What to Expect From California’s MICRA Reform - AA Law

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How Does MICRA Affect Your Medical Malpractice Case?

January 23, 2024 Alan Ahdoot
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Medical malpractice cases continues to pose challenges within our healthcare system. When a doctor or medical provider causes harm to a patient, it can result in complications or even wrongful death. 

While victims of medical negligence have the right to compensation, the Medical Injury Compensation Reform Act (MICRA) imposes a limit on the amount of damages. Continue reading to gain a deeper understanding of MICRA and its implications for your case.

What is MICRA?

MICRA, short for the Medical Injury Compensation Reform Act, was enacted by California legislators in 1975 and signed into law by then-Governor Jerry Brown. 

In essence, MICRA places restrictions on the compensation that victims or their loved ones can recover for non-economic damages in medical malpractice cases. These non-economic damages encompass elements such as pain and suffering, loss of consortium, disfigurement, and loss of enjoyment of life.

What Does MICRA Do?

Key aspects of MICRA include:

  • Limitation on Non-economic Damages: MICRA sets a cap of $250,000 on non-economic damages, including pain and suffering, disfigurement, loss of consortium, and loss of enjoyment of life.
  • Exclusion of Economic Damages: While non-economic damages are capped, MICRA does not limit the amount of economic damages. This category includes medical bills, hospital costs, and other out-of-pocket expenses related to medical malpractice.
  • Restrictions on Attorney Fees: MICRA also imposes limits on attorney fees. For instance, an attorney representing a victim of medical negligence cannot take more than 40% of the first $50,000 awarded. As the compensation amount increases, the percentage of attorney fees decreases. If a victim is awarded $600,000 or more, the attorney may only take 15% of the settlement.
  • Limitation on Lawsuits: Generally, MICRA restricts an individual’s ability to pursue a lawsuit against a medical provider for negligence. The law shortens the time limit within which people can bring a lawsuit.
  • Elimination of Collateral Source Rule: The Collateral Source Rule, which allows sources other than the defendant to contribute to compensating the victim, is eliminated under MICRA. This means that only the defendant is responsible for paying the victim’s damages.
  • Structured Payment Option: MICRA permits a physician’s insurance company to pay a jury verdict over time instead of making a lump sum payment after the trial.

How Did MICRA Start?

In the mid-1970s, a crisis emerged in the insurance landscape for physicians and medical care providers. During this period, a surge in frivolous lawsuits from patients and excessively high jury settlements led to a spike in insurance premiums. Consequently, many doctors faced the risk of losing their insurance coverage.

Responding to this pressing issue, a pivotal moment occurred in May 1975 when then-Governor Jerry Brown initiated a session involving key stakeholders such as the California Medical Association (CMA), healthcare providers, insurance companies, and trial lawyers. Over five months of hearings, the collaborative efforts culminated in the passage of AB 1XX by the California legislature. 

This legislative package, now known as MICRA, was signed into law by Governor Brown on September 23, 1975. MICRA was designed to address the challenges faced by the medical community, balancing the interests of both healthcare providers and patients in the realm of medical malpractice lawsuits.

How Does MICRA Affect Medical Malpractice Cases?

MICRA has a profound impact on the rights of medical malpractice victims, with notable consequences on malpractice liability insurance premiums. While this reform has led to decreased premiums, providing more stability in predicting losses, medical providers still maintain profitability.

Despite the positive aspects, there are limitations. Although economic damages remain uncapped, ensuring access to affordable patient care, the cap of $250,000 on non-economic damages can fall short in compensating for severe injuries or wrongful death.

A poignant example illustrates this limitation. In a case where a husband filed a lawsuit after his wife’s tragic demise following a tubal ligation shortly after giving birth, alleging surgeon negligence, the estimated value of non-economic damages exceeds $1 million. 

However, regardless of the jury’s potential award to the plaintiffs, the judge is bound to cap the non-economic damages at $250,000. This underscores a significant disparity in compensating victims, especially in cases involving profound loss or grievous harm.

MICRA Reform: What to Expect

Over the past 47 years, advocates for victims, consumer protection groups, and the California Plaintiffs’ Bar have been actively pushing for legislative reforms to eliminate the established cap under MICRA or incorporate provisions for annual increases. Following extensive discussions, a compromise took shape in the form of Assembly Bill 35 (AB 35), signed into law by Governor Gavin Newsom in May 2022.

Outlined below are the revised MICRA caps for 2023:

If these adjusted caps extend to the year 2033, they will undergo a 2% annual adjustment based on the built-in inflation index. The new legislation introduces three distinct categories of caps for recovery against the following entities:

  • Medical institution
  • Medical provider
  • Unaffiliated healthcare institution or provider

It is crucial to recognize that these changes impact all healthcare providers in California. Additionally, it’s noteworthy that damages will triple if the same institution or provider is implicated in repeated instances of medical negligence. 

This legislative update marks a significant shift in addressing the concerns surrounding MICRA and aims to strike a balance between protecting victims’ rights and maintaining the viability of healthcare providers.

two doctors perform surgery for fear of committing medical malpractice
Healthcare professionals involved in medical malpractice cases are affected by the new changes in MICRA.

Changes in Attorney Fees

Under MICRA, there are restrictions on attorney fees in cases of medical negligence. Initially, an attorney representing a victim may not claim more than 40% of the first $50,000 awarded. However, as the compensation amount increases, the percentage that an attorney is entitled to decreases. For instance, if a victim is awarded $600,000 or more, the attorney’s share is capped at 15% of the settlement.

Moreover, the reform addresses changes in contingent fee limits for attorneys. These adjustments shift from being based solely on the amount of the recovery to a timing consideration. This allows for higher fees when the circumstances and the request warrant such an increase. This nuanced approach aims to balance the interests of both attorneys and victims in medical negligence cases.

Rate Changes Based on the Size of the Facility

Those mid-sized healthcare facilities and medical providers with primary layer insurance from excess and surplus line carriers will begin to see the impact on their rates. Meanwhile, larger healthcare facilities will see increased funding needs as they usually purchase excess insurance while self-insuring their primary layers.

What Will Not Change 

Despite the significant changes to MICRA, certain aspects will remain unchanged, including:

Medical Expenses

  • The medical expenses covered by the plaintiff’s health insurance will continue to be admissible as evidence of damages.
  • Health insurers or collateral sources are still prohibited from seeking recovery against the plaintiff.

Statute of Limitations

  • The deadline for filing a lawsuit remains three years from the date of injury or one year after the plaintiff becomes aware that the victim has not fully recovered.
  • Before filing a lawsuit, the plaintiff must still file a notice of intent to sue within 90 days.

Arbitration Clauses:

  • Medical service contracts that include arbitration clauses will remain valid.
  • The presence of an arbitration clause must still exist in the first paragraph of the contract.

These elements, unaffected by the changes to MICRA, provide continuity in certain procedural and evidentiary aspects of medical malpractice cases in California.

Let Adamson Ahdoot Help You

A qualified personal injury attorney at Adamson Ahdoot can help you understand MICRA. We can help you get the compensation you deserve, in any type of medical malpractice case. Call us today at (800) 310-1606 to schedule a free consultation with a top injury lawyer.

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