Court Opinion

ID: 9662939
Source: CourtListenerOpinion
Date Created: 2023-08-23 23:23:51.724582+00
Date Added: 2024-06-11T18:14:44.106106
License: Public Domain

*961Gerrard, J.,
concurring.
In 1976, a precipitous process in the final stage of legislation led to the enactment of the Nebraska Hospital-Medical Liability Act. The act in significant instances unfairly deprives the Gourleys of the full measure of economic damages that is the most fundamental element of a meaningful recovery for negligently injured people. In a number of cases, people injured through no fault of their own will be unable to even collect their proven medical expenses. While I reluctantly concur with the per curiam opinion’s conclusion that the act does not violate any of the provisions of the Nebraska Constitution that have been raised, briefed, and argued in this case, it would be injudicious to sit idly by and silently concur in a matter of such importance to so many parties. I, therefore, write separately to express my serious concerns about the public policy upon which the act is purportedly based and whether the act adequately protects the substantive due process rights of injured persons.
ECONOMIC AND NONECONOMIC DAMAGES
The Nebraska Hospital-Medical Liability Act, Neb. Rev. Stat. § 44-2801 et seq. (Reissue 1998), limits an injured person to a total recovery of $1,250,000 for any single occurrence of medical professional malpractice. See § 44-2825(1). This limitation on total recovery ignores the distinctions to be made between different measures of damages and, as in the present case, can result in the inability of injured persons to recover even the expenses for their medical care. This unwarranted restriction on economic damages is, in my view, a fundamental flaw.
There are two separate types of compensatory damages, economic and noneconomic. Economic damages include the cost of medical care, past and future, and related benefits, i.e., lost wages, loss of earning capacity, and other such losses. Noneconomic losses include claims for pain and suffering, mental anguish, injury and disfigurement not affecting earning capacity, and losses which cannot be easily expressed in dollars and cents. See McKissick v. Frye, 255 Kan. 566, 876 P.2d 1371 (1994). See, also, Gallion v. O’Connor, 242 Neb. 259, 494 N.W.2d 532 (1993); Neb. Rev. Stat. § 25-21,185.08 (Reissue 1995). While both economic and noneconomic damages are intended to compensate plaintiffs *962for their injuries, they do so in fundamentally different ways. Money damages are, at best, an imperfect means of compensating plaintiffs for intangible injuries. The effects of economic losses, on the other hand, can be fully ameliorated by the payment of money damages.
In other words, while the legal system cannot undo pain and suffering, it can and should provide that medical expenses be fully paid.
“When liability has been demonstrated, the first priority of the tort system is to compensate the injured party for the economic loss he has suffered. . . . [I]t is unconscionable to preclude a plaintiff, by an arbitrary ceiling on recovery, from recovering all his economic damages, even though some lowering of medical malpractice premiums may result from the enactment of such a ceiling.”
Fein v. Permanente Medical Group, 38 Cal. 3d 137, 160 n.17, 695 P.2d 665, 681 n.17, 211 Cal. Rptr. 368, 384 n.17 (1985) (quoting “Rep. of Com. on Medical Professional Liability (1977) 102 ABA Ann.Rep. 786, 849”).
Noneconomic damages are generally the largest portion of a medical liability settlement. Grace Vandecruze, Has the Tide Begun to Turn for Medical Malpractice?, 15 No. 2 Health Law. 15 (2002). More significantly, unbridled noneconomic damages have been said to present the primary threat to maintaining reasonable malpractice premiums, because such awards are based on highly subjective perceptions and resist actuarial prediction. See Matter of Certif of Questions of Law, 544 N.W.2d 183 (S.D. 1996). See, also, Franklin v. Mazda Motor Corp., 704 F. Supp. 1325 (D. Md. 1989); Murphy v. Edmonds, 325 Md. 342, 601 A.2d 102 (1992); Fein, supra. See, generally, Mark C. Kendall, Expectations, Imperfect Markets, and Medical Malpractice Insurance, in The Economics of Medical Malpractice 167 (Simon Rottenberg ed., 1978); Judith K. Mann, Factors Affecting the Supply Price of Malpractice Insurance, in The Economics of Medical Malpractice 155 (Simon Rottenberg ed., 1978).
