# Petition — State Board of Medicine v. Jones

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1152%3A1

## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1977
- **Citation:** 431 U.S. 914

## Text

IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1976

no. “6-92

STATE BOARD OF MEDICINE and DEPARTMENT

OF HEALTH AND WELFARE of the State of

Idaho, and IDAHO MEDICAL ASSOCIATION

and IDAHO HOSPITAL ASSOCIATION, Petitioners,

V-.

A. CURTIS JONES, JR., M.D., ROY J.
ELLSWORTH. M.D., ROBERT B. MONTGOMERY,
M.D., ST. LUKE'S HOSPITAL, LTD., and
COMMUNITY HOSPITAL OF IDAHO FALLS,
IDAHO, and KENNETH E. DROULARD, M.D.,
and J. R. FARBER, M.D., Respondents.

PETITION FOR A WRIT OF CERTIORARI TO
THE IDAHO SUPREME COURT

WAYNE L. KIDWELL RICHARD C. FIELDS
Attorney General of Moffatt, Thomas,
Idaho Barrett & Blanton

PETER E. HEISER, JR. P. O. Box 829
Chief Deputy Attorney Boise, Idaho 83701
General of Idaho
State Capitol PAUL S. STREET
Boise, Idaho 83702 Moffatt, Thomas,

Barrett & Blanton

EUGENE C. THOMAS P. O. Box 829

Moffatt, Thomas, Boise, Idaho 83701

Barrett & Blanton

Special Assistant

Attorneys General Counsel for Petitioners
of Idaho

P. O. Box 829

Boise, Idaho 83701

INDEX
Page

GebeSaees BSIGPicccceccceeacvecuceseosese F
DUBESGELSCEIOR sc cccccecccccceccecséeceee
Questions presented... .ceccccecccces
Statutes IMVOL VAG. ccccccccccscececes
StAtCeMeNnt.cccccccccccccccccesesccove
Reasons for Granting This Writ...... 1
1. The Decision Below Conflicts
With the Decisions of This
Court Interpreting the Standard
of Review Required By the Equal
Protection Guaranty and the
Standard of Review Employed
Constitutes an Invasion of
the Legislature's Fact Finding
PUMCEIOM. ccocccccescecoceceoe 16
2. The Decision Below Conflicts
With the Decisions of This
Court Holding That Inquiry
Will Not be Made Beyond the
Stated Purpose of a Statute
Into Legislative Motivation
or Wisdom When the Consti-
tutionality of a Statute is
CROLIGRGEE. cocccccesecscecsoces JG
3. The Petition Presents Fed-
eral Questions of National
Importance to the States in
Their Attempts to Deal With
the Medical Malpractice
Imeurance CeisiS. cccccceccecs 21
ComOlusiORec cccccccccecsocececsceoes 24

APPENdixX..cccccccccccccccccccccccccAPp.l

OuUIwW WwW dN

CITATIONS

CASES:

Ada County v. Wright, 60 Idaho 394,
92 P.2d 134 7S

City of Charlotte v. Local] 660,
Intern. Ass'n. of Fire-
fighters, U.S. (1976),

96 S.Ct. 2036, 48 L. Ed.2d 636....

City of New Orleans v. Dukes,

U.S. (1976), 96 S.Ct.

a Pom, 8 FO rare

Gillesby v. Board of County
Commrs. of Canyon Cty., 17
Idaho 586, 107 P. 71 (1910).......

Katzenbach v. Morgan, 384 U.S.

641

(1969) ..ccccccccccccccccccccce

Jones v. Power County, 27 Idaho
656, 150 BP. 35 (1915S) .cccccccdcces

Leonardson v. Moon, 92 Idaho 796,
GBR Pode SES CAPSS) oe ccesccscceseoces

Marshall v. U.S., 414 U.S. 417
tt «<0 66666666666606666606066080

McGowan v. Maryland, 336 U.S.

420.

Page

10

ll,

ll,

15,

ll,

17

16

19

10

17

1l

CITATIONS

Page
CASES:

Mourning v. Family Publications
Service, Inc., 411 U.S. 356
Ole) arr rr TTT?) 15,

Oregon v. Mitchell, 400 U.S. 112
CRETE? o ccceccceeeseeseeeseeeeeeees

Reed v. Reed, 404 U.S. 71
EROUAD © 00 06 000666 6660066000006086084 10,

Robbins v. Joint Class A School
Dist. No. 331, 72 Idaho 500,
2664 P.28 11064 (1952) eccocccccecseoes

Silver v. Silver, 280 U.S. 117
ERD 00000065 6eebee ee be eeseeeeeee

State ex rel. Nielson v. Lindstrom,
68 Idaho 226, 191 P.2d 1009.......

United States v. O'Brien, 391 U.S.
367 OO SST 15,

19

19

16

10

22

19

IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1976

No.

STATE BOARD OF MEDICINE and DEPARTMENT

OF HEALTH AND WELFARE of the State of

Idaho, and IDAHO MEDICAL ASSOCIATION

and IDAHO HOSPITAL ASSOCIATION, Petitioners,

Vv.

A. CURTIS JONES, JR., M.D., ROY J.
ELLSWORTH, M.D., ROBERT B. MONTGOMERY,
M.D., ST. LUKE'S HOSPITAL, LTD., and
COMMUNITY HOSPITAL OF IDAHO FALLS,
IDAHO, and KENNETH E. DROULARD, M.D.,
and J. R. FARBER, M.D., Respondents.

PETITION FOR A WRIT OF CERTIORARI TO
THE IDAHO SUPREME COURT

The State Board of Medicine and the
Department of Health and Welfare of the
State of Idaho and The Idaho Medical Associ-
ation and Idaho Hospital Association,
petitioners herein, pray that a Writ of
Certiorari issue to review the Judgment

of the Supreme Court of Idaho, entered

2
in the shove-entities case on October
15, 1976.
OPINIONS BELOW

The opinion of the Supreme Court
of Idaho is reported at 555 P.2d 398,
and is printed in the Appendix at page
2. The memorandum opinion of the District
Court of the Fourth Judicial District
of the State of Idaho is unreported and
is printed in the Appendix at page 45.
The Declaratory Judgment entered by the
District Court of the Fourth Judicial
District of the State of Idaho is printed

in the Appendix at page 52.

JURISDICTION
The Judgment of the Supreme Court
of Idaho (Appendix page 1), was filed
on October 15, 1976. The opinions became
final by the issuance of a remittitur
by the Idaho Supreme Court on November

5, 1976. The jurisdiction of the Court

3

is invoked under 28 U.S.C. § 1257(3).

QUESTIONS PRESENTED

1. Does the equal protection guarantee
of the U.S. Const. amend. XIV, §l, as
construed by this Court in Reed v. Reed,
404 U.S.71 (1971), require use of a “means-
focus" test involving a factual review
of the means by which the legislative
classification achieves the statutory
purpose?

2. May a court inquire beyond the stated
legislative purpose into the motives of
the legislature in reviewing a statute
challenged under the due process guarantee
of U.S. Const. amend. XIV, §1?

3. Is it a denial of equal protection
and due process as guaranteed by U.S.
Const. amend.XIV, §1, to place restrictions
On medical malpractice actions?

STATUTES INVOLVED

U.S. Const. amend. XIV, § l:

4

"All persons born or naturalized

in the United States, and subject

to the jurisdiction thereof, are
citizens of the United States and

the state wherein they reside. No
state shall make or enforce any law
which shall abridge the privileges

or immunities of citizens of the
United States; nor shall any state
deprive any person of life, liberty
or property, without due process

of law: nor deny to any person within
its jurisdiction the equal protection
of the laws."

Idaho Const., art. l, § 2:

"All political power is inherent

in the people. Government is instituted
for their equal protection and benefit,
and they have the right to alter,

reform or abolish the same whenever

they may deem it necessary; and no
special privileges or immunities

shall ever be granted that may not

be altered, revoked, or repealed

by the legislature."

Idaho Const., art. l, § 13:

"In all criminal prosecutions, the
party accused shall have the right
to a speedy and public trial; to
have the process of the court to
compel the attendance of witnesses
in his behalf, and to appear and
defend in person and with counsel."

Idaho Const., art. l, § 18:
"Courts of justice shall be open

to every person, and a speedy remedy —
afforded for every injury of person,

5

property or character, and right

and justice shall be administered
without sale, denial, delay, or prejud-
ice."

Idaho Const., art. 2, Section 1:

"The powers of the government of

this state are divided into three
distinct departments, the legislative,
executive and judicial; and no person
or collection of persons charged
with the exercise of powers properly
belonging to one of these departments
shall exercise any powers properly
belonging to either of the others,
except as in this constitution ex-
pressly directed or permitted."

Idaho Const. art III, §19, set forth
in the Appendix at page 55.

Title 39, Chapter 42, Idaho Code,
set forth in the Appendix at page
58.

STATEMENT

In response to the medical malpractice
insurance crisis, the 1975 Idaho Legislature
enacted Title 39, Chapter 42, Idaho Code.
(Appendix pages 58 through 67). The purpose
of the act is set forth in Section 39-

4202, Idaho Code, as follows:

"It is the declaration of the legis-
lature that appropriate measures
are required in the public interests

6 *

to assure that a liability insurance
market be available to physicians,
and to licensed hospitals providing
health care in this state and that
the same be available at reasonable
cost, thus assuring the availability
of such hospitals and physicians

for the provision of care to persons
in the state. It is, therefore,
further declared that a limitation
upon and required underwriting of

the potential liability of such license
providers of health care is in the
public interest and that all exposure
to civil liability of such providers
of health care on account of any
error, omission, neglect or other
wrongdoing in the provision of care

- be limited and codified in

and by this act." (Appendix page

58)

This legislative declaration was arrived

at after extensive legislative hearings.

To fulfill the legislative purpose,

the Act contains the following limitations

on medical malpractice actions:

Re

Professional liability of physicians

is limited to compensatory damages not

previously paid up to a maximum amount

of $150,000 per claim or $300,000 per

occurrence. Hospital liability is similarly

limited.

(Section 39-4204 and Section

7
39-4205, Idaho Code, Appendix pages 59-
60.)

2. Medical malpractice actions are
limited to the common law theory of negligence.
(Section 39-4210, Idaho Code, Appendix
pages 66-67.)

3. Plaintiff's attorney fees in
medical malpractice actions in excess
of 40% of the recovery are presumed unreasonable
and uncollectible. (Section 39-4213, Idaho
Code, Appendix pages 66-67)

4. Physicians and hospitals are
required to carry medical malpractice
liability insurance within the limitations
of liability. (Section 39-4206, Idaho
Code, Appendix pages 60-61)

A declaratory judgment action was brought
in the district court of the State of
Idaho challenging the above stated limitations
on malpractice actions as being unconstitut-
ional in violation of the state and federal

guarantees of due process and equal protect-

8
ion of the law. In a memorandum decision,
the District Court held the Act not in
violation of the federal and state equal
protection and due process guarantees,
but held it unconstitutional in violation
of Article ‘i Section 18 of the Idaho
Constitution, which guarantees access
to the courts. (Appendix page 51)

An appeal from the district court
decision to the Idaho Supreme Court was
perfected, which put in issue the equal
protection and due process challenges
to the limitations. On October 15, 1976,
the Idaho Supreme Court filed a decision °
reversing the district court, but remanding
the case for a further factual hearing
to enable application of the equal protection
and due process tests which were considered
by the court to be the same guarantees
requiring the same standard of review
under U.S. Const. amend. XIV, § 1, and

Idaho Const. art. l, §§ 2, 13 and 18.

9
The Idaho Supreme Court in its remand
also posed the question to the Court below
of whether the legislation under considera-
tion was a type of “local or special law"
prohibited by art. 3, Section 19, Idaho

Constitution. (Appendix page 55.) That

question must be answered in the negative

on the basis of existing case law determined
by the Idaho Supreme Court. It has long
been held in Idaho that so long as an

act extends the same privileges to all
belonging to the same class, and there

is no discrimination inherent in the act

as to that class, and the provisions of

the act give all persons belonging to

the class an equal opportunity, the act

is not in effect local or special as prohib-

ited by the Idaho Constitution. Gillesby

v. Board of County Commrs. of Canyon County,

17 Idaho 586, 107 P. 71 (1910); Jones

v. Power County, 27 Idaho 656, 150 P.

35 (1915]; State ex rel. Nielson v. Lindstrom,

10
68 Idaho 226, 191 P.2d 1009 (1948); Robbins

v. Joint Class A. School Dist. No. 33l,

72 Idaho 500, 244 P.2d 1104 (1952); Leonardson

v. Moon, 92 Idaho 796, 451 P.2d 542 (1969).

Local or special laws, as prohibited in
Idaho, are such as apply to one individual,
to individuals out of a single class simi-
larly situated, or to a special locality.

Ada County v. Wright, 60 Idaho 394, 92

P.2d 134 (1939). A statute is general

if its terms apply to, and its provisions
operate upon, all persons and subjects

in a like situation says the Idaho Supreme

Court. Jones v. Power County, supra,

27 Idaho at 665, 150 P. at 37. Thus,
it is clear from the face of the legislation
under consideration that it is not of
a local or special nature prohibited by
the Idaho Constitution. |
In applying the equal protection test,

the court held that in Reed v. Reed, 404

U.S. 71 (1971), this court created a new

11

constitutional test labeled the "means-
focus" test to be applied to statutory
Classifications involving invidious discrim-
ination. (Appendix pages 15-16) This
new test requires judicial scrutiny of
the means by which the legislation effects
its purpose.

