Morris v. Savoy

Wright, J.

This court has not considered either of the statutes challenged by petitioners in this case — a remarkable fact given the age of the statutes and the limits they place on recovery by medical malpractice victims. The statutes were part of the General Assembly’s response in 1975 to a perceived health care crisis prompted by escalating medical malpractice insurance premiums.

For the reasons set forth below, we hold that that response was unconstitutional in R.C. 2307.43, by setting a $200,000 cap on general damages that may be awarded for medical malpractice. This answer will serve as a response to the first and second questions posed by the district court.

Question three requires a threshold determination of constitutionality of R.C. 2305.27 regarding limits on the collateral source rule followed by a specific finding as to the intent of the legislature in its application to future payments.1 We find that the statute is constitutional and that it was intended to reach future payments capable of being calculated with reasonable certainty-

I

The Ohio Medical Malpractice Act (“Act”) was passed as a result of the turmoil that swept the nation in the early 1970s with the medical fraternity predicting dislocation of medical care as the result of soaring malpractice rates. The Act, finally enacted by Am.Sub.H.B. No. 682, 136 Ohio Laws, Part II, 2809, 2813, was introduced in the General Assembly on April 15, 1975, in H.B. No. 682. 136 House Journal, Part I, 687. As introduced, the bill did not contain any limit on the amount of general damages recoverable from either physicians or hospitals. It did provide for abrogation of the collateral source rule. H.B. No. 682, lines 199 to 201, proposed R.C. 2743.02(C). Just two months later, on June 17, a bill much altered in committee and now containing a $200,000 cap on general damages for any medical claim was passed by the House and sent to the Senate. 136 House Journal 1217; Sub.H.B. No. 682, lines 469 to 472, proposed R.C. 2743.161. While the bill was in a Senate committee, the Ohio State Medical Association informed the legislature on July 1 that “within the next several days, the number of physicians unable to continue medical practice in Ohio because of lack of adequate malpractice coverage will reach crisis proportions.” Gongwer News Service, Inc., Ohio Report (July 1, 1975) 3. There was an attempt, while the bill was in the Senate, to place a cap on all damages at $500,000, but the amendment was defeated by a vote of eighteen to fourteen. 136 Senate Journal 889. Also during Senate consideration, R.C. 2305.27 was added to require a reduction in a plaintiffs recovery by the amount received from collateral sources. 136 Senate Journal 888. In its final form, the abrogation of the collateral source rule did not affect payments resulting from policies or contracts paid for by plaintiffs or their employers. 136 Senate Journal 950; 136 House Journal 1643-1644. On July 28, the Act was signed into law by Governor James A. Rhodes. The emergency nature of the Act was posited as follows: “The reason for such necessity lies in the fact that immediate action is necessary to insure a continuance of health care delivery to the citizens of Ohio.” Am.Sub. H.B. No. 682, Section 8; 136 Ohio Laws, Part II, 2843-2844.

The Act amended ten sections of the Ohio Revised Code and created twenty-six new statutes. The sweep was broad. Among the changes were provisions for compulsory (though nonbinding) arbitration, R.C. 2711.21, and an altered statute of limitations, R.C. 2305.11, principally to eliminate the actuary’s nightmare, “long-tail liability.” The legislature also established limits on the amounts recoverable in general, or noneconomic, damages and required a setoff for payments from collateral sources. In the last fifteen years, this court has had occasion to rule on the constitutionality of only three statutes in that Act, upholding two,2 but finding portions of a third unconstitutional.3

II

Following the events that produced the malpractice damage caps, there has been a lengthy convalescence with the remedy being examined for any unconstitutional side effects. It has been found wanting in the majority of instances where the issue has been litigated, though the rationale for overturning damage caps has varied widely.

