By Mark Schocke
Historically, Indiana is not well known for being at the vanguard of legal reform. While there are many reasons for this hesitancy to lead change, several statutes have proven to be the exception, including the Indiana Medical Malpractice Act. Indiana was the first state in the nation to enact medical malpractice tort reform in 1975, providing statutory caps for damages and a state-operated excess fund for high-value cases.
Since its inception, the act has remained largely intact, although the damage caps have increased three times since the 1970s. The initial cap of $500,000 was increased to $750,000 in 1990, and again in 1999 to $1.25 million. During the 2016 session of the Indiana General Assembly, the Legislature voted to increase the damage caps effective July 1, 2017. The new caps are graduated from $1.65 million in 2017 to $1.8 million effective July 2019. In addition to this increase in the recovery cap, the act also increases the percentage of maximum compensation for plaintiff attorneys from 15 percent to 32 percent of the amount recovered.
With the advent of the new caps, what will be the effect on the volume of malpractice claims? Moreover, will the cap alterations sufficiently protect the act from constitutional challenges? Presumably the Legislature voted to increase these caps to protect the act from constitutional scrutiny. However, in recent years, several state supreme courts have voided statutory caps on medical malpractice caps in Alabama, Georgia, Illinois, Missouri, New Hampshire, Oregon and Washington for a variety of reasons. Clearly the Legislature has walked a fine line balancing the state’s interest in protecting medical professionals via statutory caps, while simultaneously managing the consequence of encouraging additional claims.
The increased caps will increase claims and premiums
Although one clear goal of the act is to provide limits to protect medical professionals and encourage quality medical providers to remain in Indiana and/or appeal to medical professionals in other jurisdictions to establish a practice in Indiana, the recent amendments will undoubtedly increase the number of total claims. In simple terms, plaintiff attorneys now have more incentive to accept malpractice cases because of the increased financial rewards of accepting new cases.
Traditionally, malpractice actions have been handled by a small niche of specialized plaintiff attorneys with the expertise and financial backing necessary to accept these claims. However, the recent amendment to the attorney fee provisions will surely entice new players and therefore increase the total number of claims. Granted, the quality of claims may not increase, but the quantity is certain to see an uptick. Moreover, as competition increases, so will the marketing of these new players. Accordingly, the Indiana Department of Insurance and the defense bar should prepare to manage this increase in claim volume that is likely to follow these amendments.
Furthermore, malpractice insurance premiums for each medical provider are also likely to increase because the proportion of the damage cap covered by each provider will increase from the current $250,000 to $400,000 in 2017. Will this tradeoff of increased number of claims and malpractice premiums result in a strengthened constitutionality of the act?
Will the act withstand a constitutional challenge?
The most recent significant challenge to the Medical Malpractice Act was decided by the Indiana Supreme Court in 2013 in the case of Plank v. Cmty. Hosps. of Indiana, Inc., 981 N.E.2d 49, (Ind. 2013). In Plank, the plaintiff challenged the constitutionality of the act after the statutory reduction of an $8.5 million verdict. Plaintiff requested an evidentiary hearing eight days following the court’s reduction of the verdict. Ultimately the Supreme Court decided on procedural grounds that plaintiff forfeited the right to challenge the constitutionality of the act by failing to raise the matter prior to verdict and after defense counsel orally moved for reduction of the verdict.
However, Plank was quite instructive with regard to the possible future of constitutional challenges to the act. The plaintiff in Plank presumably sought to challenge the statutory cap on the verdict as a violation of the Due Process and Equal Protection clauses of the 14th Amendment and the Indiana Constitution; the Rights and Privileges Clause of Art. 1, § 23 of the Indiana Constitution; and the right to trial by jury guaranteed by Art. 1, § 20 of the Indiana Constitution. Id. However, as highlighted by counsel for the medical providers in Plank, these matters were previously litigated in the 1980 Supreme Court case of Johnson v. St. Vincent Hosp., Inc., 273 Ind. 374, 404 N.E.2d 585, (1980), ultimately holding that the state’s legitimate interests in permitting medical providers to practice without fear of rising malpractice premiums was sufficiently tailored to withstand these constitutional challenges. The Plank court specifically rejected the providers’ position that these matters were “well settled,” explaining a determination of constitutionality can be revisited and that the challenging party has the burden to prove that changes in circumstances require reversal of existing law in light of changes in social or economic conditions. Id at 53. Accordingly, the door is still open for a subsequent challenge to the constitutionality of the act as long as a plaintiff properly preserves this right at trial.
Will the graduated increases in the damage caps in 2017 and 2019 keep pace with the social and economic conditions of the times as to rebuff any challenges as to constitutionality? Although this question remains, it is clear that the General Assembly’s vote to increase the caps was an effort to keep the limits in line with these social and economic factors. Perhaps a different means to accomplish the same result could have been through legislation tying the caps to a variable rate such as inflation so as to always keep a tie to the economic factors threatening constitutionality. Even so, despite the increases, the act is sure to see additional challenges no matter how well tailored and legitimate the state’s interest.•
• Mark Schocke, an attorney with Kightlinger & Gray LLP, focuses his practice on the defense of complex litigation. The opinions expressed are those of the author.