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Mayo v. Wisconsin Injured Patients and Families Compensation Fund

Supreme Court of Wisconsin

June 27, 2018

Ascaris Mayo and Antonio Mayo, Plaintiffs-Respondents-Cross-Appellants,
v.
Wisconsin Injured Patients and Families Compensation Fund, Defendant-Appellant-Cross-Respondent Petitioner, United Healthcare Insurance Company and Wisconsin State Department of Health Services, Involuntary-Plaintiffs, Proassurance Wisconsin Insurance Company, Wyatt Jaffe, MD, Donald C. Gibson, Infinity Healthcare, Inc. and Medical College of Wisconsin Affiliated Hospitals, Inc., Defendants.

          SUBMITTED ON BRIEFS: ORAL ARGUMENT: April 19, 2018

          Circuit Court Milwaukee County, L.C. No. 2012CV6272 Jeffrey A. Conen Judge

         REVIEW OF DECISION OF THE COURT OF APPEALS Reported at 377 Wis.2d 566, 901 N.W.2d 782');">901 N.W.2d 782 PDC No: 2017 WI.App. 52

          For the defendant-appellant-cross-respondent-petitioner, there were briefs filed by Kevin M. St. John, Roisin H. Bell, John N. Giftos, and Bell Giftos St. John LLC, Madison. There was an oral argument by Kevin M. St. John.

          For the plaintiffs-respondents-cross-appellants, there was a brief filed by Susan R. Tyndall, Daniel A. Rottier, James M. Fergal, and Habush Habush & Rottier, S.C., Madison. There was an oral argument by Daniel A. Rottier.

          An amicus curiae brief was filed on behalf of the Wisconsin Academy of Family Physicians, the Wisconsin Academy of Ophthalmology, Inc., the Wisconsin Chapter of the American College of Emergency Physicians, Inc., the Wisconsin Orthopaedic Society, the Wisconsin Psychiatric Association, Inc., the Wisconsin Radiological Society, Inc., the Wisconsin Society of Anesthesiologists, Inc., and the Wisconsin Society of Plastic Surgeons, Inc. by Guy DuBeau and Axley Brynelson, LLP, Madison.

          An amicus curiae brief was filed on behalf of the State of Wisconsin by Misha Tseytlin, solicitor general, Brad D. Schimel, attorney general, and Amy C. Miller, assistant solicitor general. There was an oral argument by Misha Tseytlin, solicitor general.

          An amicus curiae brief was filed on behalf of Wisconsin Hospital Association by Sara J. MacCarthy, Timothy W. Feeley, and Hall, Render, Killian, Heath & Lyman, P.C., Milwaukee.

          An amicus curiae brief was filed on behalf of Wisconsin Medical Society and American Medical Association Litigation Center by Anne Berleman Kearney and Appellate Consulting Group, Milwaukee.

          An amicus curiae brief was filed on behalf of The Physician Insurers Association of America by Samuel J. Leib, Brent A. Simerson, Brenden M. Leib, and Leib Knott Gaynor LLC, Milwaukee.

          An amicus curiae brief was filed on behalf of Wisconsin Manufacturers and Commerce by Lucas T. Vebber, Corydon J. Fish, and Wisconsin Manufacturers and Commerce, Madison.

          An amicus curiae brief was filed on behalf of the Wisconsin Association for Justice by William C. Gleisner, III and Law Offices of William Gleisner, Brookfield, with whom on the brief were J. Michael End and End, Hierseman & Grain, LLC, Milwaukee.

          An amicus curiae brief was filed on behalf of Wisconsin Defense Counsel by Justin F. Wallace and Nash, Spindler, Grimstad, & McCracken, LLP, Manitowoc, with whom on the brief were Monte E. Weiss, Charles W. Kramer, and Weiss Law Office SC, Mequon.

