The Heirs Eng Sub [Extra Quality] Full 36
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The section of Highway 36 in North St. Paul was closed in 2007 from April to September. The highway was rebuilt to freeway standards during this time between White Bear Avenue in Maplewood and Highway 120 (Century Avenue) in North St. Paul. The changes included grade-separated intersections with no interchanges or access within North St. Paul. The full closure in 2007 allowed the project to be completed more quickly and at a lower cost compared with a staged reconstruction. It also increased safety for construction workers. The Highway 36 reconstruction project in North St. Paul was completed in 2008. The budget of the project was $24 million.
Section 667.7 ¶ the provision at issue here ¶ represents the Legislature's initial adoption of the periodic-payment-of-damages concept into California tort law. The section ¶ set forth in full below fn. 7 ¶ provides generally that when [36 Cal. 3d 367] a plaintiff in a medical malpractice action obtains an award of $50,000 or more for "future damages," the trial court, on motion of either party, shall enter a judgment providing for the periodic payment of those damages. [36 Cal. 3d 368] Explaining that the legislative intent is that "courts will utilize such judgments to provide compensation sufficient to meet the needs of an injured plaintiff and those persons who are dependent on the plaintiff for whatever period is necessary while eliminating the potential windfall from a lump-sum recovery which was intended to provide for the care of an injured plaintiff over an extended period who then dies shortly after the judgment is paid" (§ 667.7, subd. (f)), the section provides (1) that the judgment shall specify, inter alia, the dollar amount of the individual payments, the interval between payments and the period of time over which the payments shall be made (id., subd. (b)(1)), (2) that the payment schedule shall be modifiable only if the plaintiff dies before all payments are due (ibid.), fn. 8 and (3) that even if the plaintiff does die, the portion of future damages awarded for the plaintiff's loss of future earnings shall not be reduced or terminated but shall be paid to persons to whom the plaintiff owed a duty of support at the time of his or her death. (Id., subd. (c).)
[1b] Here, there can be no serious question but that the provision is rationally related to a legitimate state interest. Clearly, the Legislature could conclude that a procedure that provides for the periodic payment of future damages will further the fundamental goal of matching losses with compensation by helping to ensure that money paid to an injured plaintiff will in fact be available when the plaintiff incurs the anticipated expenses or losses in the future. In addition, the Legislature could legitimately determine that the public interest would be served by limiting a defendant's obligation to those future damages that a plaintiff actually incurs, eliminating the so-called "windfall" obtained by a plaintiff's heirs when they inherit a portion of a lump sum judgment that was intended to compensate the injured person for losses he in fact never sustained. Although reasonable persons may disagree as to the wisdom of a periodic payment approach in general, or with the merits of the particular procedure which the Legislature chose to adopt, the provision is obviously not irrational. fn. 9
[3a] Plaintiff alternatively argues that section 667.7 violates the due process rights of a malpractice victim's spouse by authorizing the termination of a portion of the future damage award on the death of the plaintiff. As noted above, the trial court accepted this argument, apparently concluding that a spouse has a vested community property right in the full amount of the damages found by the jury. Any rights which a surviving spouse may have in a personal injury judgment under the community property statutes, however, are obviously contingent on the nature of the judgment and on the measure of damages which the state has authorized for such a cause of action. Just as the injured victim has no vested right in a particular measure [36 Cal. 3d 370] of damages, the spouse similarly has no such vested right. In short, the spouse clearly has no greater constitutional right than the victim to a damage award that continues beyond the victim's life.
