MICRA and our Malpractice System Need Real Reform

Tort reform measure hasn’t been updated in over a generation

by Brian Leubitz

A lot of things have changed since 1975. For my part, I wasn’t born yet, but from what I hear it was a crazy time. Bellbottoms, long hair, and Gov. Jerry Brown. Well, maybe some things haven’t changed all that much. But, even the most jaded will admit that the dollar just isn’t worth what it once was.

Which brings us to MICRA, legislation passed in 1975 that was intended to reduce malpractice litigation and drive down the cost of malpractice insurance. It has done that, in fact, patients with all but the biggest instances of malpractice find it difficult to find a quality lawyer willing to take the case. Why? So-called “non-economic damages”, basically compensation for pain and suffering was limited to $250,000. That was a lot of money back then, easily sufficient to cover any legal expenses and to hire experts that you would need to prove your case in a court of law.

MICRA has been in the news of late, as there have been a few rather shocking results from malpractice cases. And as Consumer Watchdog points out, the results can be dangerous for patient safety. The California Medical Association, through its president, responds to the issue in today’s Bee:

If the trial lawyers are successful, it will mean more lawsuits against health care providers and higher payouts that benefit lawyers. Everyone else will pay through higher health insurance costs, higher taxpayer costs for state and local governments, and less access to the doctors, hospitals, clinics and other health workers we all rely on.

In other words, if the trial lawyers win, patients, families, health care providers, hospitals, clinics, businesses and taxpayers all lose.(SacBee)

Except, there is a lot on the other side that this leaves out. Unforutnately, regulators have rarely been there to catch mistakes, and investigate doctors. Litigation serves to expose dangerous flaws in the system, especially when the government fails to protect us.

Moreover, that $250,000 hasn’t changed since 1973.  In real dollars, the cap has been dropping dramatically. If the $250,000 had been adjusted for inflation, the cap would now be over $1,000,000. Again, typically plenty to provide for reasonable representation. Instead, that $250,000 is now equal to about $57,700, or less than a quarter of the original value. Litigation is expensive, and in major cases, costs to prepare experts for trial can reach staggering sums. And so, many malpractice cases just fall through the cracks. In fact, the author of MICRA, Asm. Barry Keene, is still upset about the lack of an inflation provision:

Keene, now 74 and long retired from the Legislature, is tormented by the failure to protect the $250,000 cap from inflation. As he explained to me in an email, he proposed an inflation-indexed cap in an amendment to his original bill, assuming it would pass routinely. Instead the trial lawyers lobby, which adamantly opposed MICRA, came out against the inflation index in order to make the bill as noxious as possible to guarantee its rejection.

They misplayed their hand. To their shock, MICRA passed the Legislature without the inflation provision, got signed by then-Gov. Jerry Brown and then was upheld by the state Supreme Court.(Michael Hiltzik / LAT)

MICRA has another perverse incentive: It’s cheaper to kill a baby, or a student, than an old, high-earning, adult. Economic damages are easy to judge for somebody with a relatively consistent salary, but much more difficult to prove for a child. A RAND study on the effect of MICRA, found some disturbing results:

Although the RAND study did not address the issue of what might be the proper amount of non-economic compensation for any particular plaintiff, the analysis revealed that jury awards for certain kinds of plaintiffs ” those with the most severe non-fatal injuries, those with modest levels of economic loss, and those who died as a result of malpractice ” are affected more often or to a greater degree by MICRA’s cap on non-economic damages than are awards for other kinds of plaintiffs. If such differences are believed to result in an inequitable application of the cap, policymakers favoring award limits might consider “carve-outs” that would exempt exceptionally tragic or egregious cases from the proposed cap.

The long and short of all that is to say that MICRA has some very real discriminatory outcomes. Damages for women are cut more than men. For children more than adults. For the fully-able over the disabled.  In fact, Hiltzik details the case of a developmentally disabled woman who was incorrectly thought to have a “Do Not Resuscitate” order, and ended up dying for the mistake. Her economic damages were low, so low that her brother wasn’t able to find an attorney to take her case.

These problems all come with the fact that California’s malpractice insurance really hasn’t been decreased. In fact, some studies have shown premiums are higher in California, and states with similar caps, than non-capped states. While the caps on MICRA are very low, the cost is quite high. In the end, the system weeds out the wrong cases. The cases that should get additional attention, in favor of wealthier plaintiffs and the profits of insurance companies. Reducing legal waste is a good goal, but we are throwing out much in that effort. In the end, it’s the wrong reform. Hiltzik argues, quite correctly, that we need a more thorough and targeted overhaul of the system:

The remedy is to make the process more efficient, perhaps by steering such cases to a specialized arbitration court. Simply padlocking the courthouse to whole categories of plaintiffs doesn’t meet the fairness test. But MICRA shoulders all other options to the back burner. It’s time to bring this 37-year-old law into the 21st century, and fix the malpractice system so that it actually works.(Michael Hiltzik / LAT)

UPDATE: Sen. Steinberg spoke about the issue today: