Arkansas enjoyed moderate premiums until the early 2000s, when rates began to climb upwards due to increased claims frequency and unpredictable jury verdicts. In 2001, Arkansas saw the largest tort verdict in the stateâ€™s history when a jury awarded $78 million to the Estate of Margaretha Sauer, a resident of the Rich Mountain Nursing & Rehabilitation Center who died from dehydration after receiving no food or water for a 24-to-48 hour period. The verdict included $63 million in punitive damages. The following year, the nationâ€™s healthcare community suffered a shock when the St. Paul Companies exited the medical malpractice insurance market. At the time, St. Paul was the largest insurer of medical liability in the United States, and the company held a 55-percent market share in Arkansas. Many smaller insurers followed suit, and with fewer carriers competing, malpractice insurance premiums began to climb at a rate not seen in more than 25 years.
In response to the looming crisis, the Arkansas Medical Society took it upon itself to draft legislation to deflate premiums, boost the number of doctors practicing in the state and improve patient access to medical care. The resulting Civil Justice Reform Actâ€”or HB 1038â€”was embraced in bipartisan fashion, being sponsored by two Democrats in the legislature and signed into law by a Republican governor. The act put limits on venue shopping and raised the standard for the imposition of punitive damages to â€śclear and convincing evidenceâ€ť of actual fraud, malice or willful and wanton conduct, among other reforms. The Act also capped punitive damages to $250,000 or three times compensatory damages, whichever was greaterâ€”not to exceed $1 million. The punitive damage cap was declared unconstitutional by the Arkansas Supreme Court in 2011.
In April 2016, the Arkansas attorney general certified a ballot title for a proposed constitutional amendment that would limit damages in medical malpractice lawsuits. However, the Arkansas Supreme Court ruled on October 13, 2016 that the measure should be left off the ballot, as important terms such as “non-economic damages” were left undefined and would not be readily understood by voters. The measure did ultimately appear on the November 8th ballot, but the Arkansas Secretary of State was instructed to neither count nor certify the results.
Rather than give up, state Sen. Missy Irvin filed a measure on Feb. 2, 2017, to place a constitutional amendment before the stateâ€™s voters in 2018. In addition to capping damages awarded in civil actions at $250,000, the measure would give the legislature over rules that affect pleading, practice and procedure in the judicial branch. Opponents of the resolution argue that it raises questions about Arkansasâ€™ separation of powers.
In 2018 â€” for the second time in as many election cycles â€” the Arkansas Supreme Court barred election officials from counting votes for a ballot measure that would have capped damages in medical liability lawsuits because it unconstitutionally proposed four separate constitutional amendments to voters in one ballot measure and would have altered the balance of power in the Arkansas Constitution without informing voters of the fact. In addition to setting a $500,000 cap on noneconomic damages in tort cases such as medical malpractice and nursing home negligence, Issue 1 would have limited attorney fees to a third of net recovery, allowed the legislature to enact court rules and lowered the vote percentage necessary for the legislature to change a court rule from two-thirds to 60 percent. â€śThe actual text of (the ballot measure) itself, even by a generous reading, institutes at least seven individual numerated changes or additions to the constitution that would significantly alter the status quo,â€ť wrote Justice Jo Hart in the Courtâ€™s 6-1 ruling. The Arkansas Supreme Court blocked a similar initiative from the 2016 ballot because the language outlining the plan did not fully describe what the proposal would do.