In an effort to thwart a perceived “crisis” based on fear concocted by media campaigns designed to divert focus from the real problem, the citizens of the state of Nevada approved a ballot initiative limiting non-economic damages in negligence actions medical. See NRS 41A.035. This limit is unconstitutional under the provisions of the United States and Nevada constitutions. The courts should declare the cap on non-economic damages unconstitutional.
A. The problem
NRS 41A.035 and related provisions, sometimes collectively referred to as “tort reform,” were enacted to address the perceived problem of skyrocketing medical malpractice insurance rates coupled with the belief that such rates were driving away physicians from the practice, limiting their practices or leaving the State of Nevada entirely. The urgency of the need for action and the insight presented was that this issue was somehow immediately and causally related to recent unreasonably high jury verdicts that created losses for insurers that justified unreasonable rate increases for home insurance. Medical negligence.
The “problem” is not some 21st century creature that has recently transformed from a single cell to a full-blown tumor. Rather, the “problem” has been around for decades. For example, in September 1976, the Legislative Commission of the Nevada State Legislative Counsel Office published Bulletin No. 71-1, entitled “The Problem of Medical Malpractice Insurance.” This bulletin grew out of Senate Concurrent Resolution No. 21 (1975), in which the study was commissioned. The Resolution establishes,
WHEREAS, there is a nationwide problem of physicians and health care providers obtaining malpractice insurance with many insurance companies going without malpractice coverage and others increasing premiums by several hundred percent; Y…
WHEREAS, the malpractice problem in Nevada is currently in a state of transition with the exact dimensions of a number of problems unclear;… The bulletin found that the “so-called malpractice crisis” began early of the 1970s, with the twin problems of high premium costs and declining availability of insurance.
B. The Historical Causes
It is important to have a general understanding of the “causes” of the alleged crisis in order to assess whether the proposed “solution” is rationally related to the interest sought to be protected. In the 1976 Bulletin, the Commission identified several potential causes. First, the Commission found that there was no single “cause.” Among the causes, the Commission included: (a) the malpractice itself; (b) the media; (c) domestic litigation; (d) contingency fees; (e) the imposition of no-fault insurance; (f) Stock market losses; (g) Improper underwriting; and (h) jury verdicts.
Although these are not all the causes, they represent the most discussed. However, the Commission concluded that the root cause of the medical malpractice crisis was the medical malpractice itself. A decade later, the Legislative Committee reviewed the crisis, publishing a “Medical Malpractice Insurance Study,” Bulletin No. 87-18, Legislative Committee of the Office of Legislative Counsel, State of Nevada, August 1986. (Exhibit IV ). This newsletter acknowledged that between the years 1976 and 1983, national malpractice insurance rates increased by only 51%. However, once again the cycle flowed resulting in dramatic increases in 1984 and 1985. Id. This again aroused legislative interest. On this occasion, in addition to the causes discussed above, the Commission affirmed that “the insurance industry is at least partially responsible.”
C. The Historical Solutions
Already in the study of the Commission of 1976, solutions were proposed to the supposed crisis. One of the proposed solutions included “liability reform.” These reforms included limiting jury verdicts. Id. As early as this report, however, the evidence suggested that Claimant’s statistical probability of success was so low that any such limitation would have almost no real impact on insurance rates and availability. The 1976 bulletin states that “only 8 percent of all claims make it to trial. Only 6 of that 8 percent make it to verdict.” Of those, only 17 percent were in favor of Claimants.”
D. The problem of the 21st century
With historical perspective and understanding, we come to the instantaneous crisis that led to the enactment of final initiative NRS §41A.035, which limits non-economic damages to $350,00.00. The clear purposes behind this tort reform movement included: (a) reducing malpractice insurance rates; (b) stabilize the insurance market and the availability of that insurance; and (c) ensure the availability of health care to the citizens of Nevada.
NRS §41A.035 was introduced in 2003 as Senate Bill 97, which tracked the initiative petition and the possible submission of ballots to voters. Legislative history is replete with references to the fact that Senate Bill 97 and the ballot initiative language were identical. Therefore, although the legislature itself did not enact NRS §41A.035, the discussions before the legislature are informative and relevant. On March 23, 2003, Dr. Manthei, a person whose name was part of the initiative petition, testified before the Senate Judiciary Committee saying: “All we are saying now is that the number of cases and the amount of the compensation payments are making health care unaffordable”.
On March 5, 2003, Ms. Alice Molasky-Arman, Commissioner of the Nevada State Division of Insurance addressed the Senate Judiciary Committee. She testified that between 1999 and 2001, 296 of 552 claims filed were closed without payment of compensation. She furthermore proved that in July 2002 there was a large increase in the number of claims filed. Id. Ms. Molasky-Arman stated that the misguided reforms of 2002 did not lead to lower insurance rates. Both Lawrence Matheis and Assemblywoman Buckley stated that the reforms would not cause a decrease in insurance premiums. At best, there was some hope that the reforms would result in stabilization. ID.
In analyzing the causes of insurance premium increases in Nevada, Ms. Molasky-Arman included in those causes: (a) reinsurance; (b) the lack of competition between insurers; and (c) stock market losses. She did not include in her statement related to the cases the jury verdicts and their impact on the fees.
Against the earlier background of the alleged “crisis,” the citizens of the State of Nevada were subjected to a media blitz from both supporters and opponents of the ballot initiative. With fears of unavailability of health care driving their votes, the public passed legislation incorporating NRS §41A.035. Now it’s a confusing and contradictory mess, to say the least. We will delve into this issue in greater detail in our next EZINE article, or you can write or email us and we will provide you with a list of possible solutions we are currently taking on behalf of our medical malpractice clients.
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