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Holly Stinnett v. Tony Tam et al

September 1, 2011

HOLLY STINNETT, PLAINTIFF AND APPELLANT,
v.
TONY TAM ET AL., DEFENDANTS AND RESPONDENTS.



(Super. Ct. No. 384025) APPEAL from a judgment of the Superior Court of Stanislaus County. David G. Vander Wall, Judge.

The opinion of the court was delivered by: Gomes, J.

CERTIFIED FOR PUBLICATION

OPINION

In 1975, the Governor convened the California Legislature in an extraordinary session to consider measures aimed at remedying what he described as "serious problems that had arisen throughout the state as a result of a rapid increase in medical malpractice insurance premiums." (American Bank & Trust Co. v. Community Hospital (1984) 36 Cal.3d 359, 363 (American Bank).) As a result, the Legislature enacted the Medical Injury Compensation Reform Act of 1975 (MICRA) (Stats. 1975, Second Ex. Sess. 1975-1976, chs. 1 & 2, pp. 3949-4007), which our Supreme Court characterized as "a lengthy statute which attacked the problem on several fronts." (American Bank, supra, 36 Cal.3d at p. 363.) "In broad outline, the act (1) attempted to reduce the incidence and severity of medical malpractice injuries by strengthening governmental oversight of the education, licensing and discipline of physicians and health care providers, (2) sought to curtail unwarranted insurance premium increases by authorizing alternative insurance coverage programs and by establishing new procedures to review substantial rate increases, and (3) attempted to reduce the cost and increase the efficiency of medical malpractice litigation by revising a number of legal rules applicable to such litigation." (Id. at pp. 363-364.)

This case involves a provision of MICRA which limits the recovery of so-called "non-economic" damages to a maximum of $250,000 in any action against a health care provider based on professional negligence. The statute, Civil Code section 3333.2,*fn1 states in pertinent part: "(a) In any action for injury against a health care provider based on professional negligence, the injured plaintiff shall be entitled to recover non-economic losses to compensate for pain, suffering, inconvenience, physical impairment, disfigurement and other non-pecuniary damage. [¶] (b) In no action shall the amount of damages for non-economic losses exceed two hundred fifty thousand dollars ($250,000)."

Appellant Holley Stinnett sued, among others, respondents Tony Tam, M.D. and Modesto Surgical Associates for the wrongful death of her husband, Stanley Stinnett, due to professional negligence. The trial court reduced the jury's $6,000,000 non-economic damage award to Stinnett to $250,000 pursuant to a defense motion made under section 3333.2. On appeal, Stinnett contends the reduction of her non-economic damages constituted: (1) a violation of her right to equal protection of the laws guaranteed by the Fourteenth Amendment to the United States Constitution and by article I, section 7, subdivision (a) of the California Constitution; and (2) a violation of her right to a jury trial under article I, section 16 of the California Constitution. As we shall explain, we find these contentions to be without merit and therefore will affirm the judgment.

FACTUAL AND PROCEDURAL HISTORIES

Stinnett brought this action for professional negligence against defendants Memorial Medical Center of Modesto, Memorial Hospital Foundation of Stanislaus County, Modesto Surgical Associates (Modesto Surgical) and Dr. Tony Tam. The complaint alleged that Stinnett's husband, Stanley Stinnett, died on January 11, 2006, as a result of the defendants' negligence, carelessness and otherwise wrongful medical care, treatment and diagnosis. Before trial, defendant Memorial Medical Center of Modesto settled with Stinnett for $175,000. At trial, the jury was instructed that Dr. Tam was a partner of Modesto Surgical Associates, and if the jury found Dr. Tam was acting within the scope of his agency when the incident occurred, Modesto Surgical was responsible for any harm caused by Dr. Tam's negligence.

An eleven day jury trial resulted in a special verdict finding Dr. Tam and Modesto Surgical "negligent in the diagnosis and/or treatment of Stanley Stinnett" and that their negligence was a substantial factor in causing his death. The jury awarded Stinnett $148,302 in past economic loss, $1,242,093 as the present cash value of her future economic losses, and $6,000,000 in "[n]on-economic damages for the loss of love, companionship, comfort, care, assistance, protection, affection, society and moral support of decedent Stanley Stinnett."

After the jury verdict, Dr. Tam and Modesto Surgical, by and through their professional liability carrier, paid Stinnett $1,510,036.27 in partial satisfaction of the jury's award of economic damages, with the final amount of economic damages to be adjusted later after determination of the credit/set-off resulting from Memorial Medical Center's pre-trial settlement.

Dr. Tam and Modesto Surgical moved to reduce the amount of non-economic damages to $250,000 pursuant to section 3333.2, and apply the payments previously made to Stinnett as an offset. Stinnett opposed the motion, arguing section 3333.2 is unconstitutional because it conflicts with the constitutional guarantee of equal protection under both the California and federal constitutions. Specifically, Stinnett argued that while the California Supreme Court upheld the constitutionality of the MICRA cap on non-economic damages in Fein v. Permanente Medical Group (1985) 38 Cal.3d 137 (Fein), the cap is now unconstitutional since the "classification incorporated in the MICRA cap has lost its rationality," as the medical malpractice insurance crisis that precipitated the adoption of the MICRA cap in 1975 "has long since ceased to exist," and the cap operates more harshly than in 1975 since it does not adjust for inflation.

