Unwise and unnecessary: statutory caps on non-economic damages in medical malpractice cases and the appellate review alternative.

• Author: Emery, Ryan T.
• Position: New York

1. INTRODUCTION

   In June 1999, a New York jury awarded over $76 million dollars to Gaelle Prindilus, a woman who suffered brain damage when she was an infant because of the purported carelessness of the resident doctors who delivered her at Harlem Hospital. (1) Allegedly, the hospital staff failed to do a sonogram that would have revealed the umbilical cord tied around the plaintiffs neck. (2) Such headline-grabbing stories have motivated many in legal, medical, and political communities to demand tort reform. (3) Specifically, many desire a cap on the amount of non-economic damages a plaintiff can receive. (4) The concern of many commentators and advocacy groups is that large awards like these are having profoundly adverse effects on the medical community and healthcare in general. (5)

   With stories of astronomical jury awards like the Prindilus (6) case, one can understand why many would argue for a reform measure such as a limit on damages for pain and suffering. (7) Reports of huge jury verdicts, however, tell the reader only half of the story. What happens after the verdict rarely gets discussed in any follow-up article and is often dwarfed by the more salacious headline and underlying story. (8) In the Prindilus case, for instance, the plaintiff received a $9 million settlement while an appeal of the case was pending; (9) this award was .118th of the size of that originally given by the jury. The power of the appellate courts to reduce damages awards (10) was likely a motivating factor for the plaintiffs attorney in settling the case. (11)

   An appellate court's power to reduce awards does not have much significance if the power is not actually used on a regular basis. The Appellate Division, however, fulfills its statutory responsibility to reduce excessive damages awards in medical malpractice cases. (12) Accordingly, it is unnecessary for New York to adopt a statutory cap limiting non-economic damages.

   A study of Appellate Division activity over a ten-year period demonstrates that the court is attentive to excessive damage awards and responds appropriately to them. Using cases decided between 1994 and 2003 as a representative sample, this study includes any medical malpractice case decided during the ten-year time frame if one of the issues discussed on appeal was whether excessive non-economic damages were awarded. (13)

   Part II provides background information and reviews issues unique to non-economic damages and their purported relationship to the civil liability "crisis." Part III presents a study of Appellate Division activity and assesses the frequency with which the court has reduced non-economic damage awards on appeal. Part III also provides an analysis of several illustrative cases. Specifically, it looks at the three cases in the sample that had the largest damage awards in order to determine whether the appellate courts reduced the award. Additionally, Part III considers the three cases with the largest damages awards where the appellate courts declined to reduce the award. After comparing the process of appellate review to a statutory cap, Part IV argues that the former is the superior method for addressing the issue of excessive non-economic damage awards.

2. BACKGROUND ON NON-ECONOMIC DAMAGES

   Non-economic damages are damages that cannot be precisely measured in money. (14) Common examples of non-economic damages include awards for pain and suffering and loss of consortium. (15) The driving force behind capping such damages is the common criticism that they are arbitrary, unpredictable, and subjective. (16) As one legal commentator noted:

   Since there is no market for the sale and purchase of pain and suffering, no source other than the legal process exists for determining whether the awards made for pain and suffering are reasonable or unreasonable.... One of the most difficult aspects of evaluating the likely damage verdict in a medical malpractice case remains predicting what the court or jury is likely to award for pain and suffering. (17) Such imprecision also allows juries to consider arguably improper characteristics, such as personal like or dislike for the plaintiff(s) and/or defendant(s). (18) Similarly, it allows juries to use such awards to improperly "punish" the defendant instead of trying to simply compensate the plaintiff. (19) The general public's dislike of managed care and the healthcare system might also have some influence on a jury's decision to award a large amount of damages. (20)

