Williams Mullen Alert: North Carolina Medical Malpractice Reforms Favor Long-Term Care Industry

Williams Mullen Alert: North Carolina Medical Malpractice Reforms Favor Long-Term Care Industry

By Elizabeth D. Scott & Jonathan R. Bumgarner

On July 25, 2011, the North Carolina House voted to override Governor Perdue's veto and approve a broad overhaul of North Carolina's medical malpractice laws. Ratified Senate Bill 33 expands the definition of "medical malpractice actions" and the types of health care providers to which the law applies. This legislation adopts sweeping reforms that permit health care providers to move for separate trials on the issues of liability and damages and caps recovery of noneconomic damages. The legislation also heightens the proof required to establish a breach of the standard of care, shortens the statute of limitations for malpractice claims by minors, and includes provisions that likely will lower the cost of appellate bonds for providers.

Some parts of Senate Bill 33 apply to actions accruing on or after October 1, 2011, while other parts apply to actions commenced on or after October 1, 2011. Therefore, it is possible that long term care facilities may experience a flurry of filings before October 1 by plaintiffs' attorneys hoping to avoid the reforms adopted in this legislation.

The North Carolina General Assembly also passed other tort reform legislation (House Bill 542), not specifically directed at medical malpractice claims, that is aimed at reducing compensation for medical expenses.

This new legislation will change medical malpractice actions in the following significant ways:

Expands Application of Medical Malpractice Laws:

Senate Bill 33 now defines medical malpractice actions to include personal injury and wrongful death actions arising out of the furnishing of, or failure to furnish, professional services in the performance of medical, dental, or other health care, and also actions alleging breach of administrative or corporate duties, including negligent credentialing, monitoring or supervision. These revisions appear to eliminate the distinction in case law between claims related to negligence in clinical care and those related to negligence in administration or facility management. The Legislature also expanded the definition of "health care provider" in N.C. Gen. Stat. § 90-21.11 to make it clear that the medical malpractice reforms apply to adult care and nursing homes licensed under Chapter 131E of the General Statutes, as well as physicians, hospitals and other health care providers.

Caps Noneconomic Damages in Most Cases:

In medical malpractice cases commenced on or after October 1, 2011, N.C. Gen. Stat. § 90-21.19 will cap noneconomic damages at $500,000. In addition, under N.C. Gen. Stat. § 90-21.19B, juries in malpractice cases must be instructed on the definition of noneconomic damages, and verdicts must state the amount of noneconomic damages awarded. The term "noneconomic damages" is defined by statute to include "[d]amages to compensate for pain, suffering, emotional distress, loss of consortium, inconvenience, and any other nonpecuniary compensatory damage." There are two exceptions to the cap on noneconomic damages: (1) the cap does not apply to punitive damages; and (2) the cap does not apply if the jury finds that (a) the plaintiff suffered "disfigurement, loss of use of part of the body, permanent injury or death," and (b) the act that proximately caused the injury was "committed in reckless disregard to the rights of others." The $500,000 cap is subject to increase every third year beginning in 2014 based on the Consumer Price Index. Opponents of Senate Bill 33 have argued that the noneconomic damages cap is unconstitutional.

Permits Separate Trials on Liability and Damages:

In tort actions commenced on or after October 1, 2011, including medical malpractice cases, amendments to Rule 42(b) of the North Carolina Rules of Civil Procedure will allow parties to move for separate trials on the issues of liability and damages if the plaintiff seeks damages in excess of $150,000. The court must grant a motion for separate trials unless it finds "good cause" for a single trial. If separate trials are ordered, evidence related solely to compensatory damages is not admissible until the jury (or judge in a non-jury trial) determines that the defendant is liable. The same jury (or judge in a non-jury trial) that tries issues of liability is required to try the issues related to damages.

Redefines the Standard of Care:

In order to establish malpractice, plaintiffs will now be required to demonstrate that the health care provider failed to deliver care in accordance with the standards of practice among members of the same health care profession with similar training and experience situated in the same or similar communities "under the same or similar circumstances" at the time of the alleged act giving rise to the cause of action. With respect to licensed nursing homes and adult care homes, the plaintiff must demonstrate that the action or inaction of the health care provider was not in accordance with the standards of practice among similar health care providers situated in the same or similar communities under the same or similar circumstances at the time of the alleged malpractice.

