Damage Cap Adds Insult to Injuries

After hearing all the evidence, a San Diego jury ruled that 2-year-old Steven Olsen’s lost sight and cerebral functions were worth $7.1 million. But unbeknown to the jurors, their medical malpractice ruling later would be cut to $250,000 -- the “pain and suffering” cap that was set by the California Legislature in 1975 and that always overrides a jury’s judgment.

Now President Bush wants to adopt this little-known standard for injured patients across the nation, and California’s dirty little legal secret could become America’s nightmare.

The jury in Steven’s case found that the boy would have been fine had the admitting doctor given him the $800 CT scan that his parents repeatedly requested. Steven had been impaled with a stick and was rubbing his head, but he was sent away with a growing brain abscess under the managed-care ethos that less is more.

The Olsen family received an additional $1.9 million in “economic damages” for Steven’s lifetime of lost wages, medical care, attendant care, special education and living assistance. However, about $500,000 of that was subtracted for court costs, expensive expert witnesses and lawyer contingency fees that cannot be recovered as part of the so-called “economic” losses.

The CEOs of insurance companies -- who make millions annually -- claim the law is fair. They argue that the “noneconomic” damages for pain and suffering, which are capped, adequately compensate for losses that do not result in a tangible bill -- such as blindness, brain damage, disfigurement or a child’s or senior citizen’s death that involved no wage loss. What’s more, they say California’s cap on recovery is “balanced” by the unlimited “economic” damages for medical bills and lost wages that families like the Olsens can receive.

What they overlook is the fundamental unfairness of this formula. For example, a successful actor or CEO who is severely disfigured can collect millions in lost wages. A disfigured blue-collar worker cannot prove significant loss of wages, so he or she will recover little. And nothing will be recovered if no attorney will take the case.

The Olsens say they are among the lucky ones. Other innocent patients who cannot prove large wage loss or medical bills -- seniors, students and those with injuries like the loss of fertility -- often cannot find attorneys because the economics do not add up for lawyers, whose contingency fees are also limited under the law. “The victims of cases that have a value of between $50,000 and $150,000 are basically without representation,” defense attorney Robert Baker told Congress in 1994.

In other words, the law generously compensates the rich but turns injured patients who are less well off into victims a second time.

Some Democrats back Bush’s class warfare against injured patients. Among the supporters is Sen. Dianne Feinstein (D-Calif.), who is sponsoring a federal bill similar to California’s legislation. Feinstein, like Bush, is a millionaire and will never have a hard time finding an attorney. Like many other politicians, she also believes insurers’ claims that caps on victims’ awards drive down malpractice premiums for doctors. It’s a lie.

Data from the National Assn. of Insurance Commissioners show that doctors’ malpractice premiums nearly tripled in the first dozen years after the 1975 California law. Premiums fell sharply and stabilized only after Californians passed insurance reform Proposition 103 in 1988.

Under 103, $135 million was refunded by malpractice insurers. The insurance measure also created an elected insurance commissioner who imposed a rate freeze for his entire first term, implemented stringent regulation and ended price fixing.

Feinstein, who opposed 103, should now recognize that it is insurance reform, not tort deform, that lowered malpractice premiums in California. She also should see that applying a one-size-fits-all limit to noneconomic damages strips individuals of their humanity, fails to recognize their suffering and penalizes the poor.

In the Olsen case, Steven’s mother had to leave her job to care for him. The money they were awarded must cover her lost income as well as Steven’s care for life -- including professional care after his parents die.

Steven is 12 now. In 2001, he had 74 doctor visits, 164 physical- and speech-therapy appointments and three trips to the emergency room. His parents say that was a good year because Steven was not hospitalized.

The jury saw Steven’s future and acted accordingly. Its foreman found out about the reduction of the jury’s award only by reading his local newspaper. Any law a jury is not told about is hardly just. And taking away the power of juries to dispense justice to medical victims in our state has resulted only in more victimization.