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Louisiana Letdown: Louisiana Supreme Court Upholds Damage Caps

The Louisiana Supreme Court, in the case of Oliver v. Magnolia Clinic, et al., had a chance to do justice for Louisiana victims of medical malpractice. Laboring under a 1975 law that caps damages at $500,000, regardless of the severity of the injury or the severity of the neglect, the Oliver trial court was forced to reduce a jury verdict for a catastrophically injured little boy from $6 million to $500,000. This reduction pointed up the unfairness of the law, resulting in the intermediate appellate court’s striking the law as unconstitutional. The appellate court reasoned that the statute unfairly discriminated against victims of catastrophic injuries and it deprived the child of an adequate remedy. Thus, the law violated the Louisiana constitution by violating the Equal Protection and Adequate Remedy clauses. Sound reasoning, and finally a vote for the common man, or, in this case, a worthy child. Also underlying the rationale was the simple fact that $500,000 in 2012 is a far cry from $500,000 in 1975. The legislature has never adjusted this amount, nor has it ever reconsidered, in the past 37 years, whether a cap is still necessary in Louisiana in order to accomplish the objective of lowering malpractice premiums.

The Louisiana Supreme Court, on March 13, 2012, handed down its opinion, reversing the appellate court, and finding the statute constitutional. The Court did find that the statute creates distinct classes and potentially offends the adequate remedy provision. However, the Court determined that because the Louisiana law creates a Patients Compensation Fund that pays for the past, present, and future medical needs of the victims of medical malpractice, even if those expenses exceed the cap, the law survives the constitutional challenge. Thus, the Court found that legislature, by creating a financially sound, well-funded mechanism for compensating medical malpractice victims’ medical needs, provided a “quid pro quo” for medical malpractice victims. Because there was a benefit conferred on the malpractice victims, the stripping of their constitutional rights could be justified. (In comparison to Florida, where there is a damage cap without any commensurate benefit, the Louisiana law does provide malpractice victims something. The Louisiana Court’s analysis would be unsustainable in Florida.)

There was a separation of powers issue raised, but the Court failed to address it.

The Court also failed to squarely address the merits of the cap amount of $500,000. This amount, passed in 1975, presents the weakest link in the law’s sustainability. The Court punted on this issue, claiming it was for the legislature to address the “adequacy” of the cap’s amount. The majority opinion asserted that the Court’s job is merely to address the constitutionality of the cap. But given the fact that “adequacy” is part of the Louisiana Constitution, I think this issue will re-appear for the Supreme Court. Indeed, Justice Johnson, in his dissent, addressed this issue:

“Twenty years after Butler, supra, this Court has a responsibility to revisit this issue, and ask whether the empirical data provided by the State supports its position, and meets its burden of proof that this limitation on damages is still required, or has averted a health care crisis in Louisiana. Louisiana has one of the most stringent caps in the nation. Economists agree that a $500,000.00 award for general damages in 1975 is comparable to less than $125,000.00 in today’s dollars.”

The issue is not mere sophistry. The Louisiana Supreme Court is scheduled to confront the adequacy of the cap in yet another case soon to be argued before it, Arrington v. Galen-Med, Inc. d/b/a Lake Area Medical Center, et al.

Stay tuned. The battle for justice continues in Louisiana. To read the Oliver opinion, click here.