Kasayuli et al v. United States of America

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
ANDREW KASAYULI, et al., )
)
Plaintiffs, )
)
vs. )
)
UNITED STATES OF AMERICA, )
) No. 3:12-cv-0241-HRH
Defendant. )
__________________________________________)
O R D E R
Cross-Motions for Ruling of Law1
Plaintiffs and defendant have exchanged motions for ruling of law with respect to
the interpretation and application of AS 09.55.549 in the context of this medical malpractice
case. Both motions are opposed. Oral argument has been requested and heard.
The complete text of AS 09.55.549 is appended to this order for ease of reference.
Subsection (d) of AS 09.55.549 places a $250,000 limit or “cap” on non-economic
medical malpractice claims such as that made in this case. However, subsection (e) of
AS 09.55.549 increases the limit on non-economic claims to $400,000 in cases of severe
physical impairment – those more than 70% disabling. Finally, subsection (f) of
AS 09.55.549 provides “[t]he limitation on noneconomic damages in this section does not
apply if the damages resulted from an act or omission that constitutes reckless or inten-
tional misconduct.”
1Docket Nos. 16 and 39.
Order – Cross-Motions for Ruling of Law - 1 -
Case 3:12-cv-00241-HRH Document 60 Filed 10/22/14 Page 1 of 8

Section 549 was enacted by the Alaska Legislature as a part of continuing efforts at
tort reform: putting limits on damages and judgments so as to hopefully thereby reduce
the cost of medical malpractice insurance and encourage doctors to remain the state. Prior
to the enactment of Section 549, the Alaska Legislature had adopted as a part of its earlier
tort reform effort AS 09.17.010. That statute provided that non-pecuniary damages, as
defined in subsection (a) of Section 010, are capped at $400,000 or $1 million when damages
are awarded for severe permanent physical impairment or severe disfigurement. The par-
ties disagree with respect to how, if at all, Section 010 applies in this case.
Plaintiffs contend that they are entitled to recover non-economic damages without
limitation if they are able to establish that an act or omission on the part of defendant con-
stituted reckless or intentional misconduct. Defendant contends that its liability for non-
economic damages is in all events capped at $1 million pursuant to Section 010. Defendant
also contends that allowing unlimited non-economic damages against only health care pro-
viders would violate the right to equal protection and due process under the Alaska
Constitution.
Discussion
Defendant urges the court to defer ruling on the above-described disagreement until
the court makes its factual findings after trial. The disagreement presently before the court
is purely a question of law. Although the ultimate application of the statutes in question
depend upon fact-finding – whether or not defendant’s acts or omissions were reckless or
intentional misconduct – resolution of the parties’ disagreement about how Section 549 and
Section 010 interact (if at all) is not dependent upon the facts of the case. As plaintiffs point
out, knowledge of the defendant’s ultimate exposure may facilitate an agreement between
the parties to resolve this case.
Defendant’s contention that the Alaska Legislature did not intend to impose unlim-
ited non-economic damages on health care providers is unpersuasive. The Alaska Legisla-
Order – Cross-Motions for Ruling of Law - 2 -
Case 3:12-cv-00241-HRH Document 60 Filed 10/22/14 Page 2 of 8

ture’s intent is first and foremost gauged by the words which it employed if they are
unambiguous. Section 549 opens with the following language:
(a) Notwithstanding AS 09.17.010, noneconomic damages for
personal injury or death based on the provision of services by
a health care provider may only be awarded as provided in
this section.
There is no contention here that defendant is not a health care provider. Plaintiff is
seeking non-economic damages for personal injury. Subsection (a) unambiguously pro-
vides that plaintiff’s non-economic damages for personal injury are to be decided by Sec-
tion 549, subsections (b) through (h), not as provided in Section 010.
The argument which defendant makes in this case was expressly rejected by this
court in Adam v. United States, No. 3:09-cv-0251 (D. Alaska July 5, 2012).2 After quoting
Section 549(a), the court in Adam held: “[t]he Court reads this passage as indicating rather
explicitly that medical malpractice damages are governed solely by AS 09.55.549, and not
AS 09.17.010.”3
This court holds that plaintiffs’ non-economic damages are governed solely by
AS 09.55.549, not AS 09.17.010. Moreover, AS 09.55.549(f) unequivocally informs us that
the Alaska Legislature intended that the damages limits established by subsections (d) and
(e) of Section 549 do not apply if plaintiffs establish that defendant’s conduct was reckless
or intentional.
Defendant next contends that if, as held above, its exposure to non-economic dam-
ages is unlimited, such result would violate its right to equal protection and due process
under the Alaska constitution. Defendant argues that exposing health care providers to
unlimited damages for non-economic losses while the exposure of other professionals, such
2See Opposition to Defendant United States’ Cross-Motion for Ruling of Law [etc.],
Exhibit 1, Docket No. 47-1. The court notes that the defendant neglected to call Adam to
the court’s attention.
3Id. at 4.
Order – Cross-Motions for Ruling of Law - 3 -
Case 3:12-cv-00241-HRH Document 60 Filed 10/22/14 Page 3 of 8

