UPDATED: Gov. Gavin Newsom signed the bill May 23.
Californians will be able to get higher compensation from medical injury cases in the first increase since 1975 under a new bill fast-tracked by the legislature and signed by Gov. Gavin Newsom May 23.
The state’s Medical Injury Compensation Reform Act, signed by Gov. Jerry Brown in 1975, capped compensation for non-economic losses in medical injury cases at $250,000. In today’s money, the cap would be $1.3 million.
“This year, the stakeholders representing patients and the medical community were determined to provide a balanced and equitable solution. They have succeeded. The result is AB 35, which represents a monumental agreement for the benefit of all involved,” said Assembly Majority Leader Eloise Gómez Reyes (D-Colton), who co-authored AB 35, in a statement.
Starting January 2023, AB 35, now signed into law, would limit civil liability for non-economic losses:
- $350,000, which would increase to $750,000 by 2034, for cases that are not wrongful death
- $500,000, which would increase to $1 million by 2034, for a wrongful death case
After 2034, the limits would increase by 2% every year, to combat inflation.
Plaintiffs could collect up to those limits from a health care provider, a health care institution and other providers or institutions based on their medical transportation.
Theoretically, a plaintiff could be awarded $1.05 million if they gain $350,000 from each of those parties.
The bill would also allow attorneys to collect contingency fees equal to 25% of settlements if the settlement occurs before a complaint is filed, and collect fees equal to 33% of settlements, arbitration agreements or judgments after a complaint is filed.
The bill would also make statements and writings expressing sympathy or regret relating to a patient’s suffering or death confidential information inaccessible to court or disciplinary hearings.
The new bill is approved by legislative leaders, Consumer Attorneys of California and both sides of the ballot measure that would have increased the limit to its 1975 value.
“We have long advocated for policies that protect both patients and the essential guardrails established under MICRA that ensure broad-based access to care for all Californians,” said Lisa Maas, executive director of Californians Allied for Patient Protection, which funded the ballot measure. “Today’s announcement demonstrates a unified commitment by all stakeholders to put the interests and wellbeing of Californians first.”
“CAOC has fought tirelessly alongside thousands of injured patients for the last 50 years to make sure they are fairly compensated when their rights have been violated,” said Craig Peters, president of Consumer Attorneys of California. “After decades of impasse, we have finally reached an historic agreement with medical providers that finally updates California’s Medical Injury Compensation (Reform) Act of 1975 to prioritize patients’ access to justice and quality health care.”
Cap purpose, reasoning unknown
The California Legislature wrote the MICRA during a medical insurance crisis, but did not provide a clear reasoning for the $250,000 cap on damages, according to a committee report.
Malpractice insurers imposed “dramatic” rate hikes and announced they planned to withdraw from the market early in 1975, according to a May 7 Assembly Judiciary Committee report on AB 35. At the time, malpractice insurance rates were not regulated in California, according to the report.
Argonaut Insurance of Menlo Park had announced they would cancel its group coverage of 4,000 doctors in California and Nevada, and would raise premiums by up to 384%. Travelers Indemnity Co. warned Los Angeles doctors their rates would multiply by five. Doctors went on strike, requesting affordable malpractice insurance coverage, and a medical malpractice crisis expanded nationwide, according to the report.
The Assembly Judiciary Committee wrote what would become the MICRA, which at the time did not include a cap on non-economic damages. The bill included a cap on attorney fees and a shorter statute of limitations, and gave the state insurance commissioner new powers to review malpractice rate increases, according to the report.
The Senate Insurance and Financial Institutions Committee amended the bill to include the $250,000 cap on non-economic damages. The reason for the cap, and its setting at $250,000, are both unknown, according to the report.
“The cost of medical malpractice insurance has risen to levels which many physicians and surgeons find intolerable. The inability of doctors to obtain such insurance at reasonable rates is endangering the health of the people of this State, and threatens the closing of many hospitals,” Brown said when he convened the Legislature at the time.
A memo from then-Cabinet Secretary Rose Bird said the MICRA “attacks the medical malpractice problem primarily through restraints on legal remedies rather than focusing on the regulation of persons committing the malpractice acts,” according to a Senate Judiciary Report.
MICRA supporters claim the law reduced medical insurance rates in California, which are among the lowest in the nation, while MICRA opposers claim the rates are low due to Prop 103’s passage in 1988, according to the report.
The MICRA was reviewed by the California Supreme Court at least four times, according to the report. Then-Assemblymember Sheila Kuehl attempted to increase the cap to $950,000 in 1997, and eliminate it in some cases, but the bill died in the Assembly.
A 2014 ballot initiative, Proposition 46, would have permanently indexed the cap to inflation, but lost the election with 33% of votes.
Ballot measure dropped
The 2022 ballot initiative to index the cap to inflation will withdraw their measure after the bill is approved by Gov. Gavin Newsom. The initiative was partially funded by San Francisco attorney Nick Rowley of Trial Lawyers for Justice. It qualified for the ballot after gathering 668,000 signatures, including 54,700 in San Bernardino County and 42,800 in Riverside County.
The measure said the 1975 law was made at the influence of lobbyists, and that jurors should be able to decide how much compensation a victim of a medical injury should receive.
“This severe restriction on patients' and survivors' legal rights to hold medical providers accountable was accompanied by a promise that a strong regulatory system would be created to protect patients from harm. That never happened. Patient safety scandals over the last 45 years have demonstrated that the health care system has been unable to police itself. As a result, there are no consequences in many cases of negligence, resulting in a decline in patient safety and quality of care,” the initiative said.
If placed on the ballot and voted in, the initiative would have pegged the cap increase to its 1975 amount adjusted for inflation, $1.3 million, and would have automatically adjusted the cap for inflation every year after. It also would have allowed damages higher than the cap for death, permanent impairment or permanent disfigurement.
A Legislative Analyst's Office report said the ballot would increase state and local government health care costs ranging from the low tens of millions of dollars to hundreds of millions of dollars annually, and could potentially increase the number of medical malpractice cases in trial courts.
Bill history
AB 35 was introduced in December, 2020, and originally would have required social media companies to disclose their misinformation policies. It was adapted to modify the MICRA April 27, and unanimously passed the Senate Judiciary Committee May 3. It passed the Senate May 5, with 37 aye votes, one no vote and two votes not recorded, and passed the Assembly May 12 with 66 aye votes and 12 votes not recorded.
“As Chair of the Senate Judiciary Committee and a practicing attorney, I know first-hand that an update to California’s medical malpractice statutes is long overdue,” said the bill’s Senate author, Senator Tom Umberg (D-Santa Ana).
Thirty-four entities have registered support for the bill, including Consumer Watchdog, Consumer Attorneys of California, California Hospital Association, Planned Parenthood Affiliates of California and Medical Insurance Exchange of California.
There is no registered opposition to the bill.
