donations of punitive damage awards as an alternative to the current approaches. Unlike traditional approaches to medical malpractice punitive damages, charitable donations of punitive damages would not suffer from the same problems of excessive compensation to the plaintiff, insufficient deterrent of the defendant, or the constitutional problems associated with government claims on punitive damages in split statute jurisdictions.

   Part II of this Note discusses the common sense goals of compensation, deterrence, and punishment that all areas of our legal system strive to accomplish.(37) Part III of this Note shows how the current status of punitive damages fails to meet these goals.(38) Specifically, Part III demonstrates that allowing victims of medical malpractice to keep punitive damage awards overcompensates plaintiffs, that placing caps on punitives underdeters wrongful conduct, and that split statutes -- while an improvement -- suffer from both of these problems to a lesser degree. Part IV offers charitable donations as an alternative to these common approaches and shows how this approach provides for appropriate punishment and deterrence of wrongful acts, a principled amount of compensation to the victim, and the greatest benefit for the greatest number of people.(39)

   As a final introductory note, the author offers this proposal for use in all areas of punitive damages. Medical malpractice punitive damages have been chosen as the focus of this Note because they have caused particular alarm in the past several years.(40) This choice of focus in no way limits the number of other contexts in which these principles may apply.

2. COMMON SENSE GOALS OF THE LAW

   A common phenomenon in any area of problem-solving is to lose sight of the larger objective when wading through the details. This trap is especially pervasive when dealing with the law. Keeping this in mind, one must realize that the goals of the law are both noble and straightforward: First, wrongs must be compensated. Second, egregious wrongs must be punished and deterred. These goals permeate all areas of the law.

   1. Compensation of Wrongs

      Although one need not devote extensive discussion to prove such seemingly self-evident propositions, two examples will illustrate the concept of compensation of wrongful acts. First, in contract law, a promisee of a breached contract is ordinarily entitled to her "expectation interest," her "reliance interest," or her "restitution interest."(41) The purpose of these remedies is to put her in the same position she would have been had no breach occurred, had no contract been made, or had she not conferred on the promissor any benefit.(42) Generally, when liquidated damages have been identified by the contract terms, the promisee may not recover an amount that would exceed reasonable compensation or that would function as punishment of the promissor.(43) In ordinary cases, punishment is not the goal of the law.

      Second, in tort law, "the concern [is] with compensation for harm done."(44) The goal of tort law is "primarily to put an injured person in a position as nearly as possible equivalent to his position prior to the tort."(45) The goal of tort law mirrors the goal of contract law: compensation of wrongs.(46) One respected authority has discussed the role of damages:

      The primary aim in measuring damages is compensation, and this

      contemplates that the damages for a tort should place the injured

      person as nearly as possible in the condition he would have occupied

      if the wrong had not occurred, and that the damages for breach of

      contract should place the plaintiff in the position he would be in if the

      contract had been...