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Caps on Non-Economic Damages

Caps on Non-Economic Damages

Outside of the legal and medical communities, it is not widely known that there are certain caps or limits that the Michigan Legislature has placed on damages awarded to individuals injured as a result of medical negligence. There are two types of damages that can be recovered in any litigation: economic damages and non-economic damages. Economic damages are quantifiable out-of-pocket losses (ie: medical expenses, prescriptive expenses, loss of wages, etc.) that result from the injury sustained. Non-economic damages are more intangible damages (ie: compensation for pain, suffering, disfigurement etc) that seek to compensate the injured person for the injury itself. Only non-economic damages are capped.

Pursuant to statute, Michigan has a two tier cap on non-economic damages; a lower of $280,000.00 and a higher cap of $500,000.00. MCL 600. 1483. Both the upper and lower caps are adjusted annually by the Michigan Department of Treasury based on changes in the consumer price index. Currently the lower cap is $408,200.00 and the higher cap is $729,000.00. Under this two tier cap, the lower cap applies unless the person injured suffered one of the enumerated injuries that would qualify him or her for the higher cap. Injuries qualifying for the higher cap are hemiplegia, paraplegia, or quadriplegia caused by injury to the brain or spinal cord; permanently impaired cognitive capacity affect the person’s ability to make life decisions and/or to perform activities of normal daily living; and permanent loss or damage to a reproductive organ which causes an inability to procreate. It should be noted that death is not currently an exception to the lower cap. See Jenkins v Patel 471 Mich 158, 684 NW2d 346(2004)

Caps on non-economic damages are problematic for several reasons. First, they infringe on our right to a trial by jury. The Michigan Constitution guarantees plaintiffs in civil suits the right to a jury trial. Const 1963, art. 1 § 14. Traditionally a Jury, after hearing all the testimony and considering all the evidence, determines all the facts at issue including the amount of damages which should be awarded. Caps apply to all medical malpractice cases an arbitrary limit on damages predetermined by the legislature. Thus, the legislature, without the benefit of hearing any evidence or testimony, substitutes their assessment of damages for that of the jury who determined damages based on the testimony and evidence particular to each case. Not only does the legislature invade the province of the jury, but they do it secretly. The jury is never told that caps are going to be applied or how much the applicable cap is. MCL 600.6304(5)

Second, caps violate medical malpractice litigants’ right to equal protection. Both the United States and Michigan Constitutions guarantee equal protection. US Const, Am IV; Constitution 1963, art 1, § 2. Caps on non-economic damages not treat all classes of litigants equally. Caps on non-economic damages apply only to claims based on medical malpractice. The legislature saw fit to limit only the recovery of individuals injured as a result of negligence by a health care provider and to protect only healthcare providers (doctors, nurses, hospitals, etc) from large awards of non-economic damages. Additionally, caps on non-economic damages disproportionately affect the recovery of individuals with limited economic losses such as children, the elderly, and homemakers who are not actively earning wages.

Despite these clear constitutional problems[1], Caps have been allowed to continue in Michigan because of the belief that the Caps serve a legitimate governmental purpose. That purpose being “to control increases in health care costs by reducing the liability of medical care providers, thereby reducing malpractice insurance premiums, a large component of health care costs.” Zdrojewski v Murphy, 254 Mich App 50 (2002). The problem with this rational, however, is that Caps on non-economic damages do not achieve this goal. A study by the Congressional Budget Office (COB) in 2004 estimated that malpractice premiums account for less than 2% of all health care spending. While some studies suggest that caps on non-economic damages may slightly reduce the cost of malpractice premiums[2], it has little to no effect on health care costs.

These findings by the COB have been proven to be accurate. Despite the fact that Michigan has had caps on non-economic damages since 1986 and at least 17 other states have imposed caps, the cost of health care has not decreased, but in fact has increased. Expenditures in the United States on health care surpassed $2.3 trillion in 2008. This is three times higher than the $714 billion spent in 1990, and eight times higher than the $253 billion spent in 1990. National Health Care Expenditure Data, January, 2010. Indeed as most people have themselves observed during their daily life, the cost of health care and health care insurance has not been going down.

Caps on non-economic damages are an unfortunate realty. Their existence is not fully known and appreciated by the general public. Most people only become aware of caps when they find themselves in a position where they or a loved have been grievously injured by the negligence of a health care provider, and learn find that their right to fully recover for their injuries was limited by the Legislature who saw fit to protect health care providers and insurance companies at the expense of the general public.

[1] Other states including Illinois and New Hampshire have struck down caps on non-economic damages, and the Constitution of Wyoming explicitly prohibits caps.

[2] It should be noted, however, that a review of the average malpractice premiums in the United States show that some of the highest malpractice premiums are paid in cases with caps on non-economic damages including Florida and Michigan. Medical Liability Monitor (October 2003).


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