In 1992, Maryland’s highest court held that Maryland’s cap on noneconomic damages is constitutional. However, last year Wisconsin’s highest court struck down that state’s $350,000 statutory cap on noneconomic damages in medical malpractice cases. The Wisconsin Supreme Court held, in Ferndon v. Wisconsin Patients Compensation Fund, that limiting such damages violated the Equal Protection Clause of the Wisconsin Constitution.

Noneconomic damages cover nonpecuniary losses such as pain and suffering, disability and mental anguish. Neither Maryland nor Wisconsin limits the amount of damages that victims of medical negligence may recover for medical expenses, lost earnings or other economic damages.

The question, however, for Marylanders is whether the Wisconsin decision is an aberration or the beginning of a trend that could spread to Maryland, and the answer is a resounding “maybe.” On the one hand, the Wisconsin case shreds the arguments of malpractice damage cap proponents, one by one, and that shredding as described below is instructive. Moreover, two other states, Louisiana and Oregon, have already arguably followed Wisconsin’s lead. On the other hand, Maryland courts are, of course, not bound by Wisconsin, Oregon or Louisiana law.

In Ferndon, the Wisconsin Supreme Court observed that the damages cap treated medical malpractice victims who suffer more than $350,000 in noneconomic damages differently than victims who suffer less than $350,000 of such damages. The former receive only part of their damages, while less severely injured victims receive full compensation. As a consequence, younger claimants with serious injuries, who are likely to suffer from the effects of their injuries for many decades, are more likely to be undercompensated than older malpractice victims with shorter life expectancies.

Under Wisconsin law, the cap must also be shared by all claimants who suffer compensable losses as the result of an act of medical negligence. Therefore, patients who are married or who have children may have to share their $350,000 award with a spouse and children, while an injured patient who is single and childless may recover the entire $350,000.

Countervailing objectives

The court in Ferndon considered whether there were sufficient reasons to justify this unequal treatment.

First, the court determined that it was not reasonable to conclude that the cap reduced medical malpractice insurance premiums. To the contrary, a United States General Accounting Office study found no definitive correlation between caps on noneconomic damages and lower medical malpractice premium rates.

The court also concluded that the $350,000 noneconomic damages cap was not rationally related either to keeping the Wisconsin Patients Compensation Fund’s annual assessments to health care providers at a low rate, or to enabling the fund to operate on a sound financial basis. (Most Wisconsin health care providers are required to carry $1 million in medical malpractice liability insurance. In addition, Wisconsin has established a Patients Compensation Fund to provide liability coverage above that threshold.)

In fact, the court noted that the Wisconsin Patients Compensation Fund assessments had actually been decreasing over the years. Moreover, the fund had been fiscally sound and had flourished since its inception in 1975, even during periods when there was no cap.

The court then rejected the contention that lowering health insurance premiums would lower overall health care costs as those savings were passed on to patients. It cited studies that found that medical malpractice premiums account for less than 1 percent of total health care costs.

The court also found no evidentiary support for the proposition that a cap on noneconomic damages creates an environment in which health care providers are more likely to move into, or less likely to move out of, Wisconsin. According to the court, the available evidence instead indicated that health care providers do not decide to practice in a particular state based on that state’s cap on noneconomic damages.

Finally, the court addressed the issue of defensive medicine, namely doctors ordering expensive, although unnecessary, tests to defend themselves in malpractice cases by saying that they did everything possible for the patient. The court also rejected this contention, relying on government studies that found that defensive medicine cannot be measured accurately and does not contribute significantly to the cost of overall health care.

In response to the Ferndon decision, Wisconsin subsequently enacted a higher cap, $750,000, on noneconomic damages in medical malpractice cases, but that new enactment has not yet been tested in court.

Louisiana and Oregon

Subsequent to the Ferndon decision, courts in Louisiana and Oregon also struck down statutory damages caps. However, rather than conducting an equal protection analysis, those courts held that the damages caps violated their citizens’ state constitutional rights to pursue civil remedies for injuries.