MEMORANDUM AND ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
STEARNS, District Judge.
Plaintiff Irving Backman brought this lawsuit against defendants Igor Smirnov and Global Quantech, Inc. (GQI), alleging breach of contract (Count I), quantum meruit (Count II), violation of the Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A, § 11 (Count III), and fraud and misrepresentation (Count IV). The dispute arose over a falling out between Smirnov and Backman over the marketing of a water "activator" touted as a fount of miraculous medical benefits. Defendants moved for summary judgment on August 26, 2010, after the close of discovery. A hearing was held on the motion on November 1, 2010.
BACKGROUND
The material facts, in the light most favorable to Backman as the nonmoving party, are as follows. In January of 2004, Backman found Smirnov on the Internet and contacted him about his "invention" of a means to "activate" water using Magnetic Resonance Effect Technology (MRET). Pl.'s SOF ¶ 89. Backman had a longstanding interest in magnetic resonance (MR) and a thirty-five year history of developing, funding, researching, marketing, and manufacturing products based on "breakthrough" technologies. Id. ¶ 2. Backman invited a discussion with Smirnov as to how his background might be put to use to advance their "common interest." Id. ¶ 89. During these preliminary discussions, Smirnov made oral and written representations that MRET activated water conferred significant therapeutic health benefits on patients suffering from grave illnesses. Id. ¶ 90.
Smirnov claims that MRET water "transmits pre-recorded molecular activity messages to biological systems." How MRET Water Activator Works, HEALING WATER TECHNOLOGY (accessed Nov. 16, 2010), http://www.healingwatertechnology.com/how-mretwater-works.php. He told Backman that MRET helped to prevent Alzheimer's disease, redressed problems of blood contamination, optimized the human immune system, suppressed cancer cells, and performed other medical feats. Pl.'s Opp'n at 2.
In March of 2004, Smirnov and Backman agreed orally that in exchange for compensation "in an amount to be agreed upon and commensurate with the effort expended," Backman would provide consulting services, marketing expertise, and access to his many contacts in a variety of industries to promote and validate MRET on a worldwide basis. Am. Compl. ¶ 17.
On March 9, 2004, Backman and Smirnov (signing on behalf of GQI) entered into a written "Agreement of Non-Circumvention" (NCA). Under the NCA, Backman agreed to market MRET to potential investors, scientific researchers, and end users. Id. ¶ 20. In exchange, GQI agreed to abstain from entering into any contracts or business arrangements with persons or entities introduced by Backman without paying him a finder's fee. Id. ¶ 21. Later in 2004, the NCA was amended to include another GQI product named the MRET Shield or Electromagnetic Radiation Optimum Neutralizer (EMRON). Id. ¶ 23.
EMRON is a device designed to compensate for the negative effects of electromagnetic radiation produced by cell phones, power lines, computers, microwave ovens, and other consumer devices utilizing electromagnetic energy.
Smirnov disputes that EMRON was ever part of any agreement with Backman.
Over the next three years, Backman provided Smirnov and GQI with regular status reports regarding the individuals and institutions whom he had approached in his efforts to market MRET and EMRON. Backman began each email update with the iteration, "To supplement our letter agreement of March 9, 2004, . . . ."Id. ¶ 26. At Backman's request, Smirnov acknowledged each of the "amendments" by countersigning and returning them to Backman. Id. ¶ 27. In connection with his marketing efforts, Backman purchased at least $52,000 of MRET and EMRON products from GQI between 2004 and 2007. At least one of Backman's contacts, Dr. Abraham Lieberman of the Lieberman Parkinson Clinic, received an invoice in the amount of $500 for the shipment of 15 MRET water activators, Pl.'s SOF ¶ 100, although no finder's fee was ever paid to Backman.
Backman resold a number of the units that he had purchased, reducing his net out-of-pocket costs to $29,490.56. Pl.'s Post-Hr'g Br. at 3.
Although defendants acknowledge sending Dr. Lieberman the invoice, they contend that they never received any payment from Dr. Lieberman or from any other of Backman's contacts. Smirnov states that he and Backman had agreed by email that Dr. Lieberman would be provided the MRET units free of charge. Defs.' Reply at 2.
From 2004 through 2006, Backman conducted extensive market research to identify prospective users, scientific researchers, and licensees of Smirnov's inventions. Am. Compl. ¶ 28. While he initiated and maintained the relationships with these contacts, he depended on Smirnov to provide the scientific and technical information that he used to market MRET and EMRON. Id. Backman and Smirnov frequently discussed the need for the positive health benefits of MRET to be independently verified, utilizing data or studies generated by credible universities. Id. ¶ 30.
Although Smirnov never told Backman directly, he did not agree with Backman that peer review or third-party validation of MRET was necessary or even desirable. Despite Smirnov's reservations, on November 30, 2004, the two men executed an agreement (Toronto Agreement) in which they undertook to sponsor a scientific study of the benefits of MRET (Toronto Study) that would be funded two-thirds by Backman and one-third by Smirnov and GQI.
Smirnov signed the Toronto Agreement on behalf of GQI and not personally. During the November 1, 2010 hearing, Backman stated that he ultimately paid for the entire Toronto Study because Smirnov reneged on his commitment to pay one-third of the cost.
Under the Toronto Agreement, Backman was to provide a final report and data analysis to GQI that both parties had the "right to use at their own consideration." Id. With respect to Backman's compensation, the Toronto Agreement stipulated that any "fees, royalties[,] or licenses resulting from use of the final report or data analysis" would recognize Backman's contribution by conferring a "reasonable portion of such monetary benefits" as "mutually agreed upon." Id.
Smirnov eventually turned the results of the Toronto Study into an abstract, which he instructed Backman to use in the marketing campaign. Am. Compl. ¶ 33. Smirnov then authored and purportedly published an article entitled "The Physiological Effect of MRET Activated Water on Patients Suffering from AIDS" in the November 2, 2006 issue of Explore: The Journal of Science and Healing, Vol. 15, no. 2: 37-40. In the article, Smirnov quoted the Toronto Study extensively and suggested that the study's data confirmed prior clinical observations of the positive effects of MRET activated water on AIDS/HIV patients, among others.Id. ¶ 35. Smirnov also incorporated results from the Toronto Study in an article he published on Alzheimer's disease, as well as in a book that he authored about the benefits of MRET. Pl.'s SOF ¶¶ 112-113.
While such a journal exists, its November-December 2010 issue is designated as the sixth in Volume 6. Dr. Dean Radin, the Coeditor-in-Chief, is an educational psychologist who specializes in parapsychological phenomena.
During the first two years of the NCA, GQI's revenue remained relatively flat. GQI's gross income totaled $465,000 in 2004 and $485,000 in 2005. After the Toronto Study results were made public, GQI's gross income skyrocketed to almost $1,000,000 in 2006, $1,900,000 in 2007, and $2,900,000 in 2008. Id. ¶¶ 114-116. Smirnov attributes the growth in sales to intensive marketing by BioPro, one of GQI's biggest distributors. Backman, for his part, credits the Toronto Study for the sudden increase in revenues, noting that BioPro made liberal use of the Toronto Study data in its marketing materials. Id. ¶ 118.