Recognizing these basic principles, the substantial majority of states that have enacted limitations on medical malpractice damages have limited noneconomic damages, but allowed complete recovery for economic losses. See, generally, 2 David W. Louisell *963and Harold Williams, Medical Malpractice ¶ 18.26 (2002); Miles J. Zaremski and Frank D. Heckman, Reengineering Healthcare Liability Litigation, ch. 11 (1997 & Cum. Supp. 1999) (compiling state statutory provisions). Similarly, several courts upholding the constitutional validity of such limitations have, in so doing, noted the distinction between economic and noneconomic damages. See, Franklin, supra; Adams v. Children’s Mercy Hosp., 832 S.W.2d 898 (Mo. 1992) (en banc); Fein, supra; Edmonds v. Murphy, 83 Md. App. 133, 573 A.2d 853 (1990), affirmed 325 Md. 342, 601 A.2d 102 (1992) (upholding statutes that permitted complete recovery of economic damages). Compare Matter of Certif. of Questions of Law, supra (striking down cap because of limitation on recovery for economic damages).
LEGISLATIVE PROCESS
The legislative history of the Nebraska Hospital-Medical Liability Act reflects awareness of the need to protect recovery for economic losses, but also reflects a legislative process that short circuited attempts to address that need. The parameters of what would become the act were first set forth in L.B. 703, 84th Legislature, 2d Session. As originally drafted, L.B. 703 would have capped total recovery, much like the present act, at $500,000. Testimony was heard by the Public Health and Welfare Committee reflecting the policy concerns set forth above, and it was decided to amend L.B. 703 to address those concerns. As amended by the committee, L.B. 703 would have capped general damages at $500,000, but placed no limitation on special damages. See Legislative Journal, 84th Leg., 2d Sess. 796 (Feb. 26, 1976).
However, L.B. 703, as amended, was held up on the floor of the Legislature. Instead, the general provisions of the original version of L.B. 703, prior to the committee amendment, were amended into a bill that had originally dealt with meat retailers. See Legislative Journal, L.B. 434, 84th Leg., 2d Sess. 1240 (Mar. 19, 1976). L.B. 434 was enacted by the Legislature. See 1976 Neb. Laws, L.B. 434. Because of the circuitous process by which the act became law, there is little evidence that the specific decision to cap both economic and noneconomic damages was fully considered by the Legislature. The members of the *964Public Health and Welfare Committee were the only senators with the opportunity to hear and examine the witnesses who testified regarding the act. But the committee’s determination to at least allow complete recovery for special damages, based on that testimony, was undone on the floor of the Legislature by parliamentary maneuvering.
EXCESS LIABILITY FUND
Moreover, there is little suggestion that the Legislature fully considered how the different aspects of the act would interact. The primary concern of the Legislature seems to have been the problem of increasing malpractice insurance premiums, and it is evident that the cap on total damages was intended to reduce those premiums. However, an examination of the statutory scheme demonstrates that there is no significant relationship between the cap on total recovery and malpractice insurance premiums, because of the intervening effect of the Excess Liability Fund.
Under the act, a qualified health care provider shall not be liable to any patient for an amount in excess of $200,000 arising from any occurrence. See § 44-2825(2). Instead, subject to the overall limit established by § 44-2825(1), any amount due from a judgment in excess of the total liability of all liable health care providers shall be paid from the Excess Liability Fund. See § 44-2825(3). Health care providers are required to maintain professional liability insurance in the amount of $200,000 per occurrence. See § 44-2827. See, generally, Brewington v. Rickard, 235 Neb. 843, 457 N.W.2d 814 (1990).