as lawyers, to claims for non-economic losses is limited to $1 million violates the equal
protection rules.
There is an equal protection violation if state law treats similarly situated persons
differently. See State v. Schmidt, 323 P.3d 647, 660 (Alaska 2014). The legislative history
of Section 549 which is before the court establishes the lack of similarity between health
care providers such as defendant and other tortfeasors. The legislative findings which
support Section 549 explain that the Alaska Legislature’s efforts at tort reform in the
medical malpractice area had not succeeded in stemming the loss of insurance coverage for
health care providers.4 Indeed, the Legislature describes the situation as a “medical mal-
practice crisis.”5 The Legislature expressed its concern that “patient access to physicians
will be affected dramatically if physicians cannot afford, or obtain at any price, malpractice
insurance[.]”6 Plainly the Alaska Legislature was justified in treating health care providers
differently as regards their exposure to liability for medical malpractice.
By AS 09.55.549(d) and (e), the Alaska Legislature granted health care providers
much more favorable limits on non-economic damages than is generally available under
AS 09.17.010 for other tortfeasors. Section 549 reduces the first tier cap on non-economic
damages for ordinary negligence from $400,000 to $250,000, and reduces the second tier cap
for permanent physical impairment from $1 million to $400,000. Section 549 does, as the
court in Adam held and as this court now holds, remove the $1 million cap on non-
economic damages in medical malpractice cases involving reckless or intentional conduct
– a subject not addressed by Section 010. Defendant would have the court focus only upon
the exposure of health care providers and others in the most serious of injury cases. Defen-
4Memorandum in Support of United States’ Opposition to Plaintiffs’ Motion for
Ruling on Law of the Case [etc.], Exhibit C at 1, Docket 40-3.
5Id.
6Id.
Order – Cross-Motions for Ruling of Law - 4 -
Case 3:12-cv-00241-HRH Document 60 Filed 10/22/14 Page 4 of 8

dant’s focus is far too narrow. The Alaska Legislature’s approach to tort reform for health
care providers was a broad, complex package. The entirety of Section 549 was aimed at
resolving the so-called “medical malpractice crisis,” not just the limitations on high-end,
non-economic loss cases. In what was a legislative compromise, the first and second tier
non-economic loss caps were drastically reduced by Section 549, while a new, unlimited
liability category – reckless or intentional conduct – was added by Section 549. This broad
restructuring of liability on the part of health care providers for non-economic losses for
purposes of meeting the malpractice crisis was based upon a broad distinction between
health care providers and other tortfeasors. The Alaska Legislature had good reason to
treat health care providers and others differently as to the three tiers of exposure for non-
economic losses created by Section 549. That reason was the reduction of malpractice
insurance costs for the great majority of claims and the encouragement of physicians and
other health care providers to be available to Alaska patients and, at the same time, provide
relief for the most serious of medical malpractice injuries. The problems confronting both
health care providers and their patients justify the differentiation made by the Alaska
Legislature between health care providers and other tortfeasors in general. There is no
equal protection violation.
Defendant also contends that Section 549 violates its substantive due process rights.
There is a due process violation, however, only if the Alaska Legislature’s action bore no
reasonable relationship to a legitimate governmental purpose. See Pfeifer v. State Dept.
of Health & Soc. Services, 260 P.3d 1072, 1083 (Alaska 2011). Here also, the legislative
findings which accompanied the adoption of Section 549 are dispositive. It is plainly
reasonable for the State of Alaska to be concerned about the availability of health care
services and medical malpractice insurance for health care providers. This is a legitimate
governmental purpose. In the absence of adequate insurance, the availability of health care
may be constricted; and, if those working in the health care industry are not insured or are
Order – Cross-Motions for Ruling of Law - 5 -
Case 3:12-cv-00241-HRH Document 60 Filed 10/22/14 Page 5 of 8

