Alaska's tort reform legislation still mired in uncertainty

In the Courts. By Tanya Albert, AMNews staff. Oct. 14, 2002. Additional information

A new Alaska Supreme Court decision is a reminder that the road to tort reform isn't a short -- or smooth -- one for physicians.

Getting a state legislature to enact a law that establishes a cap on noneconomic damages awarded in medical malpractice cases is just the first step. Inevitably, the law will be challenged in court.

Alaska is the latest state to see its statute grind through the court process.

On Aug. 30, the state's high court issued a 94-page opinion about reforms the Alaska Legislature passed five years ago. And it still doesn't put one of the biggest questions about the 1997 legislation to rest: Are caps on noneconomic damages -- $400,000 in most cases -- legal under the state constitution?

The majority of the court upheld other parts of the law, including those that shortened the statute of limitations, placed a cap on punitive damages and held physicians and other defendants responsible only for their portion of the damages.

But on the noneconomic cap issue, the court ended up in a 2-2 tie after a fifth justice did not participate in the decision. Under the Alaska court system, the tie means that a lower court decision upholding the caps will stay in place for now. But it isn't a precedent-setting decision.

A definitive answer on noneconomic caps should come next year, said Gary Guarino, the Alaska assistant attorney general who handled the case in which the 2-2 decision was reached.

Constitutionality challenged

The case that went before the court and ended in a tie, Evans et al. v. State of Alaska, involved several patients who said they were contemplating filing medical malpractice lawsuits under the new law. They challenged the constitutionality of Alaska's tort reform, claiming that capping damages infringes on their right to a jury trial.

It's a common challenge in states where the legislature puts a cap on how much injured patients can recover for pain and suffering. And it's a question that would likely be asked if Congress passes national tort reform that includes such a cap.

The verdict on caps has been mixed when state supreme courts pit the laws against state constitutions. California and Louisiana are among the states where the caps have been found acceptable. Supreme courts in Illinois and Ohio have tossed out laws.

The recent split decision in Alaska -- although written to deal with how Alaska's law specifically applies to the Alaska Constitution -- offers a look at some of the basic legal arguments for and against caps.

"The real issue is a separation of powers discussion: 'Whether the Legislature has the ability to establish the caps or if that challenges the power of the judiciary," said Jim Jordan, Alaska State Medical Assn. executive director.

The 1997 Alaska tort reform limits noneconomic damages for pain, suffering, inconvenience, physical impairment, disfigurement, loss of enjoyment of life, or loss of consortium for each injury or death to $400,000 or $8,000 multiplied by the injured person's life expectancy in years, whichever is greater. When the damages are awarded for "severe permanent physical impairment or severe disfigurement," the cap is extended to $1 million or $25,000 multiplied by the injured person's life expectancy in years, whichever is greater.

The patients who said they intend to file lawsuits challenged the constitutionality of the cap on a couple of grounds. First, they argued that it infringes on their right to trial by jury.

Chief Justice Dana Fabe of the Alaska Supreme Court and Justice Robert Eastaugh ruled that the limits do not infringe on the right to a jury trial that is guaranteed under the Alaska Constitution and the Seventh Amendment to the U.S. Constitution.

Because the Alaska Constitution's language on the subject mirrors the U.S. Constitution, the Alaska Supreme Court justices agreed with an argument the 3rd U.S. Circuit Court of Appeals made when it interpreted the Seventh Amendment in Davis v. Omitowoju. "The court held that a damages cap did not intrude on the jury's fact-finding function, because the cap was a 'policy decision' applied after the jury's determination, and did not constitute a reexamination of the factual question of damages," Fabe and Eastaugh wrote.

The justices also noted that the Virginia Supreme Court came to a similar conclusion when it was presented with the question in Pulliam v. Coastal Emergency Services of Richmond and Etheridge v. Medical Center Hospitals.

"The jury has the power to determine the plaintiff's damages, but the Legislature may alter the permissible recovery available under the law by placing a cap on the award available to the plaintiff," Fabe and Eastaugh said. "Eight other courts have upheld damages caps using the same or similar reasoning."

On the other hand

But two other Alaska Supreme Court justices disagreed.

Justices Alexander O. Bryner and Walter L. Carpeneti said the caps do violate the right to a jury trial. Consequently, Bryner and Carpeneti said, the caps are unconstitutional. "Although cases from other states are split on the issue, I think that the better-reasoned cases support the conclusion that [Alaska's] cap on noneconomic damages violates the right to a jury trial under the Alaska Constitution," Bryner wrote in the dissent.

Courts in Kansas, Oregon, Washington and Alabama have reasoned part of the jury's function is to determine how much money a plaintiff should receive. Because the demand for damages is what triggers the right to a jury trial guaranteed under the constitutions, the courts reasoned that it would be "illogical" to say that a jury couldn't then fully determine the amount of damages that the plaintiff sustained, the justices said.

They went on to say that the Virginia opinions that Fabe and Eastaugh based their reasoning on are an interpretation of a unique provision in the Virginia constitution that states that a "trial by jury is preferable to any other." Bryner and Carpeneti also said the federal case from the 3rd Circuit Court of Appeals bases its interpretation on the U.S. Constitution's Seventh Amendment. "And the Seventh Amendment has no application in state-court civil jury cases," Bryner wrote in the dissent.

The two sides similarly disagreed on whether the cap violated equal protection. On that issue, Fabe and Eastaugh applied a three-part sliding scale test and found that the patients' interests in unlimited damages were economic interests, that the state's tort reform objectives were legitimate and that the nexus, or fit, between the legislative objectives and the damages caps is adequate.

"There is also no violation of equal protection merely because the damages caps do not provide for cost-of-living adjustments," Fabe and Eastaugh added to their argument.

But Bryner and Carpeneti said that when courts ask whether substantial or legitimate legislative reason existed for adopting a cap and whether the cap bears a close and substantial relationship to the Legislature's underlying interest, courts have found the caps invalid.

"Because I see no substantial relation between the specific means chosen by the Legislature and the legitimate ends it ostensibly sought to achieve, I would conclude that the noneconomic damages cap violates Alaska's equal protection clause," Bryner wrote in the dissent.

The split among justices on the Alaska Supreme Court mirrors the split that physicians have seen in courts around the country.

"Generally, decisions upholding or rejecting caps on noneconomic damages are a policy call in each state," Guarino said. "It comes down to whether the court sees it as a legislative issue or one that a jury has the right to decide."

And as the Alaska experience shows, it can take years for that question to be decided by the courts once the Legislature takes action.

Albert is a staff writer covering legal issues.

ADDITIONAL INFORMATION:

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Alaska Supreme Court opinion in Evans v. State(http://touchngo.com/sp/html/sp-5618.htm)

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