Beginning in August or September of 2006, Smirnov began altering Backman's status reports. Among other changes, he excised references to certain corporations and countries previously listed as potential licensees, as well as references to EMRON and to international licensees, claiming that some of these potential customers were already under exclusive distribution agreements. Am. Compl. ¶¶ 42-44. On or about September 21, 2006, Smirnov's wife (Irina) informed Backman that she had assumed the role of Smirnov's business manager and that if his relationship with Smirnov were to continue, the NCA would have to be replaced by a new agreement. Smirnov subsequently drafted, signed, and mailed to Backman an Amended Agreement, but Backman refused to sign it.
Backman objected to the less favorable terms of the Amended Agreement, including the termination of the right to compensation three years after the date of an initial introduction to a client and the insertion of a choice of law clause stipulating that California law would govern any lawsuit brought by Backman against Smirnov. Id. ¶ 47.
On November 6, 2006, Smirnov emailed Backman claiming that he had never recommended that MRET activated water be used for medical purposes. He warned Backman that "[y]our decision to provide MRET Water Activators to medical doctors and other customers is your personal decision and full responsibility." Pl.'s Opp'n — Ex. 10. The relationship between the two men completely collapsed on March 7, 2007, when Smirnov's attorney sent Backman a letter terminating the NCA.
In addition to equitable relief, Backman seeks damages of $29,490.46 for the MRET units that he purchased for marketing purposes, but was unable to resell, $1,557.98 in shipping costs, $5,350 for the unreimbursed costs of the Toronto Study, $2,350 for the funding of additional studies to validate MRET, and $120,000 for secretarial and staffing expenditures from 2004 through 2008. Backman also seeks compensation for the "thousands of hours [he spent] diligently marketing and promoting MRET activated water and EMRON technologies." Sec. Suppl. Answer to Interrog. No. 13. His "conservative" valuation of his services is $500 per hour. Id.
DISCUSSION
Summary judgment is appropriate where "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c)(2). "A `genuine' issue is one that could be resolved in favor of either party, and a `material fact' is one that has the potential of affecting the outcome of the case." Calero-Cerezo v. U.S. Dep't of Justice, 355 F.3d 6, 19 (1st Cir. 2004), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-250 (1986).
Count I — Breach of Contract
"To state a claim for breach of contract under Massachusetts law, a plaintiff must allege, at a minimum, that there was a valid contract, that the defendant breached its duties under the contractual agreement, and that the breach caused the plaintiff damage." Guckenberger v. Boston Univ., 957 F. Supp. 306, 316 (D. Mass. 1997) (citations omitted). To establish a breach, plaintiff has the burden of proving the failure of the defaulting party to conform to one or more of the contract's material terms. A term is material when it involves "an essential and inducing feature" of the contract. Buchholz v. Green Bros. Co., 272 Mass. 49, 52 (1930). "[I]f the materiality question in a given case admits of only one reasonable answer (because the evidence on the point is either undisputed or sufficiently lopsided), then the court must intervene and address what is ordinarily a factual question as a question of law." Gibson v. City of Cranston, 37 F.3d 731, 736 (1st Cir. 1994).
The Non-Circumvention Agreement
Addressing first the NCA, defendants claim that Backman's contract claim is barred by the Business Broker Statute of Frauds, Mass. Gen. Laws ch. 259, § 7. The Statute provides in relevant part:
[a]ny agreement to pay compensation for service as a broker or finder or for service rendered . . . in negotiating the purchase, sale or exchange of a
business, . . . shall be void and unenforceable unless such agreement is in writing, signed by the party to be charged therewith, or by some other person authorized.
Id. Backman concedes that he provided Smirnov with some services that could be fairly characterized as those of a broker/finder, but that these made up only a minuscule portion of the work he performed under the NCA.
The definitions of "broker" and "finder" are well established.
Defendants do not contest that the NCA meets the Statute of Frauds requirement of a writing. Rather, they contend that the NCA is not a perfected "agreement" within the legal meaning of the term.
The terms "broker" and "finder" are not technical terms and, when given their ordinary meanings and construed according to their common usage, encompass activities performed by [the defendant employment agency]. . . . A broker is "[a]n agent who acts as an intermediary or negotiator, esp[ecially] between prospective buyers and sellers; a person employed to make bargains and contracts between other persons in matters of trade, commerce, and navigation." Black's Law Dictionary 187 (7th ed. 1999). A finder is "[a]n intermediary who brings together parties for a business opportunity. . . . A finder differs from a broker-dealer because the finder merely brings two parties together to make their own contract, while a broker-dealer usu[ally] participates in the negotiations."
Id. at 646. A finder locates,
introduces, and brings parties to a transaction together, while a broker does more, attempting to bring the parties to an agreement.
Cantell v. Hill Holiday Connors Cosmopulos, Inc.,
55 Mass. App. Ct. 550, 553-554 (2002) (italics removed).
The bulk of Backman's efforts were focused on the funding and marketing of MRET as the NCA contemplated. Dr. Lieberman appears to be the only customer of Smirnov's for whom Backman acted in any traditional sense as a broker. In all other instances, Backman alone maintained and managed the relationships with potential investors and promoters of MRET and EMRON. Backman's recruiting and funding of the Toronto Study could not by any definition be categorized as a broker's service.
Defendants' fallback argument is that the NCA is not an enforceable contractual agreement because it lacks an essential term, namely a specification of the exact compensation that Backman was to receive or any mechanism by which the payment could be determined with any degree of certainty. Defs.' Mot. Summ. J. at 4. Defendants contend that the NCA is merely an agreement to agree at some unspecified time in the future. Id. at 5.
Whether a document contains the essential elements of an enforceable contract is a question of law. Schwanbeck v. Federal-Mogul Corp., 412 Mass. 703, 709 (1992). "It is not required that all terms of the agreement be precisely specified, and the presence of undefined or unspecified terms will not necessarily preclude the formation of a binding contract."Situation Mgmt. Sys., Inc. v. Malouf, Inc., 430 Mass. 875, 878 (2000). Nonetheless, "it is essential to the existence of a contract that its nature and the extent of its obligations be certain." Caggiano v. Marchegiano, 327 Mass. 574, 579 (1951). Ultimately, it is the intention of the parties to be bound that is controlling. Hunneman Real Estate Corp. v. Norwood Realty, Inc., 54 Mass. App. Ct. 416, 421 (2002). "[T]here is no surer way to find out what parties meant, than to see what they have done."Pittsfield N.A.R. Corp. v. Boston A.R. Co., 260 Mass. 390, 398 (1927) (citation omitted).
It is on this last point that Backman's argument proves persuasive. He makes the compelling point that Smirnov's conduct, both personally and through his business agent (wife), contradict any contention that Smirnov did not regard the NCA as a binding contract. In her September 21, 2006 telephone call to Backman, Irina Smirnov demanded that the NCA be rescinded and revised. Smirnov subsequently drafted an "Amended Agreement" intended to replace the NCA and asked Backman to sign it, but Backman refused. In other words, a reasonable jury could find from Smirnov's own conduct — which occurred against a backdrop of over three years of unobjected-to performance by Backman — that the NCA was viewed by both men as a binding agreement.
