by John P. ScanlonOn August 25, 2005, the Governor signed the Medical Malpractice Bill – SB475. While there is really no question that doctors malpractice premiums in Illinois are too high, the real issue is determining the reason for the high premiums. Do they result from unreasonable litigation costs or do they result from the unreasonable profits and reserves of the insurance carriers. There was a heated debate in Springfield on this issue and arguments on both sides. Unfortunately, in Springfield and in reaction to a previous malpractice article written in this column, some advocates for the insurance industry, when confronted with the facts, resort to “name calling.” “Name calling” is not productive and is done to divert attention from the real issues.
Illinois now has a cap on non-economic damages in medical malpractice actions. It will be challenged in the courts because many believe the caps are unconstitutional and our Supreme Court has on two previous occasions found these types of caps to be unconstitutional. However, in that Illinois currently has caps, it would be interesting to see how a cap would be employed in certain aspects of a real case. We can use the highly publicized Vioxx case in Texas, a cap state, for discussion and as an example.
On August 19, 2005, a Texas jury found that the drug Vioxx caused the sudden death of a fifty nine year old man. The jury awarded Robert Ernst’s surviving spouse $24.5 million for her compensatory losses and an additional $229 million in punitive damages.
As trial attorneys, we are often asked how juries can come up with such large verdicts. These questions are often posed by people who are in favor of capping damages on cases such as this. The Vioxx verdict provides an excellent vehicle to discuss and explain why caps are a bad idea.
With that in mind, we are going to highlight for you some of the reasons the jury felt the manufacturers of Vioxx should be punished for their continued production and sale of a drug that was known to increase the risk of heart attack by a factor of five.
From 1999 until 2004, Merck & Co., Inc. (“Merck”) marketed the drug Vioxx. During that time period, Merck earned $11.77 billion on the sale of this pain killer.
Vioxx was removed from the market in 2004 because it was shown to have significantly increased the risk of sustaining a heart attack. A chief scientist for the Food & Drug Administration (FDA) recently testified before congress that Vioxx has contributed to the death of as many as fifty five thousand people in the United States.
One of the people who died as a result of using Vioxx was fifty-nine year old marathon runner, Robert Ernst. In support of the $253 million verdict for Mr. Ernst’s wife, the jury heard evidence of the following:
That point bears repeating. The jurors in Ernst case heard testimony that Merck delayed changing the warnings on its drug. The proposed new warning would have advised users of the increased heart attack risk associated with the drug. Jurors noted that during the time period that Merck delayed putting the new warning on its drug, the company earned $229 million on the sales of Vioxx. It was this exact dollar amount that jurors in the Ernst trial felt was an appropriate punitive damage award against the company. It is hard to fault their logic. A company should not be allowed to earn money on a drug it knew was causing harm when it failed to provide that knowledge to the users of the drug.
In an ultimate twist of irony, the jurors’ good intentions were nullified by a state law that placed an absolute cap on punitive damages. It is little known that Mrs. Ernst will never see the vast majority of that large punitive damage award. In fact, the local state law requires that the $229 million punitive damage verdict be reduced by $227.4 million all the way down to $1.6 million. Reportedly, Merck made approximately $1.6 million on sales of Vioxx every six hours and forty minutes while the drug was on the market. Obviously, if the punitive damage award is reduced to $1.6 million it provides little deterrent to companies when they can make that money in just hours.
That is the real effect of capping recoveries in cases such as this. Companies continue to make money without suffering the punishment they deserve. When a company can make $1.6 million in just hours what concern would it have for a punitive damage verdict in that same dollar amount. The answer is none. That is the state of affairs that we are now facing with this concerted effort by the business groups, pharmaceutical companies and insurance companies all clamoring for caps on verdicts. The next time you hear their arguments, keep in mind the good result the jurors in the Ernst case tried to achieve against the makers of Vioxx. Also, keep in mind that, no matter how egregious the conduct of a doctor or a hospital, under Illinois law, they cannot be sued for punitive damages in a medical malpractice case.