Horizon/CMS Healthcare Corp. v. Auld

• Decision Date: 24 August 2000
• Docket Number: No. 99-0169,99-0169
• Citation: 34 S.W.3d 887
• Parties: (Tex. 2000) Horizon/CMS Healthcare Corporation d/b/a Heritage Western Hills Nursing Home, Petitioner v. Lexa Auld, administratrix of the Estate of Martha Hary, deceased, Respondent
• Court: Texas Supreme Court

Page 887

34 S.W.3d 887 (Tex. 2000)

Horizon/CMS Healthcare Corporation d/b/a Heritage Western Hills Nursing Home, Petitioner v. Lexa Auld, administratrix of the Estate of Martha Hary, deceased, Respondent

No. 99-0169

IN THE SUPREME COURT OF TEXAS

Decided August 24, 2000

Argued November 17, 1999

On Petitions for Review from the Court of Appeals for the Second District of Texas

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Justice ABBOTT delivered the opinion of the Court, in which Justice HECHT, Justice ENOCH, Justice OWEN, and Justice GONZALES join.

The focus of this case is whether Texas Revised Civil Statutes article 4590i, section 11.02(a) (part of the Medical Liability and Insurance Improvement Act), or Texas Civil Practice and Remedies Code section 41.007, provides a statutory basis for capping punitive damages that are awarded in cases involving health-care-liability claims. We hold that the latter provision, section 41.007, provides the basis for capping the punitive damages that were awarded in this case, and that article 4590i, section 11.02(a), does not. We also hold that article 4590i, section 11.02 does, however, cap the amount of prejudgment interest awarded on Auld's actual damages falling within section 11.02(a)'s cap. As a result, Auld is not entitled to the entire prejudgment interest award in this case. Other issues raised by the parties include the constitutionality of article 4590i, section 11.02, and evidentiary and procedural concerns. We agree with the court of appeals' judgment on these matters. Accordingly, we affirm the court of appeals' judgment in part. With regard to that portion of the judgment affirming the trial court's award of prejudgment interest to Auld, we hold that Auld may recover prejudgment interest awarded on the damages specifically excluded from article 4590i's damages cap by section 11.02(b), but that Auld may recover prejudgment interest on damages subject to the cap only to the extent that such interest does not exceed the cap. Accordingly, we reverse in part and remand to the trial court to render judgment in accordance with this opinion.

I

Martha Hary became a resident at Heritage Western Hills Nursing Home (Heritage) in August 1994. When she arrived at Heritage, Hary suffered from, among other things, Alzheimer's disease, anxiety, malnutrition, emphysema, and spinal arthritis. She resided at Heritage for about one year before she was hospitalized in Fort Worth, where she was treated for ten days. After her hospitalization, Hary was transferred to a different nursing home that is not a party to this suit.

Through her next friend Francis Orr, Hary filed suit against Horizon/CMS Healthcare Corporation (Horizon) alleging that its nursing home -- Heritage -- was negligent and grossly negligent by failing to provide her with medical care and treatment within the acceptable standard of care. Hary alleged that substandard nursing care proximately caused her to develop pressure sores, that she suffered from contractures in all extremities, that not all the wound-care treatments and pressure-relieving devices that had been ordered were provided to her, and that the care actually administered for her pressure sores was painful. While the case was pending, Hary died from a heart attack. Hary's administratrix, Lexa Auld, continued the suit through a survival action, which was tried to a jury.

The jury returned a verdict of $2,371,000 in actual damages, which included $1,750,000 for physical pain and mental anguish, $150,000 for disfigurement, $250,000 for impairment, and $221,000¹ for medical care. The jury also awarded $90,000,000 in punitive damages, based on its finding that the nursing home engaged in grossly negligent conduct toward Hary. The trial court reduced both the actual and punitive damages awards. The court applied the article 4590i cap to the actual damages award and reduced it to $1,541,203.13, which represented the capped limit, adjusted for changes in the consumer price index,² plus medical expenses, which the statute specifically excludes from the cap. See Tex. Rev. Civ. Stat. art. 4590i, §§ 11.02(a),(b), 11.04.

