Kenosha Law News
By Corrinne Hess
Tuesday, April 19, 2005
Since 1981, average hospital costs in Wisconsin have gone up 267 percent. The state liability cap protecting municipalities against claims, however, has not increased a dime.
In response to a state Supreme Court decision in 1963, a Senate bill was passed to limit recovery against municipal claims to $25,000. Recognizing that with inflation $25,000 would cover very little, the ceiling was raised by the Legislature to $50,000 in 1981 – where it has remained since.
The same year the state raised the cap to $50,000, the average hospital cost per discharge was $2,096, according to George Quinn, senior vice president of the Wisconsin Hospital Alliance. The latest data the alliance has from 2003 shows the average cost has jumped to $7,695.
Most people living in Wisconsin don’t realize that such caps exist until themselves or someone they know, is the victim of negligence by a municipal employee.
Dean Tudjan and Milutin Vukmir filed a claim against the Kenosha County after a highway driver hit their brother, Dale.
The Tudjans thought they would be able to collect enough money to pay for Dale’s long-term care, along with lost wages and pain and suffering. Now they are becoming resigned to the fact that they probably won’t more than $50,000.
In its rationale for the allowing a limited liability statute, the state Supreme Court said the cap serves two purposes: to compensate victims of government negligence while protecting the public treasury. “Taxes must be kept at a reasonable level and it is for the Legislature to choose how limited public funds will be spent,” the court’s opinion stated. “As to the specific monetary limitation on recovery, we recognize that whatever figure is selected will be arbitrary in the sense that it is based on imponderables.”
But Shane W. Falk a Madison attorney and member of the Wisconsin Academy of Trial Lawyers, said the $50,000 cap is inadequate and presents significant inequity and unfairness to families who suffer injuries or death as a result of the negligence of a municipality.
Falk noted in a report he wrote on the subject for the Academy of Trial Lawyers that Nevada is the only state that has a municipal liability cap as low as $50,000.
Falk said what is even more frustrating is municipalities often carry liability insurance with limits 10 to even 100 times the $50,000 cap. “In Wisconsin we have the unfortunate consequence of very low statutory limitations on municipal damages and very high limits on insurance coverage,” Falk said. “The Legislature has an affirmative duty to address and correct the low and unreasonable cap.”
Kenosha County carries liability insurance through the Wisconsin Municipal Mutual Insurance Company up to $5 million per occurrence.
Jim Olson, risk manager for the county, however, said the insurance policy requires the insured entity to assert their right to protection under state law.
“To put it simply, losses over the statutory protection of $50,000 voluntarily assumed by the county would be paid for by the taxpayers of Kenosha County,” Olson said.
As an attorney who has represented clients in personal injury cases and a long-time Kenosha County Board supervisor, Terry Rose can see both sides of the debate.
“Whether you are in favor of caps or not all depends on who you are representing at the moment,” Rose said. “On one hand you have a person whose injury far exceeds $50,000, on the other hand there is the general public, who would have to pay in the form of higher taxes.
“It certainly is a big dilemma, but all in all, I am in favor of the cap.”
Rose did say, however, $50,000 may be too low, but added that determining a more sensible amount would be difficult without defeating the purpose of the caps.
State Rep. Jim Kreuser, D-Kenosha, said the caps are extremely low and lawmakers have lost all discretion on what is fair and reasonable.
“This doesn’t even begin to take into account how a family is wronged,” Kreuser said. “But Republicans have made it very clear they are not interested in raising any caps. If anything they want to lower them.
“It is very unfortunate. Only when it happens to a loved one do you realize just how unjust our system is.”
Kreuser said he would consider bringing forth a bill to raise the municipal liability cap, along with other state caps, but hasn’t because the effort would be in vain.
“I know the Republicans would be so stalwart, I wouldn’t even get a public hearing on it,” he said. “Maybe that is cynical, but I need to focus on things that can get accomplished.”
Municipalities are not the only entities protected by caps in Wisconsin. The state itself has a liability cap of $250,000 per person.
Ten years ago a $350,000 medical malpractice liability cap was established but increased to $432,352 per occurrence based on the consumer price index. There is also a wrongful death cap in all cases in Wisconsin at $350,000 for an adult and $500,000 for a child.
State Rep. Samantha Kerkman, R-Powers Lake, said the Legislature periodically discusses reviewing the caps, but the issue presents a “catch-22.”
“Because of high insurance costs, those caps are needed to protect the taxpayers,” she said. “Right now we also have medical malpractice caps in place so doctors will stay in Wisconsin to work.”
State Sen. Neil Kedzie, R-Elkhorn, said the caps are in place because too many individuals have filed frivolous lawsuits.
“They have created a liability nightmare,” Kedzie said. “Without these caps, insurance costs would eat away at a government’s ability to provide services.”
When asked if the cap shielding municipalities should be raised from its 1981 limit, Kedzie said the number is arbitrary.
“It is difficult to put a price tag on any injury,” Kedzie said. “I think if you ask around you would find some people would think $50,000 is too high.”
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