As Malpractice Caps Spread, Lawyers Turn Away Some Cases

Limits on Awards for Suffering Create New Impediments;
Insurers Defend Changes

A Tale of Two Mothers

By RACHEL ZIMMERMAN and JOSEPH T. HALLINAN
Staff Reporters of THE WALL STREET JOURNAL
October 8, 2004;  Page A1

Two years ago Shelly Thompson-Mooney, a 35-year-old mother in Texas, died of a cerebral aneurysm. Attorney Roy Key thought her case was a good candidate for a medical-malpractice suit.

Her common-law husband, Robert Mooney, told the attorney she was brought to the emergency room with substantially the same symptoms she had suffered once before when a blood vessel ruptured in her head. Mr. Mooney said she went three hours without proper treatment. Just over two days later, she died, leaving Mr. Mooney to raise their 4-year-old daughter.

But Mr. Key and other attorneys passed on the case. Ms. Thompson-Mooney was a homemaker, so she had no income the suit could seek to recoup. Her medical bills were covered by insurance, eliminating another potential claim in a lawsuit. That meant a suit probably would need to seek payment for "pain and suffering" -- traditionally a rich vein. But Texas recently had capped awards for such noneconomic damages in the vast majority of medical-malpractice cases at $250,000.

"From an emotional standpoint, I wanted to take the case," Mr. Key says. But he says the cap prevented him from doing so. A case like this one might cost his firm $100,000 to prepare for trial. That is more than the firm had any hope of collecting, since its fee is one-third of any award. "If there was no cap in this state," says Mr. Key, "we would have taken it -- I can say that unequivocally."

Caytie Martin, a spokeswoman for the hospital where Ms. Thompson-Mooney was treated, Northwest Texas Healthcare System in Amarillo, said she could not discuss the specifics of the case because of confidentiality laws. But she
said: "There was no medical negligence, no lawsuits were filed. We had no record of patient or family complaints."

Amid the fierce debate over limits on medical-malpractice suits, many states have enacted limits of their own that are having a sweeping impact. One of the most common types -- caps on damages for pain and suffering, or so-called noneconomic caps -- is turning out to have the unpublicized effect of creating two tiers of malpractice victims.

Cases involving high earners or big medical bills move ahead. Lawyers can still seek economic damages for the wages these patients lost or to pay for continuing medical bills. But lawyers are turning away cases involving victims that don't represent big economic losses -- most notably retired people, children and housewives such as Ms. Thompson-Mooney.

Vice President Dick Cheney mentioned the Bush administration's wish to enact nationwide caps on noneconomic damages in his debate this week with John Edwards, the Democratic vice-presidential nominee and a former plaintiffs' lawyer himself. But groups such as AARP, the organization for older Americans, and the National Organization for Women are mounting campaigns against such moves. "When you put a cap on noneconomic damages," says NOW President Kim Gandy, "quite literally [women's] lives are valued lower."

Caps on jury awards for noneconomic damages in malpractice cases became popular in the 1970s, when doctors in many states got hit with soaring premiums for their malpractice insurance. The problem was so dire that some doctors went on strike, and lawmakers feared basic medical services would be unavailable unless steps were taken to curb surging malpractice premiums.

California's 1975 Medical Injury Compensation Reform Act is considered a national model. It limits both the fees that a plaintiff's attorney may charge and the amount of money that may be awarded for noneconomic damages. Those damages are capped at $250,000, an amount that hasn't been increased since 1975. In inflation-adjusted dollars, it is now valued at about $71,000. At least 25 other states have adopted similar restrictions.

The caps can have an impact on one of the malpractice insurance industry's biggest potential sources of trouble -- suits over obstetric care. Such cases often carry great emotional appeal -- a volatile factor in jury deliberations that can lead to the high awards malpractice insurers dread.

"Paying people for their pain is an idea whose time has come and gone," says Fred Hiestand, chief executive officer of Californians Allied for Patient Protection, a nonprofit group of medical associations, insurers and others based in Sacramento that supports that state's tort-reform efforts.

A $250,000 award is more than many people receive, notes Phil R. Hinderberger, senior vice president and general counsel for Norcal Mutual Insurance Co., a physician-owned company that is one of the biggest insurers of doctors in California. "A soldier injured in combat is not entitled to any pain and suffering. A worker injured in the workplace is not entitled to any pain and suffering," he wrote in an e-mail interview.

