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Back in March 2002, Pennsylvania joined a host of other states in passing legislation aimed at insulating medical providers from liability for their negligence. Rather than accepting accountability for needless injuries caused by carelessness, physicians and large medical providers successfully lobbied to have special laws passed. Laws intended to make it more difficult for injured patients to receive compensation. Or stated another way, special laws that would make it easier for medical providers to get off the hook for their misconduct.
Citing dubious studies suggesting trial lawyers were responsible for escalating medical insurance premiums in the State (as opposed to formation and consolidation of giant health networks that placed patient care a distant second to growth and profitability), Pennsylvania passed the Medical Care Availability and Reduction of Error Act (“MCARE”). MCARE, despite its pretentious title, was a clumsily drafted tort reform act.
Among the various roadblocks to seeking justice erected by the MCARE Act was a provision that arguably makes it less profitable for trial lawyers to represent people injured by medical negligence.
Virtually all lawyers representing injured clients do so on a contingency basis. Most injured clients are unable to pay a lawyer on an hourly basis, or front the costs of litigation, which can easily run into the hundreds of thousands of dollars. Contingency fee agreements provide a solution. Clients pay nothing, no fees, no costs unless there is a recovery. If litigation does result in a successful recovery, the attorney gets an agreed upon percentage of the net recovery, normally one-third.
In medical malpractice cases, as in most personal injury cases, plaintiffs can recover (among other things) the cost of future medical expenses. Historically, juries would award future medical expenses in a lump sum amount. In other words, if a jury found a defendant negligent, it would be instructed to: (1) determine how long they thought a plaintiff would live; (2) the amount of medical expenses the injured plaintiff would incur per year; and (3) multiply those two numbers and award that amount to the plaintiff in a lump sum.
Defendants often objected to this method of calculation with a credible argument. If a jury awarded a plaintiff a specific sum of money for yearly medical expenses assuming the plaintiff would live another 10 years, but the plaintiff only ended up living 2 more years, why should they have to pay the entire amount?
The MCARE Act changed this paradigm by prohibiting juries from awarding future medical costs in a lump sum. Instead, each verdict sheet should contain a specific amount of future medical expenses, itemized per year (i.e., 2018: $100,000; 2019: $102,000). The MCARE Act also specifies that a plaintiff is only entitled to future medical awards if they are alive. So if a jury awarded a plaintiff future medical awards from 2017 to 2021, and the plaintiff died in 2018, he would not be permitted to receive the amounts awarded for 2019-2021.
But the MCARE Act threw in one more twist. Instead of a plaintiff lawyer receiving a previously agreed percentage fee for the future medical component of an award, the ACT operated to reduce the fee of the lawyer. Under the MCARE Act, future medical expenses awarded by the jury need to be reduced to present value for purposes of calculating attorney fees. So, using our previous example, if a jury awarded $102,000 for future medical expenses in 2019, that amount needs to be reduced to 2017 dollars (which will be something less than $102,000), and the lawyer will receive only a percentage of that lesser amount.
But the language of the MCARE Act is so unclear, for years defense lawyers have been arguing (frivolously) that the entire award should be reduced to present value (not just the amount awarded in attorneys fees). The upshot of this argument is that a medical defendant found liable for future medical expenses years into the future should only have to pay the present value of that award.
With respect to future medical costs, the MCARE Act states:
(b) Future Damages
(1) Except as set forth in paragraph (8), future damages for medical and other related expenses shall be paid as periodic payments after the proportionate share of counsel fees and costs based upon the present value of future damages awarded pursuant to this subsection. 40 P.S. §1303.509.
Now admittedly, this provision is very poorly written. And defense counsel have seized upon this poor draftsmanship to argue that juries need to reduce the amount of future medical awards to present value. The problem with this argument is that it is inconsistent with the purpose of the MCARE Act and really doesn’t make any sense.
Contrary to the defense bar’s arguments, the MCARE Act does not require reducing the future medical costs to present value before submitting them to a jury. In fact it requires just the opposite. Future medical costs are only reduced to present value after a verdict in order to award attorney’s fees. See Pa. SSJI (Civ.) § 14.150 (commentary).
This result is also compelled by logic. One of the benefits conferred by the MCARE Act to medical providers is that an award of future medical damages is paid out in yearly increments and only if the plaintiff is still living. Thus, considering the yearly amounts awarded by the jury are only paid in the future and only if the plaintiff is living, it would make no sense for the jury to reduce its award to present value before entering the verdict.
Judge Rambo reached this exact conclusion in a case of first impression in the Middle District of Pennsylvania in 2014. See Late v. U.S., No. 13-0756, 2014 U.S. Dist. LEXIS 112999, at *5 (M.D. Pa. Aug. 14, 2014). Two years later in Shiflett v. Lehigh Valley Hospital, Judge Carol McGinely reached the same conclusion.
But it was not until last month that the issue was finally (I think) put to rest. In Tillery v. CHOP, the Superior Court finally had an opportunity to address the issue. Following the logic of Judges Rambo and McGinley, the Superior Court rejected any argument that the MCARE Act required future medical costs to be reduced to present value by the jury. To the contrary, the Superior Court held that future medical costs are only reduced to present value for purposes of calculating attorneys’ fees.
James Goslee is a trial attorney in Philadelphia and can be reached at https://jamiegoslee.com/about/