On a 93-62 vote, the Missouri House passed a measure yesterday to reinstate that state’s cap on non-economic damages in medical malpractice cases.  The cap had been declared unconstitutional by the Missouri Supreme Court last summer.  In that decision, the Missouri Supreme Court held that the cap violated the right to trial by jury found in the Missouri Consititution.  The Court found that, because there was a common law right to sue for damages in medical malpractice actions, the legislature violated the right to a jury trial by placing limitations the amount an injured party could recover for non-economic damages.  The Missouri statute passed by the House yesterday eliminates the common law right to sue for medical malpractice and replaces it with a statutory right.  The measure then reinstates the $350,000 cap on non-economic damages such as pain and suffering, mental anguish, and lost consortium.  The measure now moves to the Missouri Senate.

Missouri’s action invites a broader discussion of damages caps in medical malpractice actions.  Health care providers and their insurers have long argued that limitations on damages in medical malpractice cases help to control costs and increase physician access.  Opponents of such caps argue that they prevent an injured party from being made whole, in violation of various constitutional protections.  The experience in Nebraska suggests that damages caps do increase access to physicians, particularly in rural areas.

Nebraska is fairly unique, in that it places an absolute cap of $1,750,000 on all damages, both economic and non-economic, in medical malpractice cases.  Only five other states have absolute damages caps.  Constitutional challenges to those caps are pending in two of those states.  The constitutionality of Nebraska’s damages cap has made it to the Nebraska Supreme Court twice and both times the Court upheld the cap as constitutional.  However, the most recent challenge, Gourley v. Nebraska Methodist Health System, Inc., 265 Neb. 918, 663 N.W.2d 43 (2003), sharply divided the Court.  Four of the Justices indicated that they would have declared the cap unconstutional had it been challenged on substantive due process grounds and two of the Justices dissented and wrote that the cap was unconstitutional special legislation.  The makeup of the Court has since changed, so the vulnerability of the cap to future challenges in unclear.

The effect of the cap on malpractice premiums is difficult to analyze.  There is significant disagreement among scholars on this issue.  At least one commenter, however, has concluded that the better designed studies show that malpractice caps lower malpractice premiums.  The prevalence of caps on only non-economic damages makes the subject difficult to study.  Where economic damages remain uncapped, insurance companies can still expect very large (and unpredictable) verdicts and must underwrite and reserve their cases accordingly.  Total caps on damages, in contrast, provide a definite upper limit of exposure and permit insurance companies to reserve their cases more conservatively and thereby reduce their premiums.  The data from states with only non-economic caps likely minimizes the premium effect that could be expected in states with total caps.

The fight over malpractice reform, and tort reform in general, is far from over.  But state legislatures are increasingly attempting to fashion damages caps that withstand constitutional scrutiny.  The issue is likely to be hotly debated for years to come.