The reason the Legislature limited the application of section 667.7 ¶ and, indeed, MICRA in general ¶ to the medical malpractice field was, of course, because it was responding to an insurance "crisis" that had arisen in a particular area. The problem which was the immediate impetus to the enactment of MICRA arose when the insurance companies which issued virtually all of the medical malpractice insurance policies in California determined that the costs of affording such coverage were so high that they would no longer continue to provide such coverage as they had in the past. Some of the insurers withdrew from the medical malpractice field entirely, while others raised the premiums which they charged to doctors and hospitals to what were frequently referred to as "skyrocketing" rates. As a consequence, many doctors decided either to stop providing medical care with respect to certain high risk procedures or treatment, to terminate their practice in this state altogether, or to "go bare," i.e., to practice without malpractice insurance. The result was that in parts of the state medical care was not fully available, and patients who were treated by uninsured doctors faced the prospect of obtaining only unenforceable judgments if they should suffer serious injury as a result of malpractice.
A number of amici, theorizing that the primary purpose of MICRA was to contain the overall costs of medical care, contend that section 667.7 ¶ and, by logical inference, all of MICRA ¶ should be held unconstitutional on the basis of statistics which indicate that the overall costs of medical and hospital care rose considerably in the years since MICRA's enactment. This contention is riddled with fundamental flaws. First, the legislative history of MICRA does not suggest that the Legislature intended to hold down the overall costs of medical care but instead demonstrates ¶ as we have explained ¶ that the Legislature hoped to reduce the cost of medical malpractice insurance, so that doctors would obtain insurance for all medical procedures and would resume full practice; indeed, in this respect amici's statistics suggest that MICRA was in fact successful. The statistical information before the Legislature indicated, however, that insurance costs amounted to only a small percentage of overall medical costs (see, e.g., Assem. Select Com. on Medical Malpractice Preliminary Rep. (June 1974) p. 49), and thus in an era of substantial inflation ¶ as experienced in the late 1970's ¶ even the total elimination of malpractice insurance premiums could not reasonably have been expected to reduce the overall cost of medical care.
Second, the rise in medical and hospital costs cannot, in any event, properly be attributed to a failure of section 667.7, since the section has never fully been implemented. The trial court's decision in this case was apparently the first judicial ruling on the question, and in view of its finding of [36 Cal. 3d 374] unconstitutionality, the periodic payment procedure has not been widely enforced. Thus amici's statistics do not shed any light on the effectiveness of the statutory reform.
Once the jury has designated the amount of future damages ¶ and has thus identified the amount of damages subject to periodic payment ¶ we believe that the court's authority under section 667.7, subdivision (b)(1), to fashion the details of a periodic payment schedule does not infringe the constitutional right to jury trial. As defendant notes, the court's function in this regard is similar to the authority long exercised by courts in the disbursement of the proceeds of a judgment under a number of well-established statutory schemes. (See, e.g., § 377 [court apportionment of wrongful death recovery among the individual heirs]; Prob. Code, §§ 3600-3603 [court control [36 Cal. 3d 377] over disbursement of proceeds of judgment in favor of minors and incompetent persons].) Plaintiff cites no decision to support the contention that the exercise of such limited judicial authority is incompatible with the jury trial guarantee, and the additur procedure ¶ upheld in Jehl, supra, 66 Cal. 2d 821 ¶ affords a court considerably greater latitude in fixing the plaintiff's ultimate damage recovery.
While subdivision (f) of section 667.7 eliminates the possibility that the heirs of a malpractice victim would obtain a "windfall" if there were funds awarded by the judgment remaining at the time of his death, the availability of such funds may well be due to the fact that the statute has prevented the victim from using the entire amount of the judgment as his needs require. Under the statute, the sums retained by the insurer are those which would have provided a financial safety valve to the victim for unexpected expenses connected with his injury during the course of his life. Thus, it is the insurer for the wrongdoer which obtains a windfall under the statute, by retaining some ¶ perhaps in some instances most ¶ of the funds which the judgment has awarded to the victim.
Of course, the periodic payment arrangement prevents dissipation of the funds awarded to the victim of the malpractice so that continued compensation is assured. However, the injured party who receives payment in full may also assure a continued income by purchasing an annuity and he may, in addition, derive growth and flexibility by acquiring liquid, income-producing investments with some of the funds awarded. 2b1af7f3a8