State Curbs on Medical Malpractice Awards OKd

The Supreme Court on Monday gave the states more latitude to curb soaring medical malpractice awards, rejecting a challenge to a California law that limits the fees lawyers can collect in such cases.

Over two dissenting votes, the court dismissed an appeal contending that the law--passed a decade ago in a major legislative effort to control rising awards and insurance costs--unfairly restricts the ability of malpractice victims to secure legal counsel.

It was the second time in the current term that the justices cleared the way for the states to enact such laws. On Oct. 15, the court refused to hear an appeal to another California law placing a $250,000 maximum on medical malpractice awards for pain and suffering.

Wide Range of Legislation

Dozens of states have enacted or are considering a wide range of legislation designed to control medical malpractice suits. By recent count, at least four states in addition to California had enacted attorney-fee limits in such cases.

Medical malpractice recoveries have increased sharply in recent years. According to the California Hospital Assn., the number of settlements and awards in California exceeding $1 million increased from four in 1975 to 19 in 1983.

The California law, part of the 1975 Medical Injury Compensation Reform Act, established a series of limitations on the percentage of malpractice awards and settlements that attorneys can receive in contingency fees. The act was passed in the hope of reducing medical malpractice insurance costs, which were seen as a threat to the availability of health care.

Under contingency-fee arrangements, lawyers receive a fixed percentage of any amount they recover. If they recover nothing, they receive no fee. The limit, among other things, was aimed at maximizing amounts that successful plaintiffs could keep for themselves and providing incentive to settle cases without going to trial, where a higher amount might be won.

Law Sets Limits

The statute permits a lawyer to receive 40% of the first $50,000 awarded to the plaintiff; 33% of the next $50,000; 25% of the next $100,000 and 10% of any amount above $200,000.

The case before the court involved a suit in San Joaquin County by Frank and Yvonne Roa against the Lodi Medical Group and Dr. Gordon B. Roget. The Roas charged malpractice in the treatment and care of their son, who suffered brain damage during birth.

The parents agreed to settle for $495,000 for their son and $5,000 for themselves. They sought to pay their lawyer 25% of the son’s award--about $122,800--but a trial judge, citing the state law, limited the fee to $90,800.

The state Supreme Court subsequently upheld the limit in a 4-3 decision.

Justice Otto Kaus, writing the majority opinion, noted that the governmental authority to limit attorney fees already was firmly established in probate, veterans and Social Security proceedings.

Chief Justice Rose Elizabeth Bird, in dissent, said the decision prevented severely injured victims--those with the best chance for a large award--from acquiring the best counsel they could.

In an appeal to the justices (Roa vs. Lodi Medical Group, 85-216), the Roas contended that the law infringed on their constitutional rights to spend all they might want for representation in court. But in a brief order, the justices dismissed the appeal. Justices William J. Brennan Jr. and Byron R. White voted to hear the case--two short of the number required for review.

In other action, the court:

--Declined to consider a last-ditch attempt to overturn a state Supreme Court decision last May that upheld the right of public employees in California to strike. The justices, without dissent, refused to hear an appeal by the Los Angeles County Sanitation District No. 2 contending that the ruling conflicted with federal water pollution laws.

The district said that allowing sanitation workers to strike could result in untreated sewage entering the waterways, violating federal statutes. Lawyers for the Los Angeles County Employees Assn. replied that the district was too late in raising the issue of federal law and that the state court’s ruling still allows judges to bar strikes when there is a “substantial imminent threat” to public health or safety.

A proposed state constitutional amendment that would bar public employee strikes in California is pending before the state Legislature (County Sanitation District vs. Los Angeles County Employees, 85-507).

--Agreed to hear a plea by the Reagan Administration to review a lower court ruling striking down a federal law aimed at reducing food stamp abuse (Block vs. Castillo, 85-250).

Supreme Court acts in gerrymandering case with far-reaching implications. Page 13.