   Excessive and unpredictable non-economic damages, it is argued, contribute to the overall civil liability "crisis" in New York and indeed, the entire nation. (21) This "crisis" in turn results in skyrocketing insurance premiums for doctors, which then increases the cost of practicing medicine. (22) Other alleged harmful effects are the potential for physicians retiring early or moving out of New York, leading to healthcare access problems for patients. (23) Furthermore, many argue that the alleged "crisis" leads to the practice of "defensive medicine" whereby doctors make decisions about patient care based on concerns over potential litigation rather than their best medical judgment. (24) Lastly, many believe that the current civil justice system creates a "culture of fear" for doctors, making them reluctant to report medical errors that are important for improving the quality of patient care because they are afraid that revealing such information will then be "used against them in a lawsuit." (25)

   Not surprisingly then, healthcare providers in New York and throughout the country are some of the strongest advocates of a statutory cap on damages. (26) The Medical Society of New York, through its affiliation with the lobbying group New Yorkers for Civil Justice Reform, (27) has advocated that New York should follow the trend of other states and adopt a $250,000 cap on non-economic damages. (28)

   Caps on damages in medical malpractice cases also have support at the federal level, as evidenced by the policy agenda of the Bush Administration in its second term. (29) It is the states, however, that have the most direct effect on tort law. (30) While it is true that some tort reform proposals are rooted at the federal level, states have been responsible for most of the reform in this area over the past few decades. (31) Moreover, because this area of law has historically been in the states' domain, such federal proposals raise serious concerns over federalism. (32) Therefore, any meaningful discussion of and proposals for tort reform should be focused primarily at the state level.

   The question remains whether New York should adopt a statutory cap on non-economic damages. The following sections explore the idea that the appellate courts might in fact already be acting as a surrogate for a statutory cap on excessive damages and that appellate review is preferable to any sort of legislatively imposed cap on non-economic damages.

3. NEW YORK APPELLATE DIVISION FINDINGS

   That the Appellate Division has the power to reduce excessive awards in malpractice cases (33) is irrelevant if it is not actually using that power. In other words, if the Appellate Division never, or very rarely, reduces an award in malpractice cases where an excessive award was an issue on appeal, the argument that a statutory cap is unnecessary would be rather hollow. As the data will show, however, the Appellate Division in fact uses this power quite frequently.

   1. Criterion for Eligibility and Exclusion in the Case Study

      Broadly stated, this case study includes any medical, dental, or podiatric malpractice case reviewed by the Appellate Division within a ten-year span, from 1994 to 2003, in which one of the issues decided on appeal was whether excessive non-economic damages were awarded. (34) Since medical, dental, and podiatric malpractice are commonly grouped together in New York statutes, (35) it is likely that any possible cap would include all three categories. Therefore, all three professions were deemed eligible for the case study. Furthermore, only cases discussing non-economic damages were included; (36) cases exclusively discussing issues of economic damages, such as loss of services, were excluded.

      The Appellate Division derives the power to reduce awards it deems excessive from section 5501(c) of the New York Civil Practice Laws and Rules (CPLR). (37) CPLR 5501(c) allows the Appellate Division to order a new trial unless plaintiff agrees to reduce the award to whatever amount the court deems appropriate if the court finds that the award "deviates materially from what would be reasonable compensation." (38) This is the predominant method for courts to reduce a damages award, but it is not the exclusive method used in cases included in this study. In a handful of cases, the appellate court completely eliminated a certain kind of damages for lack of evidentiary support or for erroneous application of legal standards. (39) If such damages were non-pecuniary in nature, the case was included in this study.

      As expected, in almost all of the cases the defendant is the appellant. Cases where the plaintiff was the appellant were included only if they met one of the following criteria: (1) the defendant cross-appealed on the issue of excessive damages; or (2) the appellate court partially reinstated a jury award reduced by the trial court, finding that an award higher than the trial court's but still lower than the jury's was appropriate. Cases fitting the second criterion were included because their results imply appellate court findings of excessive jury awards despite disagreement among the appellate and trial court as to the degree of excessiveness. (40)

      A possible criticism of including cases falling under the second criterion is that since fully reinstated jury awards were excluded from this study, inclusion of partially reinstated jury awards inflates the results favorable to the argument presented (since by...