          An amicus curiae brief was filed on behalf of the American Tort Reform Association, the Wisconsin Civil Justice Council, the National Federation of Independent Business, the Chamber of Commerce of the United States, and the Wisconsin Insurance Alliance by James A. Friedman, Bryan J. Cahill, and Godfrey & Kahn, S.C., Madison.

          PATIENCE DRAKE ROGGENSACK, C.J.

         ¶1 Our review considers whether the legislatively-enacted cap of $750, 000 (the cap) on noneconomic damages for victims of medical malpractice that is set out in Wis.Stat. § 893.55 (2015-16) [1] is unconstitutional facially or as applied, based on equal protection and due process grounds. In reliance on Ferdon ex rel. Petrucelli v. Wis. Patients Comp. Fund, 2005 WI 125, 284 Wis.2d 573, 701 N.W.2d 440');">701 N.W.2d 440, the court of appeals concluded that the cap was facially unconstitutional.[2] The court of appeals did not address whether § 893.55 was unconstitutional as applied to Ascaris and Antonio Mayo (the Mayos). However, the circuit court had concluded that the $750, 000 cap on noneconomic damages was unconstitutional as applied to the Mayos.[3]

         ¶2 We conclude that rational basis is the proper standard by which to judge the constitutionality of Wis.Stat. § 893.55; that § 893.55 is facially constitutional and constitutional as applied to the Mayos; and that Ferdon erroneously invaded the province of the legislature and applied an erroneous standard of review. Accordingly, we reverse the court of appeals' decision, overrule Ferdon, and conclude that the $750, 000 cap on noneconomic damages in medical malpractice judgments and settlements is constitutional both facially and as applied to the Mayos.

         ¶3 Therefore, we reverse the court of appeals and remand to the circuit court to impose the $750, 000 cap on noneconomic damages.

         I. BACKGROUND

         A. The Guaranteed Payment System

         ¶4 In 1975, as a result of what was deemed to be a "medical malpractice crisis," the legislature established a comprehensive system of guaranteed payments and controlled liability. The Wisconsin Injured Patients and Families Compensation Fund (the Fund) was created at that time as part of the legislature's comprehensive system. Wis. Patients Comp. Fund v. Wis. Health Care Liab. Ins. Plan, 200 Wis.2d 599, 607, 547 N.W.2d 578 (1996) (hereinafter WHCLIP). In addition to guaranteeing payment and controlling liability, the legislature established required procedures for processing and paying claims that alleged medical malpractice. § 1, ch. 37, Laws of 1975.

         ¶5 Chapter 655 "provide[s] the exclusive procedure for a person to pursue a malpractice claim against a health care provider." Rouse v. Theda Clark Med. Ctr., Inc., 2007 WI 87, ¶35, 302 Wis.2d 358, 735 N.W.2d 30. Under Wisconsin's comprehensive system, each health care provider must maintain liability coverage of at least $1 million per claim and $3 million for all claims in a given policy year, Wis.Stat. § 655.23(4) (b)2, or qualify as a self-insurer, § 655.23(3) (a) .[4]In addition to maintaining liability insurance, health care providers are required to participate in the Fund by paying annual assessments. Wis.Stat. § 655.27(3)(a).

         ¶6 The combination of required insurance and required assessments by the Fund, which health care providers must pay, creates a mechanism for guaranteed payment to those who are injured by medical malpractice. This is so because the Fund pays medical malpractice claims in excess of the health care provider's insurance coverage amount. Wis.Stat. § 655.27(1) . "In other words, the Fund is liable for payments 'after a health care provider's statutorily mandated liability coverage limits are exceeded.'" Wis. Med. Soc'y v. Morgan, 2010 WI 94, ¶12, 328 Wis.2d 469, 787 N.W.2d 22 (quoting WHCLIP, 200 Wis.2d at 613).[5]

         ¶7 In regard to those injured by medical malpractice, the Fund guarantees payment of 100 percent of all settlements and judgments for economic damages arising from medical malpractice. However, payments by the Fund for noneconomic damages are limited to $750, 000 for each claim.[6] Wis.Stat. § 893.55(4) (d) 1. So long as health care providers maintain the required insurance and annually contribute to the Fund, they are not personally liable for damages arising from medical malpractice. Wis.Stat. § 655.23 (5) .[7]