Defendants cite Caggiano at length, arguing that its language is controlling. The court disagrees. Caggiano is distinguishable on several grounds, the most significant of which is the "entirely executory" nature of the agreement at issue in which "no terms [on the subject of compensation were] expressed at all." Caggiano, 327 Mass. at 582. Where, as here, "[t]he plaintiff is not seeking damages for breach of an executory contract but is seeking to recover reasonable compensation for services which he rendered at the request of the defendants and for their benefit," the agreement may be enforceable even though the terms relative to compensation are "stated in broad and general terms." Cygan v. Megathlin, 326 Mass. 732, 734-735 (1951). The NCA stipulated that Backman's compensation would be paid in a reasonable amount "mutually satisfactory to all." As the Supreme Judicial Court reprised in Cygan:
An executory contract is one in which the contracting parties owe one another ongoing duties of performance. Summit Inv. and Dev. Corp. v. Leroux, 69 F.3d 608, 610 n. 3 (1st Cir. 1995).
[t]his court has gone far in enforcing contracts where the consideration to be paid by one party to the other was expressed as a fair and equitable share of the profits,
Noble v. Joseph Burnett Co.,
208 Mass. 75; to pay a sum which would be right and satisfactory,
Silver v. Graves,
210 Mass. 26; to "make it right" with an injured employee by the payment of some compensation in addition to the sum paid for a release,
Brennan v. Employers Liab. Assurance Corp., Ltd.,
213 Mass. 365; or to treat him right by the payment of some additional compensation until he was able to return to work,
Ferris
v. Boston Maine R.R.,
291 Mass. 529; to pay an employee well and to satisfy him,
Leverone v. Leverone,
220 Mass. 149; or to pay for services the value of which was to be left to future determination,
Evers v. Gilfoil,
247 Mass. 219. . . .
Id. at 734. The compensation terms of the contract between Backman and Smirnov were no less definite than those in the above-cited agreements.
Defendants finally insist that even if the agreement is enforceable, Backman cannot prove that GQI ever earned a penny of profit from his efforts. The argument, however, is one of fact, not law. It is undisputed that after the Toronto Study was published, the gross revenues of GQI saw a sixfold increase. Whether the increased revenues are attributable to the Toronto Study (and Backman's other efforts) is for the jury to determine, and if the proportion of the gross revenues that make up profits have not yet been ascertained, that may eventually be a proper subject of a petition for an equitable accounting. See Noble, 208 Mass. at 82. Therefore, defendants' motion for summary judgment as to the NCA breach of contract claim will be denied. The Toronto Agreement
With respect to the Toronto Agreement, defendants make the same argument — that the Toronto Agreement is "fatally indefinite as to the essential terms of the promise" and that Backman's damages are therefore "purely speculative." Defs.' Mot. Summ. J. at 7-8. For the reasons previously cited, the argument fails. As in the case of the NCA, the Toronto Agreement is not completely silent as to the compensation Backman was to receive for the use of the Toronto Study data. The agreement provides that "any monetary benefits including fees, royalties[,] or licenses resulting from the use of [the study's data]" will recognize Backman's contribution and that "a reasonable portion of such monetary benefits will be allocated to Irving Backman as mutually agreed upon." As explained above, where the terms relative to compensation are present but "stated in broad and general terms," an agreement may still be enforceable. See Cygan, 326 Mass. at 733-734. It is for the trier of fact to determine what a "reasonable portion" of the "monetary benefits" would be in this case. Defendants' motion for summary judgment as to the Toronto Agreement breach of contract claim will also be denied.
Count II — Quantum Meruit
Because the court's determination that Count 1 is not barred by the Statute of Frauds applies equally to Count 2, the point need not be belabored.
Quantum meruit "is a claim independent of an assertion for damages under the contract, . . . ." J.A. Sullivan Corp. v. Commonwealth., 397 Mass. 789, 793 (1986). "The underlying basis for awarding quantum meruit damages in a quasi-contract case is unjust enrichment of one party and unjust detriment to the other party." Salamon v. Terra, 394 Mass. 857, 859 (1985). Like unjust enrichment, quantum meruit is a theory of recovery and not an independent cause of action. In other words, if a jury finds that the agreement alleged in Count I was inchoate and therefore unenforceable, it may consider quantum meruit as an alternative (but not as an additional) theory under which Backman may recover.
In Massachusetts, the elements of a quantum meruit recovery are: (1) the plaintiff conferred a reasonable benefit upon the defendants; (2) defendants accepted the services with the reasonable expectation of compensating the plaintiff; and (3) the plaintiff provided the services with the reasonable expectation of receiving compensation. See Bolen v. Paragon Plastics, Inc., 747 F. Supp. 103, 106-107 (D. Mass. 1990).
In this case, a reasonable jury could find that Backman has established the prima facie elements of a claim in quantum meruit. Backman conferred a benefit on defendants by organizing and funding the Toronto Study, a benefit that defendants recognized by incorporating the data from the Study in the literature ballyhooing the benefits of MRET. Defendants accepted Backman's services with the reasonable expectation of compensating him with a "reasonable portion" of the "monetary benefits," belying defendants' argument that Backman agreed to perform at his own risk. When a party voluntarily accepts a valuable service or benefit, having had the option to accept or reject it, the court may infer and enforce a promise to pay. See Anisgard v. Bray, 11 Mass. App. Ct. 726, 729 (1981). Therefore, defendants' motion for summary judgment as to the claim in quantum meruit as an alternative theory to breach of contract will be denied.
Count III — Violation of the Massachusetts Consumer Protection Act
Section 2(a) of Chapter 93A declares unlawful, "[u]nfair or deceptive acts or practices in the conduct of any trade or commerce. . . ." Mass. Gen. Laws ch. 93A, § 2(a). Smirnov argues that the Chapter 93A claims fail because they are derivative of Backman's breach of contract and fraud claims. See Edlow v. RBW, LLC, 2010 WL 2034772, at *8 (D. Mass. May 21, 2010), citing Pimental v. Wachovia Mortg. Corp., 411 F. Supp. 2d 32, 40 (D. Mass. 2006) ("Since [plaintiff] has failed to allege sustainable breach of contract or negligence claims, and the Chapter 93A claim is based upon the previous two claims, there is no basis for finding [defendant] liable under Chapter 93A."). As a claim under Chapter 93A is equitable and a matter for the court and not the jury to decide, the force of defendants' arguments can be assessed after the trial of the substantive claims.See Acushnet Fed. Credit Union v. Roderick, 26 Mass. App. Ct. 604, 606 (1988). Therefore, a ruling on Count III will be deferred.
Count IV — Fraud
To make out a claim for fraud or deliberate misrepresentation, a plaintiff must show that: (1) the defendant made a false representation of material fact; (2) with knowledge of its falsity; (3) for the purpose of inducing the plaintiff to act thereon; and (4) that the plaintiff reasonably relied upon the misrepresentation as true; and (5) acted upon the misrepresentation to his damage. See Barrett Assocs., Inc. v. Aronson, 346 Mass. 150, 152 (1963); Masingill v. EMC Corp., 449 Mass. 532, 540 (2007). Defendants seek judgment as a matter of law with respect to the two species of misrepresentation alleged by Backman: (1) those regarding Smirnov's commitment to the obligations of the Toronto Agreement; and (2) Smirnov's alleged false statements regarding the supposed health benefits of MRET activated water.
