Protecting Medical Liability Reform

The Doctors Company played an instrumental role in the passage of historic medical liability tort reform legislation on behalf of doctors and allied healthcare professionals nationwide. Learn why our efforts—which continue today—are so important.

A Model for National Reform

California’s Medical Injury Compensation Reform Act (MICRA) is the model for reforms enacted in Colorado, Florida, Indiana, Montana, Texas, and Virginia, and for legislation proposed before many other state legislatures. It is also recognized as a model for federal reforms and in legislation put before Congress.

More than 30 states have enacted some kind of medical liability reform laws to promote access to healthcare. These laws are constantly under attack. The Doctors Company fiercely advocates at the legislative, judicial, and regulatory levels to defend these hard-won protections.

History of MICRA

California’s MICRA was enacted in 1975 in response to skyrocketing judgments, drastic increases in malpractice insurance premiums, and diminishing access to healthcare. That year, two malpractice insurance companies made major announcements: one notified 2,000 Southern California physicians that their insurance would not be renewed, and the other notified 4,000 Northern California physicians that their premiums would increase by 380 percent.

These companies had determined that the California medical malpractice insurance market had become too risky and unstable for financially sound underwriting. The number of claims had increased by 200 percent in a 10-year period, and the dollar amounts awarded in judgments or settlements had increased 1,000 percent in 10 years.

MICRA’s Major Provisions

  • A cap of $250,000 on noneconomic damages (i.e., pain, suffering, loss of consortium).
  • Disclosure to the jury of collateral sources of payment (other sources of health insurance payments for the same injury).
  • Limits on attorney fees.
  • Periodic payments for future damages.
  • A requirement that plaintiffs give a 90-day warning of an impending claim to the provider so that the provider has a chance to settle the claim out of court.
  • A strengthened physician discipline system.

Proven Benefits

Lower premiums: At the time MICRA was enacted, California’s malpractice insurance rates were among the highest in the nation; today, California rates are among the lowest. More healthcare professionals now carry liability insurance because coverage is available, and the premium rates are affordable.

Improved access to care: MICRA strikes a balance, encouraging the availability of healthcare while also providing for compensation to injured patients. Self-insured public institutions provide healthcare to hundreds of thousands of patients who do not have health insurance. By containing costs, MICRA maintains the availability of funds to serve those who could not otherwise afford healthcare, while injured patients are fairly compensated.

Earlier and more equitable settlements: Fewer malpractice cases go to trial now than in the era before MICRA. MICRA’s provisions promote earlier and more equitable settlements. Fewer frivolous lawsuits now go to trial (although many meritless actions are still filed).

Why Should MICRA Be Preserved?

If the MICRA cap is lifted, all sectors of healthcare will be affected. The bulk of the increase would be borne by physicians in high-risk specialties such as ob/gyn and surgery and by self-insured hospitals. Premium rates would increase significantly for physicians in all specialties. In addition, increased limits of coverage could be needed, which would also increase premium rates substantially.

MICRA provides for unlimited economic damages: Unlike some other state’s tort laws, MICRA does not limit payment for economic damages. California allows for unlimited past and future medical costs, lost wages, and lifetime earning potential. Because all of these damages are unlimited, the average size of awards has increased faster than the rate of inflation.

MICRA limits attorney’s fees so patients, not lawyers, receive more from awards: MICRA’s sliding scale on attorneys’ fees means $111,000 more for a plaintiff receiving a $1 million settlement.

MICRA does not reduce access to the legal system: California’s claims frequency is typically 50 percent higher than the national average excluding California.

MICRA reduces average time to settlement (indemnity payments only): This puts money in patient’s hands sooner.

MICRA stabilizes costs: MICRA has stabilized costs, enabling more providers to stay in practice. Furthermore, according to California’s former Legislative Analyst, increasing the MICRA cap would raise healthcare costs by approximately $11.4 billion annually, or more than $1,100 for a family of four.

MICRA reduces California malpractice insurance rates by 33 percent: Compared to pre-MICRA rates adjusted to 2003 dollars.

MICRA reduces defensive medicine costs: According to Stanford University researchers David P. Kessler and Mark McClellan, liability reforms could produce healthcare savings of between 5 and 9 percent or up to $50 billion per year nationwide.

What You Can Do

Lend your voice to the fight for effective medical liability reform by contacting your state and federal representatives and asking them to preserve and support medical liability reforms. Take every opportunity to spread the word through the media and your patients, friends, and professional colleagues. Your contribution to The Doctors Company’s federal and state political action committees (DOCPACs) helps us advocate for and defend medical liability reforms nationwide.

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