California’s Malpractice Payouts Would Rise Under a Deal to Avoid a Costly Ballot Fight

Cash payments in California medical malpractice cases would increase for the first time in nearly five decades under a deal announced Wednesday by rival interest groups that avoids a costly battle at the ballot box in November.

Source: LA Times | Published on April 28, 2022

The overhaul of the long-standing Medical Injury Compensation Reform Act of 1975, known as MICRA, will be outlined in a bill set to be introduced Wednesday in the California Legislature, with the agreement requiring it to be signed into law by Gov. Gavin Newsom before the June 28 deadline for removing a related measure from the Nov. 8 statewide ballot.

"I never thought this would happen," said trial attorney Nick Rowley, who funded the effort to collect voter signatures for a ballot measure. "I never imagined we'd come up with a legislative solution."

The medical malpractice cap in California sets a $250,000 limit on the amount of money that patients can be awarded for damages that are not directly related to medical bills and economic losses, such as lost wages. However, critics argue that a cap on pain and suffering awards severely limits the amount of compensation that injured children, retirees, and stay-at-home parents can receive while also discouraging attorneys from taking on complex cases.

The agreement reached after several weeks of intense negotiations between attorneys and physician groups would raise the legal cap on pain and suffering awards to $350,000 beginning January 1. Over a ten-year period, this amount would gradually increase to $750,000.

In cases involving a patient's death, the pain and suffering award cap would rise to $500,000 on January 1 and would eventually reach $1 million over the next decade. Following that, the cap would be adjusted annually by a 2% cost-of-living increase.

MICRA was signed into law in 1975 by then-Gov. Jerry Brown in response to concerns that doctors were retiring or leaving California due to rising insurance premiums, which were blamed on the size of malpractice awards. Patient advocacy groups have long argued that MICRA should be updated, pointing out that if the cap had been adjusted for inflation annually, it would now be $1.3 million.

The agreement will be included in Assembly Bill 35 amendments co-authored by Assemblymember Eloise Gomez Reyes (D-San Bernardino) and state Sen. Tom Umberg (D-Orange).

"This agreement marks the end of one of the most long-running battles in California politics, striking a fair balance protecting patients while ensuring physicians and other medical professionals can treat patients without fear of financial ruin," Newsom said in a written statement. "This is a significant victory for the stability and health of our health-care system, as well as for patients throughout California."

Regardless of how many healthcare providers are found to be negligent, current law provides for a single payment of no more than $250,000. Under the newly amended AB 35, an injured patient may be eligible for two separate payments at the increased amount, one for a doctor's negligence and another for a hospital's negligence. In some rare cases, a third payment for pain and suffering involving a separate, unaffiliated provider would be permitted, bringing the potential total award to $1.5 million.

"With this agreement, we can finally put this issue behind us," said Jodi Hicks, president of Planned Parenthood of California, who was part of a coalition opposing the ballot measure because of the potential financial impact on its community clinics and providers. "The compromise ensures that we keep healthcare affordable and accessible, which is a top priority for us, while also balancing appropriate compensation for Californians who suffer healthcare-related injuries."

One of the three people who filed the ballot measure, Scott Olsen, said the increased cap comes too late for his family but will help others who have suffered from medical malpractice. Olsen was awarded $7 million in pain and suffering compensation by a jury after his son suffered lifetime blindness and disability as a result of medical negligence in 1992. However, because of the state's decades-old cap, the jury award was immediately reduced to $250,000.

"It is past time for the California Legislature and all parties to acknowledge that there should not be a fixed, one-size-fits-all cap on human suffering and that survivors of medical negligence, regardless of income level, deserve legal representation and accountability," Olsen said.

AB 35 avoids what would have been a bruising and costly political battle. If approved by voters, the ballot measure would have required non-economic damages in medical malpractice lawsuits to be tied to inflation dating back to 1975, while allowing judges and juries to award damages in cases where a person dies or is permanently and physically impaired, disfigured, or disabled.

The decision to withdraw the measure in favor of legislative action is noteworthy. Prior to 2014, a statewide initiative had to be on the ballot after voter signatures were collected and verified. Lawmakers altered the rules in an attempt to encourage more compromises rather than costly and often confusing political campaigns.

Efforts to raise the malpractice cap in 2014 were almost the first test of the new ballot measure rules, but a compromise fell through, and a MICRA overhaul ballot measure, Proposition 46, was overwhelmingly rejected by voters.

Only two high-profile proposals have been sorted out through compromise at the state Capitol in the eight years since the change in state election law: a 2016 effort to raise California's minimum wage and a 2018 law that sharply expanded privacy protections over consumer data. However, neither of those agreements represented a political and public policy schism as intense or as long-lasting as the debate over the cap on medical malpractice awards.

"After decades of unfairly treating patients, California is finally opening the door to justice for those who have suffered from medical negligence," said Craig Peters, president of Consumer Attorneys of California. "We are overjoyed that patients will be able to receive fair compensation for their injuries."

Jaime Court, president of the consumer advocacy group Consumer Watchdog, stated that the current political climate differs from that of 2014. He claimed that stories in The New York Times about the lax punishment of doctors accused of repeated acts of negligence or sexual abuse, combined with an increased awareness of maternal mortality rates, have "raised the public consciousness."

Patients claim that the cap on pain and suffering awards has made lawyers less willing to take their cases, which, combined with inadequate oversight by the state's medical board, leaves them without recourse when a doctor's errors result in catastrophic injury or death.

A December Times investigation discovered that the Medical Board of California had reinstated 10 physicians whose licenses had been revoked for sexual misconduct since 2013. Two of them were doctors who abused teenage girls, and one who beat two female patients who reported him for sexually exploiting them. Furthermore, The New York Times discovered that the board had consistently allowed doctors accused of negligence to continue practicing and harming patients, sometimes leaving them dead, paralyzed, brain-damaged, or missing limbs.

Several legislative proposals to overhaul the state medical board are currently being considered by lawmakers, including one that would permanently bar doctors convicted of sexually abusing patients and another that would change the medical board's makeup to a public-member majority.

"When you put it all together, you have a perfect storm for this deal," Court explained. "The truth is that doctors do not want bad doctors to tarnish their reputation or profession. This was an acknowledgment that something needed to change. It isn't everything the initiative would have done, but it is, hopefully, the beginning of a new era of medical accountability."