We are called upon in this case to determine whether the 500,000 dollar limitation of La.R.S. 40:1299.42(B)(1) on damages recoverable for injuries caused by the malpractice of a private health care provider violates the Right to Individual Dignity and Access to Courts clauses of the Louisiana Constitution of 1974.
The unconstitutionality of the limitation was asserted in a petition for damages filed by Prince A. Williams on behalf of his minor son, Mark L. Williams, for a birth injury allegedly caused by the medical malpractice of Dr. Jack Kushner, the obstetrician who delivered the child on February 11, 1982. After Dr. Kushner admitted liability by settling for his maximum statutory liability of $100,000.00, a jury found damages totalling $1,829,000.00.
At the jury trial, the parties stipulated that Mark Williams was permanently injured at birth. The injury, which occurred during delivery, is damage to the brachial plexus, the nerves running from the spinal cord to the arm. As a result of the injury, Mark's right arm and hand are practically useless. The arm hangs, atrophied, at his side. He can move it only slightly from the shoulder and uses it in daily activities as one would use an inanimate object.
Expert testimony was presented at the trial to show the effect of Mark's disability upon his psychological and social development and upon his future earning capacity. Although Mark was not yet three years old at the time of trial, a psychiatrist testified that Mark was developing mental and emotional responses to his physical handicap. He was inhibited, avoiding rather than seeking challenges as would a normal two year old, and he was beginning to display signs of a poor self image. In order to overcome these problems, the psychiatrist recommended a regular course of therapeutic counseling for Mark and his parents. Experts in the fields of economics and occupational therapy and rehabilitation testified that Mark's career options will be limited by his disability. The experts did not agree as to the amount of the wage loss Mark will suffer, but the highest estimate was well over $200,000.00.
The challenged statute, R.S. 40:1299.42(B)(1), is part of the Louisiana Medical Malpractice Act of 1975. Among other provisions, the Act offers advantages to private health care providers (including hospitals, physicians, dentists, nurses and others) who qualify under its terms. To become a qualified provider, an individual or legal entity files with the Commissioner of Insurance proof of financial responsibility, in the form of self-insurance or a policy of malpractice liability insurance, of at least $100,000.00. Additionally, the provider pays into the Patient's Compensation Fund an annual surcharge in an amount actuarially determined by the Insurance Rating Commission. One of the advantages of qualification under the Act is the provision at issue in this case: "The total amount recoverable for any injury or death of a patient may not exceed five hundred thousand dollars plus interest and cost." R.S.40:1299.42(B)(1).
Under these provisions, the recovery of a successful malpractice claimant cannot exceed $500,000.00: a maximum of $100,000.00 from each qualified provider who is liable, with the balance of the award paid by the Patient's Compensation Fund. The Act further provides that when, as in this case, a qualified provider settles with a claimant for the maximum of $100,000.00, liability is established. La.R.S. 40:1299.44(C)(5). Only the extent of damages remains to be determined in proceedings against the Insurance Commissioner and the Patient's Compensation Fund.
INDIVIDUAL DIGNITY CLAUSE ANALYSIS
The District Court held that the 500,000 dollar limitation did not violate the Individual Dignity Clause of the Louisiana Constitution. In analyzing the limitation under the Individual Dignity clause, Article I, Section 3, the District Court relied upon Sibley v. Board of Supervisors, 477 So.2d 1094 (La.1985) (on rehearing), in which the Court considered a challenge to the constitutionality of R.S. 40:1299.39(B), the section of the Medical Malpractice Act limiting awards against the State to $500,000.00. We agree with the District Court that the Sibley standard is appropriate for analysis of R.S. 40:1299.42(B)(1).
Sibley expressly rejected the traditional three-tier scrutiny of federal equal protection analysis in favor of a more meaningful test which reflects the intent of the drafters of the Louisiana Constitution of 1974. The Sibley test is tailored to the language of the Individual Dignity clause which, in effect, contains its own standards of analysis:
La. Const., Art. I, § 3.
For purposes of Individual Dignity clause analysis, Sibley found that an injured malpractice claimant is an individual who has been discriminated against because of physical condition.
