A New Prescription for an Old Headache: Calculating Judgments in Medical Malpractice Actions Under F.S. §766.118
Understanding how final judgments are calculated is crucial to the ability to evaluate a case at any stage of the litigation, for plaintiffs and defendants alike. The task of calculating the amounts owed by defendants following trials involving the comparative fault doctrine1 has become increasingly perplexing over the course of the past 10 years, particularly as Florida’s courts have struggled with issues involving the interplay between the Florida Supreme Court’s ruling in Fabre v. Marin, 623 So. 2d 1182 (Fla. 1993), and the mechanism of setoffs.2 That task was not made any easier by the legislature’s most recent medical malpractice reform measures.
In 2003, Florida’s legislature undertook a comprehensive effort to reform the state’s medical malpractice laws, with the goal of reducing liability insurance premiums for health care providers who were facing skyrocketing insurance costs.3 The controversial centerpiece of the medical malpractice reform package is F.S. §766.118 (2003), which imposes a cap on the amount of noneconomic damages which may be recovered in medical negligence actions.4 Although inspired by the plan adopted by the Texas Legislature in the summer of 2003,5 Florida’s cap is a unique—and uniquely political—approach to limiting noneconomic damages in an effort to reduce overall insurance payouts, and thereby reduce insurance premiums.
The essential features of §766.118 include limitations on noneconomic damages separately applicable to “practitioners” and “nonpractitioners”; the ability to “pierce” the cap in certain instances; a lower cap for practitioners providing emergency medical services; and an internal “setoff” mechanism which provides the methodology for applying the cap in cases involving comparative fault and/or prior settlements. Each of these features will require courts and litigants to rethink fundamental notions about the way judgments have been calculated and entered against defendants in medical malpractice actions.
The first step in the analysis is to determine whether each defendant is a “practitioner” or a “nonpractitioner.” The definition of the term “practitioner”6 is the touchstone for determining which limitation on noneconomic damages applies to a given health care provider.7 If the health care provider falls within the definition of “practitioner,” the noneconomic damages recoverable from that defendant are subject to the limitations set forth in subsection (2) of the statute; generally, $500,000 per claimant, or $1 million in the aggregate.8 If, however, the health care provider does not satisfy the definition of a “practitioner,” the noneconomic damages recoverable from that defendant are subject to the higher limitations set forth in subsection (3) of the statute: $750,000 per claimant, or $1.5 million aggregate.
The definition of “practitioner” includes health care providers licensed under various chapters,9 as well as their employees and affiliated business entities. Additionally, the term includes “any person or entity for whom a practitioner is vicariously liable and any person or entity whose liability is based solely on such person or entity being vicariously liable for the actions of a practitioner.”10 Logically, then “nonpractitioners” would generally include persons and entities outside the stream of vicarious liability for a “practitioner.” However, “nonpractitioners” may also include a person or entity found to be vicariously liable for a “practitioner,” assuming that is not the sole basis of liability.
The statute provides two avenues of “piercing,” both of which trigger entitlement to claim the aggregate amount in each category in certain narrowly proscribed circumstances. In cases where medical negligence has caused either death or permanent vegetative state, the total amount recoverable from all practitioners, regardless of the number of claimants, is limited to $1 million, and the total amount recoverable from all nonpractitioners is limited to $1.5 million. Alternatively, if the jury finds that medical negligence has caused a “catastrophic injury,” as that term is defined,11 The patient may recover noneconomic damages not to exceed $1 million from practitioners, and $1.5 million from nonpractitioners, if the trial court makes the additional finding that “a manifest injustice would occur unless increased noneconomic damages are awarded, based on a finding that because of the special circumstances of the case, the noneconomic harm sustained by the injured patient was particularly severe.”12
Separate limitations on noneconomic damages apply to practitioners and nonpractitioners providing emergency care and services.13 Where defendants are providing emergency services pursuant to state or federal obligations,14 The maximum noneconomic damages recoverable from practitioner defendants is $150,000 per claimant, with a $300,000 aggregate amount. The maximum recoverable from nonpractitioner defendants, however, is $750,000 per claimant, with a $1.5 million total amount. “Piercing” is not available in cases subject to the emergency services cap.
In cases involving the negligence of a single defendant, the task of applying the cap on noneconomic damages is relatively straightforward. Following the jury’s verdict, the trial court would be called upon to limit the final judgment in accordance with the terms of the statute.15 For example, if the jury returned a verdict against a single physician awarding $750,000 in noneconomic damages, the judgment would reflect a reduction of the noneconomic award to $500,000, the maximum recoverable from a single practitioner defendant.
