Lawmakers say session too short to fix tort cap

Lawsuits – The Oregon Supreme Court expresses an urgent need to raise limits on medical damages

JANIE HAR
The Oregonian
http://www.oregonlive.com

In greenlighting a $17 million medical malpractice lawsuit against the state, the Oregon Supreme Court sent a clear message to lawmakers: The cap on damages from injuries caused by government negligence is too low, and they need to fix it.

Yet legislators appear in no hurry to raise the $200,000 liability limit even as they prepare for a monthlong session intended to address urgent state needs that can’t wait until next year.

The court ruling probably will mean higher insurance premiums and possibly larger payouts on claims for state agencies, cities, counties and special districts whose protection from expensive lawsuits is now in limbo.

Justices last month effectively threw out the liability cap when it gave the family of Jordaan Michael Clarke permission to pursue his lawsuit against Oregon Health & Science University. Clarke is nearly 10 years old and has been profoundly disabled for most of his life, after hospital staff failed to correct a dislodged breathing tube when he was an infant.

Legislators say the issue is too contentious and complicated to resolve in four weeks. After all, they couldn’t do it in six months, even when the governor’s office tried to broker a compromise last year.

The Oregon Trial Lawyers Association has long wanted to eliminate damages caps. OHSU, Portland’s largest employer and a public teaching and research university, says it needs caps in order to continue its public mission. Both groups have staunch allies among the Democrats, who control the Legislature.

“We came close last session, but at this time, I don’t think we’re going to get there,” says Senate President Peter Courtney, D-Salem.

Ron Lansing, who teaches torts at Lewis & Clark Law School, says lawmakers should tackle the issue regardless of the politics and quickly.

“If they’ve got an agenda, it should be near the top of the list,” he says. “It is a problem for governmental agencies, but it’s also a problem for people who are left as vegetables.”

He added, “$200,000 is really low. And some would even say it’s not just low, it’s low down.”

Oregon law limits how much a person can recover from a public agency over a botched medical procedure or other kind of injury resulting from government negligence. The maximum compensation is $100,000 for economic damages, such as medical costs and lost wages, and another $100,000 for noneconomic damages, often referred to as pain and suffering.

Most states limit recovery in order to protect public coffers, although the amounts vary. Washington has no limits.

In his Dec. 28 opinion, Oregon Supreme Court Justice Thomas Balmer wrote that lawmakers should have raised the caps on medical malpractice damages long ago and suggested that they “increase the existing claims limit substantially and immediately and, perhaps, retroactively.”

Failed negotiations

Last year, Gov. Ted Kulongoski assigned his chief of staff, Chip Terhune, to help forge a deal with an eye toward protecting the state’s finances but also reaching out to lawyers. Neither side spoke directly to the other side.

A March 7 memo from the governor’s office shows an initial offer by the university and state to increase the recovery limit for individuals to $500,000. Trial lawyers countered with $2 million. They massaged the number to $875,000.

And then it blew up.

Trial lawyers say they were stunned by a March 27 memo that showed OHSU would not budge on noneconomic damages, which trial lawyers say they need to help low-income clients, seniors and children.

“That was the end of it,” says Derek Johnson, past-president of the association.

But Amy Wayson, general counsel for OHSU, says the university had never consented to changing the cap on noneconomic damages.

“Every time we communicated with them, we were clear about raising the cap to economic damages,” she says.

Wayson says the university then offered to move on noneconomic damages — but only if the trial lawyers committed to the agreement in writing. Johnson says he never saw or heard any such offer.

Longtime OHSU critic Sen. Vicki Walker, D-Eugene, continued to push the issue, but fellow Democrats were skittish. In late April, the Senate Judiciary Committee held a courtesy hearing on the issue. The trial lawyers didn’t even testify. The debate was over.

“The shuttle bus was without tires, it was rusted and the transmission was clearly broken,” Terhune says. “I just said, ‘I can’t force this between the parties.’ ”

Effect on taxpayers

State and local government officials say they don’t know what this will mean to taxpayers but worry that it could drive up insurance and payout costs, especially in high-risk areas such as medical care. Initially, the state had estimated the ruling could cost up to $75 million a biennium in lawsuit payouts. Officials did not have a revised figure Monday.

OHSU has announced it will cut jobs and shut down services to pay for higher malpractice liability coverage. The university says it needs to trim $30 million in spending this year.

OHSU has not asked for extra money to plug its budget, but Rep. Mary Nolan, D-Portland, says lawmakers will have to study the impact of OHSU’s proposed cuts. “If we do nothing, we’re essentially ratifying that decision by the hospital.”

One short-term option for lawmakers when they meet next month is to adjust the caps to reflect inflation, says Sen. Floyd Prozanski, D-Eugene, who will take up the issue as the new chairman of the Senate Judiciary Committee.

More likely, he says, his committee will meet in the interim to draft legislation for the 2009 session.

“The reality is someone’s going to have to make some decisions here, and something is significantly wrong,” he says.

“We’re here to do a job. I think it’s time for us to take the lead.”
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