Legal News

Court of Appeal Affirms Constitutionality Of MICRA $250,000 Cap On General Damages

On September 1, 2011, the Court of Appeal, Fifth Appellate District, upheld the constitutionality of the MICRA $250,000 cap on non-economic damages in medical negligence cases. In Stinnett v. Tam (2011) 11 C.D.O.S. 11441, the appellate court affirmed the trial court's reduction of plaintiff's non-economic damages from the jury's $6,000,000 award to the $250,000 cap under Civil Code ("CC") section 3333.2. The appellate court found the cap did not violate plaintiff's constitutional right to equal protection or to a jury trial.

Plaintiff and appellant Holly Stinnett sued numerous healthcare providers for professional negligence based on the alleged wrongful death of her husband. The case went to trial and the jury found for plaintiff; it awarded her $148,302 in past economic losses, $1,242,093 as the present cash value of her future economic losses and $6 million in general damages. After the jury verdict, defendants Dr. Tam and Modesto Surgical, through their professional liability carrier, paid Stinnett a little over $1.5 million in partial satisfaction of the economic damages award; the final amount was to be determined after calculating the set-off for the amount of a codefendant's pre-trial settlement. Defendants also moved to reduce the jury's general damages award to $250,000 under CC section 3333.2, and apply previously-made payments as an offset.

Stinnett opposed defendant's motion to reduce the economic damages on the ground it violated her equal protection under both the California and federal constitutions. Her position was that the rationale for MICRA has ceased to exist because there is no longer a medical malpractice insurance crisis, and the $250,000 cap is unduly harsh since it is not adjusted for inflation. In support of her position, Stinnett submitted declarations of a Missouri attorney who has "been particularly heavily involved with the medical malpractice insurance industry" and co-authored Proposition 103, a California insurance reform initiative enacted by California voters in 1988, and an economist who stated the value of $250,000 in 1975 when MICRA became law, only had a present-day (2008) value of around $58,000. Defendants argued MICRA is constitutional. The trial court found that MICRA was not unconstitutional, but that defendants had miscalculated a credit for the codefendant's settlement. Stinnett appealed. On appeal, she argued the MICRA cap on general damages is unconstitutional because it violates her due process and denies her right to a jury trial.

The appellate court began with a lengthy discussion of the history of MICRA, the reasons for its enactment and his history of being challenged--and upheld as constitutional--in the courts. The court cited to, and discussed the decisions in the Fein v. Permanente Medical Group, American Bank & Trust Co. v. Community Hospital, Barme v. Wood and Roa v. Lodi Medical Group, Inc. cases, among others. The Stinnett opinion contains a comprehensive history of the constitutional challenges to MICRA, and the reasons the statutes were found to be constitutional.

In affirming the trial court's reduction of general damages, and the constitutionality of the MICRA non-economic damages cap, the court was not persuaded by appellant's claims of changed circumstances, or diminished dollar value of the award, but by the authority of the Legislature to craft a remedy:

"In American Bank, the court explained that the Legislature has broad authority to modify the scope and measure of damages, and it is for the Legislature to make policy determinations as the need for, and desirability of, an enactment, as long as the measure is rationally related to a legitimate state interest. (Cite) As the court explained in Fein, 'the Legislature retains broad control over the measure, as well as the timing, of damages that a defendant is obligated to pay and a plaintiff is entitled to receive, and that the Legislature may expand or limit recoverable damages so long as its action is rationally related to a legitimate state interest.' (Cite, italics in original.) The court concluded the Legislature had a legitimate state interest in reducing medical malpractice insurance costs because the Legislature found a medical malpractice insurance crisis existed that required its intervention. (Cite.)"

The Stinnett court observed that the Supreme Court in American Bank specifically "declined to determine whether...a medical malpractice insurance crisis actually existed." Rather, the Supreme Court "stated it was not the judiciary's function to reweigh the legislative facts underlying MICRA, and the Legislature, based on the information before it, rationally could conclude high malpractice insurance costs posed special problems with respect to the continued availability of adequate insurance coverage and medical care, and fashion remedies directed to the medical malpractice area to meet these problems. (Cite) Relying on this rationale, the court concluded in Fein that section 3333.2 also did not violate the equal protection clause." The court did not find MICRA constitutional based on a given set of facts, but rather because the Legislature had the inherent authority to "craft remedies to solve the crisis the Legislature found" after its analysis of the situation. The Legislature had determined that a need for regulation to address the crisis existed, and MICRA "was rationally related to that need."

Appellant's argument that section 3333.2 had been "rendered obsolete by subsequent events," was similarly unpersuasive. The appellate court observed that circumstances for finding a once-valid law unconstitutional are "quite narrow." It said "it is not the judiciary's function to determine when constitutionally valid legislation has served its purpose."

The fact that $250,000 does not have the same buying power today that it did in 1975 was of no matter to the justices in Stinnett; they did not believe it constituted a violation of appellant's equal protection rights, since Fein had already found the statute to be "rationally related to a legitimate state interest" and "rationally related to the legislative purpose." The fact plaintiff would like the statute to be indexed to inflation does not render it unconstitutional. Because Fein found there was a "rational relationship to a conceivable legitimate state purpose," Stinnett's argument that section 3333.2 violates California's equal protection laws failed.

As for Stinnett's claim that section 3333.2 violated her right to a jury trial because it essentially robs the jury of its ability to award damages as it sees fit, the Court of Appeal reiterated that the Legislature has "broad control over the measure, as well as the timing, of damages that a defendant is obligated to pay and a plaintiff is entitled to receive, and...the Legislature may expand or limit recoverable damages so long as its action is rationally related to a legitimate state interest." The court noted that no one has a vested right to any amount or measure of damages. Contrary to what Stinnett argued, the Legislature does have the ability to enact laws that modify a jury's verdict.

Note that the Stinnett dissenting justice, Dawson, takes the position that appellant should have been able to introduce evidence of changed circumstances which would establish 3333.2 is "irrational." The justice argued that Stinnett's equal protection challenge was eviscerated by the court's labeling of the issue as a "legislative matter" and would remand the case to the trial court for a hearing on the continuing validity of section 3333.2.

While the majority opinion is a clear affirmation of the constitutionality of the MICRA cap, Justice Dawson's dissent could be a harbinger of what to expect from plaintiffs' counsel in med mal cases. Though the majority opinion forcefully states that it is outside the purview of the courts to consider evidence for the purpose of revisiting constitutional objections to MICRA, defense counsel should not be surprised if plaintiffs' counsel attempt to offer factual evidence at the trial court level that is intended to challenge the existence of a rational basis for MICRA in 2011.