From the desk of Jeff Eberhard: In a prior case update, we discussed the Oregon Supreme Court’s holding in Horton v. OHSU that because the right to a jury trial under Article I, section 17, of the Oregon Constitution was “procedural” rather than “substantive,” the legislature could define the elements of a claim or the extent of damages available for a claim. Thus, the legislature’s limit to claims for personal injury was constitutional under Article I, Section 17. However, the Court also indicated that such a cap may violate the right to a remedy under Article I, Section 10, of the Oregon constitution. See the discussion below regarding the Court’s analysis of the remedy clause of Article I, section 10.
Claims Pointer: After years of cases predominantly finding tort caps to be unconstitutional, the Oregon Supreme Court held in this case that the Oregon Tort Claims Act’s (OTCA) cap on damages was constitutional. While this case specifically addresses the tort cap for public bodies, it does provide for the application of Oregon’s $500,000 limit on noneconomic damages in personal injury cases. However, the Court determined that because the Oregon Constitution preserves a citizen’s right to a remedy in the remedy clause of Article I, section 10, there are limits to the application of a tort cap. Specifically, the resulting remedy cannot be a “paltry fraction” of the damages sustained by the plaintiff. Whether applying the cap in a particular case is constitutional under the remedy clause is to be determined on a case-by-case basis. However, from prior case law, we know that reducing an award by roughly 60% ($507,500 in total damages reduced to the OTCA cap of $200,000), is acceptable, while reducing an award by nearly 99% ($17,000,000 in total damages, $12,000,000 of which was economic, reduced to $200,000) is not acceptable.
Horton v. OHSU, 359 Or 168 (2016).
The facts of this medical malpractice case were discussed in our prior update and are repeated in brief here. A six-month-old boy underwent surgery at Oregon Health & Science University (OHSU) to remove a cancerous mass on his liver, but during the operation, blood vessels going to the child’s liver were inadvertently transected, requiring a liver transplant, removal of his spleen, additional surgeries, and lifetime monitoring. The child’s mother, Lori Horton (“Horton”), brought suit against the physicians and OHSU.
At trial, the jury awarded economic damages of $6,071,190 and noneconomic damages of $6,000,000 against OHSU and one of the physicians, Dr. Harrison (Harrison). OHSU and Harrison filed a motion to reduce the jury’s verdict to $3,000,000 pursuant to the Oregon Tort Claims Act (OTCA). The trial court granted the motion as to OHSU, ruling that because sovereign immunity applied to OHSU, the legislature could constitutionally limit the damages for which OHSU was liable. However, the trial court denied the motion as to Harrison, ruling that the OTCA limit as applied to Harrison, violated the Oregon State Constitution’s remedy clause of Article I, section 10, and the jury trial clauses of Article I, section 17, and Article VII (Amended), section 3. The trial court then entered a limited judgment against Harrison for all the damages the jury had awarded, and Harrison filed a direct appeal to the Oregon Supreme Court.
Sovereign Immunity and the Oregon Tort Claims Act
As we discussed in our prior update on Horton, this case involves an exception to the principle that states have “sovereign immunity” from being sued. Prior to passage of the Oregon Tort Claims Act (OTCA) in 1967, Oregon public bodies were immune from tort liability. A person injured by the negligence of a public employee acting within the scope of his or her employment could sue the employee but not the public employer. The OTCA partially waved that immunity while simultaneously limiting the state’s potential monetary liability. A later revision to the OTCA required public employees be indemnified by the state and extended the limit on damages to claims against public employees. A second revision eliminated any cause of action against public employees, requiring any action be filed against the public body, but the Oregon Supreme Court determined in Clarke v. OHSU, 343 Or 581 (2007), that the elimination of a cause of action against public employees violated the remedy clause of Article I, section 10, because the substituted remedy against the public body was an “emasculated version of the remedy that was available at common law.” This decision prompted the Oregon legislature to increase the cap to $3,000,000 for claims against the state in 2009 and provide for incremental increases of $200,000 per year for five years, after which subsequent increases will be tied to the cost of living (the cap will rise to $4,147,100 as of July 1, 2016). In later decisions, the Court compared the remedy available if the cap applied to the remedy provided by the jury verdict on a case-by-case basis to determine whether the resulting award violated the remedy clause.
