On June 26, 2006, a five-year-old boy attended a public
swimming pool in Anne Arundel County with family friends. At some point during
the afternoon, the young boy went missing and was discovered floating in the
pool face down. Tragically, the young boy had drowned.
The young boy's surviving parents (hereinafter “The
Freeds”) brought an action against the pool management company, DRD Pool
Service, Inc. (hereinafter “DRD”) seeking monetary relief on the basis of
the wrongful death and mental anguish they have experienced since the
passing of their child. A jury found DRD negligent and awarded the Freeds
$4,006,442.00. Pursuant to the Maryland statutory cap on non-economic
damages, codified at Md. Code Ann., Cts. & Jud. Proc. §11-108, the trial
court reduced the wrongful death award to $1,002,500.00, which included
$5,000.00 for funeral expenses.
The statutory cap was first enacted in 1986. It
provided that in actions for personal injury, the award for non-economic
damages may not exceed $350,000.00. In 1994, the statutory cap was raised to
$500,000.00 and the cap was extended to a wrongful death causes of action.
The limitation increases each year by $15,000.00. For actions arising in
June 2006, the cap was $665,000.00 per beneficiary, with a maximum of
$997,500.00 for all beneficiaries. Initially, the purpose of the cap on
non-economic damages was to address the medical malpractice insurance crisis
in Maryland. The statutory cap allowed insurance companies to predict the
amount of damages to be awarded at trial, which led to better estimates on
costs, and ultimately lower premiums for customers.
The Freeds filed a Motion to Alter or Amend the
Judgment challenging the constitutionality of the statutory cap. The Freeds
argued that the statutory cap violated their right to a jury under Article 5
of the Maryland Declaration of Rights, and are guaranteed equal protection
under the Fourteenth Amendment to the United States Constitution and Article
24 of the Declaration of Rights. The trial court denied the Freeds’ motion
and the Freeds timely noted and appeal to the Court of Special Appeals.
The intermediate appellate court affirmed the trial
court’s decision, noting that the Court of Appeals had rejected similar
arguments twice, previously. See DRD Pool Service,
Inc. v. Freed, et. al., No. 104, at *7 citing
Oaks v. Connors, 339 Md. 24 (1995); Murphy v.
Edmond, 325 Md. 342 (1992). The Court of Special Appeals determined
that it was bound by the precedents enunciated by the Court of Appeals.
On appeal to the highest appellate court, the Freeds
argued that the statutory cap did not pass constitutional muster because
there is no rational basis to continue “the discrimination against the most
seriously injured non-medical malpractice tort claimant.” See DRD Pool
Service, Inc., No. 104, at *8.
The Freeds argued that the statutory cap limited their
access to the courts and their right to a jury trial. Thus, the Freeds
argued in favor of a heightened level of scrutiny when analyzing the
statutory cap. The Court rejected this argument because the statutory cap
does not limit Plaintiffs’ access to courts, rather it limits the award that
may be available at the outcome of a tort case. Moreover, the right to a
jury trial is not affected by the cap.
The Freeds next argued that their right to equal
protection is violated by the statutory cap because it created a
classification between the less seriously injured plaintiffs who are
entitled to keep all money damages awarded at trial, and more seriously
plaintiffs, whose damages are limited by the statutory cap. Accordingly, the
Freeds argued that a heightened standard of review is warranted based on the
equal protection discrimination. The Court rejected this argument and relied
upon United Stated Supreme Court standards for reviewing classifications and
held that economic classifications are regularly tested under a rational
basis test.
Finally, the Freeds argued that even under a rational
basis test, the cap failed scrutiny. Rational basis tests are extremely
deferential and even presume that the test is constitutional. A statute will
be struck down under rational basis analysis only if no rational purpose
supports the law or it interferes with a fundamental right. Here, the Court
explained that the Legislature had ample reasoning for passing this
statutory cap. The cap is intended to regulate the insurance industry and
provide some measure by which insurance companies can predict the outcome of
tort claims thereby allowing them to better assess their premiums. Also, the
cap did not interfere with any fundamental rights.
The Court of Appeals in Maryland affirmed the trial
court and its past precedent and held that the statutory cap on non-economic
damages passes constitutional muster.
The Honorable Joseph F. Murphy, Jr. dissented and
opined that the trial court should have applied a heightened scrutiny test
to determine the constitutionality of the cap as it violates equal
protection rights.
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