First District Court of Appeals Issues Significant Decision Interpreting the Application of Ohio’s Damage Cap Statute - R.C. 2323.43 - in Multiple Circumstances

In the early 2000s, it was believed that Ohio was on the verge of crisis due to the increasing number of medical malpractice lawsuits. Medical malpractice insurers were leaving the market as they faced increasing losses from rapidly increasing jury awards in medical malpractice lawsuits. The exodus of malpractice insurers resulted in an increasing difficultly for medical practitioners in Ohio to obtain affordable insurance, which lead to many practitioners, including a large number of specialists, to leave the state. Thus, there was real concern that the trickle-down effect of frequent lawsuit and increasing damage awards would be a reduction in access to healthcare and specialists in Ohio.

To combat this crisis, in 2003, the General Assembly enacted R.C. 2323.43 to limit the amount of noneconomic damages a plaintiff is able to recover in a medical malpractice action. Under the statute, the basic cap is the greater of $250,000 or three times the plaintiff’s economic damages, subject to a maximum of $350,000 per plaintiff and $500,000 per occurrence. The statute also provides for a higher cap of $500,000 per plaintiff and $1,000,000 per occurrence if the plaintiff has sustained either of the following catastrophic injuries: (1) permanent and substantial physical deformity, loss of use of a limb, or loss of a bodily organ system, or (2) permanent physical functional injury that permanently prevents the injured person from being able to independently care for self and perform life sustaining activities. R.C. 2323.43(A)(3).

Recently, in Guiliani v. Shehata, the First Appellate District analyzed the application of R.C. 2323.43 in several respects, including whether the applicability of the higher damage caps is a factual finding that must be decided by the jury and whether adjustments to account for a plaintiff’s comparative negligence should be made after the application of the statutory cap. In that case, Guiliani suffered from colon cancer that resulted in the removal of his bladder, ureters and rectum, along with a significant portion of his colon. Following the presentation of evidence, the jury determined that Dr. Shehata failed to timely diagnose Guiliani’s cancer. The jury awarded him $1,000,000 in noneconomic damages; however, they apportioned liability, with 70% of liability on the physician and 30% of the liability on Guiliani himself. As such, the trial court reduced Guiliani’s award to $700,000. The court then further reduced Guiliani’s award to $250,000, by applying the non-catastrophic damage limitation in R.C. 2323.43, holding that the lower caps applied in the absence of some determination by the jury that the higher damage caps were applicable. Both sides appealed the decision, with Guiliani arguing the trial court erred by applying the non-catastrophic caps rather than the catastrophic caps, and the doctor arguing that the trial court erred by applying the comparative-fault statute before applying the caps.

Guiliani’s position that the higher catastrophic caps of $500,000 applied was based on his presentation of expert testimony that he had to undergo the removal of his bladder, a large part of his colon and his rectum, necessitating a colostomy and urostomy. He argued the loss of two organs and the addition of the colostomy and urostomy bags left him with the loss of a “bodily organ system and substantial physical deformity,” which would trigger the higher caps. He further argued that the trial court’s conclusion that the lower caps apply absent some factual finding by the jury to support the application of the higher damage cap was not supported by the language of R.C. 2323.43.

The First District rejected Guiliani’s arguments, holding that the application of the higher caps under R.C. 2323.43 is indeed a factual issue to be determined by the jury. In reaching this conclusion, the court relied on subsections (B) and (C) of R.C. 2323.43. Subsection (B) requires the jury make specified factual findings through interrogatories, including the total compensatory damages recoverable by the plaintiff and the portion of that total that represents damages for noneconomic loss. Further, the court pointed to subsection (C), which specifically states the statutory damage limits contained in the statute “shall be applied in a jury trial only after the jury has made its factual findings required under subsection" (B). Moreover, the court noted that its conclusion was consistent with case law holding factual findings by the jury are required for the application of the higher caps under the more general tort damage cap statute, R.C. 2315.18. Thus, because the jury had failed to make a factual finding regarding whether Guiliani’s injuries fell within the confines of the higher damage cap, the lower damage cap applied.

With respect to Dr. Shehata’s claim that the trial court erred by applying the comparative-fault statute (R.C. 2315.35) before applying the statutory damage caps, Dr. Shehata pointed to the specific language in R.C. 2315.35, which states, in pertinent part: “…the court shall diminish the total amount of compensatory damages that would have been recoverable”. With that, Dr. Shehata argued that because R.C. 2323.43(D) prohibited the trial court from entering a judgment in excess of the statutory damage limits, by definition, the plaintiff’s “recoverable” damages could not exceed $250,000. Therefore, the comparative-fault statute should be applied after the damage caps were applied.

The First District rejected Dr. Shehata’s argument, holding that the law required the application of the comparative-fault statute before the application of damage caps. In reaching this conclusion, the court relied on the various subsections of R.C. 2323.43, including the requirement that the jury issue factual findings delineating the portion of total compensatory damages that represent a plaintiff’s noneconomic loss and the prohibition against informing the jury of the existence of the damage caps, as well as the General Assembly’s intent in enacting such sections. Specifically, the court stated, in pertinent part:

Because the legislature has explicitly indicated that a jury cannot be instructed regarding the existence of statutory caps on compensatory damages representing noneconomic loss as it applies to medical malpractice, it would be inconsistent with the substance of R.C. 2323.43(B)(3) to define “recoverable” damages as capped damages. Moreover, if the legislature had intended that the comparative-negligence statute apply after the damage-cap statute, it could have explicitly provided for that in the damage-cap statute.

The court further noted that its interpretation of the word “recoverable” was consistent with a similar decision rendered by the Tenth District involving statutory damage caps for punitive damages, as well as court decisions from California, Maine and Massachusetts, which hold that a jury’s determination of comparative negligence should be applied before any statutorily mandated caps on damages are subtracted from the total amount of damages.

The Guiliani v. Shehata decision is significant as it holds that the determination of the applicability of the damage caps in R.C. 2323.43 is a question for the jury and that a court is precluded from applying the higher damage cap without a direct finding of fact from the jury that the plaintiff’s injuries meet the specific requirements of the higher cap. Further, the Guiliani decision is the first to address the interplay between the damage caps in R.C. 2323.43 and the comparative-fault statute. Of note, because Guiliani was only recently decided, it is too soon to determine whether either party will seek review, or whether review will be accepted, by the Ohio Supreme Court.

If you have any questions regarding the Guiliani v. Shehata decision, would like a complete copy of the opinion, or have any questions with respect to healthcare liability, please contact a member of our Long Term Care or Medical Malpractice Practice Groups.

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