The Doctor’s Advocate | Second Quarter 2022
Government Relations Report

Landmark Legislation Preserves Medical Liability Reform in California

Elizabeth Y. Healy, Vice President, Government and Community Relations, The Doctors Company

California’s lawmakers have enacted legislation to ensure the preservation of the state’s longstanding Medical Injury Compensation Reform Act (MICRA). The California Medical Association, The Doctors Company, and the Coalition to Protect MICRA all supported the new law, which updates the 1975 MICRA statute. As a result of this historic legislation, the potentially catastrophic “Fairness for Injured Patients Act” (FIPA) initiative was withdrawn from the November ballot.

We are proud of our contribution to this important legislation. As a result of defeating the FIPA initiative, and the new law, MICRA will be safe to continue to support our members and their patients far into the future.

Had FIPA passed, MICRA would have been lost forever. Once an initiative is enacted, it cannot be changed through legislation. Literally overnight, California would have been transformed into one of the country’s worst environments for medical malpractice litigation.

FIPA would have effectively eliminated the noneconomic damages cap. It would have also abolished periodic payments, required defendants to pay unlimited attorneys’ fees for successful plaintiffs, extended the statute of limitations, and removed all limits on attorneys’ contingency fees.

Because the initiative was written to be retroactive, FIPA would have applied to thousands of open California claims as well as all future claims. Healthcare providers’ medical liability insurance rates would have more than doubled had FIPA become law.

Noneconomic Damage Caps

Although Assembly Bill (AB) 35—which becomes effective on January 1, 2023—changes the cap on noneconomic damages, it will increase by only modest increments over a 10-year period.

MICRA limited recovery of noneconomic damages to $250,000 regardless of the number of defendants. AB 35 will increase the original limit to $350,000 for cases not involving a death and $500,000 for wrongful death cases. These limits will increase incrementally over 10 years to $750,000 for cases not involving a death and $1 million for wrongful death cases. After 10 years, a 2 percent annual inflationary adjustment will apply.

AB 35 also creates three separate categories for a total of three possible caps in each case. A healthcare provider or institution can only be held liable for damages under one category, regardless of how the categories are applied or combined. Here are the new categories for possible caps:

  • Healthcare providers (regardless of the number of providers or causes of action).
  • Healthcare institutions (regardless of the number of providers or causes of action).
  • Unaffiliated healthcare institutions or providers at that institution who commit a separate and independent negligent act.

Periodic Payments, Contingency Fees, and New Protections

As outlined below, AB 35 also adjusts periodic payments and limits on attorneys’ contingency fees and establishes a new statute to safeguard protections for benevolent gestures and statements of fault by healthcare providers.

Future economic damages. At the request of either party, periodic payments can be used for future economic damages for settlements starting at $250,000 (previously $50,000).

Limits on attorneys’ contingency fees. AB 35 creates a two-tiered system (previously a four-tiered system) with the option to petition courts for a higher contingency fee for cases that go to trial:

  • A 25 percent contingency fee limit for claims resolved prior to filing a civil complaint or making an arbitration demand.
  • A 33 percent contingency fee limit for claims resolved after filing a civil complaint or making an arbitration demand.

Protections for benevolent gestures and statements of fault by healthcare providers. AB 35 establishes new discovery and evidentiary protections for all prelitigation expressions of sympathy, regret, or benevolence—including statements of fault by a healthcare provider to an injured patient or family in relation to pain, suffering, or the death of a person or an adverse patient safety event or unexpected medical outcome.

The Compromise Proposal Has Received Nearly Unanimous Support from the MICRA Coalition

The polling and campaign research indicated that the results on the FIPA ballot measure would have been very close. Betting MICRA on the equivalent of a coin flip would have been irresponsible.

The Doctors Company and other members of the Coalition to Protect MICRA (also known as Californians Allied for Patient Protection) worked closely with the California Medical Association to ensure the preservation of MICRA and the best possible outcome for our members.

Our alliance included a wide range of organizations representing physicians, dentists, hospitals, advanced practice clinicians, community clinics, and medical liability insurers. Coalition members approved the proposal in a nearly unanimous vote.

MICRA is critical to protecting healthcare professionals’ ability to continue practicing in California and the state’s ability to achieve an affordable and accessible healthcare system. We remain committed to preserving stability so that medical and dental professionals and their practices can thrive. Since 1976, we have been integral to the preservation of MICRA, and we continue that commitment with our full engagement, financial support, and leadership.

Ultimately, the passage of AB 35 should end decades of contentious battles over MICRA and inflation, add predictability to California’s medical professional liability rates, and preserve MICRA’s legacy as a model for similar initiatives across the nation.

Find additional information on MICRA.

The Doctor’s Advocate is published by The Doctors Company to advise and inform its members about loss prevention and insurance issues.

The guidelines suggested in this newsletter are not rules, do not constitute legal advice, and do not ensure a successful outcome. They attempt to define principles of practice for providing appropriate care. The principles are not inclusive of all proper methods of care nor exclusive of other methods reasonably directed at obtaining the same results.

The ultimate decision regarding the appropriateness of any treatment must be made by each healthcare provider considering the circumstances of the individual situation and in accordance with the laws of the jurisdiction in which the care is rendered.

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