Bohn Allen, president of the Texas Medical Association, says he was forced to close his surgical practice in Arlington last year in part because rising premiums for malpractice insurance made it unprofitable for him to continue operating. That happened just as Texas implemented its cap on noneconomic damages against any one defendant at $250,000.

Since the cap was passed, Dr. Allen says, at least 10 malpractice insurance companies have started doing business in the state. That in turn makes Texas more attractive to badly needed physicians.

The effect of such caps became clear to Donald Costello, a lawyer in Santa Cruz, Calif., after he handled two virtually identical breast-cancer cases. Both involved married mothers in their 40s who had two children and died from the disease. One plaintiff was a housewife and her case was settled for $300,000. The other was a Silicon Valley executive whose family won a $2 million settlement.

Bruce Fagel, a Beverly Hills doctor and lawyer who handles only medical-malpractice cases, argues that the cap on noneconomic damages is a violation of the country's equal protection laws. He cites two recent malpractice cases of his own, each involving the death of a young wife and mother. In each case, noneconomic damage awards of $3 million were reduced to $250,000.

One case in Pasadena decided last year involved a mother of two who held a master's degree and worked as a school administrator. She died of an infection following a gastric bypass, and her family won $1.6 million in economic damages.

In the other case, decided this year in San Bernardino County, an unmarried woman on welfare with two minor children died of an infection during a stillbirth after the doctor ignored the patient's symptoms until it was too late. In that case, $200,000 in economic damages was awarded.

During that trial, Mr. Fagel argued: "We are saying to doctors and hospitals it's OK to kill somebody who comes from a poor family because ultimately they aren't going to have the same effect on our medical-malpractice insurance as somebody who comes from a rich family."

The presiding judge, Tara Reilly of State Superior Court in San Bernardino County, agreed that the cap on noneconomic damages can be inequitable based on a person's socioeconomic standing. "You're absolutely right," she said, according to a trial transcript.

The American Medical Association, a supporter of tort reform, acknowledges that some plaintiffs with little in the way of economic damages have a hard time finding lawyers. "If their claim is not of high monetary value, then it's hard for them to find an attorney," says Dr. Donald J. Palmisano, immediate past president of the AMA.

Gary Paul, a Los Angeles trial lawyer, says he doesn't take smaller cases that he would have handled in the late '70s and early '80s. Instead, he says, "we tend to take cases with more catastrophic injuries," in which the economic damages are clear.

Paula Sweeney, a Dallas trial lawyer who has been handling medical-malpractice cases for 23 years, says the caps have already slashed her business. Since the beginning of the year, she's filed only one case. In a normal year, she would have filed 12 to 15 by now. "The economic feasibility has changed," she says. She says she believes the new restrictions will eliminate about 85% of medical-malpractice cases in the state.

Trying a case typically involves hiring half a dozen expert witnesses and costs about $100,000, she says. Under the state's new pain-and-suffering cap, that essentially eliminates any case where the victim had no income or no continuing medical expenses. Lawyers use economists to try to quantify "mommying activities," such as chauffeuring and cooking, to argue for economic damages, but that can be difficult and often doesn't amount to much.

A study released this year by the Rand Institute for Civil Justice, a nonprofit research organization in Santa Monica, Calif., found that California's medical-malpractice law had reduced malpractice awards involving babies under one year of age 71% of the time. The median reduction was $1.5 million.

For plaintiffs' attorneys, the primary question in cases involving babies and others without income is whether medical needs are continuing. That boosts a potential award because it wouldn't be limited by the cap on noneconomic damages. The question proved crucial for Brenda Stoltz, of Leesburg, Va. Ms. Stoltz says a botched delivery last year left her daughter, Zoe Elizabeth, severely brain damaged.

During delivery, there were signs that the baby was in distress, including an extremely slow heart rate over an extended period of time, according to Ms. Stoltz. Yet no emergency C-section was done. This lack of action and other errors, says Ms. Stoltz, left Zoe deprived of oxygen during a critical period. She was born with severe brain and other organ damage.

Last September, Ms. Stoltz and her husband decided to sue the doctor involved and they retained a Maryland law firm that specializes in medical malpractice. Zoe was facing a lifetime of expensive medical care.

But on Oct. 21, Zoe died. Ms. Stoltz says she told the lawyers of her baby's death the next day. Shortly after that, the firm dropped the case. A lawyer for the firm wouldn't comment.

Since then, the family found a new lawyer and filed a lawsuit in Loudoun County Circuit Court in June. But there is a catch: Because of a Virginia law, the Stoltzes had to agree to cover all court costs themselves, including expert testimony, securing records and taking depositions.