In support of her argument, Stinnett submitted a declaration from Missouri lawyer Jay Angoff, who has "been particularly heavily involved with the medical malpractice insurance industry" and co-authored Proposition 103, the insurance reform initiative California voters enacted in 1988. According to Angoff: (1) while courts commenting on MICRA in the past had noted when the statute was enacted malpractice insurance rates were increasing, few firms were writing malpractice coverage, malpractice insurance claims payments were increasing and malpractice insurers were losing money, in 2008 malpractice insurance rates were declining, dozens of traditional and non-traditional malpractice insurers were writing coverage, new carriers were entering the industry, claims payments were decreasing and malpractice insurance profits had been excessive for at least a decade; (2) while eliminating the MICRA cap on non-economic damages would increase malpractice claims costs, "eliminating the cap should not have a material effect on rates, since California malpractice insurers would still have been able to earn at least an adequate profit for the last ten years had the cap not existed, and would continue to be able to earn such a profit if the cap were eliminated today"; and (3) data from states that have not limited non-economic damages indicate that malpractice insurers have been able to prosper in such states. Stinnett also submitted the declaration of economist Phillip H. Allman, who stated that inflation had eroded the value of $250,000 in 1975 to a present value in 2008 of approximately $58,857. In their reply, Dr. Tam and Modesto Surgical argued section 3333.2 is constitutional and filed objections to Angoff's declaration.

Following oral argument, the trial court granted the motion in part and denied it in part. The trial court found that MICRA is not unconstitutional, but that Dr. Tam and Modesto Surgical had improperly computed the applicable credit for the settlement by another defendant.

DISCUSSION

Legal Background

After MICRA's enactment, judicial challenges to various provisions of MICRA were abundant, but unsuccessful. In the first of these, American Bank, our Supreme Court upheld a provision of MICRA, Code of Civil Procedure section 667.7, against various constitutional claims, including that the provision violates due process, equal protection and the constitutional right to a jury trial. The statute at issue provides that compensation to a plaintiff who recovers future damages of $50,000 or more is to be paid periodically over the course of time the plaintiff incurs the losses rather than in a lump sum payment. (American Bank, supra, 36 Cal.3d 359, 364.)

In rejecting the claim that the statute violated medical malpractice victims' due process rights by diminishing the value of their malpractice actions without providing an adequate quid pro quo, the court explained that "it is both unnecessary and inappropriate for us to attempt to balance the relative benefits and detriments of the legislation -- i.e. the 'adequacy' of the quid pro quo -- in determining its validity under the due process clause. It is well established that a plaintiff has no vested property right in a particular measure of damages, and that the Legislature possesses broad authority to modify the scope and nature of such damages. [Citations.] Since the demise of the substantive due process analysis of Lochner v. New York (1905) 198 U.S. 45, it has been clear that the constitutionality of measures affecting such economic rights under the due process clause does not depend on a judicial assessment of the justifications for the legislation or of the wisdom or the fairness of the enactment. So long as the measure is rationally related to a legitimate state interest, policy determinations as to the need for, and the desirability of, the enactment are for the Legislature." (American Bank, supra, 36 Cal.3d at pp. 368-369.)

The court concluded the provision was rationally related to the legitimate state interest of furthering the "fundamental goal of matching losses with compensation by helping to ensure that money paid to an injured plaintiff will in fact be available when the plaintiff incurs the anticipated expenses or losses in the future." (American Bank, supra, 36 Cal.3d at p. 369.) In addition, the court noted the Legislature could legitimately determine limiting a defendant's obligation to those future damages a plaintiff actually incurs would serve the public interest, as it would eliminate any windfall a plaintiff's heirs might obtain when they inherit a portion of a lump sum judgment intended to compensate the injured person for losses he never sustained. (Ibid.)

The court also rejected the claim that Code of Civil Procedure section 667.7 denied equal protection by limiting its operation to medical malpractice cases. (American Bank, supra, 36 Cal.3d at p. 370-371.) The court explained the Legislature limited section 667.7's application, and MICRA in general, to the medical malpractice field "because it was responding to an insurance 'crisis' that had arisen in a particular area. The problem which was the immediate impetus to the enactment of MICRA arose when the insurance companies which issued virtually all of the medical malpractice insurance policies in California determined that the costs of affording such coverage were so high that they would no longer continue to provide such coverage as they had in the past. Some of the insurers withdrew from the medical malpractice field entirely, while others raised the premiums which they charged to doctors and hospitals to what were frequently referred to as 'skyrocketing' rates. As a consequence, many doctors decided either to stop providing medical care with respect to certain high risk procedures or treatment, to terminate their practice in this state altogether, or to 'go bare,' i.e. to practice without malpractice ...


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