Posted by Bill Sandweg on 25 January 2016.
In 1975, just over 40 years ago, in response to an alleged “medical malpractice insurance crisis,” California enacted MICRA, the Medical Injury Compensation Reform Act. The act’s chief provision was one to limit any award against a medical professional for non-economic damages to $250,000.00. Despite the fact that in the ensuing 40 years the value of that amount of money has decreased by 75%, the gridlocked legislature of California has never raised the limit.
The alleged justification for depriving patients of the right to be fairly compensated when they were injured by medical negligence was the perceived need to protect the medical profession from runaway insurance costs, which were claimed to be the result of uncertain and overly generous jury awards. History shows that while the caps did their job in keeping patients from being fairly compensated, they did not keep insurance premiums in check. To the contrary, medical malpractice insurance premiums soared in California. By 1986, premiums were increasing by an average of 26% per year and California faced another “medical malpractice insurance crisis.” This time the voters of California passed a ballot initiative to control premiums, which resulted finally in stability in the malpractice insurance market and a rollback of premiums. History showed it wasn’t jury awards which had been driving up the cost of malpractice insurance; it was the greed of the malpractice insurers.
Jerry Brown, who signed MICRA into law during his first stint as governor, regrets the effects of the law on the citizens of his state. Governor Brown says that subsequent events showed him it was not jury verdicts that were driving the premium increases but insurance company avarice. “Saddest of all,” said the governor, is “the arbitrary and cruel effect upon victims of malpractice.”
One of the leading medical malpractice defense lawyers in California testified before Congress about the effect the caps were having in making it economically impossible for whole classes of injured patients to find a lawyer to represent them. Given the costs of malpractice litigation, only those patients with large economic damages could find lawyers and bring claims. As a reward for his candid testimony before Congress, the attorney’s health industry clients gave him a pink slip.
To sum up, California’s caps did nothing to curb malpractice insurance premiums while at the same time closing the courthouse doors to large classes of people who had suffered real and, at times, devastating injuries but who could not show large economic damages arising from those injuries. We can learn a lot from the sad experience of the people of California.