MICRA cap covers unsupervised conduct leading to child’s death?

On Thursday, the California Supreme Court held that the $250,000 cap under the Medical Injury Compensation Reform Act (Civil Code Section 3333.2) applied even when physician assistants knowingly treated a patient with absolutely no oversight by a physician in direct violation of the Physician Assistant Practice Act (Bus. & Prof Code Section 3502(d)). Lopez v. Ledesma, 2022 DJDAR 1827 (Feb. 24, 2022).

This ruling is the perfect example of how unfair and unjust the noneconomic cap on damages is under MICRA.

Lopez involved the avoidable death of a child, Olivia, who died from melanoma. When Olivia was only a few months old, she developed a lesion on her scalp. Concerned, her primary care pediatrician referred Olivia to a dermatologist, Dr. Ledesma. Olivia was never seen by Dr. Ledesma or any other physician. Rather, over the next three years, Olivia was repeatedly treated by physician assistants who were employees of Dr. Ledesma. Over time, the lesion became bigger and darker. The physician assistants attributed the growth to "warts."

PAPA requires that a physician assistant be supervised by a physician. Likewise, a physician assistant is only allowed to provide services within a written delegation of services agreement and can only provide services that the physician assistant is qualified to perform. Despite the act's requirements of supervision, Dr. Ledesma did not provide any oversight or supervision whatsoever. Likewise, Dr. Ledesma's physician assistants were fully aware that Dr. Ledesma was not fulfilling his statutory obligations.

While Dr. Ledesma was still intricately involved in operating his clinic in a business sense, he was no longer treating patients himself. Indeed, Dr. Ledesma has an ugly history with the California Medical Board. While he still had his medical license, Dr. Ledesma oversaw a global system of fraudulent billing to insurance carriers that was accomplished by altering providers' handwritten notes to reflect more extensive treatment than was rendered. This would allow him to "upcode" and thus charge either the patient or the patient's insurance carrier more than the treatment that was actually provided. In addition to changing handwritten notes, Dr. Ledesma instructed transcribers to change notes prepared by physician assistants to "physicians," even when the patient was never seen by a physician, so that he could bill the treatment at a higher rate.

Dr. Ledesma would also urge providers at his practice to encourage patients to undergo unnecessary laser treatment procedures in order to bilk patients or their insurance companies. An administrative law judge in late 2015 recommended that the California Medical Board revoke Dr. Ledesma's medical license after the judge repeatedly found Dr. Ledesma to have acted with "fraudulent practices."

Dr. Ledesma's illicit behavior did not stop there. In 2015 he was arrested for illegally collecting disability benefits totaling more than $1.6 million through fraudulent claims starting in 1997. Dr. Ledesma claimed he was unable to work due to medical conditions while he actually ran his practice, at least administratively. His son also collected $200,000 in fraudulently disability benefits while serving as the CEO of Dr. Ledesma's dermatology practice.

After a bench trial, the court awarded $4,250,000 in noneconomic damages. Pursuant to MICRA, the trial court reduced the damages to $250,000. A split Court of Appeal affirmed the trial court's decision to apply MICRA. 46 Cal. App. 5th 980 (2020). In doing so, while the majority upheld the cap, it also noted the unjust result: "This case tragically illustrates how the imposition of the MICRA limits (unchanged since the 1970's) woefully fails to adequately compensate the plaintiff for the damages sustained by this professional negligence."

The California Supreme Court affirmed and adopted the reasoning of both the trial court and the Court of Appeal. The primary issue was the language under Civil Code Section 3333.2, which states that MICRA only applies when the medical care provided "are within the scope of services for which the provider is licensed and which are not within any restriction imposed by the licensing agency or licensed hospital." Plaintiffs' counsel argued that by acting beyond the scope of PAPA and knowingly providing care to a little girl without any supervision by a physician, the physician assistants were no longer acting "within the scope of services for which the provider is licensed." The physician assistants argued that since Dr. Ledesma took on the responsibility of supervision even if he utterly failed to do so, the physicians assistants were acting within their scope and MICRA should apply.

The California Supreme Court correctly noted that Section's 3333.2's text was "ambiguous" and the positions provided by both sides were reasonable. However, given the legislative history of MICRA in attempting to lower premiums for physician's malpractice carriers, a broad view of the law should apply. Moreover, the California Supreme Court noted that eliminating MICRA for the physician assistants under this circumstance could lead to inconsistent and absurd results. Namely, a physician who failed to supervise his assistants would only be subject to a maximum award of noneconomic damages of $250,000 while the physician assistants themselves could be liable for millions. Not applying MICRA would also create uncertainty and require a detailed inquiry into every single case about the level and adequacy of supervision. Such a result would "be at odds with MICRA's goal of ensuring predictability in damage awards."

Again, as the California Supreme Court correctly noted, the positions of both sides were reasonable and in no way am I being critical of the court's opinion. It is logical and well-reasoned. The problem is MICRA itself. Here, a little girl is dead due to a physician who failed in his Hippocratic Oath to "do no harm." Dr. Ledesma knowingly ran a fraudulent practice with no physician oversight that focused on profits over patients. Who knows how many countless other patients were harmed but could not find representation due to the draconian cap. Olivia's family will no doubt only receive a tiny fraction of the $250,000 award given the lengthy trial, expert costs, multiple appeals, and long delay. Something needs to change. 