Eighth District Court of Appeals Ruling Removes Medical Malpractice Damages Caps in Catastrophic Injury Cases.
The issue of damages caps in medical malpractice cases has been controversial over the last several years in many states including Ohio. Historically, damages caps have served as a safeguard against runaway juries in Ohio. However, following the Eight District Court of Appeals ruling in Paganini v. Cataract Eye Ctr. Of Cleveland, the damage caps in medical malpractice cases involving catastrophic injuries have been ruled unconstitutional.
This decision marks a pivotal moment in the state’s legal landscape and has the potential to reshape how justice is served in medical malpractice cases. Below is a breakdown of what the ruling means.
What are damages caps?
Before diving into the court’s decision, it’s important to understand what “damages caps” are. In the context of medical malpractice cases, a damage cap is a legal limit on the amount of money a Plaintiff can receive as compensation for certain injuries or losses.
Under Ohio Revised Code § 2323.43, effective April 11, 2003, in a medical malpractice action there is no limit on compensatory damages for economic loss of the person awarded damages. Non-economic damages are capped at the greater of $250,000 or an amount that is equal to three times the plaintiff’s economic loss, to a maximum of $350,000 for each plaintiff or a maximum of $500,000 for each occurrence subject to a few exceptions. The exceptions for catastrophic injuries increase the caps to $500,000 for each Plaintiff or $1,000,000 for each occurrence.
The Eighth District Court of Appeals Ruling
In a landmark decision on appeal from a case in Cuyahoga County, the Eighth District Court of Appeals held the cap on noneconomic damages in catastrophic injury malpractice cases as arbitrary and unreasonable, violating rights under the due course of law clause in the Ohio Constitution.
This case arose from a cataract surgery performed by Dr. Louis on Mr. Paganini. Following the surgery Mr. Paganini developed endophthalmitis as diagnosed 4 days following surgery and Mr. Paganini’s initial symptoms. Endophthalmitis is an eye infection that can lead to vision loss or loss of the eye. Ultimately, Mr. Paganini lost his eye. The medical malpractice action alleged Dr. Louis negligently failed to diagnose the infection one day following the surgery in his assessment of Mr. Paganini’s symptoms and as a result suffered permanent substantial injury. Mr. Paganini further argued R.C. § 2323.43 (A)(3) was unconstitutional as applied to him personally. A jury awarded Mr. Paganini $1,487,500 for past and future noneconomic damages.
Under R.C. § 2323.43 (A)(3), these damages would have been capped at $500,000. The trial court granted Mr. Paganini’s motion holding the cap on noneconomic damages violates his due course of law rights under Ohio Constitution Article I, § 16.
The Eight District Court of Appeals affirmed the Cuyahoga County holding that § 2323.43 (A)(3) was unconstitutional as applied to Paganini, meaning the statute may be valid in some circumstances but the statute is unconstitutional as applied to the particular party under a specific set of circumstances, here, Paganini.
The Court of Appeals applied a rational basis test when reviewing the constitutionality of the damages caps. As defined by the Court, the rational basis test will uphold a statute as constitutional under due course of law guarantee if “(1) it bears real and substantial relation to public health, safety, morals, or general welfare of the pubic and (2) it is not unreasonable or arbitrary.” Generally speaking, most statutes pass a rational basis test; however, that was not the case here.
The Court held the legislature’s findings failed to demonstrate a real and substantial relationship between the capping of noneconomic damages for catastrophic injuries and malpractice insurance rates (R.C. § 2323.43 Editors notes Section 3(A)(3) stated “the overall cost of healthcare to the consumer has been driven up by the fact that malpractice litigation causes healthcare providers to over prescribe, over treat, and over test their patients.”)
Further, the Court held the noneconomic damages caps were arbitrary and unreasonable because the statute burdens the most severely injured by medical malpractice in order to provide an “unrealized benefit to the general public.” In support of this, the court highlighted a comparison to R.C. § 2315.18 which places no limit to recovery of noneconomic damages for catastrophic injuries to plaintiffs in tort claims other than medical malpractice. Thus, the Court concluded the statue failed the rational basis test and the caps are unconstitutional.
Impacts
While this decision currently applies to the Eighth District of Ohio, we anticipate Plaintiffs will cite this decision statewide in an attempt for all district to decline to enforce catastrophic injury damages caps. This raises concerns among insurance companies and businesses that are frequently defendants in medical malpractice cases. Without caps, the financial risk for these entities could increase significantly. This could lead to higher premiums for liability insurance and potential changes in how businesses approach risk management. Further, this could lead to an increase in runaway jury verdicts and ultimately increase the costs of healthcare.
Conclusion
We anticipate this case will be appealed to the Ohio Supreme Court. For now, Plaintiffs in medical malpractice actions under Paganini face no caps in catastrophic injury cases and insurance companies and physicians face virtually limitless liability.