To compensate for judgments above $200,000 per qualified health care provider, but below the cap on total recovery, the act creates the Excess Liability Fund (hereinafter the Fund), which is supported by a surcharge levied on all qualified health care providers. See § 44-2829. The amount of the surcharge is established by the Director of Insurance and is intended to maintain a reserve in the Fund “sufficient to pay all anticipated claims for the next year and to maintain an adequate reserve for future claims.” See § 44-2830. However, the surcharge is not to exceed 50 percent of the annual premium paid by health care providers for their required malpractice insurance, except that a special surcharge may be levied if the amount in the Fund is inadequate *965to pay all claims for a calendar year. See §§ 44-2829(2)(a) and 44-2831(1). The director may also obtain reinsurance for the Fund. See § 44-2831(2).
The effect of this scheme is to attenuate, if not almost completely sever, the relationship between the cap on total recovery and malpractice insurance premiums. Malpractice insurance premiums are established based on actuarial principles which generally evaluate, inter alia, the risk of liability and the predicted value of successful claims. See, generally, Judith K. Mann, Factors Affecting the Supply Price of Malpractice Insurance, in The Economics of Medical Malpractice 155 (Simon Rottenberg ed., 1978). Because of the Fund, however, the exposure of malpractice insurance carriers is limited to $200,000 arising out of any single occurrence for any single care provider. It is that figure, and not the cap on total liability, which must provide the primary basis for actuarial determinations of malpractice insurance premiums.
The cap on total recovery, then, has some, but minimal, bearing on the market cost of medical malpractice insurance. The cap on total recovery does not serve to limit the liability of malpractice insurers; instead, it limits the liability of the Fund. Unfortunately, the Legislature, in enacting the act, does not seem to have reflected on whether each of the specific provisions of the act were necessary or warranted in light of the remaining provisions. When considering the public policy rationale for the cap on total liability — and, more particularly, the cap on economic damages — the question is, To what extent can a limitation on recovery for proven economic losses be justified by a need to limit the potential liability of the Fund?
SUBSTANTIVE DUE PROCESS
In my view, this question, when placed in its proper constitutional framework, implicates the constitutional right to substantive due process of law. There is a substantial overlap between the tests applied under due process and equal protection analysis. See, generally, Condemarin v. University Hosp., 775 P.2d 348 (Utah 1989). The distinction is that equal protection and special legislation analyses are focused on the classes created by a statute and whether there is justification for making such classifications and treating those classes differently. See, e.g, Bergan *966Mercy Health Sys. v. Haven, 260 Neb. 846, 620 N.W.2d 339 (2000). Due process, on the other hand, questions the justification for abrogating a particular legal right, and the appropriate scrutiny is determined by the importance of the right that is at issue. See, generally, Condemarin, supra. Thus, while the act does not create suspect classifications, and there may be some rational basis for treating health care tort-feasors differently from other tort-feasors, whether economic damages may be taken from negligently injured persons is a separate issue and calls for a different constitutional analysis. Because my concerns regard the nature of the basic right that has been taken — the right to recover for proven economic damages — those concerns are properly addressed by a due process analysis.
However, as the per curiam opinion correctly determines, the issue of substantive due process has not been brought before this court, and we are precluded from deciding, on the record and briefing before us, whether the act comports with that constitutional mandate. Nonetheless, my judicial responsibilities compel me to express my serious reservations regarding the act’s satisfaction of constitutional due process, for the benefit of other litigants, the members of the Legislature, and their constituents, the public.
The Nebraska Constitution provides that “[n]o person shall be deprived of life, liberty, or property, without due process of law . . . .” Neb. Const, art. I, § 3. The concept of due process embodies the notion of fundamental fairness and defies precise definition. Marshall v. Wimes, 261 Neb. 846, 626 N.W.2d 229 (2001). The primary purpose of that constitutional guaranty is security of the individual from the arbitrary exercise of the powers of government. Rein v. Johnson, 149 Neb. 67, 30 N.W.2d 548 (1947). The Legislature may not, under the guise of regulation, set forth conditions which are unreasonable, arbitrary, discriminatory, or confiscatory. State ex rel. Dept. of Health v. Jeffrey, 247 Neb. 100, 525 N.W.2d 193 (1994).
