The Unconstitutionality of Tort Restrictions
By George R. Wise, Jr.
Our Civil Justice System Under Attack
Our civil justice system is under attack. Trial lawyers and juries are being blamed for increases in liability premiums paid by doctors, hospitals, nursing homes and other healthcare providers. Caps on damages and other tort restrictions are proposed as a panacea to stop increases in medical negligence liability premiums. This solution is proposed despite the fact congressional reports found that one-third of all nursing homes have been cited for abuses, that nine out of ten are understaffed and despite estimates that as many as 98,000 people die every year in hospitals due to medical errors (making medical negligence the 8th leading cause of death). In reality, the only certainty about caps on damages is that they increase insurance company profits while making it cheaper to catastrophically injure patients. Significantly, tort restrictions never address improving patient safety.
While doctors may be facing higher insurance premiums, there is no medical malpractice crises nor has there ever been one. In Lucas v. United States, 757 S.W. 2d 687 (Tex. 1988), the Supreme Court of Texas found that there was absolutely no relationship between insurance rates and caps on damages. In that case the court cited an independent study indicating that less than 6% of all claims brought were for more than $100,000.00. That case also cited a 1987 study by the Insurance Service Organization, which is the rate-setting arm of the insurance industry. The study found that savings from various tort reform (or more accurately tort restrictions) revisions were “marginal to nonexistent.” Current studies confirm this finding. More recently, in August 2002, Nevada passed caps on damages and within days the two major insurance companies in that state announced they had no intention of reducing rates. In Mississippi during the summer of 2002, doctors were told they would face a 45% increase in liability premiums regardless of whether damage restrictions were enacted.
Doctors’ premiums for malpractice insurance are costly. However, doctors are financially rewarded to sufficiently cover these premiums. Medical malpractice premiums are expensive because of the risk. When the risk is high and the costs of error are high, the price for insuring against such a risk is naturally high. Because these insurance premiums are costly does not mean that there is a crisis such that access to the courthouse doors should be restricted. Medical malpractice insurance premiums have also been affected by a natural cycle in the insurance industry. When the economy is in recession or when stock prices drop, premiums rise to compensate for insurance companies’ decreased investment income.
The only contact most individuals have with the civil justice system is serving on a jury. Placing restrictions on a jury’s right to determine damages in a medical negligence case is, in essence, depriving citizens of one of the few opportunities they have to participate in our civil justice system. Tort restrictions tell those citizens that they are not intelligent enough to make a reasonable determination of damages. One has to wonder if those legislatures who sponsor this type legislation go back to their constituents and tell them that they cannot be trusted to make appropriate decisions about damages. Not only are citizens insulted and deprived of their right to participate, the burden of this restrictive legislation is placed upon catastrophically injured victims of medical negligence. Caps on damages only affect those who can least afford it B the brain-damaged baby, the quadriplegic, and others permanently and horribly injured. There is a cruel irony in casting that burden on those who cannot fight back when the end result of caps on damages is insurance company profit, not safer medical care or lower premiums.
In the 2001 regular session of the Arkansas General Assembly, HB 1382 sought to restrict damages. That bill was defeated in committee. However, it is likely that in the 2003 regular session of the Arkansas General Assembly, similar legislation will be proposed. Overlooked in this debate in Arkansas is a question of whether tort restrictions are constitutional. A review of the Arkansas Constitution reveals such restrictions are clearly unconstitutional.
