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Pa. Supreme Court Upholds Statutory Cap on Damages For Claims Against Political Subdivisions

As Published in the February 2015 PELRAS Newsletter Update

Published on: Mon 8th Aug, 2016 By: Julie Aquino

In Zauflik  v. Pennsbury School District, No. 1 MAP 2014 (Pa. Nov. 19, 2014), the Supreme Court of Pennsylvania considered the constitutionality of the Political Subdivision Tort Claims Act ("PSTCA"), which places a $500,000 cap on damages recoverable from political subdivisions for tort injuries.  While the Court had empathy with the Plaintiff who suffered life changing injuries, the Court upheld the constitutionality of the cap, opining that it was up to the legislature to change the law not the Court. Had the Supreme Court reached a different conclusion, it would have eliminated a shield of legal protections in the PSTCA that insulates local governments and schools statewide from paying out high damage awards for catastrophic accidents.

In Zauflik, a school bus veered from the road when the driver hit the gas instead of the brake and struck a group of high school students standing on the sidewalk.  The bus ran over seventeen year old Ashley Zauflik, crushing her pelvis and left leg and resulting in the amputation of her leg above-the-knee. Zauflik received funds from other defendants in the case pursuant to confidential settlement agreements and proceeded to trial on the amount of damages against the School District. Damages were the only issue litigated at trial because the School District had already conceded liability for Zauflik’s injuries. A jury awarded Zauflik over fourteen million dollars for past and future medical expenses and non-economic damages, but the School District filed a post-trial motion to reduce the damages pursuant to the statutory damages cap in the PSTCA. The trial court granted the motion and molded the award to conform with the PSTCA’s $500,000 damages cap, and Zauflik appealed. 

On appeal, Zauflik argued the PSTCA violated several provisions of the Pennsylvania Constitution as well as the equal protection and due process clauses of the United States Constitution.  Based on Pennsylvania Supreme Court precedent, the Commonwealth Court rejected each challenge in turn, in a 2-1 decision, and Zauflik petitioned for an appeal to be heard by the Pennsylvania Supreme Court. The Supreme Court heard Zauflik’s appeal, but ultimately rejected, in a lengthy opinion, each of the arguments for why the $500,000 cap was unconstitutional. 

The Supreme Court’s opinion explains that the statutory cap of $500,000 has not been increased by the General Assembly in approximately thirty-six years, since the PSTCA was enacted in 1978. In 1978, a member of the General Assembly earned $25,000 a year, whereas today a legislator earns approximately $84,000. However, it is up to the legislature to change the law not the Court. Perhaps not surprisingly, in February 2014 four state legislators introduced a bill that would raise the statutory cap if passed.  (HB 2032-Reg. Sess. of 2014) (referred to the Committee on Judiciary in February of 2014). What is surprising, however, is that if passed in its current form, the bill would raise the statutory cap to $10,000,000, twenty times the current limitation.    

Lastly, the Supreme Court’s opinion also explained that the School District carried $11 million in insurance to protect itself against all manner of potential liability, but that certain causes of action are not subject to the damages cap in the PSTCA, such as violations of federal law or liability for zoning or eminent domain challenges. Therefore, good reasons exist for political subdivisions to carry insurance far above the $500,000 cap applicable to state tort claims. In fact, the School District argued in Zauflik that insurance rates for school districts are only affordable due to the very existence of the $500,000 cap for tort claims, and that coverage would be unaffordable if no claims were capped. The City of Philadelphia, the City of Pittsburgh, Allegheny County and the Commonwealth each filed briefs supporting the School District’s position in Zauflik, arguing that the cap provides some measure of predictability and that even with the cap in place they face a significant number of claims and exposure. While the Court was not called upon to weigh in on how the cap affects insurance rates for political subdivisions, the Court did conclude that evidence of insurance coverage in excess of $500,000 is not generally relevant to determining the constitutionality of the cap, nor does it act as a waiver of the protections granted to political subdivisions under the PSTCA. 

The Pennsylvania Municipal League also filed a brief supporting the School District’s position in Zauflik, as noted in the Court’s opinion, along with numerous other entities who were concerned about the challenge to the constitutionality of the damages cap. PennPRIME will keep members informed of any changes in the law in this area in the upcoming years.