California medical malpractice bill fends off battles over damage limits

Limits on damages awarded in medical malpractice cases will change next year because of a new bill signed into law by California Gov. Gavin Newsom on May 23.

The Medical Injury Compensation Reform Act (MICRA), which established a $250,000 limit for the pain and suffering caused by medical errors in 1975, could have ended by Jan. 1, 2023 without parties coming to an agreement.

The law signed by the governor sets the “non-economic” limits at $350,000 and $500,000 for injury- and death-related cases, respectively.

Over the next decade, the rates will increase incrementally each year to $750,000 for injury cases and $1 million for wrongful death suits. After a decade, they go up by 2% every year in amounts adjusted for inflation. There are no restrictions imposed for a patient’s economic losses that include the absence of income.

Still, California Assembly Bill 35 by Assemblywoman Eloise Reyes Gomez, D-San Bernardino, — which was supported by medical groups such as the California Medical Association, California Hospital Association and California Association of Health Facilities — is perceived as a compromise by stakeholders of the issue. The alternative was to let the law sunset, which may have led to lawsuits asking for infinite amounts in damages.

“The signing of AB 35 into law maintains the desired stability and affordability of medical professional liability insurance for those providing medical care in California,” California Association of Health Facilities spokesman Corey Egel told the Business Journal. Founded in 1950, CAHF is a Sacramento-based nonprofit trade group representing 900 skilled nursing homes.

In the North Bay, medical practitioners applauded the new law.

“I think it’s a very good compromise,” said Dr. Larry Bedard, a board member of MarinHealth.

Bedard, who referred to the new law as a “necessary solution,” insisted no action in which doctors were vulnerable to no-limit lawsuits would have “absolutely” represented the straw that broke the camel’s back given all the concerns health care workers face these days.

The Marin County doctor estimated that already about 20% of those in clinical practice are tempted to leave the profession, and having the old law terminate, and therefore leaving them open to lawsuits with larger damages, would have been detrimental.

Without the new law, Bedard is convinced the number of doctors throwing in the towel “would have accelerated” to at least 40% departing.

Consumer groups were challenging the MICRA law with an initiative, the Fairness for Injured Patients Act, due to go to the November ballot that would have thrown it out.

A meeting of the minds

Jack Sanford, a Santa Rosa attorney specializing in medical malpractice cases with Abbey, Weitzenberg, Warren & Emery, agreed that some action was necessary because the limits were if anything too low. Sanford represents medical patients.

“There needed to be an adjustment,” he said, adding some cases involve “horrific” abuses and “involve young children.”

Some of the worst abuses he’s seen included malpractice allegations from those with cancer diagnoses and others who became “disabled for the rest of their lives.”

Although the California Department of Insurance didn’t take a formal position on AB 35, the state regulatory agency pledged to work with consumers to get them protected under the new law. Rate increases may also be on the horizon for health insurance policies, but it may be too soon to tell, according to the state insurance agency.

“Insurers will need to review their rates to make sure they are adequate to fully indemnify their policyholders,” the insurance agency’s spokesman Michael Soller told the Business Journal. “(But) we won’t know the impact on rates until insurance companies begin filing for approval.”

For now, one of the largest North Bay carriers of medical malpractice insurance, The Doctors Company of Napa, joined the state in support of the legislation setting the rates.

“The state’s health care providers can look forward to long-term stability and the end of the continual battles to eliminate MICRA entirely,” said Dr. Richard Anderson, chairman and CEO of The Doctors Company.

Susan Wood covers law, cannabis, production, tech, energy, transportation, agriculture as well as banking and finance. For 27 years, Susan has worked for a variety of publications including the North County Times, Tahoe Daily Tribune and Lake Tahoe News. Reach her at 530-545-8662 or susan.wood@busjrnl.com