The traditional equal protection test
of reviewing the challenged legislation
Classification to determine if it had

a rational basis as articulated in McGowan

v. Maryland, 366 U.S.420 (1961), 425-426,

was rejected. The court failed to discuss
this court's applications of the rational
basis test subsequent to the Reed case

as found in Marshall v. U.S., 414 U.S.

417 (1974), and City of Charlotte v. Local

660, Intern. Ass'n. of Firefighters,

U.S. , (1976) 96 S.Ct. 2036 48 L.Ed2d

636. (1976), and City of New Orleans v.

Dukes, U.S. (1976) 96 S.€t. 2513,

49 L.Ed 2d 511, (June 25, 1976). The

12

fact that the Reed case involved a sex
based claim of discrimination was also
not addressed.

The court below found insufficient facts
in the record for application of the means-
focus test and remanded the case for a

factual hearing on the following questions:

"Is there indeed a medical malpractice
crisis in Idaho? Are physicians

and hospitals in Idaho being charged
excessive, grossly unfair premiums

for medical malpractice insurance

(and if so, what is the position

of the Director of the Department

of Insurance of the State of Idaho

in relation to duties imposed upon
him, see, I.C. § 41-201 et.seq.),

or are the monumental increases in
medical malpractice insurance premiums
reasonably attributable to the costs
of doing business in the medical
malpractice insurance field? Is

medical malpractice insurance unavailable

at reasonable rates in the absence

of legislative enactments? Is the
threat cof unavailability of health

care to the people of Idaho a reality
or not? Has there been, as suggested,
an increased rash of claims and sizable
recoveries or settlements in favor

of persons alleged to have suffered

as the result of medical malpractice

in Idaho? Finally and most importantly,
if there is indeed a medical malpractice

insurance crisis in Idaho, what is
the effect or will be the effect

13
of the limits of recovery and the
other provisions of the subject Act
with respect to forestalling or abating
the crisis? In the absence of any
factual information bearing on these
questions, if indeed there are answers,
no decision can be made by this Court
in the area of the equal protection
challenge to the Act." (Appendix
pages 32-34)
Petitioners submit that these same questions
were asked and answered in the lengthy
legislative hearings on this matter.
Unfortunately, Idaho keeps no published
record of such legislative hearings.
The questions posed by the Idaho Supreme
Court on remand constitute an attempt
of the judicial branch of the Idaho government
to invade the exclusive province of the
judiciary by holding judicial “legislative
history" hearings so as to form a written
record of investigation into that which
the Idaho Legislature has already determined.
Such judicial intrusion into an exclusive

legislative province is forbidden by Idaho

Const., art. 2, Section l, and has never

14
been permitted by this Court in reviewing
a due process challenge.

In applying the due process test, the
court below recognized that ordinarily
the due process guarantee requires
application of a "minimal scrutiny
test." However, the due process question
was remanded to the district court for a
fact finding hearing consistent with the
equal protection remand on the following
grounds:

"Questions of due process arising

in challenges to legislation ordinarily

result in a minimal scrutiny test,
and this Court and others have at

times engaged in speculative inquiry.

in order to identify any conceivable
rational relationship which would
legitimize the legislative action.
Nevertheless, it is argued, and we
agree, that there is considerable

doubt if the purpose of the limitations

as declared in the Act is in fact
the true object of legislatiye
concern. Also, there is doubt as
to the relationship between the
challenged limitations and the
legitimate public purposes that
this Act may be said to serve. We
therefore deem it prudent to refrain
from a decision on the question of
due process without the production
of a more factually revealing,

15

evidentiary record.” (Appendix
page 23)

In essence, the Idaho Supreme Court
directed the district court to hold a
hearing on the "true object of legislative
concern" on remand. By inquiring behind
the stated legislative purpose in applying
the due process test, the court below is
in conflict with the constitutional rule
of construction, the courts will not
inquire into the wisdom or motivation of

the legislature. Mourning v. Family

Publications Service, Inc., 411 U.S. 356

(1973); United States v. O'Brien, 391

U.S. 367 (1968); Katzanbach v. Morgan,

384 U.S. 641 (1966).
This pétition was filed prior to the

commencement of any proceedings on remand.

16

REASONS FOR GRANTING THIS WRIT

1. |THE DECISION BELOW CONFLICTS WITH

' THE DECISIONS OF THIS COURT INTER-

PRETING THE STANDARD OF REVIEW
REQUIRED BY THE EQUAL PROTECTION
GUARANTY AND THE STANDARD OF
REVIEW EMPLOYED CONSTITUTES AN
INVASION OF THE LEGISLATURE'S FACT
FINDING FUNCTION.

By remanding the case to the district
court for a fact finding hearing for
application of the means-focus test, the
Idaho Supreme Court misinterpreted the
equal protection test set forth in this
court's decisior in Reed v. Reed, 404
U.S. 71 (1971), and applied an equal
protection test in conflict with this .
court's most recent application of the

equal protection guarantee in City of

New Orieans v. Dukes, U.S. ae

(1976), 96 S.Ct. 2513, 2516-2517, 49
L.Ed. 2d 511, wherein it was held:

"Unless a classification trammels
fundamental personal rights or is
drawn upon inherently suspect
distinctions such as race, religion,

17

or alienage, our decisions presume

the constitutionality of the statutory
discriminations and reguire only

that the classification challenged

be rationally related to a legiti-
mate state interest.

The use of the means-focus test is
also in direct conflict with this court's

decisions in Marshall y. United States,

414 U.S. 417 (1974), and City of Charlotte

v. Local 660 Intern. Ass'n. of Firefighters,

__—*U.S. ss (1976), 96 S.Ct. 2036, 48
L.Ed. 2d 636.

By applying the means-focus test, the
Idaho Supreme Court has subjected the
parties to this action to the time, cost
and expense of conducting a fact finding
hearing on the very issues that were
presented to the legislature. Thus the
Idaho Supreme Court, under the guise of
the equal protection guarantee, is

setting itself up as a “superlegislature"

to determine if the Idaho legislature

18

chose the appropriate means to deal with
the medical malpractice insurance crisis.

The decision below did not limit use
of the means-focus test to the case at
bar, but makes it applicable to any
equal protection challenge inyolving
“invidious" discrimination. In all such
cases, a fact finding hearing must be
held to determine the constitutionality
of the law in question. Obviously,
underlying facts change, resulting in
the possibility of a determination of
violation of the equal protection
guarantee at any point in time regardless
of prior adjudication. If the limitations
on malpractice actions successfully
eliminate the crisis, does the law
become unconstitutional because there is
no crisis? The means-focus test will
result in the unending questioning and

re-testing of legislation.

19

2. THE DECISION BELOW CONFLICTS WITH
THE DECISIONS OF THIS COURT HOLDING
THAT INQUIRY WILL NOT BE MADE
BEYOND THE STATED PURPOSE OF A
STATUTE INTO LEGISLATIVE MOTIVATION
OR WISDOM WHEN THE CONSTITUTIONALITY
OF A STATUTE IS CHALLENGED.

In reviewing the act in question under
the due process guarantee, the Idaho.
Supreme Court violated a fundamental
principal of constitutional law of this
court by looking beyond the stated
legislative purpose and inquiring into
the motivation of the legislature.
Invitations to make such inquiries have

been uniformly rejected by this court.

Mourning v. Family Publications Service,

Inc., 411 U.S. 356 (1973); United

States v. O'Brien, 391 U.S. 367 (1968);

Katzenbach v. Morgan, 384 U.S. 641

(1966). Oregon y. Mitchell, 400 U.S. 112

(1970). As noted by Justice Harlan, in

his concurring opinion in Oregon v,

Mitchell, 400 U.S. 112, 205 (1970):

20

"It is suggested that the proper
basis for the doctrine enunciated

in (Katzenbach y) Morgan lies in

the relative factfinding competence
of Court, Congress, and state legis-
latures. (Citation, post, omitted.)
In this view, as I understand it,
since Congress is at least as well
qualified as a state legislature to
determine factual issues, and far
better qualified than this Court,
where a dispute is basically factual
in nature the congressional finding
of fact should control, subject

only to review by this Court for
reasonableness." ‘

Justice Black, writing for the majority
in an opinion joined in by Justice
Douglas, Brennan, White, and Marshall,

stated in Oregon v. Mitchell, supra, at

247-248:

"The nature of the judicial process
makes it an inappropriate forum for
the determination of complex factual
questions of the kind so often in-
volved in constitutional adjudication.
Courts, therefore, will oyerturn a
legislative determination of a factual
question only if the legislature's
finding is so clearly wrong that it
may be characterized as ‘arbitrary,'
‘irrational,' or ‘unreasonable.'"
(Citations omitted.)

— eh es

21

To permit such an inquiry under the
pretense of application of the due
process guarantee will result in neyer-
ending inquiries into legislators'
voting records, occupations, ambitions,
friendships and a myriad other factors,
all of which are irreleyant to the
impact of the legislation. To force
litigants into such an inquiry whenever
a due process question is raised would
limit the availability of the guarantee
and discourage its use.

3. THE PETITION PRESENTS FEDERAL
QUESTIONS OF NATIONAL IMPORTANCE .TO
THE STATES IN THEIR ATTEMPTS TO
DEAL WITH THE MEDICAL MALPRACTICE
INSURANCE CRISIS.

Petitioners urge this court to grant
their petition because of the national
importance of a decision in the area of
state attempts to meet and deal with a

very real the medical malpractice

insurance crisis. It is undisputed that

22
the nation is currently undergoing a
crisis in the field of medical mal-
practice insurance, which is manifested
by skyrocketing premium rates and
limited availability.+ The statute
involved in this action is one state's
attempt to deal with the problem. It is
the first decision by a state court in
this field to directly raise federal
questions.

This court was presented with a similar
national problem which individual states
were seeking to meet in Silver v. Silver,
280 U.S. 117 (1929), wherein a constitu-
ttional challenge was raised against
automobile guest statutes. This court
held:
lsymposium on Medical Malpractice, 1975
Duke L.J. 1177 (1975), particularly, An
Analysis of State Legislative Responses
to the Medical Malpractice Crisis, 1975
Duke L.J. 1417 (1975); U. S. Department
of Health, Education and Welfare, Report
of the Secretary's Commission on Medical
Malpractice (1973); Curran, Medical

Malpractice: A Genuine National Crisis,
292 New England J. Med. 1223 (1975).

23

"The use of the automobile as an
instrument of transportation is
peculiarly the subject of regula-
tion. We cannot assume that there
are no evils to be corrected or
permissible social objects to be
gained by the present statute. We
are not unaware of the increasing
frequency of litigation in which
passengers carried gratuitously in
automobiles, often casual guests or
licensees, have sought the recovery
of large sums for injuries alleged
to have been due to negligent
operation. In some jurisdictions
it has been judicially determined
that a lower standard of care
should be exacted where the carriage
in any.type of vehicle is gratuitous.
* * * Where there has been a
serious increase in the evils of
vexatious litigation in this class
of cases, where the carriage is by
automobile, is for legislative
determination, and, if found, may
well be the basis of legislative
action further restricting the
liability. Its wisdom is not the
concern of courts." 280 U.S. at
122-123

This petition presents this Court the
opportunity to declare that state attempts
to meet medical malpractice insurance
problems are similarly a matter for
State legislative action and to declare

that such attempts will not be saddled

24
with extraordinary standards of review.
The granting of this petition would thus
serve to guide the indiyidual states in
meeting the health care needs of their
citizenry.

CONCLUSION

For the foregoing reasons this petition

for writ of certiorari should be granted.

WAYNE L. KIDWELL

Attorney General of
Idaho

State Capitol

Boise, Idaho

PETER E. HEISER, JR.
Chief Deputy Attorney
General of Idaho
State Capitol

Boise, Idaho

EUGENE C. THOMAS

Moffatt, Thomas,
Barrett & Blanton
Special Assistant
Attorney General of
Idaho.

P. 0. Box 829

Boise, Idaho

25

RICHARD C. FIELDS
Moffatt, Thomas,
Barrett & Blanton
P. O. Box 829
Boise, Idaho 83701

PAUL S. STREET
Moffatt, Thomas,
Barrett & Blanton
P. O. Box 829
Boise, Idaho 83701

APPENDIX

—— ee

1

IN THE SUPREME COURT OF THE STATE OF IDAHO

No. 12093

A. CURTIS JONES, JR., )
M.D., ROY J. ELLSWORTH, )
M.D., ROBERT B. MONT- )
GOMERY, M.D., ST. LUKE'S)
HOSPITAL, LTD. and

COMMUNITY HOSPITAL OF
IDAHO FALLS, IDAHO,

— ~~ ee

Plaintiffs-Respondents)

)

and KENNETH E. DROULARD,)

M.D. and J.R. FARBER, )
M.D.,

)
)
Plaintiff Intervenors-)
Respondents, )
)
)
)

Vv.

STATE BOARD OF MEDICINE )
and DEPARTMENT OF HEALTH)
AND WELFARE of the )
State of Idaho, )

)
Defendant-Appellants, )
)
and
)
IDAHO MEDICAL ASSOCI-
ATION and IDAHO HOSPITAL
ASSOCIATION,
)

)
Defendant Intervenors-)
Appellants,

STATE OF IDAHO, and

MONROE G. GALLAHER,

)

)

)

)

; )
and )
)

)

)

)

)

Intervenor-Appellant.