         ¶8 From the time the Fund was created, July 1, 1975, until March of 2005, [8] the Fund paid approximately $586, 300, 000 in claims. Morgan, 328 Wis.2d 469, ¶21. By December 31, 2007, the total claim payments had increased to $666, 100, 000. Id. Through December 31, 2017, the fund has paid approximately $866, 100, 000 in claims. 2017 Functional and Progress Report, Wis. Office of the Comm'r of Ins. (Feb. 23, 2018), https:// oci.wi.gov/Documents/Funds/IPFCF2017FunctionalandProgressReport. pdf. The number of Fund claims begun in any given year fluctuates. In 2013-14, there were 83 pending potential claims against the Fund, followed just two years later in 2015-16 with 40 potential claims, and the most recent report for 2016-17 shows 55 potential claims against the Fund. Id.

         ¶9 When the Fund was created in 1975, there was no cap on noneconomic damages. It was not until 1986 that the legislature capped noneconomic damages. The 1986 cap was $1 million. 1985 Wis. Act 340, §§ 30, 72. The initial cap expired on January 1, 1991. Id.

         ¶10 After the expiration of the 1986 cap on noneconomic damages, the cost of insurance for health care providers rose, as did health care costs. See Maurin v. Hall, 2004 WI 100, ¶65 n.7, 274 Wis.2d 28, 682 N.W.2d 866, overruled on other grounds by Bartholomew v. Wis. Patients Comp. Fund, 2006 WI 91, 293 Wis.2d 38, 717 N.W.2d 216. In response, the legislature again enacted a cap on noneconomic damages, this time setting the limit at $350, 000. 1995 Wis. Act 10, §§ 5, 9.

         ¶11 The $350, 000 cap remained in place until we concluded that it was unconstitutional in Ferdon.[9] Following Ferdon, the legislature acted to impose the $750, 000 cap on noneconomic damages that is before us. 2005 Wis. Act 183, §§1, 7. For all other damages, payment is guaranteed to the injured party for 100 percent of a judgment or settlement.

         ¶12 In creating the $750, 000 cap for noneconomic damages, the legislature undertook substantial investigative efforts to assure that any future legislation in regard to a cap would be constitutionally appropriate. The assembly established a "Medical Malpractice Task Force" with the aim of implementing revisions to the law in response to the court's Ferdon decision. The task force found that noneconomic damages are an aspect of recovery that often is based on emotion and not on any predictable standard. The task force said that" [a] reasonable cap on noneconomic damages serves as a rational balance [in] the Legislature's plan to ensure that successful malpractice plaintiffs are able to recover appropriate damages." Further, "[m]edical liability reform is part of a broad legislative strategy designed to keep health care affordable and available in Wisconsin." "[C]apping noneconomic damages for unquantifiable harms while continuing to allow unlimited recovery for economic damages is crucial to this strategy."

         ¶13 Sixty-two members of a bipartisan committee of the legislature submitted new legislation that would increase the cap to $750, 000. See 2005 AB 1073, §§ 1, 7. Hearings then were held, and testimony was provided both for and against the $750, 000 cap.

         ¶14 The legislature carefully set out its objectives, stating that "[t]he objective of the treatment of this section is to ensure affordable and accessible health care for all of the citizens of Wisconsin while providing adequate compensation to the victims of medical malpractice." 2005 Wis. Act 183, § 3. Further, the legislature codified its reasoning by which "[e]stablishing a limitation on noneconomic damage awards accomplishes the objective:"