Many medical malpractice cases, however, involve multiple defendants, some of whom will have settled with the plaintiff before the case reaches trial. In recognition of such cases, §766.118(6) contains an internal “setoff” provision designed to provide guidance to trial courts faced with the task of applying the caps on noneconomic damages in conjunction with other reductions for comparative fault and setoffs for economic damages. The applicable subsection provides:
(6) SETOFF.—In any case in which the jury verdict for noneconomic damages exceeds the limits established by this section, the trial court shall reduce the award for noneconomic damages within the same category of defendants in accordance with this section after making any reduction for comparative fault as required by s.768.81 but before application of a setoff in accordance with §§46.015 and 768.041. In the event of a prior settlement or settlements involving one or more defendants subject to the limitations of the same subsection applicable to a defendant remaining at trial, the court shall make such reductions within the same category of defendants as are necessary to ensure that the total amount of noneconomic damages recovered by the claimant does not exceed the aggregate limit established by the applicable subsection. This subsection is not intended to change current law relating to the setoff of economic damages.
Pared down to its essentials, the statute provides for 1) reduction based upon comparative fault, followed by 2) application of the limitation on noneconomic damages, including setoffs for amounts received in settlement for noneconomic damages within the category of defendants, and 3) application of setoffs for amounts received in settlement for economic damages.
Pursuant to the methodology outlined by the statute, the first step for the trial court is to apply any reduction based on comparative fault. Assuming a verdict of $2 million in noneconomic damages, a single practitioner defendant found to be 10 percent at fault would be liable for only $200,000 in noneconomic damages; therefore, the court would not be called upon to make a further reduction based upon the cap. Thus, before determining whether the cap on noneconomic damages is even implicated, the court must first calculate the amount of noneconomic damages owed by each defendant based on the jury’s allocation of comparative fault.
In cases involving two or more defendants in a single category, the court must then determine whether the total amount received by the plaintiff in noneconomic damages from all defendants is consistent with the statutory limitation, and make such reductions as are necessary to ensure that the caps are not exceeded. This involves two considerations: calculating the total amount received in prior settlements allocable to noneconomic damages, in order to determine the maximum recoverable from the nonsettling defendants, and allocating that amount to the remaining defendants for purposes of entry of final judgment.
The formula for apportioning settlement proceeds between economic and noneconomic damages for the purpose of calculating setoffs was established by the Supreme Court in Wells v. Tallahassee Mem’l Reg’l Med. Ctr, Inc., 659 So. 2d 249, 254 (Fla. 1995), which held that the settlement proceeds should be divided between economic and noneconomic damages in the same ratio as the jury’s award.16 Under §766.118(6), this allocation serves two functions: determining the amount of economic damages which are subject to a dollar-for-dollar reduction of the liability of all defendants for economic damages,17 and determining the amount of noneconomic damages which have been received by the plaintiff for the purpose of making the adjustments necessary to enforce the statutory cap on noneconomic damages applicable to each category of defendants.
The purpose of §766.118(6)’s “setoff” provision, which is to enforce the statutory limitations on the recoverable amount of noneconomic damages, is unique to the statutory scheme.18 requiring what is, in effect, a partial setoff for noneconomic damages, at least to the extent of settlements from defendants within the same category (i.e., “practitioners” or “nonpractitioners”), §766.118(6) represents a departure from Wells, which held that noneconomic damages paid by a settling defendant are not subject to setoff under the setoff statutes,19 by virtue of the abolition of joint and several liability for noneconomic damages. On the other hand, because the statute confines setoffs for noneconomic damages to settlements within the same category of defendants, a nonpractitioner who would have otherwise enjoyed a full setoff for all sums paid in settlement by one for whom it was vicariously liable20 may no longer be entitled to such a setoff.21
Once the court makes the mathematical calculation of the amounts received by the plaintiff from prior settlements allocable to noneconomic damages, the court must then determine how much of the remainder of the allowable noneconomic damages are to be assessed against the remaining defendants. For example, in a case permitting a maximum recovery of $1 million from practitioners, if a plaintiff has received $400,000 in prior settlements allocable to noneconomic damages, what remains is for the court to determine how to effect the reduction of the noneconomic damage awards against the remaining defendants to an amount which equals the balance of the allowable noneconomic damages, or $600,000.
In most instances, it would be logical for the court to make the necessary reductions of noneconomic damage awards on a proportional basis, based upon the jury’s allocation of fault; however, the statute leaves the exact method of apportionment between defendants within the same category largely to the discretion of the trial court. In some instances, a strict proportional reduction would mean that the plaintiff is unable to collect the entire amount of statutorily permissible noneconomic damages. Since the effect of the statute is to limit the damages recoverable by the plaintiff, it makes sense that the trial court should maintain the discretion necessary to ensure that the method of apportioning the noneconomic damages recoverable within each category of defendants serves the interests of justice in the case, provided that no defendant is required to pay more in noneconomic damages than his or her share of the total noneconomic damage award following reduction for comparative fault.
To be sure, the introduction of a cap on noneconomic damages will further complicate the process of calculating final judgments in medical malpractice actions. Nevertheless, each complicating factor is evidence of the legislature’s painstaking effort to balance considerations of fairness against the need to limit the overall amount of damages recoverable, with the goal of bringing predictability and stability to the medical malpractice liability insurance market.
