Seeking justice through tort reform in North Carolina

Tweet

By: T. Spencer Morrow, Guest Contributor May 13, 2014

Editor’s Note: The Campbell Law Observer has partnered with Judge Paul C. Ridgeway, Resident Superior Court Judge of the 10th Judicial District, to provide students from his Law and Public Policy seminar the opportunity to have their research papers published with the CLO.  The following article is one of many guest contributions from Campbell Law students to be published over the summer.

In 2011, the North Carolina General Assembly enacted tort reform statutes to cap damages awarded in medical malpractice actions. N.C. Gen. Stat. § 90-21.19 provides that, in such cases, “the total amount of noneconomic damages for which judgment is entered against all defendants shall not exceed five hundred thousand dollars.” Exceptions do exist in cases of reckless disregard by the defendant or if the plaintiff has suffered a disfigurement. Though not part of the recent reforms, there is also a cap on punitive damages in North Carolina. In any tort case “[p]unitive damages awarded against a defendant shall not exceed three times the amount of compensatory damages [that have been awarded] or two hundred fifty thousand dollars ($250,000), whichever is greater.”

Under the guise of general tort reform, a majority of jurisdictions in the United States have passed some type of liability cap on the damages available to plaintiffs in medical malpractice cases. These statutory caps on damages were enacted in recognition of the societal perception that jury awards have “run amok” in recent years. Pundits have portrayed tort plaintiffs as thieves and the judicial system as a sham. They claim that “tort reform” is the only way to solve the injustice. On the other hand, protesters of tort reform claim that few instances of injustice have actually materialized. These types of reform may not always be the best policy.

 Statutory damage caps are unnecessary to avert the award of excessive damages in light of existing North Carolina law.

Statutory damage caps are unnecessary to avert the award of excessive damages in light of existing North Carolina law. Trial courts and juries are generally in the best position to determine appropriate damages, but Rule 59 of the North Carolina Rules of Civil Procedure provides that a motion for a new trial may be granted when there is “[m]anifest disregard by the jury of the instructions of the court” or when “[e]xcessive… damages [appear] to have been given under the influence of passion or prejudice.” This is an exceptionally useful tool readily available for courts to dispose of clearly excessive damages in a fair and informed case-by-case approach.

Moreover, the threat of a medical malpractice lawsuit with unlimited recovery for non-pecuniary damages has the regulatory effect of substantially deterring misconduct and weeding out poor performing doctors. Existing regulatory entities often fail to perform this function. Insurance companies do not normally take into account previous performance when assessing medical malpractice insurance rates and therefore do not penalize bad doctors. State disciplinary boards also can and do fall short of effective regulatory oversight. According to one report, more than 35,000 doctors had more than one medical malpractice payout between 1990 and 2002. Of those, only 7.6% were disciplined by their respective state disciplinary board.

Another downside of tort reform is that it causes an unjust allocation of loss. Caps on damages prevent full recovery among the parties that are in need of compensation, the recently injured, while permitting the negligent to partially escape liability. Disproportionately disadvantaged by such liability limitations are those in vulnerable groups, such as women, children, and minorities, all of whom are more likely to realize comparatively substantial non-economic loss.

Supporters of tort reform argue that healthcare costs will continue to rise in order to compensate for the large payouts in medical malpractice actions. However, generally applicable tort reform is unlikely to significantly raise the cost of healthcare. Opponents of liability caps disbelieve the presupposed relationship between liability caps and medical malpractice insurance premiums. Rather, in their view, insurance premiums are the upshot of insurers’ investment decisions.

 Capping punitive damages serves only to weaken the power of juries to punish and deter defendants in egregious cases.

Setting caps on the dollar amounts available for punitive damages may also be bad policy. The goal of punitive damages is to punish and deter egregious conduct.  Punitive damages often have no bearing on most cases where negligence is alleged. N.C. Gen. Stat. § 1D-15 provides that punitive damages are only to be awarded when compensatory damages are awarded and the plaintiff shows additional “plus” factors.

Instituting a threshold for punitive damages that can be met only upon a clear and convincing showing of intentionally egregious conduct is sound policy, since punishment in the civil context is the exception to the normal rule of compensation.  When a jury determines that this threshold has been met, it is authorized to punish the defendant and deter the defendant from future wrongful conduct. Capping punitive damages serves only to weaken the power of juries to punish and deter defendants in egregious cases.

Additionally, in a case with small compensatory damages and a massive corporate defendant, the prospect of large punitive damages is often all that makes the suit viable. The United States Court of Appeals for the Seventh Circuit stated in its 2003 decision in Mathias v. Accor Economy Lodging that a defendant with massive wealth has the ability to “mount an extremely aggressive defense against [a suit] such as this and by doing so [it makes] litigating against it very costly, which in turn may make it difficult for the plaintiffs to find a lawyer willing to handle their case, involving as it does only modest stakes, for the usual 33–40 percent contingent fee.”

Punitive damages and non-pecuniary medical malpractice damages are powerful tools that are completely justified in certain circumstances, even when the amount awarded is very large. Despite the public perception to the contrary, tort reform in the form of liability caps should be eschewed as they seem to be arbitrary, unnecessary, and even counterproductive to the goals of punishment and deterrence. Certainly there are problems with tort litigation, but the real answers to these problems will likely be more systemic.

 Contributory negligence is roundly criticized as an unfair all-or-nothing rule that cuts off all damages if the defendant can show that the plaintiff was even slightly negligent in the run-up to his injury.

Contributory negligence as defined in 1967 by the Supreme Court of North Carolina in Jackson v. McBride is “negligence on the part of the plaintiff which joins, simultaneously or successively, with the negligence of the defendant … to produce the injury of which the plaintiff complains.” A plaintiff that sues for damages under a negligence theory is completely barred from recovery if his own negligence was a proximate cause of his injuries, no matter how small his own negligence may be. Contributory negligence is roundly criticized as an unfair all-or-nothing rule that cuts off all damages if the defendant can show that the plaintiff was even slightly negligent in the run-up to his injury. North Carolina is one of only four states that still apply the contributory negligence doctrine.

All other states have repudiated contributory negligence in favor of a form of comparative negligence. Comparative negligence, defined by the North Carolina Court of Appeals in its 2004 decision in Whisnant v. Herrera, provides that a plaintiff may recover against a defendant whose negligence is a proximate cause of the plaintiff’s injuries even if the plaintiff’s negligence is also a proximate cause of the plaintiff’s injuries. In comparative negligence a plaintiff’s damages are reduced by the proportionate amount of fault that is attributable to the plaintiff.

 The comparative negligence doctrine offers a more fair method of apportionment in that each party is responsible for the damages attributable to that party’s proportionate negligence.

Although many comparative negligence bills have been introduced in the North Carolina legislature, none have ever been passed by both houses of congress. Instead, the North Carolina Supreme Court has founded its embracement of the contributory negligence doctrine on the idea that plaintiffs should not be rewarded for bringing an injury on themselves. The comparative negligence doctrine offers a more fair method of apportionment in that each party is responsible for the damages attributable to that party’s proportionate negligence.

Contributory negligence doctrine is inherently unfair because it holds one party to total liability for an injury that, in reality, was created from the conduct of multiple parties. The rule is unreflective of a reality in which both parties to an encounter frequently play a role in the outcome of the encounter. Making the switch to comparative negligence policies should be considered by North Carolina’s lawmakers, as doing so would be unlikely to have any tremendous bearing on insurance premiums and is in accord with modern values.

T. Spencer Morrow is a 2014 graduate of Campbell Law School. Spencer can be reached via email at ts**********@em***.edu.