Colorado damage caps: Supreme Court upholds $40 million medical malpractice award

On October 20, the Colorado Supreme Court unanimously affirmed a $40 million medical malpractice verdict, clarifying when and how juries – not judges – should determine damages in catastrophic injury cases that exceed the state’s statutory damage caps.

The decision in Banner Health v. Gresser arose from a heartbreaking birth injury case. During labor, delivery, and postpartum care at North Colorado Medical Center, medical negligence caused infant “C.G.” to suffer severe permanent neurological injuries, including cerebral palsy, developmental delays, seizures, and physical impairments. These injuries will require lifelong medical care and have significantly reduced her life expectancy.

After finding Banner Health negligent, a jury carefully examined the evidence and awarded the Gresser family approximately $27.6 million in economic damages. This included over $2.5 million for past medical expenses, nearly $24 million for future medical care through 2075, and $1.2 million for lost wages.

Because the Health Care Availability Act (“HCAA”) generally limits medical malpractice damages to $1 million, see C.R.S. § 13-64-302(1)(b), the Gressers moved the trial court to award damages in excess of the statutory cap in the amount of the full jury award. The same day, Banner Health filed a motion to reduce the jury award to comply with the statutory cap. The trial court found that there was good cause to exceed the cap under the statute and that imposing the cap would be unfair. Banner Health appealed.

Colorado’s HCAA

Colorado’s Health Care Availability Act, enacted in 1986 to control rising malpractice insurance costs, generally caps medical malpractice damages at $1 million. The legislature included this limit to ensure healthcare providers could afford insurance while continuing to serve Colorado patients.

However, lawmakers recognized that rigid caps could produce “terrible miscarriages of justice” in cases of catastrophic injury, as in the Gresser case.  Thus, they built in a safety valve: courts can exceed the cap if a plaintiff shows “good cause” and proves that applying the cap would be “unfair.”

The Gressers cleared that hurdle—the trial court found good cause and unfairness if the cap were applied in the case based on C.G.’s severe, lifelong injuries. But then came the thornier question that split Colorado’s legal community: Once a court decides the threshold question of whether or not to exceed the cap, who then determines the final amount—the judge or the jury? The trial court believed it had only “a binary decision”: enter an award for $1 million (the statutory limit) or “enter a judgment in the amount of damages awarded by the jury.”

Banner Health argued that when a court decides to exceed the $1 million cap, it gains broad discretion to set damages at any amount it deems appropriate above that threshold, the gross value of a verdict notwithstanding. Under this view, the statutory cap essentially replaces the jury’s award, and judges can substitute their judgment for the jury’s when calculating “additional” damages in excess of the cap.

The Gressers countered that the statute’s “good cause” and “unfairness” requirements apply only to the threshold question of whether or not to exceed the cap. Once that gate opens, they argued, Colorado’s common law tradition should control – meaning the jury’s verdict stands unless the losing party can successfully challenge it under established standards. In its decision, the Colorado Supreme Court sided decisively with the Gressers.

The Colorado Supreme Court’s Resolution

The relevant portion of C.R.S. § 13-64-302(1)(b) states:

If, upon good cause shown, the court determines that the present value of past and future economic damages would exceed such limitation and that the application of such limitation would be unfair, the court may award in excess of the limitation the present value of additional past and future economic damages only.

Justice Hood, writing for a unanimous court, applied careful grammatical analysis to the statute’s conditional structure focusing on the word “if” and the placement of commas after “if” and after “upon good cause shown.” The court determined that the wording of statute was structured in such a way as to mean that the good-cause and unfairness requirements applied only to the court’s first, conditional determination – whether to exceed the $1 million cap – and not to the resulting second determination—the amount of damages.

More fundamentally, the court found no clear legislative intent to strip juries of their traditional common-law role in setting damages once the statutory exception applies, which would be the effect of allowing a judge to do so. Colorado has embraced common law since its founding, and statutes that modify it must do so clearly and explicitly.  Such intent to abrogate the jury’s exclusive common law role in determining damage awards (in cases where the exception to the cap applies) was not present.

The court noted that the HCAA’s legislative history reveals an intent to “balance the concern over insurance affordability and predictability with concern for fairness to seriously injured people.” Colorado lawmakers wanted to help legitimate victims who had suffered extensive harm—not to empower judges to second-guess jury verdicts after determining those victims deserved more than the cap.

Interestingly, despite the court’s detailed grammatical analysis of the statute, Justice Hood may have left some wiggle room for future litigants (however slight) by using a suggestive “should” rather than a mandatory “shall” in the court’s ultimate holding:

“Therefore, we conclude that the legislature didn’t intend to completely abrogate the jury’s common-law authority to determine damages in medical malpractice cases. Instead, if a court determines that subsection 302(1)(b)’s exception applies, it should defer to the jury’s common-law authority to determine damages, subject to the court’s continuing authority to review the sufficiency of the evidence and to entertain certain narrow excessive-amount challenges as outlined above in Part II.B.” (Emphasis added).

“Should” is suggestive, while “shall” is mandatory.  See Washington v. Crowder, 12 P.3d 857 (Colo. App. 2000) (use of “should” rather than “shall,” meant notice provision of statute was not mandatory.)

What This Means Going Forward

Under this ruling, once a trial court finds good cause to exceed Colorado’s medical malpractice damages cap and determines the cap would be unfair, the court reverts to common law principles. The jury’s damage award will stand unless the defendant proves:

• The award is so excessive it indicates the jury acted from passion, prejudice, or corruption (requiring a new trial), or
• The award is grossly and manifestly excessive (allowing the court to order a remittitur – a reduction)

The burden falls on the party challenging the jury’s verdict. This represents a significant protection for catastrophically injured plaintiffs, ensuring that when their injuries are severe enough to overcome the statutory cap, a jury of their peers – not a single judge – determines fair compensation for their losses.

For the Gresser family, this means their nearly $40 million judgment stands. More broadly, it means that Colorado juries retain their constitutional and common law role as the conscience of the community in determining damages for the most severely injured victims of medical negligence.

 

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