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March 21, 1990.


The opinion of the court was delivered by

Chief Judge Earl E. O'Connor of the United States District Court for the District of Kansas has certified the following question for resolution pursuant to K.S.A. 60-3201: Does K.S.A. 1987 Supp. 60-19a01 violate the Kansas Constitution, including §§ 5 and 18 of the Kansas Bill of Rights?

The majority of our legislature voted to limit the traditional role of the jury to determine the monetary value for loss of the

[246 Kan. 338]

      quality of life in Kansas by setting a limit on the recovery of noneconomic damages. The majority of this court recognizes that the legislature's decision to modify the common law, by setting a limit on noneconomic damages, is a legislative decision that does not violate our state constitution.

  Prior to discussing the certified question, however, we will review some of the findings contained in the following report: Report of the Kansas Citizens Committee to Review Legal Liability Problems in Kansas as They Affect Insurance and Other Matters: Recommendations in the Area of Liability Insurance (Oct. 17, 1986) (a report to Fletcher Bell, Kansas Commissioner of Insurance) (hereinafter Citizens Committee Report). This report provides important insights into the stormy controversy which currently surrounds the liability insurance and tort systems.

  A great change in tort doctrine has taken place over the past century. The primary function of damages is no longer seen as deterrence or retribution for harm caused; damages are now seen as compensation. In large part, this shift has been caused by the modern availability of affordable liability insurance, the purchase of which has occasionally been required by legislation. See, e.g., K.S.A. 40-3401 et seq. (the Health Care Provider Insurance Availability Act guarantees the availability of insurance to all Kansas physicians).

  It is the availability of liability insurance which critics warn is threatened by the present tort system. If insurance goes, so will compensation to many plaintiffs, no matter how favorable the laws are in their favor. In reality, "[j]ustice is not achieved when deserved compensation is granted by a court; it is achieved when that compensation is paid to the plaintiff." Citizens Committee Report 52 (quoting Report of the Governor's Advisory Commission on Liability Insurance for the State of New York 121-29 [Apr. 1986]).

  Insurance companies derive profits from two sources: underwriting revenues and investment income. Investment income fluctuations play an enormous part in premium cycles. "However, never before did interest rates have such a profound influence upon premiums as during the latest cycle when double digit interest rates provided insurance companies with a substantial

[246 Kan. 339]

      pool of funds available to use to increase market share by reducing premiums." Citizens Committee Report 33-34.

  The insurance crisis of the 1970s, referred to in the Citizens Committee Report, was partially caused by the industry's increased market at lower premiums due to its remarkably high rate of return on investments. The crisis was especially hard-felt in the malpractice insurance area. In response to this crisis and to ensure the continued availability of medical liability insurance, every state enacted some type of tort reform; the statutes number over 300. Comment, Caps, "Crisis", and Constitutionality — Evaluating the 1986 Kansas Medical Malpractice Legislation, 35 Kan. L. Rev. 763, 765 n. 18 (1987).

  The Kansas Legislature and Governor took the following actions: In 1976, the Health Care Provider Insurance Availability Act, which created the Health Care Stabilization Fund, was enacted (K.S.A. 40-3401 et seq.); medical malpractice screening panels were established (K.S.A. 65-4901 et seq.); the statute of limitations was shortened as to medical malpractice actions (K.S.A. 60-513); and the collateral source rule was modified as to medical malpractice actions (K.S.A. 60-471). We upheld the modification to the statute of limitations in Stephens v. Snyder Clinic Ass'n, 230 Kan. 115, 631 P.2d 222 (1981). In Wentling v. Medical Anesthesia Services, 237 Kan. 503, 518, 701 P.2d 939 (1985), we invalidated the modification to the collateral source rule as a violation of the equal protection guarantee of our state constitution. In its 1985 session, the legislature took note of Wentling and repealed K.S.A. 60-471 by enacting L. 1985, ch. 197, § 5.

