Impact of MICRA on Malpractice Insurance in California
At one time, California was considered Exhibit A for skyrocketing, out-of-control
medical malpractice costs. Today however 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
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
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 state 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 top-rated medical testimony
to support their claims that negligence has occurred, unless negligence can simply
be inferred from the facts.