State supreme court cases that have found such violations include:

Kansas Malpractice Victims Coalition v. Bell (1988), 243 Kan. 333, 757 P.2d 251 (violates rights to trial by jury, adequate remedy, and due course of law); Lucas v. United States (Tex. 1988), 757 S.W.2d 687 (violates constitution’s open courts guarantee); Smith v. Dept. of Ins. (Fla.1987), 507 So.2d 1080 (violates right of access to courts); Carson v. Maurer (1980), 120 N.H. 925, 424 A.2d 825 (violates equal protection guarantee); Arneson v. Olson (N.D.1978), 270 N.W.2d 125 (violates equal protection); Jones v. State Bd. of Medicine (1976), 97 Idaho 859, 555 P.2d 399 (remanded to apply heightened equal protection standard); and Wright v. Central Du Page Hosp. Assn. (1976), 63 Ill.2d 313, 347 N.E.2d 736 (violates constitutional prohibition against special privilege).

Those that have upheld malpractice injury caps include:

Etheridge v. Medical Ctr. Hospitals (1989), 237 Va. 87, 376 S.E.2d 525; Williams v. Kushner (La.1989), 549 So.2d 294; Fein v. Permanente Medical Group (1985), 38 Cal.3d 137, 211 Cal.Rptr. 368, 695 P.2d 665, appeal dismissed (1985) , 474 U.S. 892, 106 S.Ct. 214, 88 L.Ed.2d 215 (White, J., dissenting); Johnson v. St. Vincent Hosp., Inc. (1980), 273 Ind. 374, 404 N.E.2d 585; and Prendergast v. Nelson (1977), 199 Neb. 97, 256 N.W.2d 657.

The determination of constitutionality needs to be tempered by the fact that, in two of the five cases cited, the courts noted the existence of an insurance fund that acted as a quid pro quo for plaintiffs’ loss of unlimited recovery for pain and suffering.

Our standards for review of this statute, challenged on due process and equal protection grounds, are the same as we used in Mominee v. Scherbarth (1986) , 28 Ohio St.3d 270, 28 OBR 346, 503 N.E.2d 717, and in Schwan v. Riverside Methodist Hosp. (1983), 6 Ohio St.3d 300, 6 OBR 361, 452 N.E.2d 1337. In Mominee, we held that: “A legislative enactment will be deemed valid on due process grounds ‘ * * * [1] if it bears a real and substantial relation to the public health, safety, morals or general welfare of the public and [2] if it is not unreasonable or arbitrary.’ ” Id., 28 Ohio St.3d at 274, 28 OBR at 349-350, 503 N.E.2d at 720-721, quoting Benjamin v. Columbus (1957), 167 Ohio St. 103, 4 O.O.2d 113, 146 N.E.2d 854, paragraph five of the syllabus. In Schwan, we agreed to an equal protection analysis that utilized the “rational basis” test because that case, like this one, did not involve a fundamental right or suspect class. Id., 6 Ohio St.3d at 301, 6 OBR at 361, 452 N.E.2d at 1338. “ ‘ * * * Consequently, the statute must be upheld if there exists any conceivable set of facts under which the classification rationally furthered a legitimate legislative objective.’ (Citation deleted.) Denicola v. Providence Hospital (1979), 57 Ohio St.2d 115, 119 [11 O.O.3d 290, 293, 387 N.E.2d 231, 234].” Id.

