California Medical Malpractice Insurance

Physicians practicing in the state of California will find a medical malpractice atmosphere that is much improved in recent years. A major tort reform measure has limited payouts to plaintiffs, and malpractice insurance premiums have declined significantly.

California is, today, a much more physician-friendly state and there are now multiple insurance companies serving the market and competing for your business.

Competition benefits you, the physician, so it's important to shop around to get the best rates and ensure you are not overpaying for your medical liability insurance.

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Tips for Minimizing your Risk

• Keep records and get patient signatures, especially before performing procedures that will involve risk and expectations. Have office staff present when these conversations occur and when signatures are secured. If patients’ have an unrealistic expectation about a procedure’s outcome – good or bad – a signature acknowledging they’ve been fairly apprised of the possible outcomes serves as strong protection.
• Train your staff in patient relations. You’d be amazed how many claims occur because a patient perceived that staff acted in a mean, indifferent or uncaring maner. In many cases, the patients might have just let it go but for the way they felt they’d been treated.
• Be aware of the perils of managed care. In California, with the prevalence of HMOs, physicians are often pressured not to perform certain procedures because the managed care organization deems it unnecessary. Perhaps a patient has ceased to be symptomatic, so the HMO feels an additional MRI to be sure is unnecessary. Later the patient’s condition returns. The key to protecting yourself here is to know the recognized standard of care. A claimant may well call an expert witness to testify that you failed to meet that standard. It is not a safe assumption that the HMO’s reluctance to pay will provide an effective defense for you if this happens.

Med Mal Rate Comparisons for California

Generally, premium rates will run highest in the Ventura County/Bakersfield area, followed by the counties of San Bernadino, Orange, Los Angeles and Riverside.

The San Diego area offers more moderate rates, while premiums in northern California tend to be on the low side compared to the rest of the state.

Rates stayed relatively stable from 2006 into 2007. The following are average representative rates that physicians can expect to pay for California medical malpractice insurance based on geographic location.

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Impact of MICRA

At one time, California was considered Exhibit A for skyrocketing, out-of-control medical malpractice costs. Today, it is a national model for reform.

While issues remain for physicians who practice in the Golden State, a 1975 law limiting non-economic damages and attorney fees in malpractice cases has resulted in a significant decrease in the amounts paid by (or on behalf of) physicians resulting from malpractice judgments.

The California legislature responded to a crisis in medical malpractice costs by passing the Medical Injury Compensation Reform Act (MICRA), which capped non-economic damages such as pain, suffering, inconvenience, etc. at $250,000. It also capped attorney fees on a sliding scale – such that fees are limited to 40 percent of the first $50,000, 33 1/3 percent of the next $50,000, 25 percent of the next $500,000 and 15 percent of any amount that exceeds $600,000.

A 2004 study by the RAND Corporation indicates that MICRA has made a major difference. According to the study, payments by defendants who lose malpractice trials have been cut by 30 percent since MICRA was enacted. The study also shows that, as a result of the attorney fee limits, plaintiffs bore only half the cost of the decrease.

In total, attorneys are now collecting 60 percent less from medical malpractice cases, which is likely having an effect on their willingness to take on new cases as well.

Dr. William G. Plested, past president of the American Medical Association, commented for the Rand study that the MICRA reforms have not only changed the landscape in California, but have led to reforms elsewhere.

“Medical liability reforms do work,” Plested said. “After placing a cap on non-economic damages more than three decades ago, the medical liability climate in California remains stable with premiums in check. Texas enacted reforms and now patients benefit from an increase of physicians.”

Other California laws offer a degree of protection to physicians.

One such law treats hospitals as liable for a physician’s actions if the physician is an employee or an agent of the hospital. The law also makes it relatively easy for a plaintiff to sue a hospital in such cases – not requiring the plaintiff to investigate whether the physician is employed by the hospital, but simply allowing the hospital to be named if it is reasonable to believe so.

California law also requires claimants to introduce expert medical testimony to support their claims that negligence has occurred, unless negligence can simply be inferred from the facts.

Furthermore, defendants in medial malpractice cases in California can introduce evidence that claimants have already received compensation for injuries from sources like Social Security and workers’ compensation – although claimants can obviously present evidence to rebut such information.

California also requires claimants to bring their claims within one year of discovering the alleged negligent act, but no more than three years after the date of the actual industry. (The rules are slightly different where children are involved.) And California also follows a pure comparative negligence rule, which can reduce a claimant’s recovery, although it cannot bar it entirely in the case of a finding for the plaintiff.

What California does not offer is a patient compensation fund, nor does it have a program of state-sponsored liability for physicians. This is mitigated somewhat by reports that insurance premiums, as well as actual awards and payouts, are considered reasonably under control as a result of the MICRA reforms.

The state of California does not impose any requirement that physicians carry malpractice insurance, although as a practical matter, virtually every hospital and physicians’ group does. Each physician will need to check the requirements of the hospital(s) on which he is on staff, as well as those of any physician group of which he may wish to join.

Obviously, a physician in California is still at risk of losing a malpractice suit. And while the caps on awards serve as protection against irrational jury awards, there remains no limit on economically quantifiable damages like medical costs, lost of wages and so forth. So as a doctor it's important to ensure you have quality medical liability coverage at the best possible price.

California has made a concerted effort to control malpractice costs over the past generation, and from all accounts has achieved considerable success. While physicians are certainly advised to obtain reasonable malpractice insurance and care for their patients to the highest possible level of quality, the malpractice atmosphere in California is such that a responsible, careful physician should have every opportunity to enjoy financial rewards and minimal risk.