After a yearslong exodus, attorneys likely to return to medical malpractice

The past year was pivotal for the plaintiff bars of California and Nevada. Updates to decades-old laws governing medical malpractice in both states were finally enacted in 2023, raising the caps on noneconomic damages, increasing the contingency fees that can be collected, and lengthening the statute of limitations in Nevada.

The modernization of the laws provides better opportunities to secure resolutions that more accurately reflect the magnitude of a medically-created injury, as well as the actual costs of physical and mental recovery and legal fees. Also of tantamount importance are the increased contingency fees, which likewise incentivize plaintiffs' lawyers to return to medical malpractice after years of exodus.

But cautious optimism should be exercised by plaintiffs' lawyers in California and Nevada as they assess the cases they will accept. Let's discuss the developments in these two neighboring states and what victims and plaintiffs should know about the new laws.

California and MICRA's overdue upgrade

The Medical Injury Compensation Reform Act (MICRA) of 1975 was the thorn in the side of medical negligence victims and their lawyers in California for nearly 50 years. MICRA was intended to lower medical malpractice liability insurance premiums for healthcare providers in the state by capping the amount a victim could receive for non-economic damages (such as pain, suffering, physical disfigurement and diminished quality of life). Under MICRA, no plaintiff injured by medical malpractice could recover more than $250,000 for these types of damages, regardless of the number of defendants.

Though every medical malpractice case is unique, state policymakers still felt that birth injury victims, amputees and anyone who suffered from a negligent act were all subject to the same artificial financial cap. Adding insult to injury, the cap amount had not been adjusted for inflation for a half-century. Over time, this impacted the quality of plaintiffs' legal representation, as the cost of hiring experts and preparing for trial might have outweighed any financial recovery to the injured plaintiff, dissuading lawyers from the outset.

Thankfully for the California plaintiffs' bar and clients, the MICRA limit is undergoing systemic change. AB 35, signed by Gov. Gavin Newsom in May 2022, will increase the cap annually. High-level points regarding non-death cases under the bill include:

• For non-death cases, the cap increased from $250,000 to $350,000 on Jan. 1, 2023, and increases $40,000 every year through 2033 until it reaches $750,000 For death cases, the cap increased to $500,000 on Jan. 1, 2023, with an incremental increase over the next 10 years to $1,000,000. The amount of the cap that applies is based upon the timing of settlement or judgment, not on when the case is filed.

• Once the caps reach $750,000/$1,000,000 in 2033, they will increase by 2% every Jan. 1 from 2034, onward.

• The cap on plaintiffs' attorneys' contingency fees goes to 25% if the action is resolved prior to the filing of an action, and 33% if the settlement or judgment occurs thereafter.

Another key detail is the categorization of defendants. As the Consumer Attorneys of California noted, AB 35 creates three separate categories of defendants, for a total of three possible caps:

• Health care providers (regardless of the number of providers or causes of action)

• Health care institutions (regardless of the number of institutions or causes of action)

• Unaffiliated health care providers or health care institutions

With all this in mind, qualified plaintiff lawyers in California should be more incentivized to accept medical malpractice cases that, until recently, would not have been economically viable for their business.

Given the new law and the pragmatic look at the next several years, defense firms are re-strategizing. The enactment of AB 35 has inspired an increase in malpractice claims and defense firms are now inundated with cases. Those that are understaffed or lack seasoned professionals are at a disadvantage and may not be able to successfully defend the cases. After years of adopting stall and delay tactics, some defense counsel are doing an about-face and resolving cases more readily, in an effort to mitigate long-term costs.

These developments are encouraging, but whether they will give way to an increase in more favorable and higher-value results for plaintiffs remains to be seen. Medical malpractice lawsuits continue to have one of the highest percentages of defense verdicts after jury trial.

Using 404 in Nevada

Malpractice lawyers in Nevada had long lamented the state's $350,000 non-economic damages cap. Like their counterparts in California (and several other states), Nevada lawyers felt the cap had not adequately compensated victims for devastating, or life-altering medical mistakes, and the limit on recovery made Nevada lawyers less inclined to take on these expensive and challenging cases. Nevada requires a merit declaration to be attached to the Complaint when a medical malpractice case is filed, so an attorney typically advances around $5,000 just to file a medical malpractice action. A private practitioner in Nevada will then advance $50,000 • $100,000 in costs on average, and it generally takes 3 to 5 years to get a case to trial.

Thankfully for the Nevada Plaintiffs Bar, the Silver State's legislature has traditionally followed in California's footsteps. That's why practitioners were optimistic when the MICRA reforms were passed in 2022. After several years of lobbying, negotiating, and collaborating, followed by a final waiting period, AB 404 became law in June 2023.

Under AB 404, the non-economic damages cap will be increased by $80,000 every year for five years, starting on Jan. 1, 2024. Once the cap reaches $750,000 in 2028, it will annually increase by a flat rate of 2.1%, beginning on Jan. 1, 2029.

This is welcome news for plaintiffs, who deserve justice after experiencing life-altering trauma and death as a result of medical neglect, and the volume of cases where medical mistakes caused serious injury has continued to rise in Nevada in recent years.

AB 404 also benefits plaintiff law firms, which are, of course, businesses as well. For nearly 20 years, Nevada lawyers were required to use a contingency fee-range that was set by statute and resulted in an overall contingency fee of roughly 20% of the recovery in cases that involved serious injury or death. The former statute said that in any medical malpractice case, attorneys could only charge a fee that was 40% of the first $50,000 recovered, 33.3% of the next $50,000, and 25% of any recovery between $100,000 to $600,000. Lawyers were only allowed to charge 15% on any amount recovered in excess of $600,000, which is an even less favorable rate than most workers' compensation cases. Many capable Nevada attorneys stopped taking medical malpractice cases because of this restrictive formula, coupled with the high expenses of medical malpractice cases and the challenges of securing a verdict at trial.

But AB 404 stipulates that lawyers can now charge a maximum contingency fee of 35% on any medical negligence case filed after Oct. 1, 2023. This change makes it much more economically feasible for attorneys to file medical malpractice cases. Caps on non-economic damages will continue to be a challenge, although this AB 404 increase also helps to make these cases more practicable.

The end result of AB 404 for Nevada plaintiffs' medical malpractice practitioners is certainly positive. It enables qualified trial lawyers to accept cases involving medical neglect that would have been economically prohibitive just last year.

The Road ahead for the gold and silver states

Medical malpractice cases differ from typical run-of-the-mill personal injury claims because they are very complex, more expensive to maintain, and are almost entirely driven by expert testimony. The out-of-pocket expenses can be voluminous and are amplified by the fact that it is nearly impossible to resolve a claim within three years of filing.

But the tides have finally turned in 2023. With these reforms in place and providing more pragmatic and cost-effective fee structures, experienced lawyers can return to the practice from which they had distanced themselves and reassess the types of medical malpractice cases they accept.