By Bruce Japsen | The Illinois Supreme Court struck down the state’s medical malpractice law today, saying it violates separation of powers by allowing lawmakers to interfere with a judge’s ability to reduce verdicts. The much-anticipated ruling, which challenged the constitutionality of damage caps for doctors and hospitals, is being watched closely by the health care industry and employers that see caps on damages as a way to tame rising health care costs.

Read the opinion Abigaile Lebron v. Gottlieb Memorial Hosiptal

The ruling could figure in the national health care debate of stalled health care legislation. In the U.S. Senate where Republicans have opposed existing health care reform legislation, the GOP has been vocal about the need for tort reform and caps on damages.

State lawmakers in 2005 passed legislation, which was signed into law by then-Gov. Rod Blagojevich, that established caps on noneconomic damages of $500,000 in cases against doctors and $1 million against hospitals. Illinois followed other states, such as California, that capped damages years ago.

But Justices writing said they were not persuaded by arguments used in other states. “That ‘everybody is doing it,” is hardly a litmus test for the constitutionality of the statute,” Justices writing for the majority opinion said.

Further, Justices said that what the statute allows for amounts to a “legislative remittur.” Chief Justice Thomas Fitzgerald delivered the judgment for the seven-member court and was joined in the opinion by Justices Charles Freeman, Thomas Kilbride and Anne Burke. Justice Robert Thomas took no part in the decision, the ruling said.

Justices Lloyd Karmeier and Rita Garman dissented on certain points of the decision and expressed sympathy to providers of medical care, citing President Obama’s recent address to a joint session of Congress that the justices said “admonished” the nation’s collective failure to enact health care reform.

“We have no business telling the General Assembly that it has exceeded its constitutional power if we must ignore the constitutional constraints on our own authority to do so,” Karmeier wrote.

Justices in the majority, however, said their decision was not made with health care reform efforts in Washington in mind, saying the “Obama administration’s health care reform efforts are not the backdrop against which we have decided the constitutionality.”

The law came after more than two years of political battle in Springfield between trial lawyers and providers of medical care and their insurers. Doctors blamed the lack of malpractice reform for an exodus of physicians from the state, particularly neurosurgeons and obstetricians who had higher insurance premiums.

Though state lawmakers took steps to ensure the law would not be struck down by narrowing the scope of the legislation, doctors and hospitals have been worried about how the Supreme Court would rule.

Twice before in state history, Illinois lawmakers have adopted caps, and both times the Supreme Court eventually nixed them.

Physicians were naturally upset with the Illinois high court’s decision this morning.

American Medical Association president James Rohack said patient access to medical care worsened in Illinois after the court overruled the state’s previous cap on noneconomic damages in 1997.”

“Severe problems with patient access to care emerged as the unrestrained excesses of the state’s legal system forced Illinois physicians to limit services, retire early, or move to other states where liability premiums were more stable,” Rohack said. “Without a cap on noneconomic damages from 1997 to 2005, Chicago physicians saw their liability premiums increase an average of 10 to 12 percent each year. When the cap was reinstated in 2005, premiums for Chicago physicians stabilized and even began to shrink.”

But trial lawyers disagreed, saying malpractice insurance companies are trying to blame patients who have been harmed by medical errors. They say insurance reform is what is needed to spur competition and keep physicians and hospital malpractice premiums low.

The case before the high court came on appeal from Cook County Circuit Court. In 2007, Cook County Circuit Judge Diane Larsen decided that caps on malpractice awards violated the Illinois Constitution’s “separation of powers” clause, in effect ruling that the state Legislature can’t interfere with the right of juries and judges to determine fair damages. Larsen’s ruling falls in line with a 1997 Illinois Supreme Court decision that overturned a 1995 law implementing caps on personal-injury cases.

The first case to test the law was that of Abigaile LeBron, a 13-month-old girl who suffered a severe brain injury during birth at Gottlieb Memorial Hospital in Melrose Park.