Smothers v. Gresham Transfer, Inc. and the Remedy Clause
The Horton Court overruled two previous decisions: Lakin v. Senco Products, 329 Or 62 (1999), which we discussed in our prior case update, and Smothers v. Gresham Transfer, Inc., 332 Or 83 (2001). In Smothers, Plaintiff sued his employer for negligence after his workers’ compensation claim was denied. Plaintiff’s claim was dismissed by the trial court on the grounds that Oregon law made the workers’ compensation system the exclusive remedy for work-related injuries. Plaintiff appealed, arguing that he was left without a remedy for the injuries he suffered at work in violation of the remedy clause of Article I, section 10 of the Oregon constitution, which guarantees every person a remedy by due course of law for injury to person, property, or reputation. The Oregon Supreme Court held that the legislature could not abolish or alter absolute rights respecting the person, property, or reputation that existed when the state constitution was adopted in 1857 without violating the remedy clause; the legislature was not authorized to define what constituted an injury under the remedy clause; and under the remedy clause, the exclusive remedy provisions of the workers’ compensation statute were unconstitutional as applied to Plaintiff.
In reviewing Smothers, the Horton Court determined that Smothers clearly erred in holding that the remedy clause locked courts and the legislature into a static conception of the common law as it existed in 1857, and so the Court overturned Smothers. In its subsequent discussion of the remedy clause, the Court noted its prior cases had considered three general categories of legislation relevant to the remedy clause. First, when the legislature had not altered a duty but denied any remedy to a person injured as a result of a breach of that duty, the complete denial was a violation of the remedy clause; similarly, providing an insubstantial remedy for a breach of a recognized duty also violates the remedy clause. Second, if the legislature adjusts a person’s rights and remedies as part of a larger statutory scheme that extends benefits to some and limits benefits to others (such as, for example, the workers’ compensation system at issue in Smothers or the partial waiver of sovereign immunity Horton addressed), this type of quid pro quo exchange would be considered in evaluating whether the reduced benefit provided to an individual plaintiff was “substantial” in light of the overall statutory scheme. Third, where the legislature modified common-law duties or eliminated common-law causes of action and the premises underlying those duties and causes of action had changed, the court considered whether the common-law cause of action that was modified continued to protect core interests against injury to persons, property, or reputation, or whether, in light of changed conditions, the legislature could permissibly conclude that those interests no longer required the protection formerly afforded them.
The Standard: Whether Post-Cap Damages are a “Paltry Fraction”
The Horton Court determined that when it was faced with a question of whether the legislature’s actions impaired a person’s right to a remedy under Article I, section 10, it had to weigh the extent to which the legislature had departed from the common-law model against its reasons for doing so. The Court further explained that the substantiality of the legislative remedy was a factor in determining whether the remedy was consistent with the remedy clause. In circumstances where the legislature does not limit the duty a defendant owes a plaintiff but does limit the size or nature of the remedy available to the plaintiff, the legislative remedy need not restore all the damages that plaintiff sustained to avoid violating the remedy clause, but if the remedy is reduced to only a “paltry fraction” of the damages that the plaintiff sustained, it would likely not be sufficient. However, the Court further stated that other factors, such as the existence of a quid pro quo, can bear on the determination.
Of course, this analysis raises the question of whether a remedy is a “paltry fraction” of the damages sustained. In Horton, the remedy was reduced from a jury award of over $12,071,190 to $3,000,000, a number that did not even cover the plaintiff’s verifiable economic damages. Nevertheless, such a reduction (the final remedy was just under 25% of the original jury award) did not violate the remedy clause, both because the OTCA partially waived sovereign immunity, thus falling into the quid pro quo category, and also because plaintiffs suing the state were provided with a solvent defendant available to pay any damages up to, in the case of Horton, $3,000,000, an assurance that would not be present if an uninsured, judgment-proof state employee was the defendant rather than the state itself. The Court specifically stated that the holding in Horton was limited to the circumstances of the case, and it did not express an opinion on whether other types of damage caps that do not implicate the state’s constitutionally recognized interest in sovereign immunity and which are not part of a similar quid pro quo, comply with Article I, section 10. While we know from prior case law that reducing a total damages award of $507,500 to the OTCA cap of $200,000 was an acceptably substantial remedy, while reducing a total damages award of $17,000,000, of which $5,000,000 were noneconomic, was an unconstitutionally insubstantial remedy, future damages awards are to be evaluated on a case-by-case basis.
Case updates are intended to inform our clients and others about legal matters of current interest. They are not intended as legal advice. Readers should not act upon the information contained in this article without seeking professional counsel.