The Illinois Supreme Court on Thursday struck down the state’s medical malpractice law, saying limits on damages awarded to victims of medical negligence are unconstitutional.
The much-anticipated ruling deals a blow to doctors and hospital officials who say caps on damages are a way to tame rising health care costs.
State lawmakers in 2005 passed legislation, which was signed into law by then-Gov. Rod Blagojevich, that established limits on pain and suffering and other non-economic damages of $500,000 in cases against doctors and $1 million against hospitals. Illinois followed other states, such as California, that capped damages years ago.
The court said the law violates the state’s separation-of-powers clause between the branches of government by allowing lawmakers to interfere with a jury’s right to determine damages. “The crux of our analysis is whether the statute unduly infringes upon the inherent power of the judiciary,” the majority opinion said.
Justices also said they were not persuaded by arguments used in other states. “That ‘everybody is doing it,’ is hardly a litmus test for the constitutionality of the statute,” wrote Chief Justice Thomas Fitzgerald in delivering the opinion for four siding in the majority of the seven-member court.
Justices Lloyd Karmeier and Rita Garman dissented on certain key points of the decision and expressed sympathy to providers of medical care, citing President Barack Obama’s recent address to a joint session of Congress that they said admonished the nation’s collective failure to enact health care reform.
But limiting medical liability is no silver bullet for controlling health costs. The Congressional Budget Office reported in September that reforms, such as capping non-economic damages, would lower the nation’s health care bill by only 0.5 percent.
The majority said the court’s decision was not made with Washington’s health care reform efforts in mind.
Still, the ruling could figure in the national debate of stalled health care legislation. Though Obama and Democrats have said they are unlikely to cap damages in federal health care legislation, they have been open to a compromise on liability reform.
The Obama administration, Republicans and doctor groups have made attempts to scale back the practice of “defensive medicine,” in which doctors perform medical procedures that are not necessary because of legal concerns. The CBO said recent studies have shown that liability reforms can slightly reduce the use of health care.
Thursday’s decision will not end the heated debate over whether lawsuits affect the quality and costs of medical care.
One area where there is agreement is on establishing evidence-based medicine, which offers guidelines for doctors to follow when treating patients.
“The high cost of potential damages impacts how insurers rate different types of practices,” said Larry Boress, chief executive of Midwest Business Group on Health, a coalition that represents some of the region’s largest employers. “While we encourage physicians to practice evidence-based medicine to ensure high quality medical care is provided, we know that not all of medicine has evidence-based guidelines. Our state and nation need alternative methods of addressing malpractice allegations.”
The state law came after more than two years of political battle in Springfield between trial lawyers and providers of medical care and their insurers. Doctors blamed the lack of malpractice reform for an exodus of physicians from the state, particularly neurosurgeons and obstetricians, who typically have higher insurance premiums.
But government studies have found little evidence that rising malpractice premiums have forced doctors to retire early or move to another state.
Thursday’s high court decision upset physicians, who say a return to high premiums and a loss of physicians are likely.
“Today’s court decision threatens to undo all that Illinois patients and physicians have gained under the cap, including greater access to health care, lower medical liability rates and increased competition among medical liability insurers,” said James Rohack, president of the American Medical Association.
Rohack said patient access to medical care worsened in Illinois after the court overruled the state’s previous cap on non-economic damages in 1997.
“Severe problems with patient access to care emerged as the unrestrained excesses of the state’s legal system forced Illinois physicians to limit services, retire early or move to other states where liability premiums were more stable,” Rohack said. “Without a cap on non-economic damages from 1997 to 2005, Chicago physicians saw their liability premiums increase an average of 10 to 12 percent each year.”
When the cap was reinstated in 2005, Rohack said, premiums for Chicago physicians stabilized and even began to shrink.
In 2008, the total volume of malpractice premiums written in Illinois was $600 million, according to the state insurance division. That was down 10 percent from 2006.
But consumer groups and insurance industry officials say the fact that rates have stabilized has nothing to do with the caps. It has more to do with insurance market cycles and other factors, such as increased competition and new insurance regulations that were included in the cap legislation, they said.
As a result of the new regulations, the state’s largest medical malpractice insurer, ISMIE Mutual Insurance Co., was subject to hearings regarding a proposed rate increase in 2005. The insurance division ordered ISMIE to return excess premiums to doctors and set a target rate reduction of 3.5 percent.
“Illinois rates have followed national trends,” said Bill Yurek, president of Chicago-based Avreco, a wholesale insurance broker. “I don’t think the caps really did much.”
Removing the caps, though, could potentially increase the cost of claims, said Jeff Weigel, chief underwriting officer at Medicus Insurance Co. of Austin, Texas, which started underwriting insurance in Illinois in 2007. He also said he believes insurance rates would have come down if the caps had been upheld. Despite the court’s ruling, Medicus plans to stay in Illinois, Weigel said.
Twice before, Illinois lawmakers have adopted caps, and both times the state’s highest court nixed them.
The latest case before the high court comes on appeal from Cook County Circuit Court. In 2007, Circuit Judge Diane Larsen decided that caps on malpractice awards violated the Illinois Constitution’s “separation of powers” clause, in effect ruling that the state Legislature can’t interfere with the right of juries and judges to determine fair damages. Larsen’s ruling falls in line with a 1997 Illinois Supreme Court decision that overturned a 1995 law implementing caps on personal-injury cases.
The first case to test the 2005 law was that of 4-year-old Abigaile LeBron, who suffered a severe brain injury during her birth at Gottlieb Memorial Hospital in Melrose Park. In a lawsuit filed in 2006, her family charged the hospital, her doctor and nurse with negligence.
Her lawyer, Jeff Goldberg, and members of the Illinois Trial Lawyers Association praised the court for lifting arbitrary limits on damages.
“We can now focus on the real issue - providing meaningful insurance reform that will keep costs down for doctors and patients alike,” said Peter Flowers, president of the lawyer group.
Damage caps hurt the most serious cases of medical negligence, said Tom Baker, a professor at the University of Pennsylvania Law School and author of “The Medical Malpractice Myth.” Personal injury lawyers are less likely to take cases from lower-earning people because the potential recovery is smaller when damages are limited to economic losses.
“Caps don’t solve the problems of the medical liability system,” Baker said. “Doctors still have tremendous distrust of the system. And people that are the most deserving don’t get the money.”