Boise June 1976
term

Filed: Oct. 15 1976

R.H. Young, Clerk

Peer oe

2

Appeal from the District Court of the
Fourth Judicial District, State of Idaho,
Ada County. Honorable Alfred C. Hagan,
District Judge.

Appeal from declaratory judgment hold-
ing Hospital-Medical Liability Act (medical
malpractice legislation) unconstitutional. ,
Reversed and remanded for further proceed-
ings.

Eugene C. Thomas, Spec. Asst. Attorney
General, Moffatt, Thomas, Barrett &
Blanton, Boise, for Defendant~-Appellants.

Paul S. Street, Moffatt, Thomas,
Barrett & Blanton, Boise, for Defen-
dant Intervenors~-Appellants.

Richard C. Fields, Moffatt, Thomas,
Barrett & Blanton, Boise, for Inter-
venor-Appellant.

Paul S. Boyd, Boise, for Plaintiffs-
Respondents.

Lloyd J. Webb, Webb, Pike, Burton &
Carlson, Twin Falls, for Plaintiff-
Intervenors~-Respondents.

SHEPARD, J.

This is an appeal from a judgment ‘
which held the 1975 Hospital-Medical Liabil-
ity Act unconstitutional. The action was
brought for declaratory judgment by certain °
physicians and hospitals against the State
Board of Medicine and the Idaho Department
of Health and Welfare. We reverse and re-
mand for further proceedings.

The Act in question, Title 39, Ch. 42,
Idaho Code, was enacted as a result of an

3

alleged “medical malpractice insurance
crisis." Among other physicians it places
limitations on the remedies and recovery of
medical malpractice actions in Idaho against
physicians and acute care health facilities
licensed in the state. Therein a ceiling
is set on recoverable damages for actions
against physicians of $150,000 per claim
and $300,000 per occurrence, I.C. Section
39-4204. The Act also sets a ceiling on
recoverable damages for actions against
acute care hospitals of $150,000 per claim
and $300,000 per occurrence or the amount
of $10,000 multiplied by the total number
of beds in the hospital, I.C. Section
39-4205. The Act limits the grounds for
malpractice actions to those of common law
negligence and requires that recovery should
be restricted to compensatory damages not
satisfied from collateral sources, I.C.
Section 39-4210. We note parenthetically
that the term “compensatory damages" is not
defined by the Act and it is appellants'
argument that such provision was only in-
tended to exclude punitive damages. The
Act also requires all physicians and hospi-
tals in Idaho to obtain malpractice insur-
ance as a condition of licensure, I.C.
Sections 39-4206, 4208, 4209.

Plaintiff-respondents are licensed
physicians and hospitals in Idaho who are
alleged to be affected by the provisions of
the Act. Respondents below alleged that be-
cause of the constitutional doubts raised
as to various portions of the Act, they
have been compelled to maintain malpractice
insurance coverage in excess of the specific
liability limitations set forth in the Act.
The cost of this seemingly unnecessary cov-
erage, they contend, has necessarily had to
be passed on to their patients. They also
allege that uncertainty as to the validity

4

of the limitations set forth in the Act

has compounded a crisis in medical mal-
practice insurance as indicated by excess-
ive insurance costs and a reluctance of
insurers to offer coverage competitive or
otherwise to health care providers. Accord-
ingly, pursuant to I.C. Section 10-1201 et.
seq., plaintiff-respondents sought to have
their status and legal obligations under
the Act resolved by declaratory judgment.
They contended that the limitations found
in I.C. Sections 39-4204, 4205 and 4210 are
in violation of the due process and equal
protection clauses of the Fourteenth Amend-
mend and Art I, Sections 2, 13 and 18 of
the Idaho Constitution. They also sought
invalidation of the conditions of licensure
found in I.C. Sections 39-4206, 4208 and
4209.

Appellant-defendants are the State
Board of Medicine and the Department of
Health and Welfare who are charged with
hospital and physician licensing and general
health care regulation. I.C. Sections
54-1805, et.seq., I.C. Sections 39-1303,
1305. In response to plaintiff-respondents'
complaint, they admitted all allegations but
denied the constitutional invalidity of the
challenged limitations. The parties stipu-
lated submission of the controversy on the
merits and the only formal factual matter
submitted was the affidavit of the Director
of the Department of Insurance.

Below petitions to intervene were filed
and admitted on behalf of the Idaho Medical
Association and the Idaho Hospital Associa-
tion. They are appellant-intervenors on
this appeal. In addition, the American
Trial Lawyers Association and the Idaho
Trial Lawyers Association, the California
Trial Lawyers Association, the Washington
Trial Lawyers Association, the American

5

Medical Association and the State Depart-
ment of Insurance appear as amici curiae.

As to the due process and equal pro-
tection violations asserted by plaintiff-
respondents below, the district court held
that it would presume constitutionality and
utilize the restrained view test stating
that “the limitation of liability feature
of the Act obviously bears a reasonable
relationship to the objectives sought to be
advanced by the Act itself, i.e., the avail-
ability of liability insurance." The dis-
trict court, however, went on to hold that
the ability of citizens to seek redress for
a breach of duty is a fundamental right pre-
served by Art. I, Section 18 of the Idaho
Constitution, which the court said requires
"a full and complete remedy for every injury
of person.” The district court reasoned:

"In my opinion, Art. I, Section 18

of the Idaho Constitution prohibits
the limitation of liability for in-
juries otherwise recoverable under

a right or cause of action and recog-
nized by the common law at least at
the time of the adoption of the Idaho
Constitution in 1890. The clause pro-
vides relief for ‘every’ injury.
Particularly does this clause pro-
hibit limitation of liability where
no substitute procedure or remedy,
judicial or administrative, is pro-
vided.* * *

"By way of Section 18, the Idaho Con-
stitution recognizes those common law
causes of action as existing in 1890

as the ability of an individual to seek
redress for a breach of a duty owed as
a basic right. These basic rights must
be preserved even in time of economic

6

stress concerning a great segment of
the public, otherwise the door would

be open for the dissolution and diminu-
tion of these basic rights to the dis-
interest of the individual members of
the public under the contention and
allegation of general public necessity.

"It is thus the conclusion of this
Court that the limitation of liability
feature of the Hospital-Medical Lia-
bility Act violates Art. I, Section 18
of the Idaho Constitution and is there-
fore unconstitutional."

The court further held that that portion
of the Act requiring the acquisition of
malpractice insurance as a condition of
licensure of physicians and hospitals was
also invalid. The district court made no
holding regarding the constitutionality of
I.C. Section 39-4210 limiting malpractice
action to common law negligence and re-
covery thereon to compensatory damages.

Here, appellants assign error to the
holding of the lower court as it relates
to Art I, Section 18, and all parties here
have argued as to whether the Act violates
the due process and equal protection guaran-
tees of both the Idaho and federal consti-
tutions. Therefore we review the issues
pertaining to due process and equal pro-
tection. See, Grayot v. Summers, 75 Idaho
125, 269 P.2d 765 (1954); Taggart v. Latah
Co., 78 Idaho 99, 298 P.2d 979 (1956).

In addition, respondents and inter-
venors assert that the restricted liabil-
ity provisions of the Act are in violation
of Idaho Constitution Art. I, Section 7
(right to trial by jury) and Art. II,
Section 1 and Art. V, Section 13 (pro-
hibition against legislative encroachment

7

upon judicial functions). Those issues
were not reached below and are not reached
here.

I.

At the outset we consider the asser-
tion that the district court erred in its
finding that that portion of the Act plac-
ing a limitation on damages recoverable in
medical malpractice actions contravenes
Art. I, Section 18 of the Idaho Constitu-
tion. That section provides:

"Courts of justice shall be open to
every person, and a speedy remedy
afforded for every injury of person,
property or character, and rights and
justice shall be administered without
sale, denial, delay or prejudice."

The holding of the trial court was predica-
ted upon its opinion that by this provision
the Idaho Constitution effectively adopted
the common law as it existed in 1890 and
thereby preserved the common law right of
action for medical malpractice. See,
Nelson v. Harrington, 40 N.W. 228 (Wis.
1888). It is argued that the rights to
recovery for injury to person, property or
character which existed at the time of the
adoption of our constitution remain invio-
late and while the legislature may alter
common law remedies and attach conditions
precedent to the exercise of those common
law rights, it must provide substitute pro-
cedures or remedies in lieu thereof or it
cannot deny a remedy which existed at com-
mon law. See, Newlan v. State, 96 Idaho
711, 535 P.2d 1348 (1975) (dissenting
opinion). We hold that the trial court
erred in its reasoning and its application
of Art I, Section 18 of the Idaho Consti-
tution.

8

To adopt that argument would be to
hold that the common law as of 1890 governs
the health, welfare and safety of the citi-
zens of this state and is unalterable with-
out constitutional amendment. Nothing in
Art. I, Section 18 either explicitly or im-
plicitly prohibits legislative modification
of common law actions. Art. I, Section 18,
contains no reference whatsoever to the
common law. The only adoption of the com-
mon law in this jurisdiction is found in
Art. XXI, Section 2 of the state constitu-
tion and I.C. Section 73-116. Those pro-
visions clearly contemplate the inherent
power of the legislature to modify the
common law with few exceptions. See, State
v. McCoy, 94 Idaho 236, 486 P.2d 247 (1971)
(dictum). In Newlan v. State, supra, it
was held that while the 120-day notice re-
guirement restricts the period in which a
Claim may be brought, such does not deny
access to the courts.

Art. II, Section 6 of the Colorado
Constitution is identical to the Idaho
Constitution, Art. I, Section 18. In re-
jecting the contention that that constitu-
tiona) language preserved all preexisting
common law actions for injury to person or
property, that court said in Vogts v.
Guerette, 351 P.2d 851 (Colo. 1960):

"The common law of England was not
adopted in the state of Colorado by
our Constitution, as it was originally
approved by the people, or by (any)
subsequent constitutional enactment.
The common law prevails in this state
* * * by legislative enactment. It
may be repealed without violating our
Constitution, by our General Assembly
at any time it chooses to do so. * * *
The legislature may at any time by a
legislative act repeal any part of the

9

common law either expressly or by

passage of an act inconsistent there-
with on any particular subject." at 855
(quoting Colorado State Board of Pharmacy
v. Hallett, 296 P. 540, 541 (Colo. 1931)).

See also, O'Quin v. Walt Disney Productions
Co., 493 P.2d 344 (Colo. 1972); Ward v.
Kidd, 87 Idaho 216, 392 P.2d 183 (1964).

10
II.

We turn now to the due process and
equal protection arguments which were made
below and which have been reargued on
appeal. There is, however, a threshold
issue necessary of resolution, i.e., what
standard or standards of review are to be
applied in our scrutiny of the legislation
under the due process and equal protection
categories of constitutional inquiry. The
single test utilized by the trial court
was whether or not the limitations on
recovery bear "a reasonable relationship
to the objective sought to be advanced by
the Act." See, Employment Security Agency
v. Joint A School Dist. No. 151, 88 Idaho
384, 400 P.2d 377 (1965). However conven-
ient that analysis may be, it fails to
consider the distinct standards with
respect to questions of due process and
equal protection which are continuing
to emerge in the United States Supreme
Court and which have been applied with
some elaboration in recent decisions of
this Court.

The opinions dealing with questions of
due process and equal protection are admit-
tedly ambiguous and fluctuate in response
to changing attitudes respecting the
judiciary's role in the examination of
social and economic legislation. As one
example we have seen the highly interven-
tionist attitude on the part of the United
States Supreme Court founded upon what has
been described as a concept of "substantive
due process" give way to an extreme ,
Holmesian abstention from inquiry into the
economic implications of regulatory legis-
lation. See, McCloskey, "Economic Due
Process in the Supreme Court: An Exhuma-
tion and Reburial," 1962 Sup.Ct. Rev. 34.
At the same time in the area of equal
protection we have seen a constitutional

1l

provision described by Mr. Justice Holmes
as "the last resort of constitutional
arguments" reach an historic high water
mark as a tool for attacking invidiously
discriminatory classifications. See,
Tussman and tenBrock, "The Equal Protection
of the Laws," 37 Cal.L.Rev. 341 (1949);
"Developments in the Law of Equal Protec-
tion," 82 Harv.L.Rev. 1067 (1969).

We deem it clear that the United
States Supreme Court has departed from any
consideration of the substantive aspects of
due process as they were formerly applied
in the early part of the century. See,
Nebbia v. New York, 291 U.S. 502 (1934);
Olsen v. Nebraska ex rel. Western Ref. &
Bond Ass'n., 313 U.S. 236 (1941); Ferguson
v. Skrupa, 372 U.S. 726 (1963). Idaho has
seen a like departure from the substantive
utilization of the due process provisions
of our constitution. A possible exception
is contained in Berry v. Summers, 76 Idaho
446, 283 P.2d 1093 (1955) and Berry v.
Koehler, 84 Idaho 170, 369 P.2da 1010 (1961),
in which the Court continues to hold that
the due process clause of our state consti-
tution , Art. I, Sec. 13, protects the
right to pursue a useful occupation.
Nevertheless, we deem the differences
between the standard applied under Idaho's
due process clause and the standard applied
under the federal due process clause to be
negligible.

