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Caps on Noneconomic Damages Effectively Lower Malpractice Payout

October 13th, 2016

LOS ANGELES – Do physicians benefit by living in states with caps on noneconomic damages that can be awarded in malpractice cases?

For those facing the ordeal of a malpractice lawsuit, the answer is “Yes,” according to a new study. The research, conducted by researchers from the University of Southern California in Los Angeles, the RAND Corp., and Harvard Medical School in Boston, was reported online recently by the journal Health Affairs.

Average payments were reduced 15% compared to no cap and a $250,000 cap reduced average payments by 20%, according to the report. No effect was seen with a less restrictive $500,000 cap on such damages as pain, suffering, inconvenience, physical impairment, disfigurement, loss of consortium, or other non-pecuniary injury. Most states have limits on malpractice payments, although the specific vary widely.

The results also showed variances by medical specialty, with the largest effect on payouts by pediatricians and the smallest for claims related to surgical subspecialties and ophthalmologists.

For the study, the authors analyzed a national sample of malpractice claims from1985-2010, merging that information with information on state liability reforms. One comparison looked at how average payments in 10 different specialty categories differed according to the restrictiveness of the cap.

“Our study is … relevant to ongoing policy debates about the size of noneconomic damages caps,” the article notes.

The authors predict that California’s proposed Proposition 46, which is on the Nov. 4 ballot and would raise the cap on medical malpractice payments for noneconomic damages from $250,000 to $1.1 million, would have a detrimental effect on payouts by medical professionals. “Our findings suggest that it would lead to about a 20% increase in average indemnity payments, with larger increases in obstetrics and in pediatrics,” they write.

The American Tort Reform Association (ATRA), an advocacy group that supports a $250,000 limit on the award of noneconomic damages, maintains that trial lawyers’ arguments against limiting noneconomic damages – essentially, that juries can determine on a case-by-case basis how best to compensate a plaintiff for harm suffered – “fails to address the difference between noneconomic damages and economic damages, and fails to take into account the intangibility of noneconomic damages awards.”

Limits on noneconomic damages do not affect the amount a plaintiff can recover for economic damages, which include past and future medical bills, expected lost wages, and other tangible damages, ATRA points out.