1. Protecting access to health care services across the state and across medical specialties by limiting the disincentives for physicians to practice medicine in Wisconsin, such as the unavailability of professional liability insurance coverage, the high cost of insurance premiums, large fund assessments, and unpredictable or large noneconomic damage awards, as recognized by a 2003 U.S. congress joint economic committee report, a 2003 federal department of health and human services study, and a 2004 office of the commissioner of insurance report.
2. Helping contain health care costs by limiting the incentive to practice defensive medicine, which increases the cost of patient care, as recognized by a 2002 federal department of health and human services study, a 2003 U.S. congress joint economic committee report, a 2003 federal government accounting office study, and a 2005 office of the commissioner of insurance report.
3. Helping contain health care costs by providing more predictability in noneconomic damage awards, allowing insurers to set insurance premiums that better reflect such insurers' financial risk, as recognized by a 2003 federal department of health and human services study.
4.Helping contain health care costs by providing more predictability in noneconomic damage awards in order to protect the financial integrity of the fund and allow the fund's board of governors to approve reasonable assessments for health care providers, as recognized by a 2005 legislative fiscal bureau memo, a 2001 legislative audit bureau report, and a 2005 office of commissioner of insurance report.

Wis. Stat. § 893.55(1)(d).

         ¶15 Act 183 also said that "the limitation of $750, 000 represents an appropriate balance between providing reasonable compensation for noneconomic damages associated with medical malpractice and ensuring affordable and accessible health care," and that "[t]his finding is based on actuarial studies provided to the legislature, the experiences of other states with and without limitations on noneconomic damages associated with medical malpractice, the testimony of experts, and other documentary evidence presented to the legislature." 2005 Wis. Act 183, § 3. Finally, the legislature noted that "the number chosen is neither too high nor too low to accomplish the goals of affordable and accessible health care, is a reasonable and rational[] response to the current medical liability situation, and is reasonably and rationally supported by the legislative record." Id.

         ¶16 The $750, 000 cap remained in effect until the court of appeals held it unconstitutional in this action. B. The Mayos

         ¶17 This action arose after Ascaris Mayo made two trips to two emergency rooms in May 2011. On the first occasion, she visited the emergency room at Columbia St. Mary's Hospital in Milwaukee after experiencing abdominal pain and a high fever. She was seen by a physician and a physician's assistant and was advised to follow up with her gynecologist because she had a history of uterine fibroids. The next day, Ascaris Mayo went to a different emergency room where she was diagnosed with sepsis that was caused by an untreated infection. As the result of sepsis, many of her organs failed and all four of her limbs developed dry gangrene, necessitating amputation.

         ¶18 In June of 2012, the Mayos sued in Milwaukee County Circuit Court alleging medical malpractice and failure to provide proper information. Their claims were tried to a jury. Neither the physician nor the physician's assistant who saw Ascaris Mayo at Columbia St. Mary's emergency room was found to have been negligent. The jury did find, however, that neither provider gave Ascaris Mayo adequate information regarding alternate diagnoses and options for treatment of the alternate diagnoses. In addition to economic damages totaling $8, 842, 096, [10] the jury awarded noneconomic damages of $15, 000, 000 to Ascaris Mayo[11] and $1, 500, 000 to her husband.[12]

         ¶19 After the verdict was issued, the Fund moved to reduce the jury's noneconomic damage award to $750, 000 as required by the cap. The Mayos also made motions after verdict, moving for entry of judgment on the verdict, as well as for declaratory judgment that Wis.Stat. §§ 655.017 and 893.55(4) are unconstitutional facially and as applied to the Mayos.[13]

         ¶20 The circuit court held that the cap was not facially unconstitutional, but concluded that it was unconstitutional as applied to the Mayos on equal protection and due process grounds. In reaching its conclusion, the circuit court relied on the court's decision in Ferdon.