In Nebbia the United States Supreme
Court retreated from consideration of the
substantive aspects of due process indica-
ting that the sole question of inquiry is
to determine whether "the means selected*
* *have a real and substantial relation to
the objective sought to be obtained." At
525. The rule has been restated in terms
of whether the regulation is reasonable in

12

relation to the subject and is adopted in
the interest of the community. West Coast
Hotel Co. v. Parrish, 300 U.S. 379 (1937).
See also, Berry v. Koehler, 84 Idaho 170,
369 P.2d 1010 (1961). See also the refer-
ence to that level of analysis by the term
"rational basis test" in the opinion of
Justice Stone, U.S. v. Carolene Products,
304 U.S. 144 (1938). It is apparent that
the practical effect of the application

of that test of legislation is to sub-
stantially remove the courts from inquiry
into the ends sought to be served by a
legislative action.

It is argued here that there remains
one additional test of substantive due
process which in essence suggests that in
abolishing common law rights the legis-
lature must provide a reasonable substi-
tute for that which has been taken away..,
As later discussion will indicate, we "
do not agree and hold that the sole
standard applicable to the due process
provisions of the federal and state
constitutions is whether the challenged
law bears "a rational relationship to’
the preservation and promotion of the
public welfare." Berry v. Koehler,
supra, at 177.

We turn now to the standards appli-
cable to equal protection challenges
under the opinions of this and the United
States Supreme Court. This Court has
recognized and followed the utilization
of a two-tier examination. Thompson v.
Hagan, 96 Idaho 19, 523 P.2d 1365
(1974); Newlan v. State, supra; Stucki
v. Loveland, 94 Idaho 621, 495 P.2d
571 (1972); State v. Cantrell, 94 Idaho
653, 496 P.2d 276 (1972). But see,
Thompson v. Engelking, 96 Idaho 793,

537 P.2d 635 (1975). If the classifi-
cation involves a fundamental right

13

or a suspect classification such as

race, the state bears a heavy burden to
justify the classification by a compel-
ling state interest. That has been termed
the strict scrutiny test.

In other classifications, parti-
cularly in the areas of social welfare
legislation, a restrained standard of
review is applied. Such standard is
set forth in McGowan v. Maryland, 366
U.S. 420, 425-426 (1961):

"The constitutional safeguard

(of equal protection) is offended
only if the classification rests

on grounds wholly irrelevant to the
achievement of the state's objec-
tive. State legislatures are
presumed to have acted within their
constitutional power despite the
fact that, in practice, their law
results in some inequality. A
statutory discrimination will

not be set aside if any statement
of facts may be reasonably
conceived to justify it.”

See also, Danbridge v. Williams, 397 U.S.
471 (1970), wherein it was stated:

"If the classification has some
‘rational basis' it does not offend
the constitution simply because

the classification ‘is not

made with mathematical nicety

or because in practice it results
in some inequality.'" (Quoting
Lindsley v. Natural Carbonic Cas
Co., 220 U.S. 61, 78 (1911).

We deem it clear then that the
scrutiny to be applied in the restrained
view of an equal protection claim is

14

similar to that applied to claims which
are grounded in due process. They appear
to be distinguished only by the fact that
with respect to due process there must be
a preliminary showing that the interest
involved is a cognizable liberty or
property interest. And, with respect to
questions of equal protection, it must be
shown that the statute under attack
creates a discriminatory classification.
As a result the trial court in the case at
bar applied a single test in deciding
equal protection and due process questions
raised in the instant case.

However, the opinions of the United
States Supreme Court in Reed v. Reed,
404 U.S. 71 (1971), and Eisenstadt v.
Baird, 405 U.S. 438 (1972), would seem to
declare a new category of inquiry as to
questions of equal protection. See also,
Levy v. Louisiana, 391 U.S. 68 (1968);
Glona v. American G & L Insurance Co.,
391 U.S. 73 (1968); and Weber v. Aetna
C & S Co., 406 U.S. 164 (1972).

As above noted, the Supreme Court in
Nebbia enunciated a new standard for
examination in response to questions posed
in terms of due process. In Reed, the |
Court has apparently revived that standard,
however, now clothed in principles of
equal protection. Quoting from the long-
neglected case of F. S. Royster Guano Co.
v. Virginia, 253 U.S. 412 (1920), the
court in Reed stated:

"The Equal Protection Clause of
that amendment does, however,
deny to the states the power to
legislate that different treat-
ment be accorded to persons placed
by a statute into different classes
on the basis of criteria wholly

15

unrelated to the objective of the
statute. A classification ‘must
be reasonable, not arbitrary,

and must rest upon some ground of
difference having a fair and sub-
stantial relation to the object
of the legislation, so that all
persons similarly circumstanced
shall be treated alike.'" at
75-76.

It is our opinion that this poses a
different and higher standard than the
traditional restrained analysis of equal
protection. The standard set forth in
Reed focuses upon the relationship between
the subject legislation and the object or
purpose to be served thereby. This new
intermediate standard of equal protection
review has been described as "means-focus"
because it tests whether the legislative
means substantially furthers some speci-
fically identifiable legislative end.

See, Gunther, "In Search of Evolving
Doctrine on the Changing Court; A Model
for a Newer Equal Protectior.," 86 Harv.L.
Rev. 1 (1972).

The "means scrutiny" test enunciated
in Reed has been followed by recent
decisions of this Court in which statutes
of a blantantly discriminatory nature
have been held to be unconstitutional as
a denial of equal protection. See,
Thompson v. Hagan, supra, invalidation of
the Idaho automobile guest statute; Mesmer
v. Ker, 96 Idaho 75, 524 P.2d 536 (1974),
invalidation of the airplane guest statute;
Harrigfeld v. District Court, 95 Idaho
540, 511 P.2d 822 (1973), invalidation
of statutory discrimination between males
and females in designation of the age of
majority; Sterling H. Nelson & Sons, Inc.,
v. Bender, 95 Idaho 813, 520 P.2d 860

16

(1974), invalidating different statutorily
imposed weight limitations for haulers

of processed versus unprocessed commodi-
ties. We deem it also clear that those
opinions did not intend to replace the
traditional restrained view standard of
equal protection tests of legislation
except in those special cases involving
invidiously discriminatory classifications.
It is enough to say at this juncture that
with respect to certain statutes which
create obviously discriminatory classifi-
cations this Court will examine the means
by which those classifications are
utilized and implemented in light of the
asserted leglative purpose. However, the
burden of showing the absence of a reason-
able relationship under the means-focus
test remains with the one who assails the
classification. Lindsley v. Natural
Carbonic Gas Co., 220 U.S. 61 (1911);

Munn v. Illinois, 94 U.S. 113, 132 (1877).

17
Iil.

We now examine the question of
whether the provisions of the Act before
us are in violation of the guarantees of
due process of law found in the Fourteenth
Amendment of the United States Constitu-
tion and Art. I, §13, of the Idaho Consti-
tution. Respondents have contended that
the Act constitutes a denial of due pro-
cess in three respects: (1) It deprives
respondents of their constitutional right
to pursue a recognized profession; (2) it
limits medical malpractice actions with-
out a corresponding quid pro guo; and
(3) the recovery provisions are arbitrary,
without rational basis and against public

policy.

Section 6 of the Act, I.C. §39-4206,
provides:

"Every acute care hospital and
physician licensed to provide
health care in this state shall,
as a condition of securing and
maintaining such licensure,
unless the requirement there-
fore has been waived as pro-
vided in section 1l of this
act, secure liability insurance
underwriting the exposure to
loss referred to in sections

4 and 5 of this act (the
physician or hospital liabil-
ity limitation sections) and
shall file an appropriate
certificate of insurance as
hereinafter provided, confirm-
ing the existence of such
insurance with at least such

18

limits of liability at all
times during which licensure
remains valid.* * *"

Additional sections specify the proced-
ures for insurance certification, I.C.
§§39-4208, 39-4209, and permit the
Director of the Department of Insurance
to waive liability insurance requirements
"upon a showing by any physician or acute
care hospital of inability to comply with
the liability insurance requirements of
this act, despite reasonable and good
faith efforts to do sc." I.C. §39-4211.

Respondents contend that those statu-
tory requirements constitute an unreason-
able limitation upon their constitutional
right to pursue a recognized profession.
See, Berry v. Summers, 76 Idaho 446, 283
P.2d 1093 (1955); Berry v. Koehler, 84
Idaho 170, 369 P.2d 1010 (1961); State v.
Smith, 81 Idaho 103, 337 P.2d 938 (1959);
State v. Armstrong, 38 Idaho 493, 225 P.
491 (1923). The principle of law set
forth in the Berry cases was not intended
to prohibit the state from pursuing its”
legitimate regulatory activities including
the mandatory licensing of professional
health care providers. Those opinions
merely recognize that the pursuit of an
occupation is a liberty and property
interest to which the due process protec-
tions of the state and federal constitu-
tions attach and may not be prohibited by
the legislature unless necessary to pro-
tect the health, safety or welfare of the
citizenry. This recognition does not
impede the power of the legislature to
regulate callings that are related to the
public health so long as such regulations
are not arbitrary or unreasonable.

19

The power to require doctors and
hospitals to obtain licenses before prac-
ticing medicine or providing health care
is clearly within the state's police
power. Here such licenses are required to
be conditioned upon obtaining medical mal-
practice insurance, a requirement not
unlike that imposed prior to the issuance
of motor vehicle registrations, I.C. §49-
232, nor unlike the bonds which are
required as a condition of pursuing
numerous trades and professions such as
barber college, bank tellers, commodity
buyers, pesticide applicators, court
reporters, weighmasters, well drillers,
outfitters and guides, checkscalers and
cemetery maintenance commissions. See,
I.C. §§54-507, 26-406; 22-1406, 22-2211,
1-1102; 71-403; 42-23; 36-5408; 38-1215;
27-114. We hold that such requirements of
obtaining medical malpractice insurance as
a condition to licensure bear a rational
relationship to the health and welfare of
the citizens of the state by providing
protection to patients who may be injured
as a result of medical malpractice and to
this extent does not violate the guaran-
tees of due process of law. Cf. Pollock
v. Methodist Hospital, 392 F.Supp. 393
(D.C. La. 1975).

It is also argued that legislation
such as the Act in question here which
abolishes a common law right without
providing a reasonable substitute or guid
pro quo therefore is violative of due
process. We note at the outset that such
argument could have little value or appli-
cation to the hsopitals in this case.
There liability, and conversely the right
te an action against a hospital, was not
a creation of the common law; at least,
certainly not the common law in existence

20

in 1890. See, Bell v. Presbytery of
Boise, 91 Idaho 374, 421 P.2d 745 (1966).
The idea that due process imposes a guid
pro quo requirement seems to have result-
ed from dictum in New York Central Rail-
road v. White, 243 U.S. 188, 201 (1917).
See also, Lasky v. State Farm Insurance
Co., 296 So.2d 9, 17 (Fla. 1974), Opinion
of the Justices, 304 A.2d 881, 835 (N.H.
1973); Pinnick v. Cleary, 271 N.E.2d 592,
605-607 (Mass. 1971). However, it appears
to have been nothing more than a make-
weight argument. In Pinrick upon which
other state cases have relied, the court
at the outset stated:

"We intimate no opinion as to

whether and if so in what cir-

cumstances, the as te of

this test [quid pro quo] is con-

stitetionsl lt Seuetxed at 605,

f.n. 16.

~,

Moreover, in Montgomery v. Daniels, 340
N.E.2d 444, 453 (N.Y. 1975), the New
York Court of Appeals indicating that a
serious question exists as to whether this
‘adequate substatute test' is any test at
all" analyzed the authority of White as
follows:

"In Munn v. Illinois, 94 U.S.
113, 134, 24 L.Ed. 77, the

court had been unequivocal in
its statement that: ‘A person
has no property, no vested
interest, in any rule of the
common law. That is only one

of the forms of municipal law,
and is no more sacred than any
other. Rights of property which
have been created by the common
law cannot be taken away without

21

due process; but the rule itself
as a rule of conduct, may be
changed at the will, or even at
the whim, of the legislature;
unless prevented by constitu-
tional limitations. Indeed

the great office of statutes

is to remedy defects in the
common law as they are devel-
oped and to adapt it to the
changes of time and circum-
stances.' In Arizona Employers
Liability Cases, 250 U.S. 400,
421, 39 S.Ct. 553, 556, 63 L.Ed.
1058, the court later repeated
those principles in the follow-
ing language: '‘'But [common law
taught rules] are no more than
rules of law, deduced by the
courts as reasonable and just,
under the conditions of our
civilization***, They are not
placed by the Fourteenth
Amendment, beyond the reach

of the state's power to alter
them, as rules of future conduct
and tests of responsibility,
through legislation designed

to promote the welfare.' Finally,
in Silver v. Silver, 280 U.S. Save
122, 50 S.Ct. 57, 58, 74 L.Ed.
221 (1929), the court in a
further dictum appeared totally
to have undercut its earlier
dictum in the White case by
citing 'the rule that the con-
stitution does not forbid the
creation of new rights, or the
abolition of old ones recognized
by the common law, to attain a
permissible legislative object.'"

22

We agree with this analysis that the
United States Supreme Court in White did
not intend to engraft upon the tradition-
al due process test an additional standard
when the challenged statute involves
alteration of some prior existing common
law doctrine.

