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Smith v. Myers12/29/1994
ZLAKET, Justice.
This case requires us to rule on the constitutionality of Arizona's periodic payment statutes, A.R.S. §§ 12-581 to -594. Plaintiffs (real parties in interest) filed a wrongful death action alleging medical malpractice. Defendants (petitioners) elected to have the case tried under the statutes in question, which provide for the periodic payment of future economic losses. Plaintiffs objected, claiming there was "good cause" for not employing this method of compensation. See A.R.S. § 12-582. That objection was overruled.
Plaintiffs also raised constitutional challenges, which were sustained by the trial Judge. The court of appeals accepted special action jurisdiction and granted relief to the defense. Smith v. Superior Court, 171 Ariz. 511, 831 P.2d 1279 (Ct. App. 1991). On review, we vacate the appellate court's opinion and hold that the periodic payment statutes violate article 2, section 31 of the Arizona Constitution by limiting medical malpractice victims to a significantly less valuable remedy than would otherwise be available. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3) and A.R.S. § 12-120.24.
THE PERIODIC PAYMENT STATUTES
Personal injury and wrongful death damages have traditionally been awarded in a "lump sum" at the Conclusion of trial. Dan B. Dobbs, 2 Law of Remedies § 8.5(5), at 479 (2d ed. 1993). Such an award typically includes compensation for losses incurred prior to trial, as well as those expected to subsequently accrue. Id. Future economic damages are generally reduced to present value. Id. § 8.5(1), at 461. Thus, the successful plaintiff receives a sum that, if invested at a reasonable interest rate, should provide enough money to cover expenses that may eventually arise. Id.
Under this payment method, tort victims have immediate access to the full amount of their awards, provided judgment debtors have sufficient assets with which to satisfy them. Except in cases involving minority or other disability, courts have properly considered the victims' use of these lump sums to be their own business. See Kansas Malpractice Victims Coalition v. Bell, 243 Kan. 333, 351, 757 P.2d 251, 263 (1988). Recipients have neither been required to invest nor to account for the money to anyone, much less to those who caused their injuries in the first place. See id. Simply put, funds acquired as compensation for losses precipitated at the hands of tortfeasors have become the immediate property of tort victims to do with as they see fit. See Carson v. Maurer, 120 N.H. 925, 944, 424 A.2d 825, 838 (1980).
Since the mid-1970s, however, a number of states have adopted laws granting tortfeasors and their insurers an alternative method of paying damage awards. See Roger C. Henderson, Designing a Responsible Periodic-Payment System for Tort Awards: Arizona Enacts a Prototyte, 32 Ariz. L. Rev. 21, 27 (1990). Under these "periodic payment" schemes, future damages are theoretically paid to injured plaintiffs when they accrue. See id. at 26. Thus, instead of receiving immediately-available lump sums that include compensation for anticipated economic losses, plaintiffs are awarded judgments specifying the amount they are entitled to receive each succeeding week, month, or year to cover that period's expected damages. See, e.g., A.R.S. § 12-586(C).
In 1989, Arizona enacted its own periodic payment legislation, applicable only to medical malpractice cases. 1989 Ariz. Sess. Laws Ch. 289, § 2 (codified at A.R.S. §§ 12-581 to
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