Schmidt v. Bellevue Medical Center L.L.C., 8:13-cv-00143

Background

S.S., born in 2012 with severe brain damage after prolonged labor, sued multiple providers; she settled with two (a midwife practice and its midwife) and tried claims against Bellevue Medical Center, resulting in a jury verdict of $17 million.
Bellevue moved post-trial; the district court reduced the judgment to $1.75 million under the Nebraska Hospital Medical Liability Act (the Act) and denied Bellevue a new trial on jury-instruction grounds.
The Act (applied to incidents 2004–2014) caps total recoverable damages at $1.75 million, caps provider liability at $500,000, and requires qualifying providers to file proof of financial responsibility and pay into an Excess Liability Fund; qualified providers must post notice in a suitable location, and patients may opt out.
S.S. appealed the application and constitutionality of the Act (raising six constitutional/statutory challenges); Bellevue appealed the district court’s denial of a new trial and certain jury-instruction rulings.
The Eighth Circuit affirmed: it held Bellevue qualified under the Act (notice is not a qualification requirement), rejected all constitutional challenges to the cap, and found no abuse of discretion in refusing a new trial on the challenged jury-instruction issues.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Bellevue qualified for Act protections because of posting notice	Bellevue failed to post required opt-out notice, so it is not a "qualified" provider	Qualification is statutory under §44-2824 (financial proof & payment); notice (§44-2821) applies only to those already qualified	Notice is not a qualification requirement; Bellevue qualified despite any posting defect
Seventh Amendment (right to jury trial)	Cap violates the jury’s role to fix damages and prevents reexamination of juror factfinding	Cap only limits recoverable amount after jury finds damages; jury still determines facts and initial damages	No Seventh Amendment violation — cap is a legal limit applied after jury verdict
Fifth Amendment Takings Clause	Cap takes plaintiffs’ vested property interest in uncapped damages without compensation	No vested property right in uncapped common-law damages under state law; therefore no compensable taking	No taking — plaintiffs have no vested right in uncapped common-law damages
Right of access to courts	Cap deters counsel from taking malpractice cases and limits effective access	No evidence the cap has meaningfully reduced counsel availability or plaintiff’s access	No denial of access shown; claim failed for lack of evidentiary support
Equal protection	Cap irrationally discriminates against catastrophically injured plaintiffs and burdens fundamental rights	Cap is a classification of recovery not a suspect class nor fundamental right; rational-basis review applies and the statute is rationally related to legitimate state interests	Upheld under rational basis: Act addresses malpractice insurance costs, availability of care, and provides financial-responsibility mechanisms
Substantive due process	Curtailing common-law damages absent a just substitute violates substantive due process	No general rule requiring a legislative substitute; rational-basis analysis suffices; precedent does not impose inverse Duke Power rule	No substantive-due-process violation; rational basis satisfied
Jury instruction re: Jensen principle (nurses following orders of private practitioner)	District court should have instructed that nurses/hospital are insulated when following private practitioner (extend Jensen to CNMs)	Jensen applies to physicians; evidence showed hospital staff had a duty to report/act (teamwork standard); case law allows liability for nurses’ failures to report	No error: district court reasonably refused the extended Jensen instruction given teamwork/reporting evidence
Use of joint-and-several liability instruction when settling parties existed	Instruction allowed Bellevue to be held jointly/severally liable for settling defendants, contrary to Nebraska law after settlement	Instruction was appropriate to explain proximate cause among multiple actors; Bellevue did not seek allocation	Any instructional overbreadth was not prejudicial; no reversible error since Bellevue failed to show improper negligence finding
Failure to allow jury allocation of fault between Bellevue and settling defendants	Allocation is mandatory under Nebraska law and cannot be waived	Bellevue waived the issue by not requesting allocation instructions or verdict form; allocation requires a submission to the trier of fact	No reversal: Bellevue waived allocation; statute requires a fact finding which Bellevue failed to request; no plain error shown

Key Cases Cited

Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (Sup. Ct. 1998) (Seventh Amendment principle that juries determine damages)
Boyd v. Bulala, 877 F.2d 1191 (4th Cir. 1989) (upholding constitutionality of state damages cap applied after jury verdict)
Smith v. Botsford Gen. Hosp., 419 F.3d 513 (6th Cir. 2005) (upholding Michigan cap; citing permissibility of post-verdict cap)
Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (Sup. Ct. 2005) (Takings Clause framework and public-benefit allocation principle)
Nollan v. California Coastal Comm’n, 483 U.S. 825 (Sup. Ct. 1987) (takings analysis for conditions on permits; not applicable here)
Christopher v. Harbury, 536 U.S. 403 (Sup. Ct. 2002) (right of access to courts requires showing of concrete obstacle to vindicating a separate right)
City of Cleburne v. Cleburne Living Ctr., Inc., 473 U.S. 432 (Sup. Ct. 1985) (equal protection framework: suspect class/fundamental rights analysis)
Romer v. Evans, 517 U.S. 620 (Sup. Ct. 1996) (rational-basis standard description)
Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59 (Sup. Ct. 1978) (legislative substitution for common-law remedies and due process discussion)
Exec. Air Taxi Corp. v. City of Bismarck, 518 F.3d 562 (8th Cir. 2008) (rational-basis analysis satisfies substantive due process)