Nearly Half a Century Later, Damage Caps in California Are Still Harming Victims of Medical Malpractice

Recent legislative developments in California are instructive as to how justice gets turned on its head when damage caps are imposed on victims of medical malpractice.

In 1975 — the same year that the Vietnam War ended, Patty Hearst was arrested for armed robbery, and the blockbuster movie “Jaws” was released — then-California Gov. Jerry Brown signed into law the Medical Injury Compensation Reform Act, known as MICRA, amid concerns that doctors were retiring or leaving the state due to rising insurance premiums. Although the insurance industry blamed hefty damage awards for this predicament, news reports from that time suggest that other factors were at play. Indeed, from 1973-1974, the stock market experienced one of the worst downturns since the Great Depression, and insurers, who base their business model upon investing premiums before they pay out on claims, were hard hit. Data from Consumer Attorneys of California (CAOC), which is a professional organization of California personal injury attorneys and other lawyers who represent plaintiffs, tells the story of an insurance industry that, notwithstanding its cries of “crisis,” collected $140 million in premiums from California doctors in 1974, and paid out only $30.7 million in verdicts and settlements.

Nevertheless, MICRA capped noneconomic (pain and suffering) damages in medical malpractice cases at $250,000, with no adjustments for inflation. In today’s dollars, that cap would be $1.3 million. Fortunately, MICRA did not cap economic damages, which relate to medical bills and other economic losses, such as lost earnings.

Yet, for all the harm that MICRA inflicted upon victims of medical malpractice who did nothing wrong (other than perhaps pick the wrong doctor), MICRA did not solve the problem of soaring insurance rates. Premiums rose more than 190 percent from 1976 until 1988, when California voters gave the state Department of Insurance more power over regulating malpractice insurance rates, according to CAOC. Only then did rates level off.

But despite its failings, MICRA stood frozen in time for 47 years until Gov. Gavin Newsom in May 2022 signed a bill that offers some relief. Under Assembly Bill 35, MICRA’s damage cap will increase to $350,000, effective Jan. 1, 2023, and then will gradually rise over a 10-year period to $750,000. Thereafter, the cap will be adjusted annually by 2 percent.

Other reforms provided by AB 35 include:

• In lawsuits involving a patient’s death, the cap on pain and suffering awards will increase to $500,000 effective Jan. 1, and then grows to $1 million over the next decade.
• In lawsuits involving multiple defendants, the law creates the possibility of up to three payments. The payments would be made under three separate caps applying to physician and non-physician providers, healthcare institutions, and unaffiliated healthcare institutions or providers at the institution that commit a separate and independent negligent act.

The new law applies only to lawsuits filed after Jan. 1, and provides no help to patients and their families with respect to previous litigation or lawsuits that are presently active.

As set forth in the documentary film “Making a Killing,” stories of patients and families who have been denied fair compensation for catastrophic injuries under MICRA include:

• A mother who was neglected and hemorrhaged to death after a C-section delivery of her second child. A CT scan was ordered stat, but never happened, despite her husband repeatedly pleading with doctors. She died 10 hours later during emergency surgery which revealed 3 liters of blood in her abdomen.
• A woman whose misdiagnosis after a routine hysterectomy led to the spread of an infection that necessitated the amputation of both her arms and legs.
• A 2-year-old boy who was left with cerebral palsy, blind, and subject to seizures because his family’s HMO insurance plan would not cover an $800 CAT scan after the child had a typical accident of childhood.
• A girl who lives with cerebral palsy after she went into cardiac arrest during surgery when she was just a few months old. During the procedure she was over-sedated and left without monitoring when the main medical provider left the room.

As demonstrated by these tragic examples, even with the new law’s increased damage caps, many victims of medical malpractice will still be denied adequate compensation for their pain and suffering.

Mark W. Tanner, a co-managing shareholder and medical malpractice lawyer at Feldman Shepherd Wohlgelernter Tanner Weinstock Dodig LLP, said that while he is pleased that some help is on the way for victims of medical malpractice in California, MICRA is nothing short of a 47-year lesson in how damage caps protect wrongdoers — doctors, nurses, hospitals and other healthcare providers who have been proven to have been negligent and whose negligence has inflicted catastrophic harm on innocent patients — at the expense of these innocent patients.

Tanner also pointed out that as medical malpractice cases are notoriously complex and expensive to litigate, damage caps, in some circumstances, inflict grave harm upon injured patients by making lawsuits economically unfeasible.

“The simple truth is that caps only serve one purpose: they harm innocent folks who have been horribly injured by another’s negligence, thus victimizing them a second time by taking away their ability to achieve a realistic and fair measure of justice. Study after study has demonstrated that economic conditions, not damage awards, impact insurance premiums. The political capital expended tinkering with the justice system would be far better utilized in measures designed to promote patient safety and well-being in the first place,” Tanner said.

The Medical Malpractice Group at Feldman Shepherd, which includes two registered nurses, both of whom are now practicing attorneys, has a proven history of achieving multimillion-dollar verdicts and settlements that provide for the lifelong medical needs and economic support for victims of medical malpractice. Notable results include a $30 million confidential settlement that also resulted in a hospital re-examining the roles of residents in patient care; a $22.4 million verdict for the victim of a negligently executed spine surgery, one of the largest medical malpractice verdicts in Pennsylvania; and an $8 million verdict for a 37-year-old woman for her pain in a case where doctors failed to properly diagnose a condition that deprived her of the full use of one hand and arm.

Follow this link for more medical malpractice case results.

If you or a family member has been injured and you would like to speak with a Feldman Shepherd attorney, please contact us.