On February 3, 2022, Kentucky House Representative Josh Bray (R-71) and Kentucky Senator Ralph Alvarado (R-28) each introduced legislation (House Bill 455 and Senate Bill 142) to amend Section 54 of the Kentucky Constitution. Section 54 currently reads: “The General Assembly shall have no power to limit the amount to be recovered for injuries resulting in death, or for injuries to person or property.”

Bottom Line:

“The proposed legislation (House Bill 455 and Senate Bill 142) sought to amend Section 54 of the Kentucky Constitution to allow the General Assembly to 1) ‘limit the recovery of noneconomic damages for injuries resulting in death; and 2) limit the recovery of noneconomic damages for injuries to person or property. In other words, the legislature would have the ability to place “caps” on damage awards.”

Limits on “Noneconomic” Damages

The proposed legislation seeks to amend Section 54 to allow the General Assembly to 1) ‘limit the recovery of noneconomic damages for injuries resulting in death; and 2) limit the recovery of noneconomic damages for injuries to person or property. In other words, the legislature would have the ability to place “caps” on damage awards. Furthermore, the legislation seeks to provide a uniform statute of limitations or statutes of repose, or both, for any civil action for injuries resulting in death or for injuries or property damage. If passed, Kentuckians will vote in November whether to approve the Amendment. This legislation is supported by the Kentucky Chamber of Commerce.

Noneconomic damages are damages for pain and suffering, mental anguish, inconvenience, loss of use, and diminished quality of life. Jury awards of noneconomic damages vary dramatically due to a variety of legal claims for damages. Economic damages, i.e., a loss of earning power, would not be “capped.”

Twenty-six States Have Similar “Caps”

Since 2000, numerous states have passed ballot initiatives to amend their constitutions, and sixteen states have passed a “cap” on non-economic damages. At least twenty-six states “cap” non-economic damages in medical malpractice claims. The “caps” range from $250,000.00 to $2,350,000.00, with the median cap being $465,900.00.

This is the first time in several years that this legislation is being considered in both the Senate and House of Representatives. In 2004, a similar proposed constitutional amendment passed the Senate, but the House never considered the bill on the floor.

Higher Damages, Higher Costs?

The United States has the world’s costliest legal system as a share of its economy, according to the U.S. Chamber of Commerce Institute for Legal Reform’s 2018 Costs and Compensation of the U.S. Tort System Report. It found that Kentucky ranked 42nd in tort costs per household with an average of $2,608, and currently ranks in the bottom ten states in the nation regarding its legal liability climate. Furthermore, per the Institute for Legal Reform, 89 percent of company executives and attorneys surveyed say a state’s legal environment impacts important decisions about where to locate or conduct business, which is a 14 percent increase from the same survey in 2015.

According to the Kentucky Chamber of Commerce, the rising costs associated with medical malpractice liability are taking a significant toll on the health care industry, resulting in increased costs for consumers and a continued inability to attract and retain enough physicians in all regions of Kentucky. The high price of liability insurance and the lack of reasonable tort limitations in Kentucky, including the lack of “caps,” are believed to have contributed to a shortage of medical professionals.

A 2021 analysis from the American Medical Association shows Kentucky leads the nation in increases in medical liability plan costs. In 2020, 29.6 percent of medical liability policies in Kentucky saw a cost increase of more than 10 percent, the most in the U.S. In all, 55.6% of these policies in Kentucky saw some increase in 2020, which was the second-most in the nation. Since Kentucky has no limits on jury verdicts, numerous awards running into the millions of dollars, in part due to recovery of noneconomic damages, have occurred. While most medical malpractice cases resolve prior to trial, health care providers must preemptively budget for litigation costs, increasing health care costs for everyone. “Caps” have been successful at curtailing medical malpractice litigation in the states that have implemented them, and average malpractice insurance premiums have typically dropped.

Legislation Challenges

If passed, this legislation would bring Kentucky in line with neighboring states like Ohio, Tennessee, Indiana, and West Virginia, although other regional states have had “caps” ruled unconstitutional by their state courts. Even though neither bill affects a person’s right to sue for negligence, “caps” on damages have been a hot button issue. However, unlike in years past, Republicans, typically tort reform advocates, now hold veto proof majorities in both the Kentucky House and Senate.

If the proposed legislation were to pass, legal challenges are sure to follow. Some contend the proposed amendment to Section 54 of the Kentucky Constitution would be in conflict with the jural rights doctrine recognized by Kentucky Courts in Williams v. Wilson, 972 S.W.2d 260 (Ky. 1998). Opponents also argue it would violate the strict separation of powers in the Kentucky Constitution by infringing on the province of the judiciary.

Is Kentucky Legislature ready to cap economic damages? We should know by the end of the 2022 legislative session, which is set to end on April 14, 2022 (see update below).

UPDATE: Neither bill made it out of committee during the 2022 session, but the issue looks as if it will continue to be brought to lawmakers’ attention for debate.

Joshua J. Owen is an insurance law and medical malpractice defense attorney with Sturgill, Turner, Barker & Moloney, PLLC. He can be reached at jowen@sturgillturner.com or 859.255.8581. This article is intended to be a summary of state or federal law and does not constitute legal advice.

This article was originally published in M.D. Update.