To the extent that Backman is alleging negligent misrepresentation, the claim is barred by the economic loss doctrine, which requires that any tort claim sounding in negligence be supported by a showing of personal injury or physical damage to property. See FMR Corp. v. Boston Edison Co., 415 Mass. 393, 395 (1993) ("Purely economic losses [are] unrecoverable in tort and strict liability actions absent personal injury or property damage."). At the summary judgment hearing, Backman specified his damages as a loss of the opportunity to spend the "last best years" of his life with his family or in pursuit of some more lucrative economic opportunity. A negligent interference with an economic opportunity that does not cause physical or property damage falls directly within the economic loss doctrine. See Cumis Ins. Soc'y, Inc. v. BJ's Wholesale Club, Inc., 455 Mass. 458, 469 (2009). On the other hand, the doctrine does not apply in Massachusetts to intentional torts. See Canal Elec. Co. v. Westinghouse Elec. Co., 973 F.2d 988, 998 (1st Cir. 1992) (the Massachusetts economic loss doctrine "restricts liability for . . . negligently-caused economic harm, though, at the same time, it permits recovery . . . where the defendant engages in an intentional tort. . . .").
Cooperation Misrepresentations
Backman claims that Smirnov misled him into believing that he fully supported Backman's efforts to obtain independent validation of MRET and would pay a one-third share of the costs of the Toronto Study. Pl.'s Opp'n Mot. Summ. J. at 14. Defendants argue that Backman cannot affirmatively prove that Smirnov gave any knowingly false assurance to Backman about his commitment to the Toronto Study. Defs.' Mot. Summ. J. at 12. The most that Backman can point to is Smirnov's deposition testimony that when Backman broached the idea of the Toronto Study, Smirnov did not believe that it would prove helpful to the MRET marketing campaign and that he "didn't accept" Backman's statement that the Study would open the door to "a broader range of applications." Smirnov Dep. at 129.
As a rule, "nondisclosure does not amount to fraud and is not a tort of any kind," unless the non-disclosing party is under a duty to speak. Greenery Rehab. Grp. Co. v. Antaramian, 36 Mass. App. Ct. 73, 77 (1994); see also Rood v. Newberg, 48 Mass. App. Ct. 185, 192 (1999). That Smirnov may not have shared Backman's enthusiasm for the Toronto Study or that Smirnov may have ultimately breached the Toronto Agreement (if the trier of fact so finds) does not advance Backman's argument. It is not a tort, or even a moral wrong, to breach a contract so long as one is willing to pay for any damages caused by the breach. The defendants' motion for summary judgment on the fraud claim (Count IV) with respect to the cooperation misrepresentations will therefore be allowed. Health Benefits Misrepresentations
Smirnov states that he intended to honor the Toronto Agreement at the time it was negotiated, but later changed his mind. Defs.' SOF ¶ 75. Changing one's mind is not proof that an earlier statement was false. McEvoy Travel Bureau, Inc. v. Norton Co., 408 Mass. 704 (1990).
Backman also claims that Smirnov misled him about the (nonexistent) health benefits of the MRET technology. To the extent that Smirnov admits that such statements were made, he alleges that Backman's claim is barred by the relevant statute of limitations, Mass. Gen. Laws ch. 260, § 2A. Backman filed his Complaint on June 2, 2008, three and one-half years after the NCA was negotiated with Smirnov. Given Backman's knowledge and experience with MR technology, Defs.' SOF ¶¶ 12-16, 26, defendants argue that he knew or should have known by the end of 2004 at the latest, that the claims of MRET's preternatural health benefits were sheer quackery. This point is telling. The evidence suggests that Backman not only knew that the health claims were false, but that he willingly engaged with Smirnov in a fraudulent scheme to promote them to others — including vulnerable AIDS/HIV patients — by touting the data of the dubitable Toronto Study. In implicit recognition of the shakiness of his position, Backman is careful to avoid any argument that the health claims were in fact false. Rather, "[i]t is the fact that Smirnov made those representations to induce Backman into a contractual relationship, and then subsequently denied ever making those claims, that forms the fraud from which Backman seeks to recover." Pl'.s Opp'n Mot. Summ. J. at 19. Denying having made a statement that one did in fact make is not fraud if there is no allegation that the disclaimed statement was false. The defendants' motion for summary judgment on the fraud claim (Count 4) with respect to the health benefits misrepresentations will therefore be allowed.
The skeptical reader might consult Stephen Lower, Wonky Water weirdness and quackery: Junk Science in the Marketplace,http://www.chem1.com/CQ/wonkywater.html (last updated Feb. 24, 2010), and make his or her own judgment.
Counts 5 and 6, which seek injunctive and declaratory relief, depend largely on the jury's resolution of the contract claims and need not now be addressed.
ORDER
For the foregoing reasons, defendants' motion for summary judgment as a matter of law with respect to the claims for breach of contract (Count I) and quantum meruit (Count II) are DENIED. With respect to the fraud and misrepresentation claims (Count IV), defendants' motion is ALLOWED. The Chapter 93A claim will be decided if necessary by the court after the jury trial and is therefore DEFERRED. The Clerk will set the case for trial before a jury commencing at 9:00 a.m. on February 14, 2011.
SO ORDERED.
s in this State; or (3) that it has improved the quality or cost of healthcare in this State
vis a vis other states. He was not aware of any data, economic rationale, or crisis eliminated by the continued expansion of the MMA to limit the liability of a host of other healthcare providers since its enactment, including more recently, nurse practitioners. The State straight forwardly admits in brief that the legislature, in limiting the liability of nurse practitioners, did not have available any data suggesting a crisis in healthcare would occur if the cap was not so extended. The State simply excuses this failure by saying "unless and until there is a claim against [a] nurse practitioner in excess of the cap," this data is unavailable — but "at that point in time will demonstrate the existence of a crisis for nurse practitioners." The State also presented no evidence to show there is a shortage of physicians in this state and a correlating need for nurse practitioners to operate and own "walk-in" clinics to
make health care more affordable or available to Louisiana citizens. Mr. Bickerstaff indicated there was statistical data available for nurse practitioners, but he chose, or was not asked, to provide it at the hearing. The following exchange occurred between Mr. Bickerstaff and plaintiffs' counsel:
Q. My point is, if you wanted to concern yourself you could have and you're capable as an actuary of getting data to each specialty, whether it's a podiatrist,
a chiropractor, or a nurse practitioner, but the data is out there in actuarial science to figure out as it applies to those, correct?
A. Let me answer it this way.
Q. Could you answer it first whether the data is there and then you could explain it.
A.
The data by specialty is available.
Q. Okay.
A. It's available on a statewide basis, it's available on a countrywide basis, it's data that we refer to routinely when we're looking at individual state's rate filings.
. . .
Q. Do you have any proof that in 1975 that there was going to be a flight of nurse practitioners, if they weren't covered under this act?
A. Again, I don't have any specific knowledge of nurse practitioners' plight at the time anymore than I do most any other specialty.
Q. Do you have any proof on the other side, that this act has improved and allowed there to be more nurse practitioners, or the state is attracting nurse practitioners here who would have gone to other states? Do you have any data for that?
A. I don't myself.
I think there is data available for that, though.