Article 5, Section 32 of the Arkansas Constitution
Let us praise an old and wonderful document which reflects the wisdom of those who established this great state. Though it has sometimes been criticized as outdated, the Arkansas Constitution has endured as a document which prevents abuses of power. The Arkansas Constitution is not a grant of power but a limitation of power. Thus, the General Assembly may only exercise its power subject to the restrictions and limitations imposed by the Arkansas Constitution. Article 5, Section 32 of the Arkansas Constitution clearly prohibits any restrictions on damages. It provides as follows:
The general assembly shall have power to enact laws prescribing the amount of compensation to be paid by employers for injuries to or death of employees, and to whom said payment shall be made. It shall have power to provide the means, methods, and forum for adjudicating claims arising under said laws, and for securing payment of same. Provided, that otherwise no law shall be enacted limiting the amount to be recovered for injuries resulting in death or for injuries to persons or property; and in case of death from such injury the right of action shall survive, and the general assembly shall prescribe for whose benefit such action shall be prosecuted. (emphasis added)
This section of the constitution has been in existence since the adoption of the Arkansas Constitution of 1874. It was amended in 1938 to allow a workers’ compensation law. Any effort to restrict damages in any personal injury case will require a constitutional amendment. It is interesting that one attempt was made in 1976 to amend this section; however, that proposed amendment was prohibited from being placed on the ballot for technical reasons. Jernigan v. Niblock, 260 Ark. 406, 547 S.W. 2d 93 (1976).
A very early case established the clear nature of this provision. In Little Rock and Fort Smith Railway Co. v. Barker and Wife, 39 Ark. 491 (1882) the Arkansas Supreme Court said:
The amount of damages to be recovered is not limited by the statute, and could not be under the constitutional provision above cited. But a jury is not left without restraints in the matter of assessing damages of the death of a minor, or in any other case. If the damages assessed are so enormous as to shock the sense of justice, and indicate that the verdict is the result of passion or prejudice, the trial judge may set it aside, and if he refuse, this court [the Arkansas Supreme Court], on appeal of writ of error may do so.
In a later case, Stapleton v. M.D. Limbaugh Construction Co., 333 Ark. 381, 969 S.W. 2d 648 (1998) the Arkansas Supreme Court held a provision of the Workers’ Compensation Laws unconstitutional because it granted tort immunity to a defendant who did not have an employment relationship with the injured party. The court explained that Article 5, Section 32 only gives the legislature the power to limit the amount of recovery in cases where there is an employer-employee relationship.
Punitive damages are also subject to the provisions of Article 5 Section 32. Arguably, punitive damages are “amounts to be recovered” in medical negligence cases or any other personal injury case where punitive damages are authorized. See, for example, Vickery v. Ballentine, 293 Ark. 54, 732 S.W. 2d 160 (1987). Additionally, a leading Arkansas scholar and author of the definitive treatise in Arkansas on damages has stated that “certainly any statutory attempts to limit the amount of punitive damages would raise serious constitutional questions [under Article 5, Section 32].” Brill, Punitive Damages in Arkansas – Expanded? Restricted?, 1990 Ark. L. Notes 25.
It is difficult to imagine a constitutional provision written with more clarity than Article 5 Section 32 of the Arkansas Constitution of 1874. The fact that tort restrictions are unconstitutional should be a significant part of the debate on this issue.
Separation of Powers – Article 4, Sections 1 and 2 of the Arkansas Constitution
Since any restrictions on damages in tort cases would violate Article 5, Section 32, it naturally follows that such restrictions would also violate the separation of powers doctrine. Remittitur is a power reserved to the courts. Courts in other states when faced with the question of caps on damages, have held them to be an impermissible legislative remittitur and unconstitutional under the separation of powers doctrine. For example, in Best v. Taylor Machine Works, 689 NE 2d 1057, Ill 1997, the Illinois Supreme Court threw out a $500,000 cap on non economic damages as an impermissible legislative remittature.
The Arkansas Constitution controls abuses of power through an express separation of powers doctrine. While some states have merely an implied separation of powers, in Arkansas the concept is specifically outlined. Article 4, Sections 1 and 2 provide as follows:
The powers of the government of the State of Arkansas shall be divided into three distinct departments, each of them codified to a separate body of magistracy, to-wit: those which are legislative to one, those which are executive to another, and those which are judicial to another.
No person, or collection of persons, being one of these departments, shall exercise any power belonging to either of the others, except in the instances hereinafter expressly directed or permitted.
