Plaintiffs' Bar Pushes To Abolish Charity Cap - Is Time Ripe For Statute To Fall?
Plaintiffs' lawyers are making a serious push for legislation that would eliminate the state's $20,000 liability cap on charitable organizations a move they say would both help obtain fairer results for plaintiffs and reduce litigation.
And while past efforts to abolish the cap have been unsuccessful, lobbyists say that a "growing sense of frustration by legislators" may make 1999 a year of change.
Some attorneys, however, pointed out that certain proposed amendments to G.L. c. 231, Sect. 85K could actually complicate litigation by raising the standard of proof for plaintiffs and increasing discovery.
Several bills proposing to change the current liability cap for charities are currently under consideration by the Legislature's Judiciary Committee, including House Bill Nos. 2937, 808 and 3511.
"There is more interest in this area this year and there are certainly more approaches under consideration by the Legislature," observed Valerie A. Yarashus, chairwoman of the Massachusetts Academy of Trial Attorney's State Legislation Committee.
For example, Yarashus pointed out that House Bill No. 2937 which the MATA supports along with House Bill No. 808 reflects a relatively new proposal.
Instead of the traditional bill to completely abolish charitable immunity, No. 2937 proposes to lift the cap only for organizations which derive less than 50 percent of their income from charitable gifts or donations, explained Yarashus.
House Bill No. 808 would eliminate the liability cap for all charities but only for conduct that rises to the level of gross negligence.
And House Bill No. 3511, proposed by the Massachusetts Bar Association, would raise the cap to $500,000 for medical charities, according to MBA General Counsel Martin W. Healy.
The full text of the various bills can be found by accessing the "Treasure Chest Of Important Documents" at Lawyers Weekly's Web site, www.masslaw.com
The Judiciary Committee -- which held a May 25 hearing on the legislation must vote on the bills by June 23.
While a favorable vote for the removal or increase of the liability cap is not a certainty, lawyers pointed out that the political environment is ripe for change.
"With every legislative session, there seems to be an increase in the number of bills filed [regarding the cap] which is reflective of the growing sense of frustration by legislators and the public with this issue," stated Healy.
A 'Sweeping' Bill
One of the most "sweeping" proposals under consideration by the Judiciary Committee is House Bill No. 2937 which would remove the charitable liability cap for ordinary negligence as well as gross negligence, according to Warren F. Fitzgerald of Boston, the incoming president of the MATA.
Yarashus observed that this bill which seeks to eliminate the cap for organizations deriving less than half of their income from charitable gifts and donations was modelled on a 1990 Maine Supreme Court case, Child v. Central Maine Medical Center, which reaffirmed the use of a two-part test for charitable immunity.
Chris A. Milne of Dover commented that the Massachusetts legislation seems "very fair," as the doctrine of charitable immunity began in the 1800s to protect "true charities" rather than entities which derive a "very small fraction" of income from charitable sources.
Fitzgerald added that the doctrine was originally intended to address the difficulty in obtaining liability insurance for charities and the fear that charitable donations would be deterred if trust assets were depleted by a lawsuit.
But neither of those reasons exists today, he said, noting that liability insurance is not only available to charities, but is "usually" purchased by such organizations, particularly those which would most often be defendants in actions for personal injury and death such as HMOs and hospitals.
"Also, the theory that donations would be discouraged doesn't seem borne out by the fact that most people making contributions understand that some of the contributions go to overhead and administrative operating costs," he said.
Yarashus added that eliminating the charitable liability cap would bring Massachusetts up to date with the majority of states.
"It appears from our research that there are only eight other states that limit liability awards of charitable corporations, and of those eight, Massachusetts has the lowest cap," she said.
Practical Impact
If legislation is passed eliminating the current $20,000 liability cap, many plaintiffs' attorneys commented that it would reduce claims, facilitate discovery and encourage settlements.
Fitzgerald explained that the $20,000 cap currently serves to increase litigation because individuals within a charitable institution must be named as defendants to circumvent the immunity.
But if the cap were removed, "it would be sufficient in many circumstances to seek compensation from the charitable corporation which would eliminate the need for a circuitous effort to seek recovery from individual [employees of the institution]," he said.
Yarashus agreed that legislation eliminating the charitable liability cap would make litigation more "streamlined and straightforward," which would ultimately reduce costs.
For example, she pointed out that "lawyers currently have to conduct whatever discovery is necessary to find one or more individuals within an organization who should be liable, and that means going through a number of depositions to find and identify those persons."
However, "if there were no artificial bar on placing responsibility where it should be placed, then there wouldn't have to be unnecessary depositions," she said.
And David W. White-Lief of Boston, chair of the MBA's Civil Litigation Committee, added that eliminating or raising the cap would also remove the current "dynamic" where juries tend to find "faceless entities" such as hospitals liable instead of individuals, which "greatly limits" recovery.
"If a corporation realizes that this dynamic is removed, it should increase the likelihood of settlements," he said.
However, some plaintiffs' attorneys suggested that the two-part test proposed in House Bill No. 2937 could actually increase litigation.
Arthur F. Licata of Boston explained that if parties must first determine whether 50 percent or more of an organization's income was derived from charitable gifts or donations, "every lawsuit would have to involve a due diligence analysis similar to what Wall Street does for an initial public offering."
He noted that this "this is an example of where the remedy is worse than the present case because, in application, you make the standard so onerous that almost no one could meet it."
Other Proposals
Other related bills have also attracted attention from members of the bar.
For example, House Bill No. 808 would eliminate the $20,000 cap for all charities "if the tort consisted of wilful, wanton or reckless conduct or gross negligence" and House Bill No. 3511 would raise the cap to $500,000 for medical charities.
Similar bills under consideration propose to raise the cap to amounts as high as $1 million for medical charities, exempt hospitals from charitable immunity or implement a cap of $250,000 for all nonprofit organizations.
While many plaintiffs' attorneys stated that they support bills which would eliminate or raise the charitable liability cap, some commented that House Bill No. 808 seems "unfair," as it would raise the level of proof to gross negligence as opposed to ordinary negligence.
"Proving negligence is difficult enough, but having to prove gross negligence is very difficult," said Milne.
Licata agreed that the standard should be negligence.
"In the state of Rhode Island, an injured plaintiff can bring a suit against a hospital, its agents, servants or employees for negligence without a liability cap," he said.
Licata noted that "this experience proves that a hospital can be profitable and at the same time insure itself so that injured patients can be compensated when they are injured due to the negligence of hospital employees."
He added that "there is no reason to build a higher standard for plaintiffs to overcome when ordinary negligence is sufficient."
But regardless of which bill plaintiffs' attorneys choose to support, the passage of any of the proposed amendments is not a certainty, according to practitioners.
"It's been almost three decades since the Legislature reviewed the present $20,000 limit, but there is a growing interest in the Legislature to change the charitable immunity cap," said Healy.
He added that the bills "seem to be getting more legislative attention now because of the whole debate over HMO liability which this legislation is tied to in a limited context."