Missouri Supreme Court Strikes Down Non-Economic Damage Cap

Missouri’s top justices have ruled that the state’s law placing limits on the amount juries can award for non-economic damages in medical malpractice lawsuits is unconstitutional.

The state Supreme Court said the law — which places a $350,000 cap on non-economic damages in jury awards — violates the right to trial by jury established in the state’s constitution.

The monetary limit had been the focal point of tort reform pushed by the Republican-led Legislature and enacted by then-Gov. Matt Blunt in 2005 with the aim of reining in medical malpractice premiums for doctors and, hopefully, improving the availability of health care, the Associated Press reported.

The ruling, published on July 31, came in a case involving a baby that was born with severe brain injury due to alleged negligent health care services.

In Watts v. Cox Medical Centers, Deborah Watts alleged that her son, Naython Watts, was born with disabling brain injuries due to negligent care provided by Cox Medical Centers and its associated physicians (collectively, Cox).

At trial, a jury found in favor of Watts and assigned an award of $1.45 million in non-economic damages and $3.371 million for future medical needs.

The trial judge subsequently reduced the non-economic damage award to $350,000 as provided for in section 538.210 of state statute.

The judge also established a periodic payment schedule for the medical damages award, which called for an “immediate payment of half of all net future medical damages with the other half paid in equal annual installments over the next 50 years with an interest rate of 0.26 percent,” the Court explained.

In her appeal, Watts asserted that not only was the non-economic damage limitation unconstitutional, the judge-established payment schedule was “arbitrary and unreasonable in that it does not assure full compensation due to the low interest rate and 50-year payment schedule.”

In the first part of the complaint, the Court agreed that the non-economic damage cap “is unconstitutional to the extent that it infringes on the jury’s constitutionally protected purpose of determining the amount of damages sustained by an injured party. Such a limitation was not permitted at common law when Missouri’s constitution first was adopted in 1820 and, therefore, violates the right to trial by jury guaranteed by article I, section 22(a) of the Missouri Constitution.”

As to the payment schedule, the Court ruled that the judge did have the authority to determine how payment of the award would proceed.

However, it found that “the trial court abused its discretion in entering a periodic payment schedule pursuant to section 538.220 that did not assure full compensation due to the interest rate and 50-year payment schedule.”

The case was remanded to the trial court determine “a new periodic payment schedule that, consistent with the goal of reducing medical malpractice costs, also ensures that Naython will receive the benefit of the jury’s award for future medical care.”

At least one medical liability insurer in Missouri — Missouri Professionals Mutual (MPM) — said it had prepared for the unpredictability of a possible overturn of the non-economic damages cap by securing an additional $100 million of reinsurance. MPM said it has reinvested its surplus to fund its retrocessional reinsurance treaty.

“This decision will drastically affect payouts in Missouri,” stated Timothy H. Trout, managing director of MPM. “A payout that would have been no more than $350,000 yesterday could now be more than $1 million.”

The Court’s decision would not quickly be reversed, Trout noted. “Historically, the cycle of tort reform damage caps has taken years to resolve,” he said.

Missouri previously had an inflation-adjusted cap of $579,000 for non-economic damages in medical malpractice cases, the AP reported. The 2005 law, which lowered the amount to $350,000, applied the cap to the total amount owed by all defendants, rather than against each defendant for each act of negligence as had been permitted under the old law.