Due Process

Although this statute is before the court for the first time, R.C. 2307.43 is no stranger to lower courts. See, e.g., Graley v. Satayatham (C.P.1976), 74 O.O.2d 316, 343 N.E.2d 832; Duren v. Suburban Community Hosp. (C.P.1985), 24 Ohio Misc.2d 25, 24 OBR 450, 495 N.E.2d 51. Of all the Ohio authority cited by the litigants in this case, there is only one case where the constitutionality of R.C. 2307.43 was analyzed and upheld. Keeton v. Mansfield Obstetrics & Gynecology (Mar. 5, 1981), N.D.Ohio No. C80-1573A, unreported. Even there, Judge Contie’s opinion was harshly critical of what he saw as shifting the risk from the health care providers to the health care recipients in response to the “crisis” in medical care.4 The merits of such a shift are for the legislature to decide. This court’s function is only to determine whether the method employed bears a “real and substantial relationship” to public health or welfare or whether it is “unreasonable or arbitrary.” Despite his obvious antipathy towards the Act, Judge Contie upheld the constitutionality of the statute. Since that time, this court has adopted a rule5 allowing certification of questions of state law from the federal courts, affording this court the opportunity to revisit the issue that so troubled Judge Contie. The language of the Act clearly shows that it was aimed at malpractice insurance rates, which had been rising rapidly in the years previous. Section 5 requires an annual report from the state Superintendent of Insurance on the “effectiveness” of fifteen of the Act’s thirty-six statutes “ * * * in reducing medical malpractice insurance premiums * * *.” 136 Ohio Laws, Part II, 2842. R.C. 2307.43 is not listed among the statutes that the legislature obviously believed would have an impact on insurance premiums. There are twenty-one statutes not covered by the survey and sixteen relate to the creation and operation of the medical malpractice underwriting association. Of the remaining five, R.C. 1739.02 subjects hospital service associations to the new statutes on the underwriting association, R.C. 2743.02 is a waiver of immunity for public hospitals, and R.C. 2305.11 is a statute of limitations and a statute of repose for medical malpractice. In Mominee, this court held provisions of that statute unconstitutional as it related to minors, in part because it was not included among the statutes to be surveyed for their impact on insurance rates. The only two other statutes in the Act left out of the survey are the two challenged here. We are unable to find, either in the amici briefs or elsewhere, any evidence to buttress the proposition that there is a rational connection between awards over $200,000 and malpractice insurance rates. There is evidence of the converse, however. The Supreme Court of Texas found no relationship between insurance rates and the cap, citing an independent study that showed that less than .6 percent of all claims brought were for more than $100,000. Lucas v. United States (Tex.1988), 757 S.W.2d 687, 691. According to three amici arguing against the statute’s constitutionality,6 a 1987 study by the Insurance Service Organization, the rate-setting arm of the insurance industry, found that the savings from various tort reforms, including a $250,000 cap on noneconomic damages, were “marginal to nonexistent.” Neither respondent nor any of the amici who argued in favor of the statute has offered evidence that the damage cap has been a factor in medical malpractice insurance rate setting. Conceivably, such evidence may exist, but that would require a second trip to the General Assembly.

On the second prong of the analysis set forth in Mominee, supra, whether the statute is unreasonable or arbitrary, we note with approval the following excerpt from an opinion of the Court of Appeals for Stark County regarding R.C. 2307.43:

“ * * * [I]t is irrational and arbitrary to impose the cost of the intended benefit to the general public solely upon a class consisting of those most severely injured by medical malpractice. * * * ” Nervo v. Pritchard (June 10, 1985), Stark App. No. CA-6560, unreported, at 8.

We hold, therefore, that R.C. 2307.43 is unconstitutional because it does not bear a real and substantial relation to public health or welfare and further because it is unreasonable and arbitrary.

Equal Protection

As noted above, our examination of authorities on this issue includes opinions from several other states dealing with caps on damages. Most have wrestled with the issue of equal protection. In Richardson v. Carnegie Library Restaurant, Inc. (1988), 107 N.M. 688, 694, 763 P.2d 1153, 1159, the Supreme Court of New Mexico held, in a case involving a cap on dramshop liability, that the requirements of equal protection do not “ ‘prohibit classification for legislative purposes, provided that there is a rational and natural basis therefor, that is based on a substantial difference between those to whom it does and those to whom it does not apply * * *.’ ” The test for one who challenges a statute’s constitutionality is to demonstrate either that there was no rational basis for the creation of the class itself or that those within the class are not being treated equally in the furtherance of a legitimate governmental interest.

