MICRA re-do; a redux or retread?

The California Legislature enacted its Medical Injury Compensation Reform Act (MICRA) in 1975. Long before MICRA’s enactment, there was heated debate whether the public was better served by the application of basic principles of tort law to medical malpractice lawsuits or by doctors receiving special protection in such lawsuits by the imposition of a limit on recovery for non-economic damages such as pain, suffering, emotional distress or mental anguish. MICRA imposed such a limit in the amount of $250,000 and with no provision for an annual adjustment to this amount.

While fairness might be in the eye of the beholder, after 1975, the beholder (i.e., decision maker) was not completely the jury of one’s peers but rather the California Legislature which imposed such a cap after being extensively lobbied by both medical and insurance industries and the plaintiffs’ bar.

Post-MICRA, what if the surgeon removed the healthy leg rather than the diseased one? Or the healthy eye? Under MICRA one could recover for pain and suffering but only up to the cap of $250,000.

MICRA also injected itself into the contractual relationship between plaintiffs and their lawyers by imposing limits on fees. MICRA imposed a sliding scale and capped fees at between 15% and 40%, depending on the amount of recovery. See Business and Professions Code Section 6146. Was this a violation of the sacrosanct attorney-client relationship? Or a necessary measure to reduce the cost of healthcare and increase its availability and especially in high-risk areas?

Given both restrictions, the business of healthcare law and the incentives for taking medical malpractice cases changed.

Did MICRA result in fewer medical malpractice lawsuits being filed? Of course it did. Was that a good thing? Well, the answer is in the eye of the beholder.

After the enactment of MICRA there were fewer medical malpractice lawsuits. One could argue that fewer lawsuits increased the public good because it resulted in cheaper medical malpractice premiums, which in turn kept more medical practices open to provide healthcare due to reduced operational costs. However, the basic laws of economics inform us that the imposed MICRA caps reduce the incentive of doctors to be careful or to avoid malpractice lawsuits.

What to do with MICRA? Or, as the English punk rock band the Clash asked in 1982, “Should I Stay or Should I go?”

After several prior unsuccessful attempts to modify MICRA caps, last year the California Legislature did not entirely scrap MICRA; rather it increased the amount that plaintiffs can get for non-economic damages. Assembly Bill 35 raised the cap from $250,000 to $350,000 with yearly incremental increases over the next 10 years until the amount reaches $750,000. The bill also increased the cap on contingency fees; 25% before the filing of a complaint or arbitration demand and 33% thereafter. If the case is tried or arbitrated the attorney is eligible to seek higher percentages.

What will be the result? We do not know. Yet Holmesian deduction informs us that if both the plaintiffs’ and lawyers’ piece of the pie increases, more lawsuits will be filed. As years pass and the cap for non-economic damages increase – thus making it more likely that a jury rather than the California Legislature will determine the final award (because an award in excess of the cap will not be clipped by the Court) – more lawsuits will be filed. Will this increase the cost of medical malpractice insurance? It might if the dollar amount of awards increase. Or it might not, if the rates of medical malpractice decrease. What was and will be for the public good? It’s all in the eye of the beholder.