California Physician

A study just published by the Rand Corporation found that California’s Medical Injury Compensation Reform Act (MICRA) works. “MICRA does appear to have had the California Legislature’s intended initial result of limiting defendants’ expenditures,” the report says. The study looked at reductions in jury awards in 257 cases from 1995-1999, finding that these awards were reduced by an average of 30 percent.

And where was most of the impact? Not on plaintiffs, as MICRA opponents frequently charge, but on lawyers. The report points out that because MICRA not only caps non-economic damages, but also limits attorney fees, the net reduction to plaintiff damages in cases where MICRA applied has been only 15 percent.

Unfortunately, the Rand report does not discuss the stabilizing effect MICRA has had on malpractice premiums in California.

Before MICRA was passed in 1976, California malpractice premiums were among the nation’s highest and some physicians were facing one-year premium increases of 400 percent. Confronting this severe medical liability crisis, Governor Jerry Brown in 1975 called a special session of the Legislature. The result was MICRA, which limits attorney fees and caps noneconomic damage awards at $250,000. Damages for economic damages, such as lost wages and medical expenses, are not capped.

Between 1986 (the year legal challenges to MICRA were finally exhausted) and 2000 premiums fell 12 percent in California, while nationally they rose 55 percent (in inflation-adjusted dollars). During that same period, rates in Florida rose 809 percent; in Nevada 8,375 percent. By making malpractice premiums more affordable, MICRA has preserved access to care for all Californians.

Contact: CMA’s legal information line, 415/882-5144 or legalinfo@cmanet.org.