         ¶21 The court of appeals, in a published opinion, affirmed the jury's noneconomic damage award, but on a different basis. The court of appeals "conclude[d] that the statutory cap on noneconomic damages is unconstitutional on its face because it violates the same principles our supreme court articulated in [Ferdon], by imposing an unfair and illogical burden only on catastrophically injured patients, thus denying them the equal protection of the laws." Mayo v. Wis. Injured Patients and Families Comp. Fund, 2017 WI.App. 52, ¶1, 7 Wis.2d 566');">377 Wis.2d 566, 901 N.W.2d 782');">901 N.W.2d 782. For the reasons stated below, we reverse the court of appeals decision, and conclude that the $750, 000 cap on noneconomic damages in medical malpractice judgments and settlements is constitutional both facially and as applied to the Mayos.

         II. DISCUSSION

         ¶22 The Mayos challenge the facial constitutionality of the cap and as the cap is applied to them. They claim that the classification for those who suffer noneconomic damages in excess of the cap violates their right to due process and equal protection. The Mayos also argue that the cap is unconstitutional as applied to them because of the dramatic decrease to their noneconomic damages award. The Fund, however, contends that under a rational basis review, the $750, 000 cap survives constitutional scrutiny.

         A. Standard of Review

         ¶23 A facial challenge to the constitutionality of a statute presents a question of law that we review independently, while benefitting from the court of appeals' and the circuit court's discussions. Milwaukee Branch of NAACP v. Walker, 2014 WI 98, ¶21, 357 Wis.2d 469, 851 N.W.2d 262. An as-applied constitutional challenge also is subject to our independent review. Society Ins. v. LIRC, 2010 WI 68, ¶13, 326 Wis.2d 444, 786 N.W.2d 385. Although we uphold historical factual findings of the circuit court unless they are clearly erroneous, id., there is no contest about the relevant facts in the case before us.

         B. General Principles of Constitutional Review

         ¶24 There are two general types of constitutional challenges to statutes: facial and as-applied. League of Women Voters of Wis. Educ. Network, Inc. v. Walker, 2014 WI 97, ¶13, 357 Wis.2d 360, 851 N.W.2d 302. We previously have explained that:

A party may challenge a law ... as being unconstitutional on its face. Under such a challenge, the challenger must show that the law cannot be enforced "under any circumstances." ... In contrast, in an as-applied challenge, we assess the merits of the challenge by considering the facts of the particular case in front of us, "not hypothetical facts in other situations." Under such a challenge, the challenger must show that his or her constitutional rights were actually violated.

Id. (quoting State v. Wood, 2010 WI 17, ¶13, 323 Wis.2d 321, 780 N.W.2d 63) .

         ¶25 In either type of constitutional challenge, we presume that the statute is constitutional. League of Women Voters, 357 Wis.2d 360, ¶16; State v. McKellips, 2016 WI 51, ¶29, 369 Wis.2d 437, 881 N.W.2d 258; Madison Metro. Sewerage Dist. v. Stein, 47 Wis.2d 349, 357, 177 N.W.2d 131 (1970); Town of Beloit v. City of Beloit, 37 Wis.2d 637, 643, 155 N.W.2d 633 (1968).

         ¶26 Our presumption of constitutionality is based on respect for a co-equal branch of government and its legislative acts. Dane Cty. Pep' t of Human Servs. v. Ponn P., 2005 WI 32, ¶16, 279 Wis.2d 169, 694 N.W.2d 344. If any doubt persists about whether a statute is constitutional, we resolve doubt in favor of concluding that the statute is constitutional. McKellips, 369 Wis.2d 437, ¶29; Aicher v. Wis. Patients Comp. Fund, 2000 WI 98, ¶18, 237 Wis.2d 99, 613 N.W.2d 849. In our analysis, we do not reweigh the policy choices of the legislature.

         ¶27 A party challenging the constitutionality of a statute bears a very heavy burden in overcoming the presumption of constitutionality. League of Women Voters, 357 Wis.2d 360, ¶17. In order to be successful, the challenger must prove that the statute is unconstitutional "beyond a reasonable doubt." Id. In the context of a challenge to a statute's constitutionality, "beyond a reasonable doubt" "expresses the 'force or conviction with which a court must conclude, as a matter of law, that a statute is unconstitutional before the statute . . . can be set aside.'" Id. (quoting Ponn P., 279 Wis.2d 169, ¶18) .

