SPRINGFIELD, Ill. (Legal Newsline)-An Illinois law limiting damage awards in medical malpractice cases is unconstitutional, the state Supreme Court said Thursday in a long-awaited and closely-watched ruling.

The high court's 4-2 ruling found that the 2005 law that caps non-economic medical malpractice damages for plaintiffs at $500,000 for doctors and $1 million for hospitals impeded juries' constitutional powers to award settlements in civil cases.

The Democratic-led state Legislature passed the law, aimed at lowering medical malpractice insurance rates that were blamed for driving doctors out of the state.

But justices said the 2005 law was "facially invalid on separation of powers grounds," meaning that the justices felt that the state Legislature overstepped its constitutional bounds by constraining the judicial branch of government.

Chief Justice Thomas Fitzgerald delivered the majority opinion. He also said the $500,000 limit on noneconomic damages is arbitrary.

"Although agreeing with the defendants that noneconomic damages are difficult to assess, we determined that such difficulty was not alleviated by imposing an arbitrary damages limitation in all cases, without regard to the facts or circumstances," Fitzgerald wrote.

In the ruling, Fitzgerald was cold to the argument that similar caps are in place in other states, including California where medical malpractice damage caps have been in place -- and withstood challenges -- for more than three decades.

"That 'everybody is doing it,' is hardly a litmus test for the constitutionality of the statute," the ruling said. "We are also not persuaded by defendants' argument that the circuit court's judgment should be reversed because courts of other states, which have considered whether a limitation on noneconomic damages violates separation of powers, have rejected this argument."

The law limits non-economic damages, such as pain and suffering. It does not, however, limit actual damages, such as medical expenses and lost wages.

"Without a cap on non-economic damages from 1997 to 2005, Chicago physicians saw their liability premiums increase an average of 10 to 12 percent each year," Dr. James Rohack, the president of the American Medical Association, said in a statement after the ruling. "When the cap was reinstated in 2005, premiums for Chicago physicians stabilized and even began to shrink."

The decision was hailed by the Illinois trial bar, which represents plaintiffs' lawyers.

"Our health care system is reeling and rather than trying to fix it, insurance companies across the country have tried to divert attention from the real reforms that would improve access and care," said Illinois Trial Lawyers Association President Peter Flowers. "With this decision, we can now focus on the real issue -- providing meaningful insurance reform that will keep costs down for doctors and patients alike, and ensure access to quality care for every resident in the state."

The case heard by the Illinois Supreme Court centered on the severe disability of a young girl, Abigaile Lebron, who suffered a brain injury as she was being delivered by a doctor and nurse at Gottlieb Memorial Hospital in the Chicago-area.

The original lawsuit was filed in Cook County, where in 2007 Judge Joan Larsen ruled that medical malpractice lawsuit caps are unconstitutional.

In 2008, Illinois Supreme Court justices heard oral arguments in case, LeBron v. Gottlieb Memorial Hospital. The high court had indicated its decision in the case would be filed in December, but later withdrew it from the list of opinions to be released.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.