Thus, Sibley has foreclosed the issue of whether there has been discrimination against a person because of physical condition; the remaining question is whether the statute is unconstitutional, violating the Individual Dignity clause, because it "arbitrarily, capriciously, or unreasonably discriminates."
Sibley makes this determination by requiring the proponent of the statute to show that "there is good reason for the statutory classification, that is, that the legislative classification substantially furthers a legitimate state purpose." Id. at 1109. Apparently, the rationale of Sibley is that if there is good reason for the classification and if the classification substantially furthers a legitimate state purpose, then it is not arbitrary, capricious, or unreasonable.
In addition to this new interpretation of the appropriate standard for Louisiana equal protection analysis, Sibley also announced a departure from the longstanding rule that legislation is presumed constitutional with the opponent carrying the burden of proving that a statute violates the constitution. "When the statute classifies persons on the basis of ... physical condition,... its enforcement shall be refused unless the state or other advocate of the classification shows that the classification has a reasonable basis...." Id. at 1107. We now must decide whether the Trial Court erred in finding that the proponents of R.S. 40:1299.42(B)(1) carried their burden of proving that it is not unconstitutional.
First, it is appropriate to consider whether the statutory limitation has a legitimate state purpose as its goal. There can be little serious argument, and none is presented in this case, but that the State of Louisiana has a legitimate interest in the health and welfare of its citizens and that this interest extends to the availability of medical care. The Louisiana Supreme Court has found "the guarantee of continued health care services for our citizens at reasonable cost" to be an "appropriate governmental interest." Everett v. Goldman, 359 So.2d 1256, 1266 (La.1978).
The proponents of R.S. 40:1299.42(B)(1) contend that its absolute limitation on damages which may be recovered by a medical malpractice claimant and the classification which that limitation creates are a means by which the state legitimately fosters reasonably-priced medical care from private providers. This contention, which focuses on the relationship between the limitation of R.S. 40:1299.42(B)(1) and the State's interest in access to private medical care, must be measured by the stringent constitutional rule that a means such as the limitation shall not arbitrarily, capriciously or unreasonably discriminate. Because the proponents must show that the legislature reasonably believed that the means it chose would substantially further the State's interest, we must closely examine the facts and premises the legislature considered before enacting R.S. 40:1299.42(B)(1).
At the District Court hearing, the proponents of the statute, the Patient's Compensation Fund and the intervenors, introduced testimony and documents describing conditions in the health care and insurance
After hearing five weeks of testimony, the Trial Court concluded that when the legislature passed the Medical Malpractice Act of 1975, it was seeking a solution to a "crisis" that existed in the health care industry of Louisiana, one that would worsen if remedial legislation was not enacted. The Trial Court found that the "crisis," if allowed to continue, would have jeopardized the state of Louisiana's legitimate interest in "the guarantee of continued health care services for our citizens at reasonable cost."
The record supports the Trial Court's finding; it is not manifestly erroneous. And, after accepting this factual finding, we must now only consider whether the Trial Court's holding that the statute did not violate the Individual Dignity clause was erroneous. Did the legislature select an arbitrary, capricious and unreasonable means to its goal by discriminating against classes of those who are physically handicapped, like Mark Williams, and who have proven damages which exceed the 500,000 dollar limitation?
The record before us shows that the legislature intended the provisions of the Medical Malpractice Act as a comprehensive interrelated reform package and that the 500,000 dollar absolute limitation on recovery R.S. 40:1299.42(B)(1) can, as a practical matter, function only in conjunction with the 100,000 dollar maximum liability for providers which is established by R.S. 40:1299.42(B)(2) and with the Louisiana Patient's Compensation Fund established by R.S. 40:1299.44. Together, these statutory provisions were intended to create an atmosphere of certainty in which insurance companies would be able to write medical malpractice insurance in Louisiana at a reasonable cost. Without a limitation on the size of awards, insurance actuaries, who utilize nationwide claims data, must consider in their rate-setting the increasing risk of higher settlements and limitless judgments. Although there had been few awards in excess of 500,000 dollars (and apparently none in Louisiana) before 1975, consideration in rate determinations of judgments which might exceed 500,000 dollars justified radically higher premiums to cover the risk that an insured might incur such a loss.