The Act itself, by addressing the malpractice issue, created two classes: medical malpractice victims and all other tort victims. Equal protection of the laws requires the existence of reasonable grounds for making a distinction between those within and those outside a designated class. State v. Buckley (1968), 16 Ohio St.2d 128, 45 O.O.2d 469, 243 N.E.2d 66. Assuming the existence of a crisis in the medical malpractice insurance area, we do not take issue on equal protection grounds with the legislature’s determination to respond as it did with the Act. For example, in Denicola v. Providence Hosp. (1979), 57 Ohio St.2d 115, 11 O.O.3d 290, 387 N.E.2d 231, this court upheld the constitutionality of the Act’s limitations on medical malpractice experts contained in R.C. 2743.43. We found that that classification — qualifications for experts in medical claims not applied to expert witnesses in other malpractice cases — rationally furthered a legitimate legislative objective. However, “[legislation must apply alike to all persons within a class * * Porter v. Oberlin (1965), 1 Ohio St.2d 143, 30 O.O.2d 491, 205 N.E.2d 363, paragraph two of the syllabus. R.C. 2307.43 deals with damages in medical claims, but treats members of the class of medical damage claimants in radically different fashion. First, the statute applies only to claims “not involving death.” Respondent contends that this distinction is immaterial because Section 19a, Article I of the Ohio Constitution forbids a limit on damages recoverable in wrongful death actions. The fact that the Constitution prohibits treating one portion of a class in the desired fashion surely is not license to subject the balance of the class to disparate treatment. Second, and more importantly, the statute treats the most seriously injured malpractice victims differently from the rest of the class. To this, respondent replies: “The legislature intended to ease the burden of exorbitant awards of noneconomic damages to facilitate continuous delivery of health care in Ohio. * * * Whether it is the best method or whether it will accomplish its goal, is not a decision for the courts.” We would emphasize that we are not concerned with the wisdom of the Act. However, respondent cites no evidence to support his contention regarding this purported easing of the burden of alleged “exorbitant” malpractice awards. The American Heritage Dictionary of the English Language (1981) defines “exorbitant” as “Out of all bounds” or “extravagant.” While it is not determinative of this issue, we are loath to assume that any amount above $200,000 for pain and suffering is “exorbitant” in a malpractice case, like this one, involving such grievous injuries and continuing pain and suffering. The vast weight of authority requires that, when utilizing the “rational basis” test, the courts defer to the legislature on the issue of constitutionality. “We do not inquire whether this statute is wise or desirable * * *. * * * Misguided laws may nonetheless be constitutional.” James v. Strange (1972), 407 U.S. 128, 133, 92 S.Ct. 2027, 2031, 32 L.Ed.2d 600, 606. Neither precedent nor deference, however, requires that we blind ourselves when confronted with a challenge involving something other than a fundamental right or suspect class. Someone once said that if tempted by a sense of humanity, treat it not as a weakness, but grant it a measure of consideration.

Having urged consideration, though, we stop short of finding the statute defective on equal protection grounds, despite the disparate treatment within the class. Using the “any conceivable set of facts” test of Schwan supports a rational-basis argument for the distinctions made in this statute.

Ill

Our finding regarding the unconstitutionality of R.C. 2307.43 on due process grounds disposes of the second question posed by the district court, i.e., whether the limitation on awards of general damages applies to limit aggregate recovery by all claimants arising out of a single medical claim. It having been decided that the limitation is unconstitutional, the second question becomes moot.

IV

When we subject R.C. 2305.27 to the same equal protection and due process analysis, we achieve a different result. Again, a line is drawn — the statute covers only a “medical claim” — but does not make any internal distinctions among class members. All plaintiffs in medical malpractice must confront the same setoff of benefits from collateral sources. We find no constitutional infirmities involving equal protection with such a provision.

As noted above, R.C. 2305.27 was not included in the statutes to be surveyed for their impact on malpractice insurance rates. The statute limits certain types of double recovery, specifically those which would duplicate recovery from funds that are directly, or indirectly, supported by the general public or the business community, e.g., public welfare or workers’ compensation and unemployment compensation. The malpractice victim’s recovery is not reduced by the benefits of traditional insurance policies purchased by either himself or his employer. While it is not clearly apparent that there is a substantial relationship between the setoff and malpractice insurance rates, it does not appear to be unreasonable or arbitrary to deny a double recovery. Such a proposition surely does not offend fundamental fairness. Such a setoff may inure to the benefit of the tortfeasor, but it does not do so to the detriment of the victim as does the damage cap of R.C. 2307.43 as discussed above. Consequently, in answer to the first part of the third question certified by the district court, we hold R.C. 2305.27 to be constitutional.