It is additionally argued that the
Act is unreasonable and arbitrary since
there is no relation between the monetary
limitations placed on a recovery and any
particular injury which has resulted from
medical malpractice. It is asserted that
the limitation is clearly an arbitrary
amount selected for no reason other than
political convenience and has no rela-
tionship to any legitimate public inter-
est. We do not necessarily agree. The
question here is only whether there is a
rational relationship to a legitimate
legislative purpose.

The legislative purpose of the Act
as set forth in I.C. §39-4202 is:

"Declaration of Necessity and
Purpose:* * *to assure that

a liability insurance market
be available to* * *physi-
cians and licensed hospitals
* * *and the same be available
at a reasonable cost, thus
assuring the availability of
such hospitals and physicians
for the provision of care to
persons in this state.”

Therefore the appellants contend and
argue that the recovery limitation
served to create a stable insurance
market with reasonable rates, thereby
securing a climate for continuous health

23
care services to the people of this state.

Questions of due process arising in
challenges to legislation ordinarily
result in a minimal scrutiny test, and
this Court and others have at times
engaged in speculative inquiry in order
to indentify any conceivable rational
relationship which would legitimatize the
legislative action. Nevertheless, it is
argued, and we agree, that there is con-
siderable doubt if the purpose of the
limitations as declared in the Act is in
fact the true object of legislative con-
cern. Also, there is doubt as to the
relationship between the challenged
limitations and the legitimate public
purposes that this Act may be said to
serve. We therefore deem it prudent to
refrain from a decision on the question
of due process without the production of
a more factually revealing evidentiary
record. Since, as will appear, it is
essential that this case be remanded for
the determination of questions pertinent
to the equal protection challenges, it
is appropriate that both the equal pro-
tection and due process challenges be
considered in light of a better factual
record.

We emphasize, however, that the
remand on the due process question is
limited to the production of facts and
we do not depart from what we have here-
tofore discussed and upheld as the
traditional standard for consideration of
questions of due process.

24
IV.

We turn now to consideration of the
argument that those portions of the Act
limiting recovery in medical malpractice
actions create a classification which is
discriminatory and in violation of the
egual protection clauses of the Four-
teenth Amendment and Art. I, §2 of the
Idaho Constitution. The classification
which is there created distinguishes be-
tween those who are damaged as a result
of medical malpractice in amounts exceed-
ing $150,000.00 as contrasted with others
likewise damaged by medical malpractice
but those damages are less than $150,000.
Thus, those who are damaged in excess of
the statutory limitation are denied full
recovery. The standard which is to be
used for review here is largely determin-
ative of whether this classification is
invidiously discriminatory so as to be
prohibited by the guarantees of equal
protection.

It is initially argued that the
limitations upon recovery for medical
malpractice infringe upon a fundamental
right, thus necessitating the application
of the "strict scrutiny test” standard. .
We disagree and deem it clear that the
challenged classification is not “suspect”
as that has been identified by the United
States Supreme Court. Newlan v. State,
supra. We also disagree with the asser-
tion that such classification involves
fundamental rights as contemplated by
Art. I, §18, of the Idaho Constitution.

Rather, we believe that the standard
to be applied in testing the classifica-
tion created by the challenged legisla-

25

tion is one of lesser scrutiny. Appel-
lants argue that the classification
created by the legislation must be judged
by the standard set forth in McGowan v.
Maryland, supra, which broadly states
that a" statutory discrimination will not
be set aside if any state of facts can be
conceived to justify it." (Emphasis
supplied). See also, Evans v. Idaho
State Tax Commission, 95 Idaho 54, 501 P.
2d 1054 (1972). On the other hand, res-
pondents assert that the classification
created by the legislation must be tested
by the standard of Reed v. Reed, supra,
i.e., according to whether it “rests on
some ground of difference having a fair
and substantial relation to the object of
the legislation." See also, Thompson v.
Hagan, supra. When the test set forth in
McGowan has been utilized, the result has
Ordinarily been the removal of the court
from any but the most cursory review of
the challenged legislation. It invites
courts to conceive purposes which would
justify statutes. The validity or in-
validity of discriminatory classifica-
tions may under that test depend solely
upon the extent of the imagination of the
reviewing court and/or its adherence to
the theory of judicial restraint. See,
e.g-, Gossaert v. Cleary, 335 U.S. 464
(1948); Kotch v. Board of River Port
Pilots Commissioners, 330 U.S. 552 (1947).
While we recognize and agree with the
concept of judicial restraint as it
cautions against substituting “judicial
opinion of expediency for the will of the
legislature,” Purity Extract & Tonic Co.
v. Lynch, 226 U.S. 192 (1912), neverthe-
less, blind adherence and over-indulgence
results in abdication of judicial respon-

26

sibility. It is appellant's position

in the case at bar that since the legis-
lature has declared the purpose of the
subject Act and since that declaration is
said and presumed to be founded on a ra-
tional factually based legislative deter-
mination, this Court is foreclosed from
additional inquiry into the Act. We
disagree.

This Court has found it necessary to
look beyond the minimal scrutiny test of
McGowen in reviewing classifications al-
leged to be violative of equal protection.
In so doing, we have relied upon the
standard set forth in F.S. Royster Guano
Co. v. Virginia, supra, as quoted in
Reed. That test scrutinizes the means
by which the challenged legislation is
saii to affect its articulated and other-
wise legitimate purpose. See, State v.
Cantrell, supra; Evans v. Idaho State Tax
Commission, supra, upholding challenged
legislation and Kerr v. Dept. of Employ-
ment, 97 Idaho 385, 545 P.2d 473 (1976);
Thompson v. Hagan, supra; Mesmer v. Ker,
supra; Harrigfeld v. District Court,
supra; and Sterling H. Nelson & Sons v.
Bender, supra, where statutes have been
overturned as violative of equal protec-
tion.

In the usual and ordinary case where

a statutory classification is to be tested

in the context of equal protection, judi-
cial policy has been, and continues to be,
that the legislation should be upheld so
long as its actions can reasonably be
said to promote the health, safety and
welfare of the public. Nevertheless,
where the discriminatory character of a

27

challenged statutory classification

is apparent on its face and where there
is also a patent indication of a lack of
relationship between the classification
and the declared purpose of the statute,
then a more stringent judicial inquiry is
required beyond that mandated by McGowen.
That common thread runs through all the
cases in which the Royster-Reed test has
been applied by this Court.

Here it is apparent from the face of
the Act that a discriminatory classifica-
tion is created based on the degree of
injury and damage suffered as a result of
medical malpractice. Rather obviously
although the Act is said to be designed
to insure continued health care to the
citizens of Idaho it cannot do other than
confer an advantage on doctors and hospi-
tals at the expense of the more seriously
injured and damaged persons. In the
absence of any record we are without in-
formation as to the factual basis under-
lying the purported correlation between
limitation of claimant recovery ard the
promotion of health care for the people
of Idaho. We therefore deem it essential
that the purposes of the Act and the re-
lationship of the legislatively designed
means to accomplish those purposes must
be examined.

Does the statute reflect any reason- -
ably conceived public purpose, and does
the establishment of the classification
have a fair and substantial relation to
the achievement of the objective and

purpose?

Since appellants have argued their

28

case in terms of the McGowen standard,

we are unable to ascertain how the
Classification between various victims

of malpractice relate to the asserted
purpose of assuring medical care to the
people of Idaho, notwithstanding the
declaration found in I.C. §39-4202. It

is asserted, however, that because of

the increasing number of medical mal-
practice claims premium rates for

medical malpractice insurance have dra-
matically increased and that Idaho's here-
tofore principal medical malpractice in-
surance carrier has withdrawn any coverage
of 500 of the state's 900 doctors. It is
argued that by limiting the amount of
recovery it was intended to create a more
stable basis for prediction of malpractice
losses and thereby encourage the entry in-
to Idaho of new insurance carriers at
lower, more reasonable and more competi-
tive rates. We are unable to judge the
accuracy or completeness of these asser-
tions on the record presented here.

It is argued that the Act is a nec-
essary legislative response to a "crisis
in medical malpractice insurance” in
Idaho, but the record does not demonstrate
any such "crisis". Further, there is no
evidentiary basis presented here to
either support or refute the relationship
between the limitations created by the
Act and the abatement of the alleged
crisis. As heretofore stated, the sole
evidentiary record is found in the affi-
davit of the Directory of the State De-
partment of Insurance.

Although that affidavit is conclu-
sory in stating that the Act was a “res-

29

ponse to the medical malpractice insurance
crisis” which crisis is indicated by in-
creased premium rates and unavailability
of insurance carriers, and that the Act
was designed to stabilize the medical
malpractice insurance market by providing
a predictable level of recovery, other
matters are contained therein which cast
doubt on the validity of these conclu-
sions. Simultaneous with the passage of
the Act in question here, there was en-
acted additional legislation authorizing
creation of a temporary joint under-
writing association (JUA) of liability in-
surance carriers in the field of medical
malpractice insurance. Chapter 163,
(1975) Idaho Sees. Laws 427. The forma;
tion of that association was contingent
upon a finding by the Director of the De-
partment cf Insurance that medical mal-
practice insurance was unavailable under
the standards of I.C. §41-1405 ina
voluntary market. I.C. §41-4103(3).
Attached to the affidavit of the Director
of the Department of Insurance are the
findings of the hearing held by him to
consider the necessity of forming the
underwriting association. Therein it is
indicated that although two insurance
carriers are withdrawing from the mal-
practice field in Idaho, seven remain,
one of whom is offering to insure physi-
cians left uninsured by the recent with-
drawals. It is further found that the
rates offered by the remaining companies
"are based on competent actuarial con-
siderations and appear to be adequate
but not excessive or unfairly discrimin-
atory". (Emphasis supplied). And, the
Director concluded that it was thus un-
necessary to activate the underwriting

30
association stating:

"Medical malpractice insurance
including coverage above $300,000,

is available in Idaho under standards
described in Section 41-4105, Idaho
Code, for physicians in the volun-
tary market on a reasonably compe-
titive basis."

In the affidavit those conclusions were
extended to include hospitals as well as
physicians. At the very least the
findings of the Director resulting from
that hearing present a differing and con-
flicting view of the alleged "crisis" upon
which the Act is said to have been predi-
cated.

The question was raised concerning
the instability of the reinsurance market
and its effect upon Idaho's primary car-
riers. It is apparent that reinsurance
occupies a vital position for continued
stability of medical malpractice insur-
ance. U.S. Department of Health and Wel-
fare Report to the Secretary's Commission
on Medical Malpractice 39 (1973); Kendall
and Haldy, “The Medical Malpractice In-
surance Market,” Appendix to the Report,
at 546-548. Nevertheless, the only record
before us are the hearsay declarations of
the Director of the Department of Insu-
ance that he has been informed by one in-
surer that it had in turn been informed
by its reinsurer that it could no longer
contract reinsurance in amounts usually
requested of the $1,000,000. excess policy.
Such cannot be considered persuasive evi-
dence of a general instability in the
medical malpractice reinsurance market

31

which affects Idaho's carriers. In the
HEW Report, supra, it is indicated that
the degree of influence that the reinsur-
ance market exercises on the primary mal-
practice market depends directly upon the
size of the primary insurance carriers.
The report makes two additional findings
of significance, i.e., that it is highly
doubtful that any established carrier
has not entered the malpractice field
because of weakness in the reinsurance
market and that to the extent medical
Malpractice insurance is available in

the primary market, it is also available
in the reinsurance market.

We would be remiss if we did not note
the problems of the primary malpractice
market vis-a-vis the reinsurance market
which in the opinion of the Director of
the Department of Insurance as set forth
in his affidavit, are due to "extremely
high losses" resulting from malpractice
liability claims "combined with the ab-
normally low earnings from investments".
We are troubled by the clear inference
resulting therefrom that the "crisis" in
response to which the subject Act was
adopted results in part from economic
fluctuations and resultant unsuccessful
investment practices.

Attached to the original complaint
in the case at bar is a statement alleged-
ly presented to the legislature as an ex-
planation of the need for the enactment of
the subject legislation. It states in

part:

"The rapidly increasing frequency
and size of malpractice claims and

32

judgments against physicians and
hospitals nationwide, coupled with
stock market reverses, have led to
skyrocketing premiums for malpractice
liability insurance and even potential
inability to purchase such insurance."

Although appellants argue that such state-
ments cannot be considered by this Court
for any purpose, we disagree. I.R.C.P.
10(c); 2A Moore's Federal Practice, §10.06
(2d Ed., 1975); 5 Wright & Miller, §1327
(1969); Barron & Holtzoff Federal Practice
& Procedure, §325(1960). See also,
Simpson v. Southwest Railroad Co., 128
F.Supp. 532 (D.C. Ga. 1955), affirmed on
other grounds, 231 F.2d 59 (5th Cir.
1956), cert. denied, 352 U.S. 828 (1956?.

One further problem is posed by the
affidavit of the Director of Insurance
in determining the relationship between
the means (restriction on claims) as re-
lated to the objective of the Act. There-
in it is stated that the $150,000-300,000
limitation placed upon malpractice re-
coveries “would have covered all claims
to date”. The implication arising
therefrom is that no judgment or settle-
ment in a medical malpractice action in
Idaho has to the knowledge of the Director
exceeded the recovery limits of the Act.

In these regards the affidavit of
the Director of the Departement of
Insurance sheds no light and provides no
assistance to this Court, but rather as
indicated poses additional unsolved
problems in our application of the test
to the classification created by the Act
and the challenge that such classification

33
is violative of equal protection.

