Members of the Colorado Supreme Court considered on Tuesday whether a decades-old limitation on medical malpractice awards also creates an absolute restriction on the interest that injured plaintiffs can receive when they prevail at trial.

The question affects the balance between fairly compensating people who suffer severe or lifelong injuries from medical negligence, on the one hand, and ensuring defendants do not face unexpectedly large claims years after the fact.

Under state law, damages in medical malpractice cases are generally capped at $1 million as part of a 1988 reform intended to curb the costs of medicine and ensure continued availability of health care. There is a safety valve, however, permitting trial judges to override the cap if there is “good cause” to believe the limitation is unfair.

An El Paso County jury awarded Alexander Rudnicki $4 million in 2017 for injuries he suffered at birth more than 10 years earlier. Rudnicki’s trial judge found good cause existed and overrode the cap. After a stop at the Supreme Court to clarify the calculation of damages, District Court Judge David A. Gilbert reinstated $391,000 in damages he had previously deducted.

However, the total amount Rudnicki would receive based on the recalculation was nearly $1.4 million. The substantial increase was due to the interest awarded in two categories: Interest that started accruing from the time of the lawsuit’s 2014 filing, known as post-filing interest, and interest that began from the time Rudnicki was injured — pre-filing interest.

Now before the Supreme Court a second time, lawyers for defendant Peter Bianco maintained state lawmakers never intended for pre-filing interest to push the total award to plaintiffs over the $1 million cap. Attorney Kendra N. Beckwith explained the fact that someone injured at birth is permitted to wait at least 18 years before filing suit means medical malpractice defendants may be liable for huge amounts of interest before they even knew a complaint will be filed.

“We now have a potential 20-year statute of limitations that allows for that pre-filing, pre-judgment interest to accrue for an exceptionally long time,” she said during oral arguments. “It would be, in my view, a very dangerous interpretation to incentivize massive amounts of pre-filing, pre-judgment interest. Because we want these claims to be brought (promptly).”

Rudnicki’s lawyers, meanwhile, cast doubt on Beckwith’s characterization. They told the Supreme Court that Bianco’s insurer had rejected their offer to settle the case for $1 million nearly a decade ago. Moreover, Gilbert already found good cause to override the cap.

Attorney Megan K. Matthews added that lawyers representing injured children typically wait to see how a doctor’s alleged medical malpractice will affect a child’s development. 

“If we bring the claims too early, when the children’s neurological deficits are not well understood, then we will be accused of having speculative damages and we will not prevail at trial,” she said.

Members of the Supreme Court were generally more quizzical of Beckwith’s arguments, especially her claim that allowing for large amounts of pre-filing interest would “incentivize” injured plaintiffs to sit on claims for years.

“Do you really think a party would delay filing a claim because of the possibility of pre-filing, pre-judgment interest? With respect, I’m skeptical of that,” said Justice Richard L. Gabriel.

Rudnicki suffered injuries during his 2005 birth that required ongoing therapies and expenses. Years later, he and his parents sued Bianco, his doctor, for medical malpractice. After the jury trial, the first appeal to the Supreme Court and Gilbert’s recalculation of the damages award, Bianco started another round of appeals.

In November 2023, a three-judge panel for the Court of Appeals rejected Bianco’s challenge to the interest that had accrued between Rudnicki’s injuries at birth and the filing of his medical malpractice lawsuit. The panel explained the purpose of interest is to compensate an injured party for the time spent between their injury and when they are ultimately paid.

“Thus, prefiling, prejudgment interest is an element of damages subject to the $1 million damages cap,” wrote Judge Jaclyn Casey Brown. “The district court found good cause to exceed the $1 million damages limitation and determined that it would be ‘manifestly unfair’ to apply the limitation in this case.”

Without challenging the good cause finding, Bianco maintained to the Supreme Court that the legislature did not intend for pre-filing interest to push jury awards over the $1 million cap. But some of the justices wondered why they should endorse that interpretation when lawmakers had not used those exact words.

“You would think that automatically or necessarily they would have thought about, ‘Oh, what about the exception to the cap?'” said Justice Carlos A. Samour Jr. “And they would have said something if they didn’t want that to apply. I have trouble with that, the fact that it’s silent on that point. And why isn’t that a legislative fix anyway?”

Justice Melissa Hart did not attend the arguments due to illness. Chief Justice Monica M. Márquez said Hart “will be participating in the decision.”

The case is Bianco v. Rudnicki et al.