Boy’s Case Reopens Malpractice Law Debate

What is the price for the pain and suffering of a little boy with a bent and partly paralyzed right arm?

A Compton jury in 1993 decided $550,000. That should be Jabes Salgado’s compensation for the future distress engendered by a 1988 birth injury at Harbor/UCLA Medical Center, in which his enlarged body became lodged inside his diabetic mother, according to a Los Angeles County Superior Court panel.

But if the judge’s decision in the case stands, the defendant, Los Angeles County, will invest less than $62,000 to satisfy the pain and suffering award.

Attorneys for the boy and other patients are crying foul. And the case, which has been unanimously accepted for review by the California Supreme Court, could give rise to one of the most important decisions in state malpractice law since dramatic reforms were enacted in the 1970s.

At issue is the interpretation of a controversial California legal provision capping pain and suffering awards in medical malpractice cases at $250,000. Although insurer and doctor groups say the limit is essential to control costs, plaintiffs’ attorneys call it arbitrary and unfair. Juries, as in the Salgado case, typically are not informed of its existence; the reduction is automatic after trial.

The Salgado case does not challenge the $250,000 cap. But it poses a question with implications for hundreds of victims of medical malpractice in the state, especially children: Is the victim entitled to the equivalent of $250,000 up front or over the course of his lifetime?

For Jabes, now 10, the difference is substantial. If, as his lawyer argues, he is entitled to the lump sum, investment of that money could yield nearly $900,000 over his lifetime. If he is only entitled to $250,000 over his lifetime, the county can take care of its debt by buying a $62,000 annuity, which will earn enough interest to make monthly payments for the next 66 years.

The case has attracted attention far beyond the principal players, reopening wounds in the debate over the justice of California’s malpractice law and whether it shortchanges plaintiffs. In critics’ minds, the “reduction” of the $250,000 to a lesser annuity amounts to a double penalty for patients. Advocates for doctors and insurers say spreading out payments is good social policy; it saves the health care system money.

“I don’t think [a double penalty] is what the Legislature reasonably intended,” said Ken Sigelman, chairman of the medical malpractice committee of the Consumer Attorneys of California, an organization of plaintiffs’ lawyers.

“What is being done amounts to deprivation of due process of law, when the will of a jury is subverted to that degree.”

Malpractice defense experts say the Supreme Court has an opportunity in the Salgado case to underscore the intent of the 1975 law: to keep malpractice awards reasonable and premiums affordable.

The law, known as the Medical Injury Compensation Reform Act, was enacted during what was billed as a malpractice insurance crisis, when doctors were complaining of skyrocketing premiums and insurers of unrealistic jury awards.

A second issue, not raised in the legal briefs but looming large in the minds of plaintiffs’ attorneys, is the impact of the court ruling on their practices. If the Supreme Court upholds the most recent ruling, malpractice awards will, they say, be reduced to such paltry sums that no attorney who knows the business will take malpractice cases.

They say poor families, in particular, will suffer because they cannot afford to make payments up front to lawyers; attorneys’ fees come out of the awards. In cases where victims are young and there are little or no economic damages for lost wages, such as the Salgado case, the lawyers’ fees often come out of awards for pain and suffering.

If Jabes doesn’t prevail, “I’ll quit and play the stock market,” grumbled Manuel Hidalgo, the Salgados’ attorney, noting that his low-income Spanish-speaking clientele in East Los Angeles can’t pay him out of pocket. Jabes’ father, for example, supports a family of 13 on $8 an hour as a mechanic.

Advocates for doctors and insurers dismiss that sort of talk as bluster. “I don’t see any of these attorneys dropping out of medical malpractice cases,” said Martin Stein, an appellate attorney for the county in the Salgado case. “I don’t think that will change.”

The case comes amid renewed debate about the Medical Injury Compensation Reform Act in the state Legislature and the courts. A pending bill by Assemblywoman Sheila Kuehl (D-Santa Monica), which is being hotly contested by the California Medical Assn., among others, would more or less index the law for inflation, bringing the cap to $700,000. Kuehl is scrambling for votes: If the bill is not taken up by Saturday, it dies.

Another court case is pending in which attorneys for the University of California regents, hit with a multimillion-dollar malpractice verdict, are challenging a San Diego judge’s decision to inform jurors of the $250,000 pain and suffering cap. In general, malpractice defense attorneys worry that if informed of the cap, juries will compensate by awarding inflated economic damages.

Protesters have weighed in as well. When federal officials two years ago began touting California’s malpractice law as a national model for tort reform, a backlash ensued. Consumer groups and other opponents of the law demonstrated in wheelchairs and on crutches, dumped manure at an Orange County congressman’s office and stuffed photos and case histories into a coffin, sending it to a senator.

Jabes’ case, on the surface, is not so different from any other malpractice claim of moderate injury. The little boy’s family argued during trial that county doctors disregarded the mother’s need for a caesarean section for her abnormally large infant--a complication of her diabetes. He got stuck against her pelvis. By the time he was pulled out, he had suffered nerve damage, leaving his right arm and shoulder partially--but permanently--disabled. He can’t fully straighten it, lift his hand above his shoulder or throw a ball.

The jury awarded the boy $550,000 for future pain and suffering, $10,000 for past suffering and $125,000 for future medical expenses. But after the judge got through applying his interpreation of the reform law, the jury verdict of $685,000 became a judgment with a present value of a little more than $103,000. (That included the nearly $62,000 for compensating Jabes for future pain and suffering.)

Hidalgo says Jabes was “ripped off.” Most important, he says, Jabes is entitled to the full current value of the pain and suffering award.

“The reality is the victim is getting less than he deserves; he’s getting much less than the economic value” the jury intended, Hidalgo said.

Countered Stein: “There is nothing in statute” that indicates the $250,000 is meant to be paid out in current dollars.

Others, on both sides of the issue, say the law is fuzzy.

It isn’t clear whether the pain and suffering money is worth $250,000 now or is to be paid over a lifetime, said Jay Michael, chief executive of Californians Allied for Patient Protection, a group representing doctors, insurers and other health providers. In most cases, he said, his organization would support payments being spread out in the interests of keeping costs reasonable.

Last September, the state Court of Appeal sided with the county, though it said the result might be “harsh” in Jabes’ case. By the court’s reckoning, one statute specifies the cap; another allows periodic payments of future awards.

Advocates for doctors and insurers say the decision is in keeping with the Legislature’s intention, more than two decades ago, to cut costs to insurers and their clients. Specifically, they say, “future damages” are meant to be paid in the future, as the need for compensation arises. If paid in the present, they argue, the amount ought to be discounted.

The county’s attorneys added that plaintiffs have an opportunity, during trial, to show that their clients need larger upfront payments. “They did not show that” in Jabes’ case, said Feris M. Greenberger, another appellate attorney for the county.

Hidalgo said he offered plenty of proof that Jabes would suffer most early in his life, but the judge rebuffed him.

At a certain point, the reform law proponents said, the monetary question becomes absurd. Pain and suffering, after all, is not easily assessed even when it already has happened. How does one put a price on future damages?

Hidalgo and other plaintiffs’ attorneys say that is avoiding the issue. A jury assigned the value, and the jury’s intent was ignored.

“What they are doing is to give a ridiculously rationalized reason for why they don’t even pay the lousy $250,000,” said Joseph F. Harbison III, a plaintiff’s malpractice attorney in Sacramento.

* C-SECTION POLICY: Hospitals’ practice sparks supervisor’s call for inquiry. B1