A review of jurisprudence across the country shows, when courts have considered similar malpractice caps in response to state constitutional challenges by severely or catastrophically injured victims, they have been troubled by the disparate impact caps have on this group. As noted, victims with minor injuries or whose claims do not exceed the cap are allowed to recover fully all their economic and non-economic damages; while those who are harmed the most recover minimal damages in comparison. The saddest incidences, perhaps, involve the youngest victims of malpractice who, like Taylor, will in all likelihood reach old age and remain wards of their parents or other family members in excess of 60 plus years. Taylor's injuries occurred when she was an infant. The cap on the jury's award also leaves Taylor's parents with no possibility of recovering any damages for the harm caused them. There lives are forever disrupted without any recompense from the tortfeasor.
In Moore v. Mobile Infirmary Assoc., 592 So.2d 156 (Al. 1991), the Alabama Supreme Court invalidated a $400,000.00 cap on non-economic damages based on its finding that the link between damages caps and health care costs was remote. The Moore court found the State failed to show a reasonable means/end fit between caps and the asserted purpose of alleviating the effects of the alleged malpractice crisis. That court, in reviewing available empirical data, held there was insufficient evidence that the enactment of medical malpractice damages caps leads to a decrease in insurance premiums or an improvement in the availability of health care services. The Moore court was particularly concerned by the legislative attempt to balance the "direct and palpable burden placed upon catastrophically injured victims of medical malpractice against the indirect and speculative benefit that may be conferred on society . . ." Id. at 170.
In Brannigan v. Usitalo, 134 N.H. 50, 587 A.2d 1232 (1991), the New Hampshire Supreme Court invalidated on equal protection grounds an $875,000 non-economic damages cap. That court held when a statute creates a classification interfering with the right to recover for personal injuries, the classification may not be unreasonable or arbitrary, and must have a "fair and substantial relation to the object of the legislation." Id. at 1234 (quoting Carson v. Maurer, 120 N.H. 925, 424 A.2d 825, 831 (1980) where the same court found a $250,000 cap unconstitutional). The New Hampshire Supreme Court in Carson, 424 A.2d 825, 837, recognized, while medical malpractice caps serve an important societal goal, it is still "unfair" to force a class of the most severely injured patients to support the entire medical industry through a reduction in damage awards.
We also find particularly interesting the series of events which have occurred in Wisconsin. In 1975, the Wisconsin legislature created the Wisconsin Patient Compensation Fund in order to stabilize the insurance market by providing a layer of coverage beyond that obtained from private insurers. Subsequently, in 1986, the Wisconsin legislature adopted a cap of $1,000,000 in non-economic damages that limited the Wisconsin PCF's liability. That cap expired in 1991. In 1995, the Wisconsin legislature adopted a cap of $350,000 (adjusted for inflation) on non-economic damages in medical malpractice cases.
In Ferdon v. Wisconsin Patients Compensation Fund, 2005 WI 125, 284 Wis.2d 573, 701 N.W.2d 440, 446 (2005), Matthew Ferdon, who was injured at birth, causing his right arm to be partially paralyzed and deformed, brought a medical malpractice claim against the doctor and hospital. Mr. Ferdon was awarded by a jury $700,000 in non-economic damages. The trial court reduced this award to the statutory limit of $410,322 (the $350,000 cap adjusted for inflation). Mr. Ferdon appealed, and the Wisconsin Court of Appeals affirmed. The Wisconsin Supreme Court reversed, declaring the cap unconstitutional under the equal protection clause of the Wisconsin Constitution. The opinion identified five legislative objectives of the statutory cap, and concluded the cap was not rationally related to achieving any of those objectives. First, the court explored "whether a rational relationship exists between the legislative objective of compensating victims fairly and the classification of medical malpractice victims into two groups — those who suffer noneconomic damages under $350,000 and those who suffer non-economic damages over $350,000." Id. at 97. The court emphasized that, as structured, "the burden of the cap falls entirely on the most seriously injured victims of medical malpractice," and accordingly, "no rational basis exists for treating the most seriously injured patients of medical malpractice less favorably than those less seriously injured." Id. at 98, 102.
Next, the Ferdon court examined whether there was a rational relationship between the cap and "[p]roviding reasonably priced medical malpractice insurance for health care providers." Id. at 106. Relying on several published studies, the court concluded that "medical malpractice insurance premiums are not affected by caps on noneconomic damages." Id. at 123.
Third, the court discussed whether the cap on non-economic damages was rationally related to the legislative function of keeping the Wisconsin PCF operating on a sound financial basis. Finding the PCF "flourished both with and without a cap," the court found "the rational basis standard requires more to justify the $350,000 cap as rationally related to the [PCF's] fiscal condition." Id. at 158.
Fourth, the court explored whether the cap was rationally related to the legislative objective of lowering overall health care costs. The court pointed out that "even assuming that a $350,000 cap affects medical malpractice insurance premiums and the [PCF's] assessments on health care providers, medical malpractice are an exceedingly small portion of overall health care costs." Id. at 162 (emphasis added). The court concluded such a reduction, if it in fact existed, "would have no effect on a consumer's health care costs." Id. at 165.
Finally, the court in Ferdon examined the issue of physician flight. The court discussed studies which indicated "that caps on noneconomic damages do not affect doctors' migration," and thus, the cap was not "rationally related to the objective of ensuring quality health care by creating an environment that health care providers are likely to move into, or less likely to move out of, in Wisconsin." Id. at 168, 171.
Not surprisingly, there was legislative reaction to Ferdon, and in 2005, the Wisconsin legislature passed a bill adopting a cap of $550,000 on non-economic damages for victims under eighteen years of age and $450,000 for adults. However, this bill was vetoed by the Governor of Wisconsin. Subsequently, the legislature passed a $750,000 cap on non-economic damages, and that bill was signed into law.
The interests which the State in this case insists are served by Louisiana's cap are the same ones many of the courts and the U.S. General Accounting Office have found lack scientific basis to correlate with actual healthcare costs and malpractice insurance premiums.
However, the State suggests somehow that Louisiana's equal protection and anti-discrimination guarantees in the Constitution offer no relief to these plaintiffs because, as found in Butler, the MMA provides these victims with offsetting benefits to the Act's $500,000 limitation. The State argues any discrimination against those with excessive injuries is accompanied by a quid pro quo: A reasonable alternative remedy. See Bazley v. Tortorich, 397 So.2d 475 (La. 1981). Since the legislature's statutory solution to the medical malpractice problem also furthers the state purpose of compensating victims, the State urges, the cap is not constitutionally infirm. Plaintiffs maintain that this purpose is not being furthered by a cap which has existed for well over 34 years without any adjustment for inflation. They point to the declining purchasing power of the dollar during this period and inflation which has reduced the cap to one quarter of its value in 1975. Dr. Kurth testified that the purchasing power of the $500,000 cap has dwindled to only $125,000 from the date of its enactment to the present. On the other hand, the State relies on Dr. Bauer's testimony and attempts to convince us that "because of the increasing dollar cost of medical goods vis a vis non-medical goods and services, and because of the increasing benefits obtained from medical care from 1975 and 1992 to the present, a severely injured victim of malpractice is actually economically and physically better off recovering medical malpractice damages now than in 1975 and 1992." As we have already noted, Dr. Bauer's conclusions are not supported by any data introduced as evidence in this record, leaving us to rely on common sense and our own experiences. We find it difficult to accept that young Taylor and her parents are better off today than they would have been if her injuries had occurred in 1974; and we are certain if Taylor and her parents could travel back in time, they would gladly refuse the increasing medical benefits the State alludes to in return for competent medical care when Taylor was first examined. The medical profession will profit for many years to come from the medical costs generated by Ms. Duhon's malpractice. The State believes it praiseworthy that Taylor's medical care costs will be paid. Taylor did not cause her injuries, a medical practitioner did, and yet, it is the medical profession which will continue to profit from this medical malpractice while the meager sum recoverable under the cap would steadily dwindle in value. It would be praiseworthy if the medical profession, like other professions, provided Taylor's future medical care pro bono instead of at an escalating profit.
