South Carolina Supreme Court Upholds Two-Tier Damages Cap

June 14, 2011

South Carolina’s two-tier statutory cap on damages is constitutional, the state Supreme Court has ruled.

In the same ruling, however, the court found that two separate governmental entities’ negligent acts, which resulted in severe injuries to the plaintiffs, constituted two occurrences, not just one, under the state’s Tort Claims Act.

The Supreme Court thus agreed with the circuit court that found the two-tier statutory cap constitutional but disagreed that only one occurrence was presented by the facts.

Plaintiffs Larry Lee and Jeannie Boiter were injured when their motorcycle collided with a car driven by Nancy Kochenower in an intersection in the town of Inman where the red light signal’s light bulbs had burned out earlier that day.

The Boiters suffered significant injuries as a result of being thrown from the motorcycle, requiring lengthy hospital stays and incurring $888,756 in medical bills and $203,897 in lost wages. They settled with Kochenower for her policy limits of $50,000.

The Boiters filed lawsuits against South Carolina Department of Transportation and South Carolina Department of Public Safety, alleging negligence in their failure to prevent the accident.

The Boiters alleged SCDOT failed to implement a policy to replace bulbs in traffic signals before they burn out. They alleged that a citizen’s call one hour and 27 minutes prior to the accident reporting the outage should have resulted in SCDPS notifying a trooper to report to the scene and direct traffic.

The negligence of both agencies was undisputed in the appeal to the Supreme Court. At trial, the jury found in favor of the Boiters and awarded each of them a total of $1.875 million.

The state agencies filed to reduce the verdict amount in accordance with the Tort Claims Act. In response, the Boiters filed a motion challenging the constitutionality of the two-tier cap in that law. They also asserted that the state agencies’ negligence constituted two separate occurrences under the tort act.

The circuit court denied the state’s motion challenging the cap’s constitutionality, but the court found there was only one occurrence and granted the state’s motion to reduce the verdict. Therefore, the Boiters’ verdict was reduced to $300,000 each, for a total of $600,000. The Boiters appealed.

South Carolina has a two-tier statutory cap on damages based on who allegedly committed the act. For state-employed physicians and dentists, the cap is $1.2 million per person and per occurrence. For all other state entities, the cap is $300,000 per person and $600,000 per occurrence.

The Boiters alleged that this disparate treatment based solely on the identity of the tortfeasor violates their constitutional right to equal protection of the laws.

Noting that it has upheld the constitutionality of the statutory caps in three prior cases, the Supreme Court did so again, finding the caps pass a rational basis test.

The Boiters had argued that there was no rational basis for the two tier-system. They presented national and state studies designed to establish that there is no empirical evidence to justify the difference in the respective caps.

The high court found that, even taking all of their evidence into account, the court must give great deference to the General Assembly’s judgment in support of the caps. The court cited two reasonable hypotheses provided by lawmakers: relieving the government from the hardships of unlimited liability and furthering accountable and competent healthcare while promoting affordable medical liability insurance.

Based on those hypotheses, the court upheld the constitutionality of the two-tiered system.

“The evidence submitted by the Boiters before the circuit court does not overcome these two reasonable hypotheses, and we are not persuaded that the General Assembly’s two-tier classification is arbitrary or without rational basis,” the court ruled.

However, the high court did agree with the Boiters on the second matter that the circuit court erred in failing to find two separate occurrences in the two separate acts of negligence committed by SCDOT and SCDPS.

The Supreme Court said there were two separate entities which committed two separate and independent acts of negligence, and it does not believe the General Assembly’s intent was to limit recovery in such situations based on there being only one occurrence. Accordingly, each act of negligence was a separate occurrence, which entitled the Boiters to a combined verdict of $1.2 million.

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