  Some insurance industry observers correctly predicted that a new crisis would develop in the early 1980s as interest rates fell and insurance companies' investment returns decreased. See Comment, 35 Kan. L. Rev. at 770. The crisis of the 1980s is the burgeoning price of medical malpractice insurance.

  Because the legislation of the 1970s had failed to halt the increasing cost of medical malpractice insurance and in response to the new crisis of the 1980s, the Kansas Legislature took the following actions in 1985: (1) a cap was placed on punitive damages in medical malpractice actions, and (2) another attempt was made at modifying the collateral source rule in medical malpractice

[246 Kan. 340]

      actions (K.S.A. 1985 Supp. 60-3403). In Farley v. Engelken, 241 Kan. 663, 740 P.2d 1058 (1987), we found this modification of the collateral source rule to be a violation of equal protection.

  When its prior efforts failed to check the rising cost of medical malpractice insurance premiums as promised, the 1986 legislature went further, taking the following actions: medical malpractice screening panel decisions were made admissible at trial (K.S.A. 1986 Supp. 65-4904[c]); the Health Care Stabilization Fund's liability was restricted (K.S.A. 40-3403); the award of attorney fees was made contingent on approval after an evidentiary hearing (K.S.A. 1986 Supp. 7-121b[a]); the Internal Risk Management Program was created (K.S.A. 1986 Supp. 65-4922); and limitations were placed on the qualifications of expert witnesses in medical malpractice actions (K.S.A. 1986 Supp. 60-3412). Finally, the legislature attempted to limit the liability of health care providers in medical malpractice actions by capping recovery for noneconomic losses at $250,000 and by placing a total cap on all losses, both economic and noneconomic, at $1,000,000 (K.S.A. 1986 Supp. 60-3407). We invalidated this last measure as a violation of §§ 5 and 18 of the Kansas Bill of Rights in Kansas Malpractice Victims Coalition v. Bell, 243 Kan. 333, 757 P.2d 251 (1988) (Malpractice Victims).

  The great majority of states have also enacted statutes to deal with the new crisis. See Comment, 35 Kan. L. Rev. at 771 n. 53. And, many of these statutes provide for caps on noneconomic losses. See Brantingham, Civil Justice Reform: The Continuing Search for Balance, 10 Hamline L. Rev. 387, 399-402 (1987); see Annot., 80 A.L.R.3d 583; Lewis, The Case Against Caps, 75 Ill. B.J. 164 (1986). Many of these statutes are so recent they have not yet been challenged on appeal. As for those which have been challenged, the outcomes vary according to the arguments raised and the state constitutional provisions upon which those arguments were based.

  In Fein v. Permanente Medical Group, 38 Cal.3d 137, 211 Cal.Rptr. 368, 695 P.2d 665 (1985), the California Supreme Court upheld the constitutionality of a statute which limited noneconomic damage awards in medical malpractice suits to $250,000. The provisions of the California Constitution applicable in Fein are similar to the constitutional provisions involved in this case.

[246 Kan. 341]

      Applying a rational basis standard of review, the court rejected the plaintiff's equal protection and due process claims. The court also rejected Fein's argument that the legislature had limited the potential recovery of medical malpractice victims without providing an adequate quid pro quo, holding that (1) a plaintiff has no vested property right in a particular measure of damages, and (2) the legislature has broad authority in modifying the scope and nature of damages. 38 Cal.3d at 157.

  In reviewing similar cases from other jurisdictions, the Fein majority noted that the statutes challenged in those cases, with one exception, involved caps which limited both economic and noneconomic damages. 38 Cal.3d at 161. The Fein dissent cited many of the same cases, emphasizing that a majority of those courts> had invalidated the challenged caps regardless of the type of limitation imposed by the legislature. 38 Cal.3d at 170.