The State also claims the cap provides an alternative remedy to the severely injured victim by assuring that healthcare providers will have malpractice insurance and these victims will recover damages and medicals from a solvent fund. As noted by Dr. Kurth and the U.S. General Accounting Office, there are no definitive studies or evidence supporting the State's conclusion that malpractice caps translates into lower premium cost for the average health care provider. Further, the PCF introduced no data in this record to show that providing more equitable relief to the severely injured victim would compromise the stability of the fund and health care generally in this State.
The state also interposes a procedural objection to plaintiffs' constitutional challenge. The state argues, as it did below, that plaintiffs failed to specifically plead that R.S. 40:1299.41 was "overly broad" in including and limiting the liability of nurse practitioners. This failure, the State insists, bars plaintiffs from challenging the cap's constitutionality based on its application in cases involving claims lodged against nurse practitioners owning and operating clinics in this State. Despite not being convinced of the State's arguments on the constitutionality issue, the trial court accepted a belated "specificity" attack and concluded the petition was barred for "procedural insufficiency."
We do not agree that Plaintiffs petition was procedurally insufficient. Plaintiffs in their Petition for Declaratory Judgment attacked the entire Malpractice Act, specifically requesting that the court "declare the limitation on recovery imposed by the Louisiana Medical Malpractice Act, La.R.S. 40:1299.42(B) to be unconstitutional." They also alleged the " unconstitutionality of La.R.S. 40:1299.41, et seq." As we noted in Arrington v. Galen-Med, Inc., 04-1235 (La.App. 3 Cir. 7/6/07), 970 So.2d 540, 541-42 (emphasis added), the Louisiana Supreme Court has said:
[O]ur Code of Civil Procedure does not require a single procedure or type of proceeding for challenging or assailing the constitutionality of a statute. [
Vallo v. Gayle Oil Co., Inc., 94-1238 (La.11/20/94),
646 So.2d 859] at 864. The requirement that the unconstitutionality of a statute must be specially pled and the grounds for the claim particularized is a jurisprudential one designed to prompt a "contradictory hearing, wherein
all parties will be afforded the opportunity to brief and argue the issue."
Arrington, 947 So.2d at 726 (
quoting Vallo, 646 So.2d at 865). The ultimate purpose of this rule, as explained by the supreme court, is that "[t]he record of the proceeding could then be reviewed to determine whether the party attacking the statute sustained his or her burden of proof, and
whether the trial court attempted to construe the statute so as to preserve its constitutionality." Id.
Plaintiffs did not attack the Act's constitutionality by alleging it was overly broad by including nurse practitioners. A constitutionality attack for "overbreadth" seeks to "demonstrate from the text of the challenged statute and from actual fact that a substantial number of instances exist in which the statute cannot be applied constitutionally." See St. Mary Anesthesia Associates, Inc. v. Hospital Service Dist. No. 2 of Parish of St. Mary, 01-2852 (La.App. 1 Cir. 12/20/02), 836 So.2d 379, 384, writ denied, 03-220 (La.3/28/03), 840 So.2d 577. The constitutional doctrine of "substantial over-breadth," is generally applied only in First Amendment cases, and requires a showing of a realistic danger that the statute will compromise recognized First Amendment protections. Over-breadth is not applicable in the instant case. Here, Plaintiffs clearly alleged "equal protection" as grounds for finding the MMA in its entirety unconstitutional as applied to severely injured patients. The trial court was not prevented from reviewing the Act to determine if all or part of it was constitutional.
The MMA has a severability clause in order to maintain the constitutionality of the Act in part, even if certain provisions are found not to meet constitutional muster. That precisely was what the trial court declared in its original ruling. It severed nurse practitioners as a covered group from the MMA, as is statutorily allowed, in order to maintain the constitutionality of the remainder of the Act. The pleading requirements do not mandate that Plaintiffs cite every provision of the MMA in attacking its constitutionality. It is the courts' responsibility in reviewing the MMA to uphold all portions of the act wherever possible, except the portions that violate the constitution. The test for determining the severability of a statute's provisions is whether an unconstitutional provision in a statute is so interrelated and connected with the constitutional provisions that these provisions cannot be separated without destroying the intention manifested by the Legislature in passing the act. Cobb v. Louisiana Bd. of Insts., 237 La. 315, 327, 111 So.2d 126, 130 (1958). In this case, severing nurse practitioners as a group covered by the cap will not destroy the protection afforded the principal group, namely doctors, that the legislature was attempting to protect at the time of the Act's adoption.
Still, the State argues, when the MMA was enacted the legislature intended to include within its protection nurse practitioners because registered nurses were included from the inception of the Act. We are not at all convinced that the legislature, in including registered nurses in the MMA from inception in 1975, ever intended to include nurse practitioners as qualified healthcare providers. The State argues since nurse practitioners are registered nurses, and registered nurses have always been listed as qualified health care providers, then it follows the legislature always intended to apply the cap to nurse practitioners. Although it is true nurse practitioners must be registered nurses, the statutes clearly indicate their job responsibilities are significantly different. La.R.S. 37:913(13) specifically provides that "[t]he practice of nursing or registered nursing shall not be deemed to include acts of medical diagnosis or medical prescriptions of therapeutic or corrective nature. " (Emphasis added.) However, that statute was amended in 1996 and now provides that "[a]dvanced practice registered nursing may include certain acts of medical diagnosis, in accordance with R.S. 37:913(8) and (9), or medical prescriptions of therapeutic or corrective nature . . ." Registered nurses are not permitted to render medical diagnosis and prescribe medications.
CONCLUSION
In Arrington, this Court instructed the State that it must do more than simply rely on prior jurisprudence upholding the constitutionality of the MMA's cap. It must present readily available evidence to show the cap continues to serve a legitimate public purpose and that a reasonable basis still exists for maintaining the discriminatory classification affecting a plaintiff's right to full recovery in medical malpractice cases. This burden, as was clearly set forth in Sibley, rests with the State.
