Missouri Supreme Court Clarifies Payment of Court-Awarded Medical Damages

In Watts v. Lester Cox Medical Center, handed down July 31, 2012, the Missouri Supreme Court clarified how future medical payments should be made after a medical malpractice verdict. Wattsis the same opinion in which the court struck down non-economic damage caps, as described in a previous post.

Background

A jury determined that a boy was seriously injured by the malpractice of health care providers, to the point that he suffered future medical damages of $3.4 million. Consistent with Missouri law, the jury reduced the award of future medical damages to $1.7 million, finding that this amount represented its present value B that is, in order to decide how much money would equate to the future award, the jury must assume a certain rate of growth of the money over time. It is well accepted that a dollar today is worth more than a dollar in the future.

After the jury’s verdict, however, the medical defendants argued that the future damages should be reduced even further beyond the jury’s present value calculation. Missouri has a relatively new “periodic payments” statute, Section 538.220, RSMo. 2005, that essentially allows for the payments to be made on a schedule over the course of the young boy’s life.

The trial court ordered that half of the future medical damages must be paid immediately, while the balance would be paid over the next 50 years at an interest rate of 0.26 percent.

Cox Medical Center, the defendant, appealed, arguing that the trial court was required to order that all future damages were subject to periodic payments. After examining the language of the statute, the Court concluded that the trial court has “discretion to award future medical damages wholly in periodic payments or in part in a lump sum.”

Ms. Watts also appealed the trial court’s payment schedule, arguing that it was “arbitrary and unreasonable in that it does not assure full compensation due to the low interest rate and 50-year payment schedule.” The Missouri Supreme Court first noted that before the trial court entered its payment schedule and interest rate, the jury had already reduced its assessed future medical damages to present day value. When future damages are discounted to present day value, it “necessarily means that full compensation for those future damages is, in large part, dependent on the statutory interest rate being the same as the rate of health care inflation over the course of the payment schedule.” But the evidence showed that the payment schedule adopted by the trial court “virtually guaranteed that inflation in health care costs would result in . . . insufficient funds [for] future medical costs.” As such, the Court ordered that the trial court reconsider the matter so that the periodic payment schedule “ensures that Naython [Watts] will receive the benefit of the jury’s award for future medical care.”

This decision will help to insure that those injured because of medical error will be able to receive full compensation from the negligent party. The decision prevents a wrongdoer from shifting future costs to the injured person, who is often a seriously injured child or young adult facing decades of costly medical care, or to the taxpayers.