Courting Justice: Four Things The Insurance Industry Didn’t Tell You About Caps On Non-Economic Damages

July 2, 2013

By Robert N. Hunn

For years, the tort reform movement has pushed for monetary caps on non-economic damages claiming that caps are a cure-all for everything that ails us in the world of healthcare. They claim that caps on damages will reduce the cost of healthcare and bring down the cost of medical malpractice insurance, which in turn will increase the number of doctors practicing medicine, which in turn will provide all of us with more access to less costly healthcare.

What a crock of sh*t. We don’t have caps here in Pennsylvania or New Jersey. Yet, 19 states in this country have imposed caps on non-economic damages. The stay-at-home mother with three small kids. What is her life worth? A pre-ordained $250,000. The disabled person who can’t work. What is his life worth? $250,000. The little boy lying in a coma for the rest of his life as a result of medical negligence. What is his life worth? You guessed it: $250,000.

Here’s what the insurance industry hasn’t told you about caps:

  • They don’t result in a reduction in malpractice premiums. Insurance companies earn a living by investing premiums in the market. When the market is good, premiums go down. When the economy goes down, premiums go up. Because the stock market has been chugging along the last 4 years, malpractice premiums have been going down. It has nothing to do with caps.
  • Caps do not reduce the cost of healthcare. Medical malpractice insurers are not writing your health insurance policy.
  • Caps on non-economic damages means that we value the life of the wage earner in a family much more than we value the life of the stay-at-home mom or dad.
  • The only purpose that caps on damages serve is to make otherwise legitimate malpractice claims economically unviable to pursue because the cost of pursing the case is too great in light of what can ultimately be recovered. Why would I, as an attorney, spend $100,000 to pursue a malpractice claim if all I could recover for the client is $250,000? I would do better investing that $100,000 in the market.

Recently, a Federal Court in Mississippi awarded the family of a woman who died $5.45 million due to the death of their mother and her unborn child. The negligence was so clear that the defendant admitted liability. But, Mississippi is a state with caps. The judge had to reduce the award to $500,000. In doing so, here is what the federal judge said:

“All grief is not equal. All pain cannot be reduced to a one-size-fits all. In Mississippi, though, one’s suffering at the hands of a healthcare provider is worth no more than half a million dollars, no matter how egregious, and no matter if your suffering leads to your death, your unborn child’s death, and leaves your children orphans. This is offensive.”

That’s right. Damage caps are offensive.