The State simply did not meet its burden of establishing that the cap on damages, as it applies to nurse practitioners, is rationally related to any of the enunciated objectives set forth by the legislature when creating the cap. For the reasons set forth, we conclude the cap, to the extent it includes nurse practitioners within its ambit, violates the equal protection guarantees of the Louisiana Constitution. Benefit to the public may be a rational basis for a discriminatory classification, but the more speculative and remote the benefit, the more arbitrary is the discrimination. In this case, any correlation between the protection of nurse practitioners by including them under the purview of the cap and any corresponding benefits to the health care system has not been established. The State has not set forth any legitimate basis, under whatever level of scrutiny the constitutional issue before us is examined, for discriminating against severely and catastrophically injured victims by forcing them to shoulder the economic burden for yet another group of healthcare providers who cause them harm. Ms. Duhon owned and operated a clinic and provided medical care to the unsuspecting public without consulting with a physician and without the years of formal study required to become one; yet she held herself out as fully capable of caring for Taylor who appeared ill and in pain 32 times at her clinic — not once did she pause to question her skills or seek advice from a physician. Her decision not to do so has caused severe harm to Taylor. She now complains a judgment against her in excess of the cap will "put her out of business." The Louisiana Association of Nurse Practitioners have also filed an Amicus brief in her defense, specifically noting "the scope of practice for Nurse Practitioners continues to expand and develop nationally and under Louisiana law." The brief recites "when NP care is compared with that of other providers such as physicians, NP patients are more satisfied with their care and say that, in addition to providing excellent healthcare, their NP excels in giving health advice" Ms. Duhon did not attend any institution of higher learning; and, her gross negligence and incompetence has caused Taylor severe harm and burdened her parents for the duration of their lives. The cap, if enforced in this case, will reward her wilful failure to follow the professional rule of her own sub-specialty which requires that she provide patient care in consultation with a physician, and she will be free to open her doors and repeat her failures in caring for another child. We do not believe a rational basis exists in fact to warrant insulating her from full liability for the severe harm she has caused; and, the State has failed to provide any evidence or otherwise to convince us that a legitimate state interest is furthered by allowing Nurse Practitioners as a group to hang their shingles and to operate clinics across this state without direct supervision by a physician.
Many have argued the presence of a cap serves to negate the deterrent effects of tort law. There is little incentive, if any, for healthcare providers to decrease the occurrence of malpractice incidents, because the cap serves to decrease the real value of a provider's liability, and, as such, provides extensive protection and shields negligent healthcare providers from even their grossly negligent acts. This effectively thwarts one of the key purposes the MMA was designed to achieve, the providing of fair and adequate relief to innocent malpractice victims.
This case presents a compelling example of the most pernicious consequence of capping the liability of malpractice tortfeasors. Taylor is unfortunately a member of the two classes which are most discriminated against by a cap on recoverable damages: the severely injured plaintiff, and one who is also young and will have to live with her injuries and disabilities for the remainder of her life. Spread out over the expected lifetime of a young child such as Taylor, the award of $500,000 shrinks to relative insignificance, and will continue to decrease as inflation erodes the value of the allowable award. There simply is no rational reason why the most severely injured malpractice victims should be singled out to pay for special relief for a nurse practitioner who operated in derogation of her statutorily mandated duties.
The legislature, when it decided in 2009 to expand the MMA's cap to limit the liability of Nurse Practitioners, did not articulate any basis for their inclusion and the state has offered little more as evidence in this record. We will not supply this evidence for them nor remand this case for another Sibley II hearing. We are satisfied all the interested parties were fully apprised and aware of the constitutional issues presented — this is not the first case challenging the continued application of the cap in cases involving severely or catastrophically injured victims based on equal protection grounds.
DECREE
For the reasons set forth above, the judgment of the trial court awarding the Olivers past medical expenses and judicial interest to be paid by the PCF on those past medical expenses is affirmed. The trial court award of future medical costs to be paid by the PCF is also affirmed. We deny Susan Duhon's peremptory exception of res judicata. Lastly, we conclude the cap, to the extent it includes nurse practitioners within its ambit, violates the equal protection guarantees of the Louisiana Constitution and La.R.S. 40:1299.41(A)(1), and, thus, is unconstitutional. Therefore, the jury's award of damages is reinstated. Costs of this appeal are assessed to Defendants.
We note that Nurse Practitioners are still covered under the Act to the extent an injured party's damages do not exceed the cap, but that any excess liability is not covered by the Act.
AFFIRMED IN PART; REVERSED IN PART; EXCEPTION OF RES JUDICATA DENIED.
SAUNDERS, J., concurs in the result with written reasons.
PAINTER, J., concurs in the result for the reasons assigned by SAUNDERS, J.
GREMILLION, J., dissents and assigns written reasons.
SAUNDERS, Judge, concurs in the result and assigns written reasons.Page 1
In my view, nurse practitioners are not the same as registered nurses, and, thus, were not covered by the Medical Malpractice Act prior to its amendment in 2009 to specifically include them. It is clear that while a nurse practitioner can perform all the activities of a registered nurse, as in order to be a nurse practitioner one must first be a registered nurse, a registered nurse cannot perform the same activities as a nurse practitioner. Examples include diagnoses of some maladies and prescriptions of some medications.
Should one to look at the language of La.R.S. 40:1299.41, it is clear that who is covered by the act is listed specifically rather than casting a general umbrella. For example, prior to the 2009 amendment, La.R.S. 40:1299.41 listed certified registered nurse anesthetists and registered nurses separately. Like nurse practitioners, a certified nurse anesthetist must also be a registered nurse for one year prior to application for this licensing.
In my view, there is no need to address whether the medical malpractice act is constitutional, as nurse practitioners were not covered by the act when this unfortunate incident transpired. The writing judge addresses the constitutionality of the MMA when addressing nurse practitioners, and reaches the same result of my view regarding the seminal issue of this case, whether the MMA applies.
Moreover, I note that the MMA could not have contemplated inclusion of nurse practitioners in its language providing coverage to registered nurses when it was created in 1975. Nurse practitioners were not licensed in Louisiana until legislation was passed in 1995, effective January 1, 1996. As such, I concur in the result of the writing judge's opinion per the written reasons as stated above.
GREMILLION, Judge, dissents and assigns written reasons.Page 1
Two appeals of separate judgments form the controversies at issue. Joe and Helena Oliver, individually and on behalf of their minor child, Taylor, appeal the trial court's declaratory judgment in favor of the State of Louisiana declaring the Medical Malpractice Act's limitation on recovery (the cap), La.R.S. 40:1299.42(B), constitutional and the judgment entered in their underlying tort claim. The Louisiana Patients' Compensation Fund (PCF) appeals a judgment on the Oliver's underlying tort claim. Additionally, defendant/appellant, Susan Duhon, has raised in the appeal a peremptory exception of res judicata in which she asserts that the Olivers only appealed the declaratory judgment and not the judgment on the verdict in the underlying tort claim.
Judges Cooks and Thibodeaux take pains to state that their decision is limited in its application to nurse practitioners. Judges Saunders and Painter maintain that nurse practitioners are not covered at all. However, these findings are problematic. The Olivers never assigned as error the application of the cap to nurse practitioners; rather, they want this court to declare that the cap itself, by virtue of its diminished value, is unconstitutional. We are generally precluded from considering issues not assigned as error. See Uniform Rules-Courts of Appeal Rules 1-3 and 2-12.4.
Additionally, Judges Cooks and Thibodeaux's reasoning is by no means limited to the circumstances of nurse practitioners. It could apply to any health care provider. In fact, they specifically take aim at health insurers' "dividends," doctors' "incomes," and the alleged "escalating profits" of the entire "medical profession."