The court also reduced the punitive damages award from $90,000,000 to $9,483,766.92, based on the statutory cap on punitive damages awarded in personal injury suits found in Texas Civil Practices and Remedies Code section 41.007. This reduction was based on the version of the Texas Civil Practice and Remedies Code cap applicable at the time Hary's cause of action accrued. It provided that "exemplary damages awarded against a defendant may not exceed four times the amount of actual damages or $200,000, whichever is greater." Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.12, sec. 41.007, 1987 Tex. Gen. Laws 37, 46, amended and renumbered by Act of April 11, 1995, 74th Leg., R.S., ch. 19, § 1, 1995 Tex. Gen. Laws 108, 111 (current version at Tex. Civ. Prac. & Rem. Code § 41.008). Using this formula, the court multiplied the jury's uncapped actual damages award³ by four to calculate the punitive damage total of $9,483,766.92.⁴ The trial court further awarded prejudgment interest on the capped actual damages at the rate of ten percent per annum, totaling $211,968.21. Both parties appealed. The court of appeals affirmed, finding no reversible error. 985 S.W.2d 216. We affirm all parts of the court of appeals' judgment, except for the award of prejudgment interest on the capped amount of actual damages.

II

Punitive Damages

The court of appeals held that punitive damages awards in health-care-liability claims are not capped by article 4590i, section 11.02(a). 985 S.W.2d at 224. Instead, the court of appeals affirmed the trial court's application of the punitive damages cap found in Texas Civil Practice and Remedies Code section 41.007. Id. at 224, 234.

A

Article 4590i

Texas Revised Civil Statute article 4590i, section 11.02 provides:

(a) In an action on a health care liability claim where final judgment is rendered against a physician or health care provider, the limit of civil liability for damages of the physician or health care provider shall be limited to an amount not to exceed $500,000.

(b) Subsection (a) of this section does not apply to the amount of damages awarded on a health care liability claim for the expenses of necessary medical, hospital, and custodial care received before judgment or required in the future for treatment of the injury.

Tex. Rev. Civ. Stat. art. 4590i, § 11.02(a),(b). Horizon argues that article 4590i should cap punitive damages in this case because the phrase "civil liability for damages" necessarily includes all obligations to pay damages in a civil case, without distinction between actual damages and punitive damages. Horizon focuses on the Legislature's specific exclusion of certain types of medical expenses from section 11.02(a)'s application. Auld contends the opposite -- that punitive damages are not capped under article 4590i because the term "damages," as used in the statute, means "compensation for injury or loss," which would not include punitive damages.

This Court's ultimate goal in construing a statute is to give effect to the Legislature's intent as expressed in the language of the statute. See Crimmins v. Lowry, 691 S.W.2d 582, 584 (Tex. 1985). Article 4590i does not define "damages." It does, however, provide that "[a]ny legal term or word of art used in this part, not otherwise defined in this part, shall have such meaning as is consistent with the common law." See Tex. Rev. Civ. Stat. art. 4590i, § 1.03(b). After exploring the common law to ascertain the common-law meaning of "civil liability for damages," we reach the conclusion that the common law provides no meaningful guidance regarding whether punitive damages should be included in a common-law definition of "civil liability for damages." Compare, e.g., City of Dallas v. Cox, 793 S.W.2d 701, 733 (Tex. App.-Dallas 1990, no writ) (citing McRae v. Lindale Indep. Sch. Dist., 450 S.W.2d 118, 124 (Tex.Civ.App.-Tyler 1970, writ ref'd n.r.e.), which defines the term "damages" as "the sum of money the law awards as pecuniary compensation, recompense, or satisfaction for an injury done or a wrong sustained as a consequence of either a breach of a contractual obligation or a tortious act"); and Dalby v. Lyle, 105 S.W.2d 764, 766 (Tex.Civ.App.-Amarillo 1937, no writ) ("Damages are compensation for loss . . . .") with Azar Nut Co. v. Caille, 734 S.W.2d 667, 668-69 (Tex. 1987) (affirming the court of appeals' conclusion that the term "damages," as used in the retaliatory-discharge provision of the workers' compensation statute, included punitive damages); American Home Assurance Co. v. Safway Steel Prods. Co., 743 S.W.2d 693, 701-02 (Tex. App.-Austin 1987, writ denied) (interpreting two insurance policies that obligated an insurer to pay all sums the insured became legally obligated to pay as damages to encompass both actual and punitive damages); Castleberry v. Frost-Johnson Lumber Co., 283 S.W. 141, 142 (Tex. Comm'n App. 1926, judgm't adopted) (holding that "the word 'damages,' unless limited, as is not done [in the Workmen's Compensation Act,] covers exemplary as well as actual damages"). Nevertheless, any ambiguity concerning the scope of the meaning of "civil liability for damages" is clarified by the statute's legislative history.

Horizon and amici curiae⁵ in support of Horizon's position argue that the statute's legislative history evinces a legislative intent to include both punitive and compensatory damages within article 4590i's cap, primarily focusing on the specific exclusion of certain damages in section 11.02(b). On the other hand, Auld and supporting amici curiae⁶ assert that article 4590i's legislative history demonstrates the Legislature's intent not to include punitive damages within the cap. We agree with Auld that article 4590i's legislative history indicates that the Legislature did not intend to...