Finally, there is the issue of the application of this statute to future payments. The language of the statute requires that “ * * * an award of damages * * * shall be reduced by any other collateral recovery for medical and hospital care, custodial care or rehabilitation services, and loss of earned income.” (Emphasis added.) R.C. 2305.27. The sole issue is the impact of this language on future workers’ compensation payments the plaintiff could reasonably expect to receive and whether there should be an equivalent reduction in the jury’s award of $600,000 for future lost wages. Reading the language of the statute consistent with our finding that the legislature intended to eliminate certain types of double recovery, we find that future payments, to the extent they can be determined with a reasonable degree of certainty, can and should be deducted from the jury’s verdict for future lost wages. Such was the case here.

Judgment accordingly.

Moyer, C.J., and H. Brown, J., concur.

H. Brown, J., concurs separately.

Holmes, J., concurs in part and dissents in part.

Sweeney and Resnick, JJ., concur in part and dissent in part.

Douglas, J., not participating.

1 The third question could be interpreted as assuming constitutionality and asking only for statutory interpretation. However, at our request, Judge Bell clarified his order by stating that he wanted the court’s determination whether the statute violated the Ohio Constitution. See (1990), 53 Ohio St.3d 709, 559 N.E.2d 1366; (1990), 54 Ohio St.3d 707, 561 N.E.2d 941.

2 R.C. 2743.43, regarding qualifications for expert medical witnesses, was upheld in Denicola v. Providence Hosp. (1979), 57 Ohio St.2d 115, 11 O.O.3d 290, 387 N.E.2d 231. R.C. 2711.21(C), regarding arbitration panels in medical malpractice cases, was upheld in Beatty v. Akron City Hosp. (1981), 67 Ohio St.2d 483, 21 O.O.3d 302, 424 N.E.2d 586.

3 This court has considered elements of R.C. 2305.11(A) and (B) in several cases. In Vance v. St. Vincent Hosp. & Medical Ctr. (1980), 64 Ohio St.2d 36, 18 O.O.3d 216, 414 N.E.2d 406, the court upheld a one-year statute of limitations for minors ten years and older (though not on constitutional grounds). Vance was overruled in Schwan v. Riverside Methodist Hosp. (1983), 6 Ohio St.3d 300, 6 OBR 361, 452 N.E.2d 1337, when the court held that the four-year statute of repose was unconstitutional as to the different treatment accorded minors under ten years of age and those over ten. The court said it could find no rational basis for tolling the statute for those younger than ten, but not for those older. In Opalko v. Marymount Hosp., Inc. (1984), 9 Ohio St.3d 63, 9 OBR 267, 458 N.E.2d 847, the court explained Schwan as invalidating only the pre- and post-ten-years-old distinction contained in R.C. 2305.11(B), not the four-year limitation *688itself, which the court upheld. Finally, in Mominee v. Scherbarth (1986), 28 Ohio St.3d 270, 28 OBR 346, 503 N.E.2d 717, this court ruled R.C. 2305.11(B) unconstitutional as applied to minors on the grounds that it violated the due course of law provisions of the Ohio Constitution.

4 “ * * * This legislation * * * is designed to relieve health care providers and insurers from the financial strains of the high cost of malpractice insurance. * * *

“ * * * The Court has not been able to locate any authorities that contend that due to the high cost of malpractice insurance, it is no longer profitable to be a health care provider. What is more likely is that due to rising malpractice insurance costs, it is not as profitable as it was previously. * * *

“The Court’s questioning of the reasoning underlying this legislation is not aimed at doubting whether there really exists a medical malpractice insurance crisis. Rather, the Court’s only purpose is to point out that the real rationale behind the legislation is not to guarantee that health care services will be provided to all citizens. The real rationale for this legislation is that the legislation is aimed at shifting the risk of practicing medicine from the health care provider to the health care receiver.” Keeton, supra, at 12-13.

5 Rule XVI of the Rules of Practice of the Supreme Court.

6 Brief of amici curiae Association of Trial Lawyers of America, Consumer Federation of America and Dissatisfied Parents Together, at 24.