Over the past several years, Oregon’s statutory cap on non-economic damages arising out of bodily injury claims has faced numerous constitutional challenges. Recent action by the Oregon Supreme Court has resurrected O.R.S. § 31.710 as a basis for a valid affirmative defense; however, enforcement of the damages cap is not guaranteed. Based upon the particular facts of the individual claimant’s circumstances, plaintiffs can raise a challenge under the Oregon Constitution’s Remedy Clause to application of the statute. If the trial court determines the damages cap represents a “paltry fraction” of the jury’s award for noneconomic damages, the cap will not be enforced and the plaintiff will receive the jury’s full award of non-economic damages. The Oregon Supreme Court has charted a complicated pathway to this outcome.
In 2013, the Oregon Supreme Court decided Klutschkowski v. PeaceHealth, 354 Or. 150 (2013). Klutschkowski was a medical malpractice claim wherein the plaintiff was awarded $1,375,000 in non-economic damages. Defendants sought to enforce the statutory non-economic damages cap, and the plaintiff responded with a constitutional challenge. The Court held that the non-economic damages cap was unconstitutional. In so holding, the Court determined that for a cause of action recognized at common law when the Oregon Constitution was passed in 1857, the state legislature cannot create limitations on damages. Specifically, the Court concluded that the Jury Trial Clause of the Oregon Constitution, which gives litigating parties the right to have all questions of fact decided by a jury, prohibits legislatively-imposed damages limitations. Under the Court’s reasoning, because the amount of damages is a question of fact, a jury must decide that question. As such, any legislation restricting the amount of damages a jury could award, including Section 31.710’s cap on non-economic damages, was unconstitutional.
Oregon’s position on damages caps changed earlier this year when the Supreme Court decided Horton v. Oregon Health & Science University, 359 Or. 168 (2016). Horton involved medical malpractice claims brought under the Oregon Tort Claims Act, which imposes a $3,000,000 cap on all damages. The plaintiff received a jury award in excess of $12,000,000, and the defendants invoked the Tort Claims Act’s damages cap. The plaintiff, in turn, challenged that statutory cap as unconstitutional under both Oregon’s Remedy Clause and Jury Trial Clauses. The Court reversed its prior position, holding that, in most circumstances, the Oregon legislature can impose damages caps without violating the Oregon constitution. The only time a damages cap becomes unconstitutional is when the cap’s damages ceiling is insubstantial when compared to the amount of the jury’s award. Instead of a blanket ban, Horton now requires a case-by-case evaluation of each award.
Regarding the constitutionality of legislative damages caps under the Remedy Clause, Horton abandoned the notion that penalties for causes of action were locked in when the Oregon Constitution was passed in 1857. Instead, the Court created a new test that specifically addresses when the legislature alters the remedies available to an injured party. The Horton test addresses whether the capped damages amount is so insubstantial when compared to the jury award as to make it unconstitutional. Horton defines insubstantial as a “paltry fraction.” In attempting to clarify what constitutes a “paltry fraction,” the Court discussed three examples. In the first example, a jury awarded the plaintiff $12,000,000 in economic damages and $5,000,000 in non-economic damages on a claim governed by a $200,000 damages cap. The Court determined that the $200,000 damages cap would be a “paltry fraction,” and therefore the damages cap was unconstitutional. In the second example, a jury awarded the plaintiff $507,500 in damages on a claim also governed by a $200,000 damages cap. Here, the Court determined that the $200,000 cap was not insubstantial, and therefore application of the statutory cap would be constitutional. In the third example, a jury awarded the plaintiff $600,000 in damages on a claim governed by a $100,000 damages cap. Again, the Court determined that the $100,000 cap would not be insubstantial, and therefore application of the cap would be constitutional.
As to the constitutionality of legislative damages caps under the Jury Trial Clauses, Horton seems to have ended the ability of a party to raise a viable argument that a legislative damages cap is unconstitutional under the Jury Trial Clauses of the Oregon Constitution. Therefore, going forward, the Remedy Clause would seem to provide the only possible basis for challenging the constitutionality of damages caps in Oregon.
While Horton appears effectively to have overturned the reasoning of Klutschkowski, that case is still technically “good law.” However, Horton specifically overturned the precedent on which Klutschkowski was based, and it is therefore reasonable to conclude, in practice, that Klutschkowski no longer reflects Oregon law.