While we are as aware as any other
member of the public of assertions of
growing problems in the medical mal-
practice insurance field, the record here
presents no factual basis for understand-
ing the nature and scope of the alleged
medical malpractice crisis nationally or
in Idaho. It is thus impossible for this
Court to assess the necessity for this
legislation and whether or not the limi-
tations on medical malpractice recovery
set forth in the Act bear a fair and sub-
stantial relationship to the asserted pur-
pose of the Act.

Is there indeed a medical malpractice
insurance crisis -in Idaho? Are physicians
and hospitals in Idaho being charged ex-
cessive, grossly unfair premiums for medi-
cal malpractice insurance (and if so,
what is the position of the Directory of
the Department of Insurance of the State
of Idaho in relation to duties imposed
upon him, See, I.C. §41-201 et. seq.),
or are the monumental increases in medi-
cal malpractices insurance premiums
reasonably attributable to the costs of
doing business in the medical malpractice
insurance field? Is medical malpractice
insurance unavailable at reasonable rates
in the absence of legislative enactments?
Is the threat of unavailability of health
care to the people of Idaho a reality
or not? Has there been, aS suggested, an
increased rash of claims and sizable re-
coveries or settlements in favor of per-
sons alleged to have suffered as the result
of medical malpractice in Idaho? Finally,
and most importantly, if there is indeed a

34

medical malpractice insurance crisis in
Idaho, what is the effect or will be the
effect of the limits of recovery and the
other provisions of the subject Act with
respect to forestalling or abating the
crisis? In the absence of any factual
information bearing on these questions,
if indeed there are answers, no decision
can be made by this Court in the area of
the equal protection challenge to the
Act.

In an effort to find some answer
outside the parameters of the record in
this case we have examined some of the
growing body of literature on medical mal-
- practice insurance. Therein we find gen-
eral agreement that there is a growing pro-
blem in medical malpractice insurance
which is manifested by increasing rates
and a threat of curtailment of health
care. Four dominant factors appear of
prominent concern although the overall
causes of the problem appear intricate,
highly interrelated and difficult of as-
certainment. The HEW Report, supra, at
24, attributes the root cause of medical
malpractice problems to an increase in
patient injuries. While those iatrogenic
injuries (those induced during treatment)
May or may not be caused by negligence,
their numerical increase is a reality:

The second causal factor is the increase
in number of malpractice claims. .We are
aware of no statistics evidencing such

an increase in number of claims in Idaho
and on a national basis the statistics
vary considerably. The Insurance Services
Organization estimates nationally an in-
crease in claims of 12%. In contract, an
estimate of 225% annual increase between

35

1970 and 1975 was made by St. Paul Fire

& Marine Insurance Co. That same data,

however, indicates a 130% increase be-
tween 1969 and 1974. Downey, “Medical
Malpractice Bares Its Fangs at Hospitals,
and Its Venom May Prove Deadly", Modern
Health Care, 21-23 (June 1975). The HEW
Report, supra, at 12, characterizes medi-
cal malpractice incidences as being "a
relatively rare event" and suggests that
claims are even more unusual. On the
basis of 1970 data from 26 of the largest
medical malpractice insurance carriers
(representing 90% of the industry nation-
ally) it is estimated that a malpractice
incident was reported in one out of every

- 158,000 patient visits and a claim was

made for only one of every 226,000 visits.
Rudolph Myers and Mirabella, “Medical
Malpractice Insurance Claims Files Closed
in 1970", HEW Report, Appendix. This

same report also indicates that fewer
than one court trial was held for every
ten claims closed in 1970. One commenta-
tor states that the number of claims made
against physicians is not excessive given
the actual number of serious medical
errors which occur and the extent to which
patients and their attorneys perceive
meritorious grievances. Mechanic, "Some
Social Aspects of the Medical Malpractice
Dilemma," 1975 Duke Law Journal 1179.

A third factor exerting an effect
upon medical malpractice insurance is the
dollar amount cf damages awarded in ver-
dicts and the rise in that dollar amount
in recent years. Downey, supra, at 27.
The HEW Report, supra, at , Lound in
1970 that the median recovery was $3,000
and "less than 1% of all cases closed

36

(in 1970) were for amounts in excess of
-$100,000." On the other hand, St. Paul
Fire & Marine Insurance Co. reports that
the average payment for malpractice claims
nationally increased from $6,705 in 1969
to $12,535 in 1974. Congressional Quart-
erly 709 (April 5, 1975). Of large sig-
nificance, of course, is that in 1970
medical malpractice insurance losses in
Idaho (including expenses as well as
actual awards and settlements) constituted

less than one-tenth of 1% of the national |

total.

A final factor indicated by the lit-
erature has been the difficulty in pro-
_viding medical malpractice insurance at
reasonable rates. Rate-setting in medi-
cal malpractice insurance has been
described as an "actuarial nightmare”.
Therein it is stated:

"The basic objective of any insurance
company is to sell insurance at a rate
which is competitive and which will
result in a profit for the com y-
In order to do this companys employ
actuaries to predict future losses
that must be paid from present pre-
miums.***Rates must produce a suf-
ficient premium volume to (1) cover
the losses that will occur during
the period. (2) cover the adminis-
trative expenses of running the
business, and (3) provide a small
margin for the unknown contingencies
which may become a profit if not used”.
HEW Report, supra, at 41-42.

While the objective in setting medi-
cal malpractice insurance premiums may

37

be stated simply, the actuarial principles
utilized to develop those rates are comp-
licated. The relatively small size of

the market and the fluctuations in the
number of claims and the size of the a-
wards “have deprived the rate-maker of

his basic ingredients for rate making
frequency and average claim cost". See,
Roddis & Steward, "The Insurance of Medi-
cal Loss", 1975 Duke Law Journal 1281.
There is no method by which we can gauge
the reasonableness of the means in limit-
ing Idaho malpractice awards without some
understanding of the actuarial problems
facing insurers as they specifically and
directly relate to Idaho. Parenthetically
we note that a Detroit based group calling
themselves the “Physicians Crisis Commit-
tee" has recently stated that the rate
making of one of the major malpractice
insurance carriers bears no relationship
to actuarial principles or calculations.
That company it is said has exploited the
crisis in malpractice insurance by in-
creasing its rates in such a way that

its after tax earnings on investments were
nearly 32% in 1975 as contrasted with 113
in 1965. "MD's say carrier makes 32%
after tax profits," Medical World News

21 (May 3, 1976).

Perhaps the most vexing problem in
malpractice rate setting nationally has
been the protracted period of time that
passes prior to the reporting and settle-
ment of malpractice claims. See, HEW
Report, supra, at 22; Comment, “Recent
Medical Malpractice Legislation--A First
Checkup", 50 Tulane Law Review 655 (1976);
Comment, "The ‘Claims Made' Dilemma in
Professional Liability Insurance," 22
UCLA Law Review 925 (1975). What has~™

38

been described as the "long tail" on mal-
practice losses is the period during which
doctors and hospitals may be exposed to
liability for iatrogenic injuries follow-
ing actual patient contact. In part, this
results from some statutes of limitations
which may not begin to run until several
years after the incident which caused the
injury. As a result a claim may be far
removed in time from the point at which
the patient received the actual treatment.
In Idaho this problem has been significant-
ly restricted by I.C. §5-219 which sets a
limitation of court action for medical mal-
practice within two years “following the
occurrence, act or omission complained of"
or one year following "discovery" of a
foreign object left in the body. See,
Billings v. Sister of Mercy of Idaho, 86
Idaho 485, 389 P.2d 244 (1964); Cook v.
Soltman, 96 Idaho 187, 525 P.2d 969 (1974)
and further restricted by Johnson v. Gorton,
94 Idaho 595, 495 P.2d 1 (1972); Stoner v.
Carr, 97 Idaho 641, 550 P.2d259 (on re-
hearing) (1976); but see Renner v. Edwards,
93 Idaho 836, 475 P.2d 530 (1970); Johnson
v. Stoddard, 96 Idaho 230, 526 P.2d 835
(1974). In light of the above case law

in Idaho it appears that the actuarial
problem resulting from time lag may be
less in Idaho than on a national scale.

In the case at bar the Act has been
described by the appellants as a “local
response to a national problem". The
above discussed literature casts some light
on the existence of a so-called "crisis" and
some of the problems inherent in that crisis.
The record before us contains no attempt
to relate any findings of national scope
to Idaho and this Court lacks the ability
to extrapolate any such relation from the
national literature. Since Idaho has only

39

-5% of the general practitioners, .2% of
the surgeons and .8% of the hospitals,
all as contrasted with national totals,
any limitation on the liability of
physicians or hospitals in this state may
have only the most remote effect upon a
nationwide medical malpractice insurance
crisis. See, Kendall & Haldey, supra, at
525-527.

It is necessary, therefore, that the
case at bar be remanded to the district
court for additional evidence, findings
and conclusions consistent with this
opinion. The respondents are not relieved
from their burden to show the unconstitution-
ality of the assailed classifications con-
tained in the legislation. See, State v.
O'Bryan, 96 Idaho 548, 531 P.2d 1193 (1975);
Cummings v. J.R. Simplot Co., 95 Idaho 465,
511 P.2d 282 (1973); Leonard v. Moon, 92
Idaho 796, 451 P.2d 542 (1969); Idaho
Telephone Co. v. Baird, 91 Idaho 425,

423 P.2d 337 (1967).

40
Vv.

Since the case at bar will be reman-
ded, one further issue is necessary of
discussion albeit such was not before the
district court. Following disposition
below but prior to consideration here, an
opinion of the Illinois Supreme Court had
under consideration that state's medical
malpractice statute and declared it uncon-
stitutional in aspects pertinent to the
case at bar here. Wright v. Central
Dupage Hospital Assn., _ N.E.2d , slip
opinion No. 48075 (Ill., May 24, 1976).
That Illinois Act contained a maximum
liability recovery of $500,000 "on account
of injuries by reason of medical, hospital
or other healing art malpractice.” That
monetary limitation was found to be viola-
tive of Art. IV, sec. 13, of the Illinois
Constitution, prohibiting “special privi-
lege" legislation. Art. III, sec. 19, of
the Idaho Constitution provides in perti-
nent part:

"The legislature shall not pass local
or special laws in any of the follow-
ing enumerated cases, that is to say:
* * * releasing or extinguishing,
in whole or in part, the indebted-
ness, liability or obligation of any
person or corporation in this state
or any other municipal corporation
therein. * * *"
The respondents-intervenors have argued
that the recovery limitation in the Idaho
malpractice Act is likewise unconstitu-
tional as offensive to Art. III, sec. 19,
of the Idaho Constitution.

41

That provision of the Idaho Constitu-
tion was patterned after those which occur-
red in many state constitutions in the
late nineteenth century following a proli-
feration of special and local laws in post-
Civil War legislatures. Clow & Marcus,
"Special and Local Legislation," 24 Ky .Law
Journal 351, 355-358 (1936). The general
purpose of such constitutional provisions
was "to prevent legislation bestowing
favors on preferred groups or localities."
State ex rel. Idaho State Park Board v.
City of Boise, 95 Idaho 380, 383, 509 P.2a
1301 (1973).

It has been indicated that the distinc-
tion between general and special legislation
is that a law is general if "all persons
Subject to it are treated alike as to privi-
leges, protection and in every other
respect." Wanke v. Ziebarth Const. Co.,

69 Idaho 64, 202 P.2d 384 (1948). Stated
in other terms, "A-statute is general if
its terms apply to, and its provisions
Operate upon, all persons and subject
matter in like situations." Jones v. Power
County, 27 Idaho 656, 150 P. 35 (1915);

In re Bottjer, 45 Idaho 168, 260 P. 1095
(1927). "It is well settled that a law is
not special in character, 'if all persons
subject to it are treated alike, under
Similar circumstances and conditions, in
respect to both the privileges conferred
and the liabilities imposed.'" State v.
Horn, 27 Idaho 782, 793, 157 P. 275 (1915).
See also, In re Crane, 27 Idaho 671, 151 P.
1006 (1915); Ada County v. Wright, 60 Idaho
394, 92 P.2d 134 (1939); State v. Lindstrom,
68 Idaho 226, 191 P.2d 1009 (1948).

Clearly it is arguable.at least that
the Act in question here is special in that

42

it selects from a class of persons other-
wise subject to liability for their negli-
gent acts, physicians and hospitals, and
releases or extinguishes, in part at
least, their otherwise liability contrary
to the interdiction of special laws in
Art. III, sec. 19. The limitations of
Art. III, sec. 19, are not, however,
absolute in their application.