  The United States Supreme Court dismissed the subsequent appeal of Fein for want of a substantial federal question. 474 U.S. 892, 88 L.Ed.2d 215, 106 S.Ct. 214 (1985). Justice White dissented as to the dismissal, noting that a majority of state courts> had so far invalidated such damage caps, including those caps which were limited to noneconomic damages. 474 U.S. at 893. Justice White would have granted the appeal to consider the following question left unanswered by Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 57 L.Ed.2d 595, 98 S.Ct. 2620 (1978): whether federal due process requires a quid pro quo when a state replaces a common-law remedy with a legislatively enacted compensation scheme.

  The Supreme Court's treatment of the Fein appeal was acknowledged in Ferguson v. Garmon, 643 F. Supp. 335, 340 (D. Kan. 1986). Chief Judge O'Connor noted that the dismissal of Fein in most safely construed, in the absence of doctrinal developments indicating otherwise, as a ruling on the merits that a statute capping recovery of noneconomic loss presents no substantial issue under the federal constitution. See Hicks v. Miranda, 422 U.S. 332, 344, 45 L.Ed.2d 223, 95 S.Ct. 2281 (1975).

  In Duren v. Suburban Community Hosp., 24 Ohio Misc.2d 25, 495 N.E.2d 51 (1985), the Court of Common Pleas of Ohio, a trial court of general jurisdiction, let stand a $1,000,000 award

[246 Kan. 342]

      for pain and suffering by invalidating an Ohio statute which set a general cap of $200,000 on medical malpractice awards. Central to the court's decision was the legislature's failure to distinguish between general damages, those which "necessarily result from the injury complained of," and noneconomic damages. 24 Ohio Misc.2d at 28. Because the parties settled, no appeal was taken from this decision. (In Malpractice Victims, 243 Kan. 333, we found unconstitutional a similar set of statutes that capped the total recovery of all damages, both economic and noneconomic, at $1,000,000.)

  In Smith v. Department of Ins., 507 So.2d 1080, 1088-89 (Fla. 1987), the Supreme Court of Florida held a $450,000 cap on noneconomic damages violative of the right to a jury trial as guaranteed by the Florida Constitution. The court stated that a cap on such damages would be constitutional only if the legislature provided a quid pro quo or found that there was no other alternative in meeting an overpowering public necessity.

  In Lucas v. U.S., 757 S.W.2d 687 (Tex. 1988), the Texas Supreme Court held that a $150,000 cap on damages in medical malpractice actions violated a state constitutional provision which guarantees "remedy by due course of law." 757 S.W.2d at 690. The only damages exempted from the cap were those to compensate for past and future expenses of necessary medical, hospital, and custodial care. The court found that when the legislature set the cap, it had failed to provide an adequate substitute to obtain redress for injuries (a quid pro quo), as was done in the state's Workers Compensation Act. Following the rationale applied by the Florida court in Smith, the Texas court held that citizens of that state are entitled to have damages in civil actions assessed by a jury. 757 S.W.2d at 692. (Our rationale in Malpractice Victims is similar to the rationale of the Florida Supreme court in Smith and the Texas Supreme Court in Lucas.)

  In Boyd v. Bulala, 647 F. Supp. 781 (W.D. Va. 1986) reconsideration denied, 672 F. Supp. 915 (W.D. Va. 1987), rev'd 877 F.2d 1191 (4th Cir. 1989), a case brought under diversity jurisdiction, the federal district court held that a Virginia statute which limits total damages in medical malpractice actions to $1 million violates the right to a jury trial as guaranteed by the 7th Amendment to the United States Constitution and by the Virginia Constitution.

[246 Kan. 343]

      The federal court stated that the assessment of damages was clearly a jury function under the common law and that the 7th Amendment was intended as a check on both the judiciary and the legislature. As for the Virginia Constitution, the federal district court found the state guarantee of a jury trial to be at least as strong as that provided in the federal constitution.