Protects Emergency Medical Care Providers:

The new malpractice legislation makes it more difficult to pursue claims against emergency room doctors and others who provide emergency medical treatment. To recover damages from providers that treat "emergency medical conditions," as defined by §42 U.S.C. 1395dd(e)(1), plaintiffs must prove a deviation from the standard of care "by clear and convincing evidence."

Enhances Rule 9(j) Certification Requirements:

Under amended North Carolina Civil Procedure Rule 9(j), malpractice plaintiffs will now have to certify in their complaint that an expert qualified to testify under the North Carolina Rules of Evidence has reviewed the medical care and all medical records pertaining to the alleged negligence available to the plaintiff and, after reasonable inquiry, is willing to testify that the care did not comply with the applicable standard of care. Prior to the amendment, malpractice complaints were required to allege only that the "medical care ha[d] been reviewed" by an expert expected to qualify under Rule 702 of the North Carolina Rules of Evidence. Case law had indicated that the certification requirements could be satisfied without having an expert review plaintiff's medical records prior to expressing his opinion with regard to the medical care provided.

Heightens Evidentiary Requirements for Expert Testimony:

In actions commenced on or after October 1, 2011, amendments to Rule 702(h) of the North Carolina Rules of Evidence will prohibit expert witnesses from giving testimony as to the standard of care applicable to administrative or nonclinical issues in a malpractice case "unless" the witness has substantial knowledge about the applicable standard of care based on training and experience. This change may make it more difficult for plaintiffs in malpractice actions to meet the evidentiary foundation requirements needed for admission of expert opinions on administrative or nonclinical issues.

Permits Consideration of Insurance and Net Worth in Setting Appeal Bonds:

Senate Bill 33 also sets new bond requirements that apply to health care providers who appeal malpractice awards. Under N.C. Gen. Stat. § 1-289(c), as amended, the bond is to be set by the court after notice and a hearing and considering relevant factors, including (1) the amount of the judgment; (2) the limits of all applicable liability policies, including the amount of the provider's medical malpractice insurance coverage; and (3) the aggregate net worth of the provider. This change in the law is expected to result in lower bonds on appeal.

Shortens Statute of Limitation for Minors:

Senate Bill 33 shortens the statutory period within which minors can bring claims for malpractice. If the limitation would expire "before the minor attains the full age of 10 years," the minor now must file his or her action before attaining ten years of age. See N.C. Gen. Stat. §§ 1-17(b)-(c). However, there are exceptions for children who have been adjudicated abused or neglected and for children placed in the custody of the State or an approved child placement agency.

Other Evidentiary Changes May Reduce Plaintiffs' Recovery:

Finally, in addition to the malpractice reforms discussed above, the North Carolina Legislature also passed general tort reform legislation in House Bill 542 that could have an impact on malpractice claims. For causes of action accruing on or after October 1, 2011, plaintiffs will no longer be able to submit evidence of hospital invoices to prove past medical expenses. Instead, plaintiff must prove past medical expenses by showing the amount actually paid or that must be paid to satisfy unpaid medical bills, regardless of the source of payment. This will have the impact of reducing the amount of medical expenses that plaintiffs may present to the jury where medical bills were paid by private insurance, for instance, at a discount. However, N.C. Gen. Stat. §8-58.1 and Rule 414 of the North Carolina Rules of Evidence still allow plaintiffs to recover amounts paid by collateral sources, such as private insurance, without defendants being able to prove or seek a reduction in damages based upon collateral source payments. 

For more information about this topic, please contact the author or any member of the Williams Mullen Long Term Care Facilities Team.

With approximately 300 attorneys practicing in over 30 practice areas, Williams Mullen provides comprehensive legal services to regional, national and international clients. Their clients include multinational Fortune 500 companies, private family-owned businesses, nonprofit organizations and government entities.  From offices in North Carolina, Virginia, Washington D.C. and London, Williams Mullen attorneys bring skills and experience to solving the legal needs of their diverse client base.

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