In the early 1970s, the high cost of liability claims and unchecked jury awards were forcing doctors in high risk specialties such as obstetrics and neurosurgery to close their practices. Medical malpractice insurance premiums were soaring, threatening to force thousands of doctors out of business.
To help stem this tide of skyrocketing medical malpractice costs, then-Governor Jerry Brown convened a special session of the California Legislature in 1975. The Legislature enacted the Medical Injury Compensation Reform Act (MICRA). This landmark legislation has been held up as a national model for having stabilized liability and jury award limits, as well as having reduced the cost of medical malpractice insurance in California.
MICRA provisions include:
• Specific limits on attorney’s contingency fees;
• Full compensation for economic damages such as present and future medical costs, lost wages, future earnings, custodial care and rehabilitation;
• A $250,000 limit on non-economic damages (or pain and suffering);
• A statute of limitations on claims; and
• Binding arbitration to settle claims.
An immediate impact of MICRA was that settlements and awards were geared specifically to patients. It also sped up the claims settlement process. Injured patients receive their awards 26 percent sooner than patients in states without MICRA-style reforms.
Between 1999 and 2006, more than $190 million in high damage awards were redirected from lawyers to patients because of the reforms, according to Californians Allied for Patient Protection, a non-profit organization formed to protect MICRA.
Net recoveries actually realized by plaintiffs were only 15 percent less than they would have been without the award caps or fee limits. Attorney’s fees were also reduced by 60 percent, according to a 2004 Rand Institute for Civil Justice.
To this day, MICRA is held as an example of the type of reform that works to the benefit of patients as well as medical professionals. California has kept the laws intact, and doctors’ practices, including high risk specialties, continue to thrive in the state.
ADDITIONAL RESOURCES
Californians Allied for Patient ProtectionRand Institute for Civil Justice