  Without mentioning the federal district court's decision in Boyd, the Supreme Court of Virginia held that the statutory cap at issue in that earlier case did not violate the state constitution's guarantee of a jury trial. Etheridge v. Medical Center Hospitals, 237 Va. 87, 376 S.E.2d 525 (1989) (three justices dissenting). While the Virginia court agreed that a plaintiff is entitled to a jury determination of actual damages under the state constitution, it held that the legislature may limit actual recovery since full recovery was never guaranteed at common law. 237 Va. at 96. (Using a different rationale when reviewing workers compensation, we reached a similar result in Rajala v. Doresky, 233 Kan. 440, 661 P.2d 1251 [1983]).

  In Boyd v. Bulala, 877 F.2d 1191 (4th Cir. 1989), the Court of Appeals reversed the district court's earlier judgment and upheld the constitutionality of Virginia's cap on medical malpractice damages. The court found the Virginia Supreme Court's holding in Etheridge dispositive of challenges made under the state constitution. 877 F.2d at 1195. As for the federal constitution, the court found no 7th Amendment violation: "If a legislature may completely abolish a causes of action without violating the right of trial by jury, we think it permissibly may limit damages recoverable for a cause of action as well." 877 F.2d at 1196. The court also found no violation of due process or equal protection since the cap was reasonably related to the legitimate goal of ensuring adequate health care services. 877 F.2d at 1196-97.

  In Franklin v. Mazda Motor Corp., 705 F. Supp. 1325 (D. Md. 1989), the United States District Court for the District of Maryland held a $350,000 cap on noneconomic damages in personal injury awards did not violate the federal or state constitutions. First, the Maryland court noted an individual has no vested interest in any rule of common law; therefore, the cap did not violate the right to a jury trial under the Maryland Constitution. Article 23 of the Maryland Declaration of Rights reads:

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 "The right of trial by Jury of all issues of fact in civil proceedings in the several Courts> of Law in this State, where the amount in controversy exceeds the sum of five hundred dollars, shall be inviolably preserved." The court distinguished the role of a jury as a part "of the dispute resolution apparatus between parties" and the role of the legislature in making "rules in advance of disputes." 705 F. Supp. at 1331. The court noted that the legislature has the power to "terminate an entire valid and provable claim through a statute of limitations," and found that a remedy, as opposed to a finding of liability, is a matter of law rather than of fact. 705 F. Supp. at 1333.

  The cap on noneconomic damages also withstood Franklin's second challenge based on Article 19 of the Maryland Declaration of Rights, which provides: "[E]very man, for any injury done to him in his person or property, ought to have remedy by the course of the Law of the land, and ought to have justice and right, freely without sale, fully without any denial, and speedily without delay, according to the Law of the land." The court had previously determined that Article 19 gave the same due process rights as the 14th Amendment of the United States Constitution. Access to the courts> of Maryland is determined under a test of reasonableness, with no requirement of heightened scrutiny. The court held the cap bore a reasonable relation to a valid legislative purpose, but acknowledged that some states, such as Kansas, find "more protection in their state due process clauses." 705 F. Supp. at 1337 (citing Malpractice Victims, 243 Kan. 333). The court also acknowledged that "some state constitutions treat full recovery in tort as a fundamental right." 705 F. Supp. at 1337 (citing Barrio v. San Manuel, 143 Ariz. 101, 692 P.2d 280 [1984]).

  In Sofie v. Fibreboard Corp., 112 Wn.2d 636, 771 P.2d 711 (1989), the Washington Supreme Court held a statutory limitation on noneconomic damages unconstitutional. The damage limitation operated on a formula based upon the age of the injured plaintiff. The court, without addressing the equal protection claim, found that the statute's limitation on noneconomic damages in medical malpractice actions interferes with the jury's traditional function of determining damages.

  In Meech v. Hillhaven West, Inc., 776 P.2d 488 (Mont. 1989), a group of employees brought action in ...

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