With a limitation of liability of 100,000 dollars on medical care providers, actuaries can make rate determinations based on a known maximum loss, and premiums paid by medical care providers are lower than if there were no limit. Similarly, with a limitation of 500,000 dollars on the total amount recoverable, the amount of the surcharge medical care providers pay to the Patient's Compensation Fund is calculated on a known risk, and the additional amount that would be required to cover limitless judgments is unnecessary.
Because the cost of increased premiums could reasonably be expected to be passed on to patients, the legislature could have reasonably believed that stabilized insurance rates would retard increases in costs of medical care and would permit medical care providers to offer a full range of services without the threat of exorbitant costs of insurance coverage. Therefore, the legislature, when considering passage of the Medical Malpractice Act, could reasonably have believed the statute would substantially further the state's interest.
We are urged by counsel for Mr. Williams to look at the effects of the Act to determine whether it has in fact accomplished
The statutory scheme which includes the limitation of R.S. 40:1299.42(B)(1) may not have operated in the precise manner intended by the legislature, and it may not have been a panacea. The courts' role, however, is not to evaluate the statute's effectiveness but its constitutionality, and we cannot say the Trial Court erred in finding no violation of Louisiana's constitutional guarantee to Individual Dignity.
ACCESS TO COURTS ANALYSIS
The second constitutional violation alleged in this case is that malpractice claimants with proven damages in excess of $500,000.00 are denied "an adequate remedy by due process of law and justice" as guaranteed by the Access to Courts clause. La. Const., Art. I, § 22.
The Access to Courts clause of the Louisiana Constitution does not prohibit legislative restriction of legal remedies. Rather it operates only to ensure that the courts will be open to provide remedies which are fashioned by the legislature. Article I, Section 22 is, therefore, a mandate to the courts to be open to hear complaints such as that of Mr. Williams; it is not a limit on the legislature. Crier v. Whitecloud, 496 So.2d 305, 309-310 (La. 1986). The Trial Court, in denying Williams's recovery in excess of 500,000 dollars, did not deprive Williams of an opportunity to assert his rights in judicial proceedings, nor did it deny due process. The right which is protected by due process in this case is the cause of action to recover damages for medical malpractice. Having found that right legislatively limited by R.S. 40:1299.42(B)(1) in a manner which is not arbitrary, capricious or unreasonable, we conclude that the Trial Court's adherence to the limitation does not deprive Williams of an adequate remedy by due process of law.
Because we hold that the proponents of R.S. 40:1299.42(B)(1) have shown that it complies with both Section 3 and Section 22 of Article I of the Louisiana Constitution, Prince Williams may recover from the Patient's Compensation Fund only the balance of his damages not paid by Dr. Kushner, plus interest, up to $500,000.00. Because we hold that the 500,000 dollar limitation on Williams's recovery is valid, and we have held that he has damages of at least that amount, we need not consider the question of whether the jury's full award of $1,829,000.00 was excessive.
PENALTIES AND ATTORNEY FEES
The final issue to be decided in this appeal is whether the Patient's Compensation Fund is liable for penalties or attorney fees as provided by La.R.S. 22:657 and 658. Williams contends that these sections of the Insurance Code are applicable because the damages payable by the Patient's Compensation Fund are in the nature of insurance benefits for the claimant, and he alleges that the Fund delayed unreasonably in evaluating his claim and failed to pay him the amount of the claim which he contends was undisputed.
We pretermit a decision upon Williams's allegations that the Patient's Compensation Fund failed to act as it should have because we agree with the District Court's conclusion that R.S. 22:657 and 658 do not apply in this case. Mark Williams is not an insured, and although the Patient's Compensation Fund functions in some respects like an excess insurance carrier, it is not governed by the Insurance Code. The penalty provisions of the Insurance Code, R.S. 22:657 and 658, like all
For the reasons stated above, the judgment of the Trial Court is affirmed in all respects, all costs of appeal to be paid by Prince A. Williams.