Generally, classifications appearing in social or economic legislation require only a rational relationship between the state’s legitimate interest and the means selected to accomplish that end. The ends-means fit need not be perfect; it need only be rational. State v. Champoux, 252 Neb. 769, 566 N.W.2d 763 (1997). *967Accord Robotham v. State, 241 Neb. 379, 488 N.W.2d 533 (1992). But measures adopted by the Legislature to protect the public health and secure the public safety and welfare must still have some reasonable relation to those proposed ends. See, Jeffrey, supra; Finocchiaro, Inc. v. Nebraska Liq. Cont. Comm., 217 Neb. 487, 351 N.W.2d 701 (1984). See, also, Rein, supra. There must be some clear and real connection between the assumed purpose of the law and its actual provisions. Finocchiaro, Inc., supra.
When a fundamental right or suspect classification is not involved in legislation, the legislative act is a valid exercise of the police power if the act is rationally related to a legitimate state interest. Champoux, supra. However, this begs the question whether the right to recover for economic losses is important enough to merit heightened scrutiny under the Nebraska Constitution. Although this court, because of the limitation on the issues presented, has no occasion in this case to determine the appropriate level of scrutiny to be applied in a due process analysis of a cap on economic damages, it is worth noting that several courts have concluded the right to recover damages for personal injury is essential, and caps on damages are subject to heightened judicial scrutiny in making constitutional determinations. See, e.g., Matter of Certif. of Questions of Law, 544 N.W.2d 183 (S.D. 1996); Condemarin v. University Hosp., 775 P.2d 348 (Utah 1989); Carson v. Maurer, 120 N.H. 925, 424 A.2d 825 (1980); Ameson v. Olson, 270 N.W.2d 125 (N.D. 1978); Jones v. State Board of Medicine, 97 Idaho 859, 555 P.2d 399 (1976). As explained by the Supreme Court of South Dakota:
Medical bills, lost wages, and prescription costs are tangible damages, whereas pain and suffering and like damages are largely intangible. Unbridled noneconomic damage awards present a real threat to maintaining reasonable malpractice insurance premiums, because such awards are unpredictable and based on highly subjective perceptions.. .. In tmth, however, the ... flat cap on total damages potentially cuts not only fat, but muscle, bone and marrow. If a malpractice patient’s hospital bill, for example, exceeds the cap, then the patient can recover nothing for the remaining medical bills, future bills, past and future income lost, prescriptions, etc.
*968Matter of Certif of Questions of Law, 544 N.W.2d at 200. The right to such recovery “ ‘is a substantial property right, not only of monetary value but in many cases fundamental to the injured person’s physical well-being and ability to continue to live a decent life.’ ” Condemarin, 775 P.2d at 360, quoting Hunter v. North Mason School Dist., 85 Wash. 2d 810, 539 P.2d 845 (1975).
The facts of the instant case demonstrate the callous effect of denying recovery for economic damages. The record shows that Colin suffered severe brain damage and will, for the rest of his life, be afflicted by cerebral palsy and extensive physical, cognitive, and behavioral deficiencies. The economic evidence presented by the Gourleys sets forth the expenses likely to be incurred over the course of Colin’s life because of his disabilities, including medications, care, and medical treatment and equipment. The Gourleys’ expert testified, without contradiction, that the expenses for Colin’s care will total $12,461,500.22 over the course of his life. This figure has a present value of $5,943,111, of which the jury awarded $5 million. In short, it is undisputed that the Gourleys will recover, because of § 44-2825(1), less than one-fourth of Colin’s medical expenses alone.
