This document discusses various approaches to tort reform that can help limit healthcare costs. It outlines how capping damages paid to plaintiffs has been found constitutional if optional withdrawal from the program or increased benefits are provided. Periodic payment plans that space out damages over time can also be constitutional. Tort reform can promote efficiency by encouraging physician retention and reducing frivolous malpractice claims through medical review panels. The document argues tort reform is overdue in Kentucky to allow the healthcare industry to serve communities more efficiently and at a higher standard.

1. Position Statement – Tort Reform
By: Maggie Creech
Introduction
Across the United States, the need for tort reform has been recognized, especially with
regards to healthcare law. Through tort reform, jurisdictions have improved their health care
industries economically and non-economically. Various measures have been taken to ensure that
healthcare entities are protected from frivolous lawsuits so that they can focus on what really
matters: the communities that they serve.
Limiting Damages
Currently, plaintiffs in medical malpractice cases can recover a number of economic and
non-economic damages. The ability for plaintiffs to collect an unlimited amount of damages
makes it hard for Kentucky’s Healthcare industry to expand. This is because Kentucky’s relaxed
liability raises the operational costs of healthcare and deters new healthcare businesses from
entering the state’s market. 1
There are numerous ways to approach reducing the cost of liability through tort reform.
The most obvious way is setting limitations on the amount of damages that are available to
plaintiffs. Many states have attacked liability costs through putting caps on damages that are
available to plaintiffs. However, this approach has proven itself to be very problematic. Many
legislative programs that cap damages have been found unconstitutional under the equal
protection clause.2
The majority of the programs that have withstood constitutional scrutiny have
1
David Adkisson, Time to address medical liability reform in Kentucky, (Mar. 22, 2014, 1:20am)
http://www.courier-journal.com/story/opinion/contributions/2014/03/22/time-address-medical-liability-reform-
kentucky/6708477/
2
3-15 Treatise on Health Care Law § 15.05 (2015).

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included provisions for the benefits of plaintiffs, such as mandated funds that ensure recovery
and increased disciplinary systems for physicians. 3
Nebraska offers an example of a capping statute that has weathered constitutional
scrutiny. Nebraska addresses the constitutionality of their statute through Prendergast v. Nelson.4
The statute at issue in Prendergast put a $500,000 cap on malpractice damages. However, this
statute is distinguishable from unconstitutional capping statutes, in that patients can elect to
withdraw themselves from the capping program. Through the lens of the “rational basis” test, the
Court reasons that the statute withstands scrutiny, because “[t]he Legislature acted to meet a
crisis situation.”5
Further, they rule that this program is constitutional because of the “fair, just,
and reasonable connection with the legislation and the promotion of the health, comfort, safety
and welfare of the citizens of Nebraska.”6
Another way to limit the amount of damages paid to plaintiffs is through periodic
payment schedules. Periodic payment plans allow courts to better meet the needs of patients
affected by medical malpractice. Through periodic payment plans, plaintiffs receive payment for
medical expenses and lost wages when they occur, rather than in one large lump sum. These
plans also help cut costs of damages, because the death of a plaintiff typically relieves a
defendant of future payments.7
3
Id.
4
256 N.W.2d 657 (Neb. 1977).
5
Id. at 668.
6
Id.
7
Ronen Avraham, An Empirical Study of the Impact of Tort Reforms on Medical Malpractice Settlement
Payments, (Nw. Univ. Sch. of Law, Law & Econ Research Paper Series, No. 06-07, 2006), available at
http://www.ssrn.com/abstract=912922.

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The California Supreme Court case American Bank & Trust Co. v. Community Hospital,8
validates the constitutionality of a periodic payment statute, once again through the lens of
rational basis review. The California statute at question allowed courts, when damages exceeded
$50,000, to impose a periodic payment plan on the plaintiff’s award in an effort to accommodate
the plaintiff’s specific needs. This statute also allowed all awards, except for loss of future
earnings, to be modifiable upon the plaintiff’s death.9
The Court rules that this plan is
constitutional because it rationally achieves the legislative goal by reducing expenses in the
healthcare field and ensuring that awards are available to injured plaintiffs when they are actually
needed.10
Although the constitutionality of periodic payments has been questioned, this method
of limiting damages seems to be the least controversial, especially when it is framed to focus on
the plaintiff’s best interest.
Promoting Efficiency
Not only can tort reform limit the amount of damages that is paid to plaintiffs; it can also
promote efficiency in the healthcare field. Joanna Shepherd, in her article, Tort Reforms’
Winners and Losers: The Competing Effects of Care and Activity Levels,11
examines the
relationship between doctor retention and tort reform. When a state adopts some type of tort
reform, physicians, especially ER physicians and specialists, tend to remain in that state for the
protection that is offered to them.12
This retention promotes efficiency by allowing healthcare
entities focus on the quality of their facilities, rather than physician recruitment.
8
683 P.2d 670 (Cal. 1984).
9
Id. at 675
10
Id. at 676.
11
55 UCLA L. Rev. 905.
12
Id. at 942, 943.

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Tort reform can also support judicial efficiency. Judicial efficiency is promoted through
the formation of medical review panels. Medical review panels are boards, typically
compromised of lay people and professionals, which screen medical malpractice cases before
they enter into the court system. This method of tort reform promotes judicial efficiency through
attempting to remove frivolous cases from an already congested court system. Although there
have been constitutional questions surrounding the formation of these review panels, Arizona
upheld a review panel in Eastin v. Broomfield.13
The Eastin Court ruled that because the Arizona
statute allowed for the panel’s decisions to be appealed to a trial court, that the petitioner’s right
to trial was not violated.14
The Court also ruled that the panel’s findings were admissible
evidence at the trial court level.15
An impartial panel would allow plaintiffs to determine whether
their case would be worth pursuing, therefore, ridding the courts of unsupported medical
malpractice claims.
Conclusion
Tort reform is long overdue in the state of Kentucky. This delay is stunting the growth of
our healthcare field. If we wish for Kentucky residents to have access to more efficient
healthcare that operates independent of the looming fear that is medical malpractice, then we will
move towards tort reform. The healthcare industry is meant to serve, and although tort reform
can be seen as taboo, Kentucky can implement a tort reform program that allows the healthcare
industry to serve more efficiently and at a higher standard.
13
570 P.2d 744 (Ariz. 1977).
14
Id. at 748.
15
Id.