Opinion ID: 2270855
Heading Depth: 1
Heading Rank: 4

Heading: The Order of Operation of the Cap and Settlement Credit

Text: Out of an abundance of caution, the Circuit Court assumed hypothetically that the cap might be applicable to the present case and determined that any pro rata reduction of the verdict, based on Dr. Marcus's joint tortfeasor settlement with the Semskers, should be taken into account prior to application of the non-economic damages cap. [16] We reach the opposite conclusion, holding that the cap on non-economic damages must be applied to reduce the award or verdict prior to any reduction based on a joint tortfeasor settlement. The statute governing the effect of a joint tortfeasor settlement and release is § 3-1404, entitled Effect of release on injured person's claim. That section provides: A release by the injured person of one joint tort-feasor, whether before or after judgment, does not discharge the other tortfeasors unless the release so provides, but it reduces the claim against the other tort-feasors in the amount of the consideration paid for the release or in any amount or proportion by which the release provides that the total claim shall be reduced, if greater than the consideration paid. § 3-1404. Thus, as noted by the Circuit Court, the statute defers to the language of the release for the effect of the settlement. The release between the Semskers and Dr. Marcus acknowledged Dr. Marcus' position as a joint tortfeasor and called for a pro rata reduction of any verdict or judgment of any non-settling tortfeasor. The Circuit Court concluded that the word verdict in the release meant the verdict prior to theoretical application of the statutory cap, and that the word judgment referred to the capped verdict. Characterizing its conclusion as fairness in giving the Semskers the benefit of their bargain with Dr. Marcus, the Circuit Court determined that the joint tortfeasor settlement credit would apply to the uncapped verdict, rather than the capped judgment. We disagree with the Court's conclusion in this regard and hold that the word verdict in the release means inherently the capped verdict. Section 3-2A-09(b) provides that an award or verdict under this subtitle for noneconomic damages for a cause of action arising between January 1, 2005, and December 31, 2008, inclusive, may not exceed $650,000. § 3-2A-09(b) (emphasis added). The section mandates that a jury's verdict may not exceed the statutory cap. Thus, any verdict rendered by a jury exceeding the amount of the non-economic damages cap inherently is a verdict in the amount of the cap from the moment it is rendered. Under this construction, the reference in the release to a verdict cannot mean the uncapped jury's verdict which exceeds the statutorily-mandated cap; § 3-2A-09(b) states explicitly that there can be no such verdict. As such, the verdict or judgment in this case are one in the samethe amount of the jury's verdict reduced in conformity with the non-economic damages cap of § 3-2A-09(b). Thus, the appropriate order of operations is to apply first the cap to the jury's verdict for non-economic damages, followed by a credit for the joint tortfeasor settlement. In addition, the release states that [a]ll damages arising out of the occurrence recoverable by the [Semskers] against anyone other than [Dr. Marcus] will be reduced as provided in [§ 3-1404]. (Emphasis added). Due to the application of the non-economic damages cap, the only non-economic damages recoverable by the Semskers from the Physicians are the damages capped by § 3-2A-09(b). This portion of the release further suggests that any pro rata credit for the joint tortfeasor settlement with Dr. Marcus will be applied only after application of the non-economic damages cap. Had Dr. Marcus not settled with the Semskers, and had the Semskers proceeded to trial against Dr. Marcus and Dr. Albert, the cap on non-economic damages would have been applied to the total verdict, not to each defendant's pro rata share of the verdict. Application of the pro rata credit for Dr. Marcus' settlement prior to application of the cap on non-economic damages would not yield a consistent outcome. Rather, such an order of operations hypothetically would enable the Semskers to recover total non-economic damages in an amount in excess of the cap, much the same as if the cap applied only to each defendant's pro rata share of non-economic damages, thus negating the purpose of the cap limiting recovery of non-economic damages. In order to preserve the effectiveness of the cap on non-economic damages and ensure that the joint tortfeasor settlement does not affect Dr. Albert's potential liability for non-economic damages, the cap must be applied prior to any pro rata credit for a joint tortfeasor settlement. The order of operation that we hold applicable today, applying first the cap on non-economic damages followed by any credit for a joint tortfeasor settlement, has been adhered to previously by Maryland courts without exception. See Franklin v. Morrison, 350 Md. 144, 153, 174-75, 711 A.2d 177, 182, 192-93; Anne Arundel Med. Center, Inc. v. Condon, 102 Md.App. 408, 414, 649 A.2d 1189 (1994).