Furthermore, if the cap applies to nurse practitioners, its unconstitutionality necessarily affects all other qualified health care providers. I believe the cap does apply to nurse practitioners. The legislature recently enacted Act 14 of the 2009 Regular Session, amending La.R.S. 40:1299.41 effective August 15, 2009, to include nurse practitioners among those providers specifically listed in the definition of "health care providers." The significance of this amendment is that, were nurse practitioners not already covered by the act, the cap would not apply retroactively to Duhon.
The field of nursing has long been regulated in Louisiana, as it is in most states. Nurse practitioners are required to be registered nurses. La.R.S. 37:913. The MMA has long applied to registered nurses.
The legislative history of the 2009 bill persuades me that the purpose of Act 14 was simply to clarify the MMA. The original author, Representative Willmott, testified before the House Committee on Civil Law and Procedure that the bill was intended to clarify the law. In his view, nurse practitioners were already covered by the MMA, as the law requires that they be registered nurses before becoming nurse practitioners. He spoke in favor of the bill from the House well and stated that its purpose was clarification. Similarly, Senator Heitmeier, who moved for the bill's final passage by the Senate, advised that body that the purpose of the bill was to clarify the law. I agree. Accordingly, the MMA applies to nurse practitioners notwithstanding the majority's contrary finding.
http://house.louisiana.gov/marchive/Ram/RamMay09/0504_09_CLP.ram.
http://house.louisiana.gov/marchive/Ram/RamMay09/ 0511_09_Day09_2009RS.ram.
http://senate.legis.la.us/video/2009/June/060209_schramb_P2.ram.
Because Judge Cooks bases her ruling on the equal protection issue alone, she chooses to not address the other grounds upon which the Olivers claim the cap is unconstitutional. While I would find that the cap withstands all the Olivers' claims of unconstitutionality, I will follow Judge Cooks' lead and address only the equal protection claim.
EQUAL PROTECTION
Judges Cooks and Thibodeaux find that the cap violates the equal protection clause of the Louisiana Constitution. I disagree. The cap forms one provision of the MMA, La.R.S. 40:1299.41, et seq., enacted by Act 817 of 1975. Its amount has not been increased. Since 1975, according to the economic experts who testified on the Olivers' behalf, the value of the cap adjusted for inflation has reduced the purchasing power of the $500,000 to the 1975 equivalent of $125,000. The Olivers argue that the effect of inflation on the value of the cap renders it a constitutionally infirm remedy.
Louisiana Constitution art. I, § 2 provides:
No person shall be denied the equal protection of the laws. No law shall discriminate against a person because of race or religious ideas, beliefs, or affiliations. No law shall arbitrarily, capriciously, or unreasonably discriminate against a person because of birth, age, sex, culture, physical condition, or political ideas or affiliations. Slavery and involuntary servitude are prohibited, except in the latter case as punishment for crime.
Because the MMA represents a legislative classification based upon physical condition, it is not entitled to the presumption of constitutionality normally afforded a statute. Sibley v. Bd. of Sup'rs. of La. St. Univ., 477 So.2d 1094 (La. 1985). In the case of classifications based upon birth, age, sex, culture, physical condition or political ideas or affiliations, the burden of proving them constitutional is shifted to the proponent of the classification. Id. The classification must be proven to substantially further an important state interest. State v. Fleury, 01-871 (La.10/16/01), 799 So.2d 468.
The State and Duhon contend that the Louisiana Supreme Court has declared the cap constitutional, and that ruling is binding on this court. See Butler v. Flint Goodrich Hosp., 607 So.2d 517 (La. 1992). Judge Cooks finds that we are not bound by the ruling of this state's supreme court, but is persuaded by the supreme courts of Wisconsin, Alabama, and New Hampshire. She premises her decision to not follow Butler on the fact that it was decided 18 years ago. The conditions that prevailed when it was decided still exist today: severely injured patients are ensured that their doctors will carry medical malpractice insurance; they still have access to a solvent pool of recovery in the PCF; and, all medical care and related expenses will be paid. Ironically, two of the three out-of-state opinions relied upon by Judges Cooks and Thibodeaux are older than Butler.
Duhon filed a brief adopting by reference the argument of the State in its brief.
According to the evidence at trial, while the value of the general damages element of the cap has diminished in the intervening years, the element of recovery of future medical care from the PCF has dramatically increased because the costs associated with health care have risen significantly faster than inflation. My colleagues have claimed their privilege to discount this evidence, but to say this evidence does not exist in the record is simply incorrect.
The Butler decision involved a challenge by the patient to the cap based on the equal protection clause and the adequate remedy component of the due process clause of the state constitution. The patient did not argue that the amount of the cap rendered it unconstitutional, but rather its existence. The court found that the aforementioned benefits represented a "reasonable but imperfect balance between the rights of victims and those of health care providers." Butler, 607 So.2d at 521. This represented a legitimate state interest. Id. The cap, said our supreme court, did not violate either the federal or state constitutions. Id.
The "quid pro quo" recognized in Butler still exists. The patient is guaranteed the three aforementioned benefits: greater likelihood her health care provider will carry, and be able to carry, malpractice insurance; the availability of additional recovery from a solvent pool; and, the payment of all medical and related expenses. Id. These benefits do not depend on the amount of the cap. If, then, the dollar value of the cap has diminished, that cannot rise to the level of a constitutional infirmity. Recourse for its adjustment lies in the legislature and not the courts.
An additional and corollary argument in the present matter is the deprivation of the loss of consortium claims of Joe and Helena Oliver. By operation of the cap, the Olivers' claims for loss of consortium are also subject to the cap. They will then recover none of the $233,000 awarded to them individually.
The cap is no less valid when applied to the Olivers' claims than it is when applied to Taylor's. The same benefits exist: the Olivers will not bear Taylor's medical expenses into the future. The trial evidence demonstrates that this benefit will far outweigh the value of the $233,000 they would receive in general damages. Accordingly, it is not an arbitrary, capricious, or unreasonable classification.
CONCLUSION
The cap does, indeed, fall most heavily upon those most seriously injured. However, the Louisiana Supreme Court has recognized that such a classification of persons by physical condition is suspect, and nevertheless has held that an important state interest is furthered by the cap. That the cap may now be seen by many as insufficient does not negate the benefits the cap ensures all patients: greater likelihood that all health care providers will be insured; a solvent pool from which to collect; and, the payment of all future medical expenses arising from acts of medical negligence, a benefit that potentially far exceeds the value of any award of general damages.
The cap does not violate a patient's right to access to the courts or to an adequate remedy. It represents an imperfect but reasonable "quid pro quo" between qualified health care providers and their patients. There exists no constitutional guarantee of a tort victim's recovery of a particular remedy, but merely the guarantee of a right to pursue a remedy.
The cap, which has gone without adjustment for 34 years, should be adjusted by the legislature. However, while the amount of the cap is now worth substantially less than it was in 1975, it is not constitutionally infirm. Still, the legislature should consider the burden the cap places on its injured citizens and raise it. I also would respectfully suggest that the legislature index the cap in a responsible manner, which would obviate cases like the one before us now.
The critical question before this court is not whether problems with the medical malpractice cap should be addressed. The answer to that questions is clearly, "Yes." Rather, the question, I submit, that was wrongly answered by Judges Cooks and Thibodeaux is who should address the problem. The answer to that question is not this court, but the legislature.
Therefore, I would affirm the judgment of the trial court declaring the cap constitutional and the jury's verdict awarding damages.