In our constitution, local and special
laws are prohibited only in regard to the
matters therein specifically mentioned.
Butler v. City of Lewiston, 11 Idaho 393,
83 P. 234 (1905); State ex rel. Idaho Park
Board v. City of Boise, supra. In that
fashion, our constitution differs from
that of California in that Idaho's contains
no catch-all restriction against special
laws where a general law would apply. In
California, the standard applicable to
their special legislation clause is
equated with that standard utilized under
the equal protection clause of the federal
constitution. Los Angeles County v.
Southern California Telephone Co., 196 P.2d
773 (Cal. 1948), appeal dismissed, 336 U.S.
929 (1949); Carleson v. Superior Court for
County of Sacramento, 100 Cal.Rptr. 635
(Cal.App. 1972); Russell v. Carleson, 111
Cal.Rptr. 497 (Cal.App. 1973). See also,
McCarty v. Goldstein, 376 P.2d 691 (Colo.
1962); People v. Sprengle, 490 P.2d 65
(Colo. 1971); Clow & Marcus, supra. We
hold the equal protection clause of the
federal constitution and Art. III, sec. 19,
of the Idaho Constitution, were adopted to
serve distinctly different identifiable
purposes. While it might be constitutional
in the sense of equal protection for our
legislature to single out persons or
corporations for preferred treatment, such

43

would nevertheless be regarded as in conf-
lict with Art. III, sec. 19. See, Jackson
v. Gallet, 39 Idaho 382, 228 P. 1068
(1924); State Water Conservation Board v.
Enking, 56 Idaho 722, 58 P.2d 779 (1936);
Wiggin v. City of Lewiston, 8 Idaho 527,
69 P. 286 (1902); Board of County Commis-
Ssioners of Lemhi County v. Swensen, 80
Idaho 198, 327 P.2d 361 (1958).

If as asserted by appellants here the
Act in question is found to have been
enacted in response to a problem of state-
wide concern in Idaho and by alleviation
of that problem it is found to serve the
health and welfare of the people of the
state of Idaho, and the means adopted in
the Act are held to be reasonably related
to the solution of those problems, then
the Act will survive the challenge that it
is offensive to Art. III, sec. 19, of the
Idaho Constitution. Therefore, the
challenges posed to the Act as offensive
to Art. III, sec. 19, are likewise remanded
to the district court for additional evi-
dence, findings and conclusions by that
court.

There is also remanded to the district
court for its consideration the challenge
to sec. 10 of the Act which limits the
grounds for malpractice action to common
law negligence and requires that recovery
shall be restricted to compensation damages
not satisfied from collateral sources.

I.C. sec. 39-4210. Also to be considered
by the trial court are those questions
presented by the enactment of Chapter 278,
[1976] Idaho Sess. Laws, p. 953, establi-
shing panels for review of medical malprac-
tice actions. See, Wright v. Central
Dupage Hospital Assn., supra.

44

Judgment of the trial court is
reversed and remanded for further procee-
dings consistent with this opinion. No
costs allowed.

McFADDEN, C.J., and BISTLINE, J.,
concur. DONALDSON and BAKES, JJ., concur
except as to Part I in which they concur
in the result.

45

IN THE DISTRICT COURT OF THE FOURTH
JUDICIAL DISTRICT OF THE STATE OF
IDAHO, IN AND FOR THE COUNTY OF ADA

A. CURTIS JONES, JR., M.D.
ROY J. ELLSWORTH, M.D.,
ROBERT B. MONTGOMERY, M.D.,
and BERNARD A. BODMER, M.D.,
ST. LUKE'S HOSPITAL, LTD. and
COMMUNITY HOSPITAL OF IDAHO
FALLS, IDAHO,

Civil No.
55527

Plaintiffs,
and

KENNETH E. DROULARD, M.D.,
and J. R. FARBER, M.D.,

Plaintiff
Intervenors,

vs.
STATE BOARD OF MEDICINE and

DEPARTMENT OF HEALTH AND
WELFARE of the State of Idaho,

Civil No.
55586

Defendants,

and

MEMORANDUM
IDAHO MEDICAL ASSOCIATION DECISION

and IDAHO HOSPITAL ASSOCIATION

Defendant
Intervenors,

me me ee ee ee ee ee ee ee ee ee ee ee ee ee ee ee ee ee ee

46

APPEARANCES :

For the Plaintiff PAUL S. BOYD
Attorney at Law

For the Plaintiff-Intervenors &
Idaho Trial Lawyers Association
American Trial Lawyers Association

BRUCE O. ROBINSON
LLOYD J. WEBB
Attorneys at Law

For the Defendants EUGENE C. THOMAS
Special Assistant

Attorney General

For the Defendant-Intervenors

PAUL S. STREET
RICHARD C. FIELDS
Attorneys at Law

For the State of Idaho &
Intervenor Monroe C. Gollaher

WAYNE L. KIDWELL

Attorney General

RUDOLPH D.BARCHAS

Deputy Attorney
General

ROBERT M. JOHNSON

Assistant Attorney

General

47

Before this Court is the question of
the constitutionality of Senate Bill No.
1186, Chapter 162, 1975 Session Laws,
codified as title 39, Chapter 13, Idaho
Code, and referred to as the "Hospital-
Medical Liability Act." The actions are
for declaratory judgment of unconstitu-
tionality of the act. The original two
actions have been consolidated; The State
Board of Medicine, Department of Health
and Welfare of the State of Idaho and
Monroe C. Gollaher, Director of the
Department of Insurance, State of Idaho
have intervened and several amicus curiae
briefs have been received, all on stipu-
lation of the parties. The parties have
in effect stipulated for submission of
the controversy on the merits, on the
record through a motion for declaratory
judgment, argued September 16, 1975. The
only formal factual matter submitted is
the affidavit of Monroe C. Gollaher,
Director of Department of Insurance for
the State of Idaho, submitted for consid-
eration by stipulation.

The act imposes limits of civil lia-
bility upon licensed physicians and
licensed acute care hospitals in the
amount of $150,000.00 accruing as a
result of injury to or death of any one
patient arising out of the course of
treatment. Limits are also imposed on
claims accruing to two or more persons
arising from a single occurrence. It is
to the limitation of liability feature of
the act that the claim of unconstitution-
ality is directed. The main constitu-
tional attacks are violation of due
process of law and equal protection of
the laws under the United States and

48

Idaho Constitutions, and the allegation
of violation of Article I, Section 18 of
the Idaho Constitution.

This Court will accede to the public
policy decision of the legislature enact-
ing Senate Bill 1186 and will not attempt
to substitute its judgment therefore,
under the restrained review test of the
two-tier equal protection of laws analysis
acknowledged by the Idaho Supreme Court
in Thompson v. Hagan, 96 Idaho 19, 523
P.2 1365, Stucki v. Loveland, 94 Idaho
621, 495 P.2 571, and Newlan v. State,
535 P.2d 1348. The presumption of con-
stitutionality under the due process and
equal protection arguments as far as the
restrained review test will be indulged
in by this Court. An inquiry into the
legitimacy of the legislative action as
necessary to the public welfare will not
be made at this level. The limitation of
liability feature of the act obviously
bears a reasonable relationship to the
objectives sought to be advanced by the
act itself, i.e., the availability of
liability insurance. The main question
is whether the price to be paid by the
public is worth the remedy. The legis-
lature has answered this question in the
affirmative and a presumption of validity
must be given, at least by this Court to
that decision under the restrained review
test.

As concerns tne fundamental right test,
or the second tier of the two-tier
criteria, under the classification of
fundamental rights enunciated in Newlan,
and cases cited therein, this legislation
does not fall within the “suspect”

49

Classification under the various Supreme
Court decisions classifying fundamental
rights under the United States Constitu-
tion. Therefore the equal protection of
laws and due process arguments advanced
by Plaintiffs will be rejected.

However, the ability of citizens or the
public to seek regress for a breach of a
duty is a fundamental right in the broad
classification despite the fact the
United States Supreme Court has not so
classified the same in equal protection
cases There are other constitutional
considerations. Article 1, Section 18 of
the Idaho Constitution states:

"JUSTICE TO BE FREELY AND SPEEDILY
ADMINISTERED.-- Courts of justice shall
be open to every person, and a speedy
remedy afforded for every injury of
person, property or character, and
right and justice shall be administered
without sale, denial, delay, or :
prejudice.”

Under the act, in the event of an
injury or injuries which exceed the
statutory limits of liability, a person
or persons would not be afforded a full
remedy, but only a remedy to the extent
of the imposed limits. The above clause
requires a full and complete remedy for
every injury of person.

Article 1, Section 18 is a variant of
Chapter 40 of the Magna Carta. (See
discussion in dissenting opinion in
Newlan v. State supra. See also Howard,
"The Road from Runnymede," University
Press of Virginia, 1968.) An issue
comparable to the one before this Court
was considered by the California Supreme

50

Court in Werner v. Southern California
Associated Newspapers, 216 P.2d 825,
wherein limitation of liability was held
constitutional in libel cases.

But the California Constitution does
not contain a provision specifically
allowing a remedy for every injury of
person, property or character.

In my opinion, Article 1, Section 18 of
the Idaho Constitution prohibits the
limitation of liability for injuries
otherwise recoverable under a right or
cause of action and recognized by the
Common Law at least at the time of the
adoption of the Idaho Constitution in
1890. The clause provides relief for
"every" injury. Particularly does this
clause prohibit limitation of liability
where no substitute procedure or remedy,
judicial or administrative, is provided.
While it can be argued the-act provides a
substitute by the procision requiring
insurance to the extent of the limited
liability, the act in Section 11 also
allows a waiver of this requirement if
insurance is unobtainable.

By way of Section 18, the Idaho Constitu-.

_tion recognizes those Common Law causes
of action as existing in 1890 as the
ability of an individual to seek redress
for a breach of a duty owed as a basic
right. These basic rights must be pre-
served even in times of economic stress
concerning a certain segment of the
public, otherwise the door would be open
for the dilution and diminution of these
basic rights to the disinterest of
individual members of the public under
the contention and allegation of general
public necessity.

51

It is thus the conclusion of this Court
the limitation of liability feature of
the Hospital-Medical Liability Act
violates Article 1, Section 18 of the
Idaho Constitution and is therefore
unconstitutional.

This opinion may serve as formal Findings
of Fact and Conclusions of Law. Counsel

for Plaintiffs may prepare a form of
Declaratory Judgment for signature.

Dated and signed this 23rd day of
September, 1975.

Alfred C. Hagan
District Judge

52

IN THE DISTRICT COURT OF THE FOURTH
JUDICIAL DISTRICT OF THE STATE OF
IDAHO, IN AND FOR THE COUNTY OF ADA

A. CURTIS JONES, JR., M.D.
ROY J. ELLSWORTH, M.D.,
ROBERT B.-MONTGOMERY, M.D.,
and BERNARD A. BODMER, M.D.,
ST. LUKE'S HOSPITAL, LTD. and
COMMUNITY HOSPITAL OF IDAHO
FALLS, IDAHO,

Civil No.
55527

Plaintiffs,

KENNETH E. DROULARD, M.D.,
and J. R. FARBER, M.D.,

Plaintiff
Intervenors,

vs.

)
)
)
)
)
)
)
)
)
)
and )
)
)
)
)
)
)
)
)
)
)

STATE BOARD OF MEDICINE and Civil No.
DEPARTMENT OF HEALTH AND ) 55586
WELFARE of the State of Idaho,)

)
Defendants, )
)
and )
) DECLARATORY
IDAHO MEDICAL ASSOCIATION ) JUDGMENT
and IDAHO HOSPITAL ASSOCIATION)
Defendant
Intervenors,

and

STATE OF IDAHO &
MONROE G. GOLLAHER,

Intervenor.

53

This matter having come on regularly
before the Court upon the complaint of
plaintiffs and plaintiff intervenors, and
the responsive pleadings of defendants and
defendant intervenors and by their respec-
tive counsel of record aad the matters
being consolidated by agreement of the
parties and pursuant to the order of the
court; and the matter having been set for
hearing and arguments, both oral and
written having been submitted, and all
parties having rested and submitting the
matter to the Court, and further

The Court, being fully advised in the
premises, having on September 23, 1975,
rendered its Memorandum Decision and
directing and ordering that such opinion
serve as Formal Findings of Fact and
Conclusions of Law, to which reference
is hereby made;

NOW, THEREFORE, IT IS HEREBY ORDERED,
ADJUDGED AND DECLARED:

1. That the statute here under con-
sideration, entitled "Hospital-Medical
Liability Act", approved by the Legislature
of the state of Idaho as Senate Bill No.
1186, Chapter 162, 1975 Session Laws,
codified as Title 39, Chapter 13, Idaho
Code, is unconstitutional and null and
void, and thus does not apply to plain-
tiffs, A. Curtis Jones, M.D., Roy J.
Ellsworth, M.D., Robert B. Montgomery,
M.D., Bernard A. Bodmer, M.D., St. Lukes
Hospital, Ltd. and Community Hospital of
Idaho Falls, Idaho, or Kenneth E.
Droulard, M.D. and J. R. Farber, M.D.,
Plaintiff-Intervenors, and hence does not
prohibit the caid A. Curtis Jones, Jr.,
M.D., Roy J. Ellsworth, M.D., Robert B.
Montgomery, M.D. and Bernard A. Bodmer,
M.D., St. Lukes Hospital, Ltd., and

54

55
Community Hospital of Idaho Falls, Idaho,
or Kenneth E. Droulard, M.D. and J. R. Idaho Const., Art. 3, Section 19:
Farber, M.D. or each of them from the
practice of medicine and surgery or The legislature shall not pass local
operating and doing business as an acute or -special laws in any of the fol-
care hospital licensed as such in this . ’ lowing enumerated cases, that is to
state, without first having complied say:
with any requirement of the Hospital- Regulating the jurisdiction and duties
Medical Liability Act, or any order or : ; of justices of the peace and constables.
demand of the State Board of Medicine and For the punishment of crimes and mis-
the Department of Health & Welfare of demeanors.
the State of Idaho, made pursuant to the Regulating the practice of the courts
requirements of the Hospital-Medical - of justice.
Liability Act. Providing for a change of venue in
civil or criminal actions.
2. That if it was the intention of the Granting divorces.
Legislature of the State of Idaho to pro- Changing the names of persons or
hibit plaintiffs and plaintiff-intervenors places.
from the practice of medicine and surgery | Authorizing the laying out, opening,
and to operate as acute care hospitals altering, maintaining, working on, or
without first having acquired medical vacating roads, highways, streets,
malpractice insurance as a condition of alleys, town plats, parks, cemeteries,
licensure, then said Act is unconsti- or any public grounds not owned by the
tutional as violative of Article I, state.
Section 18 of the Idaho Constitution as Summoning and impaneling grand and
against plaintiffs and plaintiff-inter- trial juries, and providing for their
venors, as being a denial of the right compensation.
of an individual to seek redress for a | Regulating county and township busi-
breach of duty owed as a basic right, and ness, or the election of county and
is therefore, as against plaintiffs and township officers.
plaintiff-intervenors, unenforceable, For the assessment and collection of
null and void. taxes.
; ; - 7 Providing for and conducting elections,
Dated and signed this 29th day of or designating the place of voting.
September, 1975. Affecting estates of deceased persons,
‘ , minors, or other persons under legal
Alfred C. Hagan | disabilitieis.

