Legal Alert: Nevada's $350,000 Professional Negligence Cap Now Applies to Medical Associations

November 21, 2016

Twelve years ago, Nevada voters approved the Keep Our Doctors in Nevada (KODIN) ballot initiative to limit medical malpractice claims.  KODIN included the adoption of NRS 41A.035, which limits or “caps” the recovery of a plaintiffs noneconomic damages in a health-care provider's professional negligence action to $350,000 per incident.  Significant litigation has spawned over the $350,000 cap, resulting in several published and unpublished dispositions over the past decade.  These dispositions have clarified many unanswered questions puzzling attorneys and doctors alike.  However, some unanswered questions have remained.

One of these unanswered questions is whether the $350,000 cap applied to professional medical associations, also known as a physician practice, that employ health-care providers. 

The Nevada Supreme Court recently held in Zhang v. Barnes that the cap did indeed apply to a professional medical association for liability derivative of the health-care provider.  In so holding, the Nevada Supreme Court left open the slight possibility that the cap would not apply in situations where the claims against the medical association were not grounded on professional negligence. 

In Zhang, a plaintiff sued a physician and the physician’s professional medical association for professional negligence and negligent hiring, training and supervision, after a surgery left her with severe burns. The physician is a colorectal surgeon employed by a professional medical association comprised of physicians caring for patients with disorders of the colon and rectum.

A jury found in favor of the plaintiff and against the physician and professional medical association.  The jury awarded in excess of $2 million, much of which consisted of noneconomic damages for past and future pain and suffering.  The district court reduced the award and, in doing so, applied the $350,000 cap to the physician, but not the professional medical association that employed the physician.  On appeal, Nevada Supreme Court held that the $350,000 cap likewise applied to the professional medical association.  The Nevada Supreme Court also held that the negligent hiring, training and supervision claim was rooted in the physician’s professional negligence, such that the medical association was entitled to have its liability for noneconomic damages capped at $350,000.

Plaintiffs are now shielded from piercing the $350,000 cap in an action premised on professional negligence – whether that be against the physician, professional medical association, hospitals that credential physicians, or hospitals that employ the professional medical association. The Zhang decision could have wide-reaching implications in future professional negligence actions in Nevada. 

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