Long overdue: 

Amend “Medical Injury Compensation Reform Act” (MICRA) of 1974 (Civ. Code § 3333.1 et. seq.)

In 1974, in response to what was then portrayed as a “medical malpractice crisis”, the California legislature, under intense pressure from the insurance and medical lobbies, enacted a series of “reforms” generally referred to as the “Medical Injury Compensation and Reform Act” (MICRA). 

Here’s what it did effective August, 1975 and what is still in effect presently:

1. •Limits maximum for non-economic loss to $250,000
   

2. •Limits fees for lawyers representing injured patients (Note: no limits are set for lawyers representing medical providers or insurance companies)
   

3. •Allows insurance companies to pay off any judgments over time instead of in a lump sum
   

4. •Allows offsets for amounts for medical care paid by health insurance
   

What has happened in the last 36 years since this law was put into effect?

INSURANCE RATES FOR DOCTORS HAVE NOT COME DOWN.

California physicians still pay comparatively high premiums.  The amounts saved by insurance companies in limiting payments to injured patients have mostly gone to the insurance companies in the form of profits, not to the physicians by reduced premiums.

INSURANCE COMPANIES HAVE REAPED A WINDFALL.

Unlike other areas of insurance coverage (automobile insurance) a medical liability insurance company gets to play on an uneven field.  No matter how much injury is caused through medical negligence, non-economic damages are “capped” at $250,000.  They get to insure against a “risk” the upside of which has largely been removed.

PATIENTS HAVE BEEN LEFT UNCOMPENSATED.

The estimated cumulative inflation rate since January, 1975 to December, 2010 is 320.69% according to InflationData.com.  According to the U.S. Census Bureau, an average house cost $39,500 in January, 1975.  According to the U.S. Department of Energy, an average new car cost $5,084 in 1975.  According to the U.S. Social Security Administration, the average income in 1975 was $8,630.92.  Yet what was supposedly “fair” as compensation for grievous injury or death caused by medical negligence in 1975 is still “fair” almost 40 years later.

JUSTICE IS OFTEN DENIED:

PATIENTS ARE LEFT WITHOUT ACCESS TO LAWYERS.

Without lawyers willing to prosecute cases, lawsuits involving medical malpractice won’t be brought.  By limiting damages and fees, the insurance industry knew it could price legal representation out of the market for most injured patients, and it has done so.

Medical cases are extremely expensive to prosecute.  They require multiple experts, analysis of complex medical issues and records, and are defended by well funded top flight lawyers with no limits on their fees.

It often costs $50,000 or more of out-of-pocket expenses (non-attorney fee expenses) to get a case to trial.

Most injured patients can’t afford to pay hourly legal fees.  The only way a case can usually be brought is by a lawyer willing to take the case on a “contingency fee” (i.e. the lawyer fronts all the costs and only gets paid a percentage of the recovery).  Under MICRA, that percentage is limited to 29.6% of the maximum general damage award of $250,000.  This would provide the attorney with a total fee of $74,000 if the maximum recovery is obtained.

So, let’s do the math.  Let’s suppose top notch trial lawyers in Los Angeles/Orange County are presented with these cases (based on actual cases in the Los Angeles/Orange County area this last year).  They all, tragically, involve the death of a child (ages 5 to 8 years), we’ll call her “Amy”:

CASE 1

In case number 1, “Amy” and her mother are involved in an automobile accident.  A semi-tractor trailer with bad brakes goes out of control and crosses the center divider of the freeway crushing the car “Amy” rode in.  The family sues the trucking company and the company that negligently maintained the brakes on the truck.  The case is resolved for $1.8 million as compensation for the death of “Amy”.  This would be considered a relatively mid-line result (i.e. not particularly low or high but close to average for similar cases).

CASE 2

In case number 2, “Amy” and her family took a vacation trip to a beachside resort where “Amy” was put in a “kids camp”.  The three young people who were supposed to be supervising the kids apparently got distracted and took their attention away from the kids in their care.  They left the kids unattended for about 15 minutes out by the pool.  “Amy” slipped as she was playing with a toy with another child and fell into the deep end of the pool and hit her head on the side.  The head injury wasn’t serious, but it dazed her.  She inhaled some water and couldn’t clear her lungs.  The other kids ranging in age from 4 to 10 years old didn’t notice.  She drowned.  The result was the hotel was at fault for negligent supervision.  The case resolved for $2.3 million.

CASE 3

In case number 3, however, we see a major difference.  In this instance, “Amy” was admitted to the hospital for appendicitis.  During the surgery, there were some problems with her blood clotting properly.  After surgery, she was put on a medication to help her blood clot.  However, the order from the physician was transposed with another order for another patient that had the opposite problem (i.e. a patient that needed anti-coagulants or blood thinners).  “Amy” was given the wrong medicine, the anti-coagulant.  She quickly began to hemorrhage internally.  Before anyone noticed, she had gone into cardiac arrest and died.

THIS WAS A CLEAR CASE OF MEDICAL NEGLIGENCE, BUT WHAT WAS THE RESULT?

First, “Amy’s” family had difficulty finding a lawyer because lawyers in California know the case would require significant up front costs to prosecute and their fees would be severely limited.  Lawyers know that medical defendants and their insurance companies bring top notch legal talent to defend their cases.  Since the insurance companies know there is a $250,000 maximum limit and they have no “upside” risk, they can drive a hard bargain in negotiations (i.e. settle  for less than $250,000 or force the case to trial).

The resolution here was the case went to trial.  The jury awarded the family $1.6 million in damages.  But the judge then applied the MICRA limits (which the jury was never allowed to hear about) and cut the award to $250,000.  It cost “Amy’s” family and her lawyers $87,650 in outside trial expenses to litigate this case.  This included payments to expert witnesses, trial exhibits, etc.  That $87,650 had to be paid back off the top of the $250,000 reduced verdict.

The case had taken almost 2 years of time to get to trial that lasted several weeks.  Amy’s lawyers spent over 2,000 hours on the case.  Of course, they did so without benefit of being paid along the way since this was a contingency case.  The math worked out like this:

$250,000 - $87,650 (costs) - $74,000 (29.6% for the lawyer’s contingency fee) = $88,350 net

Two years of effort.  Risking $87,650 in trial expenses.  For a “maximum” recovery of $88,350 for the loss of this little girl.

The lawyers for “Amy” hardly did much better.  They fronted the $87,650 without interest which, if they had lost the case, would have never been recouped.  They ended up working for about $50 per hour, much less than the insurance company’s lawyers who had zero risk of not getting paid at all, never had to pay any of the costs of the trial out of their pockets, and who got paid regularly throughout the two years the case was litigated.

Does that seem fair?  It’s no wonder it’s hard to find justice under the antiquated MICRA system in California.

Regardless of political beliefs, this should not happen.  It’s fundamentally wrong.  Let your legislator know how you feel - that’s the only way this almost 40 year old injustice will ever change.

http://www.legislature.ca.gov/