This effect on the quality of life of an injured child, incurred because of a statutory limitation on the right to collect economic damages, must be balanced against the act’s only direct effect: the maintenance of the Fund. The evidence in this case does not indicate that the Fund requires financial protection. In fact, the evidence is far to the contrary. In 1998, the surcharge for qualified health care providers was 5 percent. The balance in the Fund at the end of 1998 was $62,625,074, and the estimated liabilities of (i.e., potential claims against) the Fund at that time were $24,014,000. Between 1990 and 1998, the amount of total claims paid in any given year ranged from a low of $1,795,069 in 1990 to a high of $4,197,308 in 1991. In 1998, the Fund earned over three times more than it paid out in claims, even disregarding the additional funds obtained through the surcharge (which, it should be noted, was only one-tenth of the surcharge permitted under the act).
Given the stark comparison between the assets of the Fund and the potential poverty that can result from forcing negligently injured persons to find their own means of paying for catastrophic *969medical expenses, it may ultimately be determined that the act, in capping recovery for economic damages, is unconstitutional as applied to plaintiffs whose proven economic damages exceed the cap. This would not render the act completely inoperative, but would prelude application of the cap where it would prevent a complete recovery of economic damages. See, generally, Olmer v. City of Lincoln, 23 F. Supp. 2d 1091 (D. Neb. 1998), affirmed 192 F.3d 1176 (8th Cir. 1999); Texas Workers’ Compensation Com’n v. Garcia, 893 S.W.2d 504 (Tex. 1995); Whitehead Oil Co. v. City of Lincoln, 245 Neb. 680, 515 N.W.2d 401 (1994) (distinguishing between facial challenge to statute, which asserts statute unconstitutional under all circumstances, and as-applied challenge, which asserts statute operates unconstitutionally because of party’s unique circumstances).
I recognize the general principle that the wisdom and utility of legislation is a matter for the Legislature, and not the courts, and that judges should not substitute their social and economic beliefs for the judgment of legislative bodies. See, City of Grand Island v. County of Hall, 196 Neb. 282, 242 N.W.2d 858 (1976); Major Liquors, Inc. v. City of Omaha, 188 Neb. 628, 198 N.W.2d 483 (1972). See, also, e.g., Ferguson v. Skrupa, 372 U.S. 726, 83 S. Ct. 1028, 10 L. Ed. 2d 93 (1963); Okl. Ed. Ass’n v. Alcoholic Bev. Laws Enf. Com’n, 889 F.2d 929 (10th Cir. 1989). However, the discretion of the Legislature is circumscribed, as always, by the Nebraska Constitution, particularly where the abrogation of fundamental rights is concerned. The effect of the act on a substantial right — recovery of economic damages — is especially troubling, and potentially unreasonable, when balanced against the negligible effect that such recovery would have on the Fund.
The parties in this case have not presented the question whether the act, as applied, violates substantive due process, and I agree with the per curiam opinion’s determination that we should not overthrow a legislative enactment on the basis of authority not raised and argued by the parties. The per curiam opinion expressly reserves ruling on such issues, which means that some of the most important questions about the act remain, for the time being, unanswered. This does not, however, prevent the Legislature from considering whether the act, in its current form, is fair, wise, or necessary, nor should it preclude legislative *970changes to protect both the constitutional validity of the act and the well-being of the citizens of Nebraska.
CONCLUSION
As previously stated, I concur, albeit grudgingly, in the per curiam opinion’s conclusions regarding the constitutional challenges to the act. I join in the opinion of the court regarding the other issues presented. I remain deeply troubled by the public policy choices reflected in the act, particularly the denial of economic recovery to negligently injured persons. It is pointedly unfair, and may well prove unconstitutional, for the law of this state to safeguard a surplus of tens of millions of dollars in the Excess Liability Fund by denying negligently injured persons money for needed medical care and potentially condemning them to undue poverty. But, because this case does not afford us the opportunity to decide that constitutional question, I reluctantly concur in the judgment of the court.
Hendry, C.J., joins in this concurrence.