District Judge Extending the time for collection of

taxes.

‘Giving effect to invalid deeds, leases
or other instruments.

Refunding money paid into the state
treasury.

Releasing or extinguishing, in whole

56

Or in part, the indebtedness, liability
or obligation of any person or corpora-
tion in this state or any municipal
corporation therein.

Declaring any person of age, or
authorizing any minor to sell, lease

or incumber his or her property. |
Legalizing as against the state the
unauthorized or invalid act of any
officer.

Exempting property from taxation. |
Changing county seats, unless the law
authorizing the change shall require
that two-thirds of the legal votes cast
at a general or special election shall

designate the place to which the county

seat shall be changed; provided, that
the power to pass a special law shall -
cease as long as the legislature shall
provide for such change by general law;
provided further, that no special law
shall be passed for any one county
oftener than once in six years.
Restoring to citizenship persons con-
victed of infamous crimes.

Regulating the interest on money.
Authorizing the creation, extension

or impairing of liens.

Chartering or licensing ferries, bridges
or roads.

Remitting fines, penalties or for-
feitures.

Providing for the management of common
schools.

Creating offices or prescribing the
powers and duties of officers in coun-
ties, cities, townships, election
districts, or school districts, except
‘as in this constitution otherwise pro-
vided.

Changing the law of descent or suc-
cession. .

Authorizing the adoption or legitimi-
zation of children.

57

For limitation of civil or criminal
actions.

Creating any corporation.

Creating, increasing or decreasing
fees, percentages, or allowances of
public officers during the term for

which said officers are elected or
appointed.

58

TITLE 39, CHAPTER 42, IDAHO CODE:

39-4201. Title.--This act shall be
known as the ‘Hospital-Medical
Liability Act.” [1975, ch.162, §1,
p. 422.]

39-4202. DECLARATION OF NECESSITY
AND PURPOSE.--It is the declaration
of the legislature that appropriate
measures are required in the public
interest to assure that a liability
insurance market be available to
persons licensed to practice medicine
and surgery, persons licensed to
practice osteopathic medicine and
surgery, all of whom are hereinafter
referred to as physicians, and to
licensed hospitals providing health
care in this state and that the same
be available at reasonable cost,

thus assuring the availability of
such hospitals and physicians for

the provision of care to persons in
the state. It is, therefore, further
declared that a limitation upon and
required underwriting of the potential
liability of such licensed providers
of health care is in the public
interest and that all exposure to
Civil liability of such providers of
health care on account of any error,
omission, neglect or other wrongdoing
in the provision of care or performance
of its, his or her function as an
acute care hospital or physician be
limited and codified in and by this
act.

59

39-4203. LIABILITY LIMITED.--
Licensed physicians and licensed
acute care hospitals proyiding
health care in this state shall have
a limit of liability, as such, to
any one (1) claimant for or on
account of any one (1) occurrence or
to two (2) or more claimants on
account of any one (1) occurrence,

as hereinafter provided; and further,
there shall be no civil liability of
any kind of such hospitals or
physicians for any error, omission,
neglect or other wrongdoing in the
provision of care or performance of
its, his or her function as an acute
care hospital or physician other
than or beyond the limit of liability
as provided herein. [1975, ch. 162,
§3, p.422.]

39-4204. PHYSICIAN'S LIABILITY.--The
limit of civil liability for damages
of a licensed physician, as aforesaid,
to or on the account of injury to or
death of any one (1) patient arising
out of any treatment or tourse of
treatment shali be one hundred fifty
thousand dollars ($150,000), and to
or on account of injury or death of
two (2) or more patients arising out
of any one (1) occurrence shall be an
aggregate of three hundred thousand
dollars ($300,000); provided, however,
the provision of the above aggregate
limit is not to be construed as
extending or enlarging such exposure
or liability to or on account of any
one (1) patient. [1975, ch. 162, §4, .
p. 422.)

60 5

39-4205. HOSPITAL LIABILITY.--The
limit of civil liability for damages
of a licensed acute care hospital,
as aforesaid, to or on account of
injury to or death of any one (1)
patient arising out of any treatment
or course of treatment shall be one
hundred fifty thousand dollars
($150,000), and to or on account of
injury or death of any two (2) or
more patients arising out of any one
(1) occurrence shall be an aggregate
of three hundred thousand collars
($300,000) or the total of the
number of patient hospital beds in
the facility multiplied by ten

thousand dollars ($10,900), whichever

figure be greater; provided, however,
the provision of the above aggregate
limit is not to be construed as
extending or enlarging such exposure
or liability to or on account of
any one (1) patient. [1975, ch. 162,
§5, p. 422.]

39-4206. INSURANCE.--Every acute
care hospital and physician licensed
to provide health care in this state
shall, as a condition of securing
and maintaining such licensure,
unless the requirement therefor has
been waived or provided in section
39-4211, secure liability 39-4204
and 39-4205 and shall file and
appropriate certificate of insurance
as hereinafter provided, confirming
the existence of such insurance with
at least such limits of liability at
all times during which licensure
remains valid. The liability of any
such physician or hospital which has

61

complied with or obtained a waiver
of insurance requirements of this
act at the time of provision of any
health care from which a claim for
liability arises shall be limited as
provided in this act, but any such
physician or hospital in violation
of this act in providing such are in
this state under the authority and
image of a licensed physician or
hospital without having complied
with or obtained a waiver of insurance
requirements of this act shall, as
respects any claim arising from such
are or conduct, have unlimited
liability upon any legal theory
recognized at common law. [1975,
ch. 162, §6, p. 422.)

39-4207. SELF-INSURANCE, DEDUCTIBLES
AND ALTERNATIVE COMPLIANCE ALLOWED. --
(a) Any otherwise acceptable plan,
fund or policy of insurance securing
or underwriting exposure to liability
under this act may provide a deductible
or self-insurance arrangement to the
extent of the first five thousand
dollars ($5,000) of exposure on any
one (1) claim or for an undivided
portion equal to one-half (1/2) of
the first ten thousand dollars
($10,000) of exposure on any one (1)
claim, without prejudice to the
sufficiency of such underwriting or
other provisions for securing
financial responsibility for liability
recognized hereunder; and provided
further, any physician or hospital

so complying shall not be deemed out
of compliance by reason of such a
self-insurance, deductible or like
arrangement.

62

(b) Amy such physician or hospital
may also comply with insurance
requirements of this act by filing

a cash or other bond in an amount
and form approved by the director of
the department of insurance which
approval shall be granted upon a
showing and the director's determina-
tion of the operational, actuarial
and legal sufficiency thereof,
assuring the required financial
responsibility of such licensee and
the timely, competent processing of
claims in connection therewith.
{1975, ch. 162, §7, p. 422.]

39-4208. CERTIFICATE OF INSURANCE-
PHYSICIANS.-Any physician licensed

to practice medicine in this state
shall, at the time and as a condition
of securing or renewing such license,
place on file with the Idaho board

of medicine a certificate of insurance
from a licensed insurance company
authorized to do business in this
state, certifying that liability
insurance of the scope and limits
required by this act is in effect

for such licensee and shall remain

in effect for such period of licensure
unless notification of cancellation

is first given to the board at least
thirty (30) days in advance of
cancellation. In compliance with

this section any organized professional
society made up of licensed physicians,
any association or entity made up of
licensed acute care hospitals or the
state board of medicine, or any
combination thereof, may apply to

the director of the department of
insurance for authorization to

63

provide such certification based

upon a reciprocal program organized .
and operated under chapter 41, title
29 [chapter 29, title 41], Idaho
Code, and such authorization may be
provided with respect to all or any
part of the required security and
certification specified by this act,
it being specifically provided that
any combination of valid certificates
may be accepted as compliance with
the insurance requirements of this
statute; provided the director of

the department of insurance shall
grant such authorization only upon a
determination made to his satisfaction
that such proposal is legally,
actuarially and financially sound

and is supported by competent manage-
ment and administration to assure
good standards of practices, including,
but not limited to, competent claims
processing and administration.

{[1975, ch. 162, §8, p. 422.]

39-4209. CERTIFICATE OF INSURANCE--
HOSPITALS.--Any acute care hospital
licensed as such in this state

shall, at the time and as a condition
of securing or renewing and as a
condition of continuing such license,
place on file with the director of

the department of health and welfare
of the state of Idaho a certificate

of insurance from a licensed insurance
company authorized to do business in
this state, certifying that liability
insurance of the scope and limits
required by this act is in effect

for such licensee and shall remain

in effect for such period of licensure
unless notification of cancellation

64

is first given to the department at
least thirty (30) days in advance of
cancellation. In compliance with
this section any organized pro-
fessional society made up of licensed
physicans, any association or

entity made up of licensed acute

care hospitals or the state board of
medicine, or any combination thereof,
may apply to the director of the
department of insurance for authoriza-
tion to provide such certification
based upon a reciprocal program
organized and operated under chapter
41, title 29, [chapter 29, title

41], Idaho Code, and such authorization
may be provided with respect to all
or part of the required security and
certification specified by this act,
it being specifically provided that
any combination of valid certificates
may be accepted as compliance with
the insurance reguirenfents of this
statute; provided, the director of
the department of insurance shall
grant such authorization only upon a
determination made to his satisfac-
tion that such proposal is legally,
actuarially and financially sound

and is supported by competent manage-
ment and administration to assure
good standards of practices, including,
but not limited to, competent claims
processing and administration.

{[1975, ch. 162, §9, p. 422.]

39-4210. REMEDIES LIMITED--NEGLIGENCE.
--In furtherance of the policies of
this act and in the interest of the
accomplishment of its goals, it is
hereby provided that licensed physicans
and hospitals which are, at the time

65

of provision of such care, in compli-
ance with or have obtained a waiver
of insurance requirements of this
act as provided herein shall not be
liable to any patient, his heirs or
representative on account of pro-
fessional malpractice or any other
theory of civil liability arising
out of the provisions of health care
to or on behalf of such patient
except upon the common law ground of
negligence proximately causing such
damages, and in those cases recovery
shall be limited to compensatory
damages not previously paid or
satisfied by any other person or
from any other source. ‘Common law
and statutory defenses recognized by
the law of Idaho shall continue in
full force and effect and such
claims shall be resolved in keeping
with the general rules of law and
civil procedure applicable to such
claims and causes, except as expressly
in this act otherwise provided.
[1975, ch. 162,§10, p. 422.]

39-4211. WAIVER OF INSURANCE REQUIRE-
MENT.--Upon a showing by any physician
or acute care hospital of inability

to comply with the liability insurance
requirements of this act, despite
reasonable and good faith efforts to
do so, the director of the department
of insurance shall issue his order
waiving such liability insurance
requirements as to that physician or
hospital for a period not to exceed
the term of the license sought to be
secured or maintained. Such order

or waiver may be filed in lieu of the
certificate of insurance otherwise
required by sections 39-4208 or 39-4209

66

in order to secure or maintain such
license. There shall be limit as to
the number of successive orders of
waiver which may be issued to any
physician or hospital, so long as a
new showing is made as provided
herein prior. to issuance of each
such order. [1975, ch. 162, §1ll, p.
422.]

39-4212. RULE MAKING AUTHORITY.--
The director of the department of
insurance may promulgate rules,
regulations and standards for the
administration and implementation of
the portions of this act concerning
the actuarially sound underwriting
or other securing of the limited
liability provided by this act,
including without limitation pro-
visions for the form and scope of

policies or certificates of insurance

or like documentation contemplated
by this act, and provisions and
procedures for the showing required
to obtain a waiver of the insurance
requirements of the act. [1975, ch.
162, §12, p. 422.]

39-4213. CLAIMANTS' CONTINGENT
ATTORNEY FEES.--In the event any

Claimant or claimants seeking recovery

for damages on account of medical
malpractice against any hospital or
physician enters into a contingent
fee contract pursuant to which the
attorney or aitorneys representing
such person or persons shall be
compensated, it shall be unlawful
for such attorney or attorneys to
charge or collect an unreasonably
large fee; further, such a fee,
including reimbursed expenses, which

67

in the aggregate equals or exceeds
forty per cent (40%) of amounts
recovered or collected shall be
presumed to be unreasonable and
uncollectible. [1975, ch. 162, §13,
p. 422.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1152%3A1. Public record. Not legal advice.