Pennsylvania High Court Upholds 48-Year Old Damages Cap Protecting State Agencies

The Pennsylvania Supreme Court last week upheld the constitutionality of the state’s $250,000 damages cap on claims against state agencies, turning aside arguments that the cap that was set in 1978 violates both the right to a jury trial and right to a remedy guaranteed by the state Constitution, even where the injured party may end up with little or nothing.

The high court majority affirmed that the legislature has the authority to set a cap on the state’s liability while also acknowledging three consenting opinions that appeal to the legislature to update the damages cap. The high court declined to substitute its judgment of what the cap should be for that of lawmakers.

The ruling came in a case of Hayley Freilich who sustained catastrophic, life-altering injuries when she was hit by a Southeastern Pennsylvania Transportation Authority (SEPTA) bus. Freilich required a partial amputation of her left foot, skin grafts, and tendon lengthening surgeries and suffers from permanent nerve damage and will require lifelong medical care.

SEPTA admitted negligence and, due to COVID-19 conditions at the time, the parties entered into a stipulated jury verdict totaling $7 million ($1 million for economic losses and $6 million for non-economic damages). Thereafter, in accordance with the Sovereign Immunity Act, the trial court reduced the $7 million verdict to the statutory cap of $250,000. The sovereign immunity doctrine holds that the Commonwealth cannot be sued in its own courts except with its consent and insulates the Commonwealth and its agencies from liability except in specified circumstances when that consent is granted.

Shrinking Value

Freilich opposed reducing the damages to the $250,000 amount in the immunity act, pointing out that would leave her with zero financial recovery because legal fees, medical costs and insurer reimbursements would take all of it and more.

Freilich argued that the damages cap is unconstitutional as applied to her because it “renders cost-prohibitive the exercise of her right to a jury trial” in light of the realities of litigating a catastrophic injury case against the Commonwealth. Freilich also pointed out that the real value of the cap has been shrinking each year, increasingly shifting the burden of paying for accidents caused by the Commonwealth onto tort victims.

SEPTA defended the cap as a constitutional act of the legislature. SEPTA argued that the legislature eliminated jury trials in contract claims against the Commonwealth and channeled such actions through the Board of Claims.

But assuming such a right exists, SEPTA maintained, a statutory cap on damages does not impose the kind of “onerous burden” that impedes the jury trial right, rather it merely imposes a limit on the right to recovery post-verdict.

Both the Philadelphia County Court of Common Pleas and the Commonwealth Court sided with SEPTA and the damages cap. They cited a 2014 Supreme Court case (Zauflik v. Pennsbury School District), which rejected a similar claim that a statutory damages cap violated the right to a jury trial. That decision found that the right to a jury trial involves a process and the damages cap does not curtail that right.

The lower courts found that if the Zauflik precedent is to be overturned, the high court would have to do it.

The Supreme Court declined to overturn Zauflik, ruling instead that its logic applied to Freilich’s case.

No Onerous Burden

Section 6 of the Pennsylvania Constitution provides that “Trial by jury shall be as heretofore, and the right thereof remain inviolate.” The Supreme Court noted that in construing the right to a jury trial, it has considered the term “inviolate” to mean “freedom from substantial impairment.” The court said that what is most important is that the right to a jury trial “must not be burdened by the imposition of onerous conditions, restrictions or regulations which would make the right practically unavailable.”

The high court found that Freilich could have had a jury trial but instead agreed during the pandemic to a stipulated jury verdict. The court found that the cap did not impose “onerous conditions” on her right to a jury trial.

“While Appellant may receive only a de minimis or no recovery in her case, she could have had a full trial by jury. Her claim of inadequate damages goes to her ultimate recovery, post-verdict, as a result of the application of the statutory cap; her minimal recovery was not the result of the denial of, or of a defective, jury trial. The damages cap did not alter the availability, or contours of, a jury trial,” the opinion written by Chief Justice Debra Todd stated.

Indeed, Todd continued, “rather than limiting or burdening the process of a jury trial, the statute limits the amount that may be recovered from the Commonwealth and its agencies. It curtails the remedy but not the process.”

Furthermore, the court added, there is no constitutional right to a complete recovery on a jury’s verdict. Freilich was, in fact, able to fully prosecute her case and would have proceeded to a trial by jury if not for the COVID-19 pandemic. Her claims could have been heard by a jury, according to the court.

Remedies Clause

The high court next addressed whether the statutory limitation on damages violates the Pennsylvania Constitution’s remedies clause, concluding that it does not. This clause, which guarantees a remedy for injured persons, states in full:

“All courts shall be open; and every man for an injury done him in his lands, goods, person or reputation shall have remedy by due course of law, and right and justice administered without sale, denial or delay. Suits may be brought against the Commonwealth in such manner, in such courts and in such cases as the Legislature may by law direct.”

According to Freilich, the court should assess whether the challenged statute is substantially related to an important governmental interest. She submitted that the then 44-year-old damages cap was no longer substantially related to the governmental interest of compensating injured persons and protecting the public fisc (government resources). In her view, “the damages cap now protects only the Commonwealth’s purse.”

SEPTA suggested that the General Assembly’s control over the Commonwealth’s exposure to suit is not even subject to judicial review. In the alternative, SEPTA offered that the Commonwealth has a “substantial interest in protecting its policymaking prerogatives and the public fisc, emphasizing its need for financial stability and to provide critical services, and its limited budget for paying personal damages claims.” According to SEPTA, this overriding interest outweighs an individual’s interest in a full tort recovery.

Freilich stressed that she was not challenging the General Assembly’s power to place general limitations on liability in favor of a government unit. Rather, she said her challenge was much narrower, that the cap violated her right to a remedy where it has not been adjusted for over 40 years, and because the fees and costs of litigating her case “rendered a trial economically unfeasible and a remedy illusory.”

The Supreme Court noted that the remedies clause not only expressly provides that every injured person shall have a “remedy by due course of law,” but also that suits against the Commonwealth may be brought only “in such manner, in such courts and in such cases as the Legislature may by law direct.”

The court thus reasoned that if the General Assembly may limit a cause of action by abolishing a claim entirely with an immunity statute, essentially setting the limit on damages at $0, then it follows that the legislature may waive sovereign immunity in some instances and limit damages to $250,000, “even if this amount renders her recovery nugatory.”

Thus, according to the court, Freilich is essentially asking that the court substitute its judgment regarding what is an adequate amount for that of the legislature.

The remedy clause, the court continued, “guarantees an important substantive right of access to courts for the redress of wrongs but is not absolute and does not guarantee a remedy for every claimed wrong. As our case law makes clear, it is for the legislature to provide for remedies, including any limitations on the type or amount of the remedies.”

Consenting Opinion

While Justice Todd found that the court had to follow the legislature’s wishes in upholding the Sovereign Immunity Act and damages cap, he was among the three judges writing a consenting opinion. Todd highlighted what he said is “an unconscionable failure on the part of the General Assembly to raise the limits of this statutory cap in 40 years.” Todd, joined by Justices Kevin M. Dougherty and Sallie Updyke Mundy, called upon the General Assembly to increase the statutory damages cap to an “amount commensurate with a reasonable recovery for all of our citizens injured by the Commonwealth.”

Justice Christine Donohue filed a dissenting opinion in which Justice Daniel D. McCaffery joined. The dissent argued that “while the General Assembly’s powers to govern suits against the Commonwealth are broad, they are not unlimited and the power to set dollar-amount limitations on damages is not among them.” These justices said the damages cap could and should be severed from the rest of the Sovereign Immunity Act.

Photo: Pennsylvania Supreme Court