Lifting Caps on Non-Economic Damages Prove Beneficial, Even to Insurance Giants

June 25, 2013

3116686631_a04274f897.jpgMedical malpractice attorneys at Pintas & Mullins highlight a recent article by Crain's Chicago Business, highlighting the immense benefits the 2010 Illinois Supreme Court decision to prevent caps on damages plaintiffs are able to collect in jury verdicts.

When this decision was made, medical malpractice insurance carriers among others predicted it would create a doomsday scenario for the Illinois health care industry. The reality is proving much different: in 2012, two years after the Supreme Court decision, the state's largest carrier reported record profits of $57 million. Insurance companies' meritless belief was that removing caps on damages would cause frivolous lawsuits to clog up courts, ultimately, causing malpractice rates to skyrocket.

This belief, along with the previous $500,000 cap on damages, turned out to be not only false but unwarranted as well. ISMIE Mutual Insurance, which enjoyed the $57 million in profits last year, has seen its profits climb steadily since 2010 even though revenue has fallen. This fall in revenue is driven by a lesser prevalence of claims, however, investment gains have remained high, counteracting the revenue drift.

The medical liability industry, as any other, goes through cycles of soft and hard markets. Soft markets are characterized by fewer malpractice claims, meaning more competition among insurance carriers and leading to more choices to choose between for physicians, who then enjoy discounted premiums. The Chicago area has among the highest rates of insurance premiums in the country, and the recent soft market economy has been much welcomed (the annual base premium for OB/GYN's in Chicago, for example is nearly $140,000).

In fact, experts assert that the soft market trend has stretched into the longest in memory. Of course, a number of factors contribute to this trend, the most significant being more stringent risk-management practices by doctors and hospitals.

Despite this, ISMIE'S net income in 2012 was the highest it has been in the past two decades. About forty years ago, many medical liability insurers were forced to leave Illinois in light of huge malpractice losses.

The Illinois state legislator passed the initial law placing caps on non-economic damages in 2005; non-economic damages pertain to the pain and suffering the patient had to endure after being victimized by medical negligence. The law was intended to reduce rates, however, an ISMIE spokesperson affirms that it actually had little to no effect on premiums. Between 2004 and 2012, the number of claims reported fell 22%, the number of claims paid decreased by nearly 40%, and the gross premium about also decreased by 38%.

Families and advocates in California recently headed to the State Capitol to protest the state's limits on economic damages, which is set at a mere $250,000. This cap was signed into law in 1975 by then-Governor Jerry Brown, and, despite significant inflation and rise in costs of living and healthcare, has never changed. For victims of medical malpractice, particularly the youngest, $250,000 is not nearly enough to cover a lifetime of pain and suffering.

Take, for example, the Jeffers' case. In 2010, the Jeffers' daughter was just a toddler, and had a small, treatable infection. They took her into a clinic in Sacramento for treatment, however, the doctors did not diagnose or treat her until it was too late. This unacceptable and negligent delay in diagnosis forced physicians to amputate her lower legs and hands. She now requires, and will continue to require, 24-hour care.

Her life has changed forever, and family cannot afford the care their daughter needs. The $250,000 they received in their lawsuit is already almost gone due to medical bills and care-giving costs. They went to the State Capitol to argue that the cap is unfair and in its essence unjust. No amount of money should be determined valuing victims' lives.

Medical malpractice lawyers at Pintas & Mullins have decades of experience advocating on behalf of victims of medical negligence. If you or a loved one was seriously injured by a health care professional, you have important legal rights, and may be entitled to compensation for past and future medical bills, lost wages, and emotional distress.