under-insured, then patients are at risk of not being compensated adequately if malpractice
occurs. By Section 549, the Alaska Legislature created a three-tiered damages scheme
($250,000 generally; $400,000 in the event of death or severe, permanent, physical impair-
ment; and no limit with respect to reckless or intentional conduct). Reducing the exposure
of health care providers to non-economic damages, and thereby reducing medical malprac-
tice insurance costs, plainly serve the Alaska Legislature’s purpose of meeting the medical
malpractice crisis. Treating those who have acted intentionally or recklessly – in this
instance unlimited non-economic damages for those who act recklessly – is a concept that
has run through American civil law from the beginning and is not unreasonable. Treating
those who act recklessly differently is no violation of due process.
Finally, there were some additional issues raised by plaintiffs in their motion for
ruling on law.7 The parties’ briefing indicates that there is no disagreement about the fol-
lowing:
(1) The burden of proof in a medical malpractice case is the prepon-
derance of the evidence standard. AS 09.55.540.
(2) The terms “reckless” or “intentional misconduct” are to be defined by
Alaska law.
(3) Although the defendant is silent on the subject, it is clear to the court
that Section 549(f) is not punitive. It simply removes limits otherwise
applicable to non-economic damages. Adam, No. 3:09-cv-0251
(D. Alaska July 5, 2012)8
7Docket No. 16.
8See Opposition to Defendant United States’ Cross-Motion for Ruling of Law [etc.],
Exhibit 1 at 4, Docket No. 47-1.
Order – Cross-Motions for Ruling of Law - 6 -
Case 3:12-cv-00241-HRH Document 60 Filed 10/22/14 Page 6 of 8

Summary
Plaintiffs’ and defendant’s cross-motions for ruling of law are granted and denied
as set out above.
DATED at Anchorage, Alaska, this 22nd day of October, 2014.
/s/ H. Russel Holland
United States District Judge
Order – Cross-Motions for Ruling of Law - 7 -
Case 3:12-cv-00241-HRH Document 60 Filed 10/22/14 Page 7 of 8

Sec. 09.55.549. Limitation on damages from health care provider's services.
(a) Notwithstanding AS 09.17.010, noneconomic damages for personal injury or
death based on the provision of services by a health care provider may only be awarded
as provided in this section.
(b) In an action to recover damages for personal injury or wrongful death based on
the provision of services by a health care provider, damages may include both economic
and noneconomic damages.
(c) Damage claims for noneconomic losses shall be limited to compensation for pain,
suffering, inconvenience, physical impairment, disfigurement, loss of enjoyment of life, loss
of consortium, and other nonpecuniary damage, but may not include hedonic damages.
(d) Except as provided in (e) of this section, the damages awarded by a court or a
jury under (c) of this section for all claims including a loss of consortium claim or other
derivative claim arising out of a single injury may not exceed $250,000 regardless of the
number of health care providers against whom the claim is asserted or the number of
separate claims or causes of action brought with respect to the injury.
(e) The damages awarded by a court or jury under (c) of this section for all claims
including a loss of consortium claim or other derivative claim arising out of a single injury
or death may not exceed $400,000 regardless of the number of health care providers against
whom the claim is asserted or the number of separate claims or causes of action brought
with respect to the injury or death when damages are awarded for wrongful death or
severe permanent physical impairment that is more than 70 percent disabling.
(f) The limitation on noneconomic damages in this section does not apply if the
damages resulted from an act or omission that constitutes reckless or intentional
misconduct.
(g) Multiple injuries sustained by one person as a result of a single course of
treatment shall be treated as a single injury for purposes of this section.
(h) In this section,
(1) "economic damages" means objectively verifiable monetary losses incurred as a
result of the provision of, use of, or payment for, or failure to provide, use, or pay for
health care services or medical products, and includes past and future medical expenses,
loss of past and future earnings, cost of obtaining domestic services, burial expenses, loss
of use of property, cost of replacement or repair, loss of employment, and loss of business
or employment opportunities;
(2) "health care provider" has the meaning given in AS 09.55.560 and includes a state
agency or municipality the health care services of which are the subject of an action that is
subject to this section;
(3) "hedonic damages" means damages that attempt to compensate for the pleasure
of being alive.
Order – Cross-Motions for Ruling of Law - 8 -
Case 3:12-cv-00241-HRH Document 60 Filed 10/22/14 Page 8 of 8