Arkansas courts strictly construe this doctrine. Remittitur is an exclusive judicial power. Because Arkansas courts have the inherent power to reduce jury awards through the practice of remittitur, any court restrictions would pose a serious constitutional problem under the doctrine of separation of powers. Both old and current Arkansas cases indicate that Arkansas courts have reserved remittitur as a judicial power. In St. Louis & N.A.Ry.Co. V. Mathis, 76 Ark. 184, 91 S.W. 763 (1905), the Arkansas Supreme Court held as unconstitutional a legislative enactment on remittitur. That statute is currently codified at Ark. Code Ann. ’16-64-124; however, in Morrison v. Lowe, 274 Ark. 358, 625 S.W. 2d 452 (1981), the Arkansas Supreme Court held that remittitur was within the inherent power of the courts and not based on this statute.
Arkansas courts also understand that non-economic damages cannot be determined under a “one size fits all method.” In McElroy v. Benefield, 299 Ark. 112 (1989), the court said that “there is no definite and satisfactory rule to measure compensation for pain and suffering and the amount of damages must depend on the circumstances of each particular case.” While the judiciary can assess remittitur on a case by case basis, the Arkansas General Assembly is not capable of determining in advance the amount of damages in each case.
The Arkansas Supreme Court has never been hesitant to use its power of remittitur. Judicial review of excessive jury verdicts is a well-established part of our civil justice system. It works as the appropriate case by case check and balance to the jury’s role as fact finder of damages. It is a power the judiciary should not concede to the Arkansas General Assembly. Under the separation of powers doctrine, any attempt to restrict a jury’s right to determine damages and the court’s right to review those damages will be unconstitutional.
Other Constitutional Arguments
Other states do not have the strong protection provided by Article 5 Section 32 of the Arkansas Constitution. Arkansas is unique in having this absolute protection against the abuse of power which occurs with tort restrictions. Consequently, other arguments have been used to hold tort restrictions as unconstitutional. These arguments would also be available under the Arkansas constitution.
Article 2 Section 7 of the Arkansas constitution provides that the right to trial by jury “Ashall remain inviolate, and shall extend to all cases at law . . .” There is no Arkansas Supreme Court case addressing the issue of whether caps on damages infringe on the right to a jury trial; however, the trend in other states has been to find that statutory damage caps on non-economic or punitive damages violate the right to a jury trial. In Lakin v. Senco Products, Inc., 987 P 2d 463 (OR 1999), the Oregon Supreme court said that its right to a jury trial encompassed the right to have a jury decide all issues and not just those which the legislature determined juries should decide. The Oregon court pointed out that there is a fundamental difference between judicial remittitur and legislative remittitur. If a judge decides that a jury’s verdict is excessive, the plaintiff is granted a new trial. With tort restrictions imposed by a legislature on the amount of damages, plaintiffs are denied a second jury trial. The Oregon court correctly pointed out that caps on damages are not based on the idea that the jury award is excessive. Tort restrictions on damages are imposed regardless of the facts of the case. In other words, even in cases where the facts support damages in excess of the cap, the plaintiff is denied the right to full compensation. Legislative remittitur or legislative inference with a full award of damages violates the right to a jury trial.
Article 2 Section 7 of the Arkansas constitution is brief and clear. Any legislative effort to interfere with a jury’s decision or its role in civil trials should not be allowed. Tort restrictions in Arkansas would violate the right to a jury trial.
The guarantee of the right to a jury trial can be traced back to the Magna Carte in 1215. The historical concept of resolving differences by presenting them to one’s peers is even older. As promised in the Arkansas Constitution, the right to a jury trial should remain inviolate. This fundamental right should not be subjected to the political whims and whimsy of those who happen to be in power at a particular moment. We are fortunate in Arkansas to have a constitution which unequivocally prohibits tort restrictions. One hopes that the arguments outlined above will not be needed. It will be important in the legislative debate on damage restrictions to impress upon legislators that any attempt to infringe on a jury’s power to decide damages is beyond the power of the General Assembly.