Insurers Laud Tort Reforms in Wisconsin

Insurers hailed the passage of tort reform legislation in Wisconsin that includes caps on punitive damages and the adoption of scientific principles adopted in most states.

"It's going to bring some balance back to Wisconsin," said Deirdre Manna, vice president of industry, regulatory and political affairs for the Property Casualty Insurers Association of America.

Under S.B. 1, signed by new Gov. Scott Walker, punitive damages are capped at $200,000 or twice compensatory damages, whichever is more, in most instances. For liability at long-term care facilities, the cap is $750,000, the same level as for medical professional liability insurance. It also establishes penalties for frivolous lawsuits. The new law also adopts the use of scientific principles for evaluating expert opinions in litigation that are in use in all but 14 other states, according to the Wisconsin Civil Justice Council, an alliance of organizations supporting reforms.

The law is good news for the state's insurance marketplace, said Mark Johnston, Midwest state affairs manager for the National Association of Mutual Insurance Companies. "You can't have a good environment if you've got bad litigation and high liability costs," he said.

Rep. Gary Hebl, D-Sun Prairie, said the legislation undermines both quality care and consumer rights. "Why should the state of Wisconsin put an arbitrary price tag on the suffering these people and their families had to endure? The only logical conclusion I can draw is to protect the financial interest of the care providers," the ranking Democrat on the Assembly Committee on Judiciary and Ethics said in a statement. "If this happened to me or someone I loved, I would want a jury of 12 of my peers deciding what's appropriate."

In early 2010, supreme courts in Georgia, Illinois and Missouri struck down tort reforms (BestWire, March 25, 2010).

In Missouri, the state supreme court found state caps on noneconomic damages in medical professional liability cases can't be applied retroactively. A 2005 state law that limits noneconomic damages was found not to apply in cases where the cause of injury occurred before 2005. Under that 2005 law, noneconomic damages -- like "pain and suffering" -- in medical liability cases was capped at $350,000, and married couples were limited to one award between them, instead of two caps of $579,000 under the old law.

The Georgia Supreme Court struck down a cap on medical professional liability insurance awards, applying it retroactively and overturning a centerpiece of 2005 tort reform legislation. The determination of total damages, including noneconomic damages, is a jury decision, Chief Justice Carol Hunstein wrote in her decision joined by or concurred with by the court's six other justices. The presence of caps unconstitutionally forces a court to reduce noneconomic damages if the jury finds them in excess of the upper limit, according to the decision (BestWire, March 23, 2010).

The Illinois Supreme Court declared unconstitutional a state law limiting plaintiffs' damage awards for pain and suffering resulting from medical procedures gone wrong. The court found that portions of a 2005 statute that capped noneconomic damages at $500,000 against doctors and $1 million against hospitals violated the separation of powers between the Illinois General Assembly and the judiciary (BestWire, Feb 4, 2010).

In Wisconsin in 2005, the Supreme Court overturned a medical professional liability cap law, saying it violated the state's equal-protection guarantees. The legislature responded by passing a new version with slight changes intended to alleviate the court's concerns. The second law created two caps -- one of $550,000 for people less than 18 years old and one of $450,000 for those older than 18 (BestWire, Oct. 28, 2005).

The top five writers of medical professional liability insurance in Wisconsin in 2009 were: ProAssurance Group, with a 30.2% market share; CNA Insurance Cos., with 20.2%; Berkshire Hathaway Insurance Group, with 12.9%; MMIC Insurance Ins., 12.3%; and Wisconsin Health Care Liability Insurance Plan, with 5.3%, according to Best Link, which provides online access to A.M. Best's database of insurance information.

(By Sean P. Carr, Washington Bureau Manager: [email protected])