How Oregon’s top court erred in striking down noneconomic damages cap

By Tanya Albert Henry Oregon Source

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  • September 29, 2020

SOURCE: AMA

For three decades, Oregon had a $500,000 limit on noneconomic damages awarded in medical and other liability cases. It helped keep medical liability insurance rates from rising to unaffordable levels and made Oregon a more attractive place to practice medicine.

But the Oregon Supreme Court has abolished the cap, ruling that the statute the legislature enacted in 1987 violated the state constitution’s remedy clause.

“We have no doubt that [the statute] was intended to reduce insurance costs and improve insurance availability,” the court said. But by “enacting the damages cap in [the statute] the legislature left defendants’ common-law duty of care intact, but deprived injured plaintiffs of the right to recover damages assessed for breach of that duty.”

The Litigation Center of the American Medical Association and State Medical Societies, the Oregon Medical Association (OMA) and the American College of Obstetrics and Gynecologists (ACOG) had urged the state’s high court to rule in the other direction.

In a jointly filed amicus brief supporting the noneconomic damages cap, they told the court that striking down the cap would make Oregon a less attractive place for physicians to practice because they would be more likely to face meritless lawsuits and less likely to find affordable liability insurance. In turn, that would result in reduced access to care for patients.

“While physicians continue to provide quality healthcare to their patients as they have done for centuries, the burdens on the profession continue to increase. No one does their best work while under duress and physicians are no exception. For all patients to be able to receive quality health care and for our medical system to continue functioning, there must be reasonable limits on liability,” the AMA Litigation Center, OMA and ACOG brief told the court.

Find out more about the cases in which the AMA Litigation Center is providing assistance and learn about the Litigation Center’s case-selection criteria.
Meritless cases, doctor shortages

The lawsuit that resulted in the court striking down the cap, Busch v. McInnis Waste Systems, did not involve a physician. Instead, the defendant was a garbage truck owner whose vehicle struck a pedestrian crossing the street.

The law that would have reduced the more than $10 million the jury awarded to the pedestrian in noneconomic damages, however, is the same law that courts apply in medical and other liability cases.

Physicians have championed noneconomic damages for decades and studies show that states that don’t limit the noneconomic portion of awards see an increase in meritless lawsuits and exasperated physician shortages.

The cap, the brief told the court, improves physician supply for patients because “the omnipresent cloud of potential liability impacts where physicians decide to practice, their chosen specialty, what procedures they will perform in certain cases even if they will practice at all.”
Caps still needed

The AMA Litigation Center brief noted that the Oregon legislature considered numerous bills over the years that could have changed the law. In 2019 alone, lawmakers considered bills to increase the limit, repeal it or limit its application to certain types of cases.

Ultimately, none of the legislation was enacted.

Physicians and others pointed to evidence showing that doctors would retire early, choose to not offer certain high-risk procedures or choose to practice in a state with caps if Oregon changed their law.

The AMA Litigation Center brief also told the court that the need for limits on noneconomic damages remains because the scope of physician liability continues to expand as courts in Oregon recognize new theories of liability against physicians.

For example, a 2017 case, Smith v. Providence Health & Services, recognized there is a cause of action based on the loss of an opportunity for a better outcome. A 2018 case, Tomlinson v. Metropolitan Pediatrics LLC, allowed a claim against medical providers for failing to diagnose in favor of nonpatients.

The brief told the court that “legislatively imposed boundaries to liability such as noneconomic damages limits, statutes of limitation and repose, comparative fault, limits on attorney’s fees, providing immunity for certain services and collateral source reforms allow strides toward patient safety goals to continue as the system adjust toward greater reform.”