Important Update on Litigating the Statutory Cap on Noneconomic Med Mal Damages and Related Tort Reform Robert E. Harrington & Brian L. Church June 16, 2018
Background: Tort Reform and Senate Bill 33 • Senate Bill 33 (codified in part at N.C. Gen. Stat. § 90-21.19) was enacted over the governor’s veto on July 25, 2011 • Caps noneconomic damages in medical malpractice actions at $500,000 • Against all defendants • For all claims arising out of the same professional services • Noneconomic damages includes pain, suffering, emotional distress, loss of consortium, other nonpecuniary damage
Key Aspects of the Noneconomic Damages Cap • Does not abrogate or eliminate recovery of noneconomic damages and does not limit recovery of economic damages • Jury still determines noneconomic damages and is not informed of the Cap • Judge applies the Cap after the jury renders its decision
Medical Expenses and Compensatory Damages • North Carolina Rule of Evidence 414 • “Evidence offered to prove past medical expenses shall be limited to evidence of the amounts actually paid to satisfy the bills that have been satisfied, regardless of the source of payment, and evidence of the amounts actually necessary to satisfy the bills that have been incurred but not yet satisfied. . . .” • N.C. Gen. Stat. § 8-58.1 • “Whenever an issue of [medical] charges arises in any civil proceeding, the injured party . . . is competent to give evidence regarding the amount paid or required to be paid in full satisfaction of such charges, provided that records or copies of such charges showing the amount paid or required to be paid in full satisfaction of such charges accompany such testimony”
The Scope of Legislative Power The legislature is “the policy-making agency of our government, and when it elects to legislate in respect to the subject matter of any common law rule, the statute supplants the common law rule and becomes the public policy of the State.” McMichael v. Proctor , 243 N.C. 479, 483, 91 S.E.2d 231, 234 (1956)
Possible Constitutional Challenges to Tort Reform • Separation of Powers • Right to Trial by Jury • Right to “Open Courts” • Unconstitutional Taking • Due Process and Equal Protection • Special Emoluments • Federal Constitutional Challenges
Procedural Issues in Litigating the Constitutional Challenges • Necessary Parties • Three-Judge Panels • The Appellate Process
Necessary Parties • N.C. R. Civ. P. 19(d) • “Necessary Joinder of House of Representatives and Senate. - The Speaker of the House of Representatives and the President Pro Tempore of the Senate, as agents of the State through the General Assembly, must be joined as defendants in any civil action challenging the validity of a North Carolina statute or provision of the North Carolina Constitution under State or federal law.”
Three-Judge Panels • N.C. Gen. Stat. § 1-267.1(a1) • “[A]ny facial challenge to the validity of an act of the General Assembly shall be transferred pursuant to G.S. 1A-1, Rule 42(b)(4), to the Superior Court of Wake County and shall be heard and determined by a three-judge panel of the Superior Court of Wake County, organized as provided by subsection (b2) of this section” • N.C. R. Civ. P. 42(b)(4) • “[T]he court shall, on its own motion, transfer that portion of the action challenging the validity of the act of the General Assembly to the Superior Court of Wake County for resolution by a three-judge panel if, after all other matters in the action have been resolved, a determination as to the facial validity of an act of the General Assembly must be made in order to completely resolve any matters in the case. . . .”
Appellate Process • N.C. Gen. Stat. § 7A-16 • “The Court of Appeals shall sit in panels of three judges each and may also sit en banc to hear or rehear any cause upon a vote of the majority of the judges of the court.” • There is no longer an appeal as of right to the North Carolina Supreme Court for constitutional challenges
Practical Considerations • Joining of necessary parties • Pleading the noneconomic damages cap • Timing of the decision
Time to Join Necessary Parties • N.C. R. Civ. P. 12(h)(2) • “A defense of failure to state a claim upon which relief can be granted, a defense of failure to join a necessary party, and an objection of failure to state a legal defense to a claim may be made in any pleading permitted or ordered under Rule 7(a), or by motion for judgment on the pleadings, or at the trial on the merits.”
Pleading the Noneconomic Damages Cap • N.C. Gen. Stat. § 90-21.19 • “Judgment shall not be entered against any defendant for noneconomic damages in excess of five hundred thousand dollars ($500,000) for all claims brought by all parties arising out of the same professional services.” • Does N.C. R. Civ. P. 8(c) apply? • “Affirmative defenses. - In pleading to a preceding pleading, a party shall set forth affirmatively accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations, truth in actions for defamation, usury, waiver, and any other matter constituting an avoidance or affirmative defense.”
Timing of the Decision • Rule 42(b)(4) provides for resolution of a facial constitutional challenge only “if, after all other matters in the action have been resolved, a determination as to the facial validity of an act of the General Assembly must be made in order to completely resolve any matters in the case.” • At least one Superior Court Judge has denied a motion for judgment on the pleadings regarding a constitutional challenge
Relevant Law • Rhyne v. K-Mart Corp. , 358 N.C. 160, 594 S.E.2d 1 (2004) • Upholding cap on punitive damages • Osborn v. Leach , 135 N.C. 628, 632-33, 47 S.E. 811, 813 (1904) • Declaring unconstitutional abolition of compensatory damages in some libel actions
What’s Happening Elsewhere? • Roughly 30 states have passed damages caps • Nearly all have been challenged, and the results are generally split • It often takes years for challenges to reach the state supreme court
Other Jurisdictions – Two General Lines of Analysis • Etheridge v. Medical Center Hospitals, Inc. , 237 Va. 87, 376 S.E.2d 525 (1989) • “A remedy is a matter of law, not a matter of fact. A trial court applies the remedy’s limitation only after the jury has fulfilled its fact-finding function.” • Sofie v. Fibreboard Corp. , 112 Wn. 2d 636, 771 P.2d 711 (1989) • Held that “the Legislature cannot intrude into the jury’s fact- finding function in civil actions, including the determination of the amount of damages.”
The Current Forecast • Nearly seven years removed from enactment of tort reform, a constitutional challenge will likely reach the appellate courts in the coming months or years • Experiences in other jurisdictions show that existing precedent and judicial philosophy shape constitutional decisions • Organization and vigilance is critical
Robert E. Harrington rharrington@robinsonbradshaw.com Brian L. Church bchurch@robinsonbradshaw.com
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