         ¶28 Generally, Wisconsin courts have employed two levels of scrutiny when addressing equal protection challenges. Thorp v. Town of Lebanon, 2000 WI 60, ¶38, 235 Wis.2d 610, 612 N.W.2d 59. Strict scrutiny is applied to statutes that restrict a fundamental right. League of Women Voters, 357 Wis.2d 360, ¶¶139-40 (concluding that the right to vote is fundamental). Strict scrutiny is also applied to the regulation of protected classes. Thorp, 235 Wis.2d 610, ¶38. When strict scrutiny is applied, the statute must serve a compelling state interest; the statute must be necessary to serving that interest; and the statute must be narrowly tailored toward furthering that compelling state interest. Id. There has been no contention that the Mayos have a fundamental right to payment of all damages awarded by the jury nor that the $750, 000 cap on noneconomic damages discriminates against a suspect class. Therefore, strict scrutiny does not apply. Bostco LLC v. Milw. Metro. Sewerage Dist., 2013 WI 78, ¶76, 350 Wis.2d 554, 835 N.W.2d 160.

         ¶29 The more common level of statutory scrutiny is rational basis scrutiny, where statutes are upheld if there is any rational basis for the legislation. Id. "The basic test is not whether some inequality results from the classification, but whether there exists any reasonable basis to justify the classification." Id. (citing Sambs v. City of Brookfield, 97 Wis.2d 356, 293 N.W.2d 504 (1980)). In an as-applied challenge to the damages limited by Wis.Stat. § 893.80(3), we concluded that not all disparities are sufficient to sustain the contention of unconstitutionally disparate treatment. Bostco LLC, 350 Wis.2d 554, ¶79.

         ¶30 In Ferdon, the majority opinion spent many paragraphs discussing rational basis and concluding that strict scrutiny was not appropriate in assessing the then $350, 000 cap on noneconomic damages. Ferdon, 284 Wis.2d 573, ¶¶59-96. Its discussion recited the usual rules applicable to a rational basis review. However, after its thorough discussion, the court threw all of the principles of rational basis aside. It created an intermediate level of review that it called "rational basis with teeth, or meaningful rational basis." Id.

         ¶31 The court gave this new level of scrutiny no standards by which to determine whether it should be applied; but instead, overturned the then existing cap on noneconomic damages through application of the majority's policy choice for Wisconsin. For example, the court opined that" [a] cap on noneconomic damages diminishes tort liability for health care providers and diminishes the deterrent effect of tort law." Id., ¶89. In concluding that the legislature's policy choice was constitutionally flawed, the majority opinion said, "[t]he legislature enjoys wide latitude in economic regulation. But when the legislature shifts the economic burden of medical malpractice from insurance companies and negligent health care providers to a small group of vulnerable, injured patients, the legislative action does not appear rational." Id., ¶101. The majority did not consider that part of the legislative plan that guaranteed 100 percent payment of all other damages, a benefit that no other tort carries. Accordingly, the test for rational basis with teeth is whether the petitioner's claim is in line with the Ferdon majority's policy choice for Wisconsin.

         ¶32 We hereby overrule Ferdon. Rational basis with teeth has no standards for application, usurps the policy forming role of the legislature and creates uncertainty under the law. Ferdon also creates new doctrine when it holds that" [a] statute may be constitutionally valid when enacted but may become constitutionally invalid because of changes in the conditions to which the statute applies. A past crisis does not forever render a law valid." Id., ¶114. There is no law to support this extraordinary declaration and we overrule it as well as "rational basis with teeth." C. Facial Challenge

         ¶33 When a party challenges a law as being unconstitutional on its face, he or she must show that the law cannot be enforced "under any circumstances." Wood, 323 Wis.2d 321, ΒΆ13. A challenger must meet the highest level of proof, beyond a reasonable doubt, if he or she ...


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