1 Fla. Stat. §768.81 (2001).
2 Fla. Stat. §§46.015 and 768.041 (2001). See, e.g., Gouty v. Schnepel, 795 So. 2d 959 (Fla. 2001); Y.H. Invs., Inc. v. Godales, 690 So. 2d 1273 (Fla. 1997); Wells v. Tallahassee Mem’l Reg’l Med. Ctr, 659 So. 2d 249 (Fla. 1995). See also D’Angelo v. Fitzmaurice, 832 So. 2d 135, 137 (Fla. 2d D.C.A. 2002) (noting that setoff was “the litigation du jour for personal injury practitioners”), rev. granted, 845 So. 2d 888 (Fla. 2003).
3 2003 Fla. Laws ch. 416.
4 Ch. 766 defines the term “claim for medical negligence” as “a claim arising out of the rendering of, or the failure to render, medical care or services.” Fla. Stat. §766.106(1)(a) (2003). See J.B. v. Sacred Heart Hosp. of Pensacola, 635 So. 2d 945, 948-49 (Fla. 1994); Puentes v. Tenet Hialeah Healthsystem, 843 So. 2d 356 (Fla. 3d D.C.A. 2003).
5 2003 Tex. Gen. Laws 204, art. 10, §74.301.
6 Fla. Stat. §766.118(1)(c) (2003).
7 2003 Fla. Laws ch. 416 includes a new comprehensive definition of “health care provider” for purposes of Fla. Stat. ch. 766. Fla. Stat. §766.202(4) (2003).
8 Section 766.118(2)(a) provides, however, that no individual practitioner is to be liable for more than $500,000 in noneconomic damages, regardless of the number of claimants.
9 The notable exception is that nurses licensed under Ch. 464 are not defined as “practitioners” under §766.118(1)(c). As a result, individual nurses should share the same cap on noneconomic damages as their employers, thereby eliminating the incentive to sue nurses individually as a means of increasing the total noneconomic damages recoverable in an action.
10 Fla. Stat. §766.118(1)(c) (2003).
11 Section 766.118(1)(a) defines “catastrophic injury” to mean: “[a] permanent impairment constituted by: 1. Spinal cord injury involving severe paralysis of an arm, a leg, or the trunk; 2. Amputation of an arm, a hand, a foot, or a leg involving the effective loss of use of that appendage; 3. Severe brain or closed-head injury. . . ; 4. Second-degree or third-degree burns of 25 percent or more of the total body surface or third-degree burns of 5 percent or more to the face and hands; 5. Blindness, defined as a complete and total loss of vision; or 6. Loss of reproductive organs which results in an inability to procreate.”
12 Fla. Stat. §§766.118(2)(b)(1), (3)(b)(1) (2003).
13 Fla. Stat. §766.118(4), (5) (2003). See also 2003 Fla. Laws ch. 416, §55 (setting forth legislative findings regarding access to emergency medical services).
14 The emergency services cap applies to any treatment act, “including diagnosis that occurs prior to the time the patient is stabilized and is capable of receiving medical treatment as a nonemergency patient, unless surgery is required as a result of the emergency. . . , in which case, the limitation. . . applies to any act or omission of providing medical care or treatment which occurs prior to the stabilization of the patient following surgery.” Fla. Stat. §766.118(4), (5) (2003).
15 Presumably, the limitation would be invoked by a motion to limit the judgment filed by the defendant within 10 days of the verdict. See, e.g., Florida Patient’s Comp. Fund v. Scherer, 558 So. 2d 411 (Fla. 1990); Fla. R. Civ. P. 1.530(g).
16 Query: In this context, would it be more equitable to use a ratio based on the proportion of economic damages to recoverable noneconomic damages, rather than simply to unreduced noneconomic damages awarded by the jury?
17 Section 766.118(6) expressly provides that it is “not intended to change current law relating to the setoff of economic damages.”
18 “[I]n order to ensure strict adherence to the statutory caps scheme, the court must reduce an award of noneconomic damages that exceeds the statutory cap for the particular category of defendant and injury.” Senate Staff Analysis and Economic Impact Statement, CS/SB 2-D, Health Aging and Long-Term Care Committee, available at www.flsenate.gov/data/session/2003D/Senate/bills/analysis/pdf/2003s0002D.hc.pdf
19 Fla. Stat. §§46.015(2), 768.041(2) (2001).
20 See, e.g., J.R. Brooks & Son, Inc. v. Quiroz, 707 So. 2d 861 (Fla. 3d D.C.A. 1998) (vicariously liable defendant is entitled to a full setoff for a prior settlement with an actively negligent defendant).
21 In cases where a direct negligence claim is joined with a vicarious liability claim or claims, the nonpractitioner’s maximum liability for noneconomic damages is limited to the “nonpractitioner” cap, which includes vicarious liability. Fla. Stat. §766.118(3)(c) (2003).
Gail Leverett Parenti is a partner with Parenti, Falk, Waas, Hernandez, Cortina, P.A., in Coral Gables. A graduate of Tift College in Forsyth, Georgia, Ms. Parenti received her law degree from the University of Georgia School of Law.
This column is submitted on behalf of the Appellate Practice and Advocacy Section, Jack J. Aiello, chair, and Jacqueline E. Shapiro, editor.
