California’s New MICRA Modifications

MICRA, the Medical Injury Compensation Reform Act, was passed by California in 1975 to control sky-rocketing medical malpractice insurance premiums, which seemed to force physicians out of practice, and to ensure the continuing availability of malpractice insurance coverage.   MICRA instituted a cap of $250,000 on any award for non-economic damages, like pain and suffering, and imposed limits on plaintiffs’ attorney fees, with a sliding scale, allowing for fees between 40% and 15%, depending on the award.

MICRA remained unchanged since its enactment in 1975. However, MICRA cap changes will take effect on January 1, 2023. The new MICRA cap changes are governed AB 35. Under AB 35, MICRA caps will begin to increase annually. The annual increases are dependent upon the type of medical malpractice case.

For a non-wrongful death case, the cap will increase from $250,000 to $350,000 on January 1, 2023. The cap will then continue to increase $40,000 each year for 10 years (i.e., until 2033). Once the non-wrongful death MICRA cap reaches $750,000 in 2033, the cap will then increase by 2% starting on January 1, 2034. The cap will continue to increase by 2% every year thereafter.

For a wrongful death case, the cap will increase from $250,000 to $500,000 on January 1, 2023. The cap will then continue to increase $50,000 each year for 10 years (i.e., until 2033). Once the wrongful death MICRA cap reaches $1,000,000 in 2033, the cap will then increase by 2% starting on January 1, 2034. The cap will continue to increase by 2% every year thereafter.

AB 35 has also created three separate categories of defendants. Plaintiffs may recover a separate cap for each category of defendant in the case. The new defendant categories are health care providers, health care institutions, and unaffiliated health care providers or institutions.

Health care provider is defined as a person licensed or certified under Division 2 of the Business and Profession Code; county medical facilities; and any outpatient clinic, health dispensary, or health facility. A health care provider also includes the legal representatives of a health care provider and the health care provider’s employer, professional corporation, partnership, or other form of recognized professional practice organization.

Health care institution is defined as a facility, place, or building that is organized, maintained, and operated for the diagnosis, care, prevention, and treatment of illness where persons are admitted for at least a 24 hour stay.

Unaffiliated health care providers or institutions are defined as those who are not employed by, performing under a contract with, an owner of, or in a joint venture with another specified entity, health care institution, health care provider, organized medical group, professional corporation, or partnership, or that is otherwise not in the same health system with that health care provider, health care institution, or other entity; or those who are not covered by the definition of affiliated under Corporations Code Section 150.

Therefore, three separate limits of liability may apply. However, the Plaintiff may only recover from each of the three categories once within a case, regardless of the number of defendants within each category. A health care provider or institution defendant cannot be liable for non-economic damages in more than one of the categories.

Other new provisions include periodic payments for future economic damages can be utilized starting at $250,000 (which previously started at $50,000); Plaintiffs’ attorneys’ contingency fees are increased to 25% if the recovery occurs before a civil complaint or demand for arbitration is filed, and 33% if the recovery occurs after a civil complaint or demand for arbitration is filed; and all pre-litigation expressions of sympathy, regret or benevolence, including statements of fault, made in relation to the pain, suffering or death of a person, an adverse patient safety event or unexpected medical outcome are inadmissible.

Many physicians have malpractice policies for $1,000,000 per incident; therefore, this new adjustment for inflation is not necessarily efficient in keeping premiums down for physicians, and the coverage would need to go up immensely to cover the new MICRA caps. It is unclear just how these changes will affect medical malpractice claims, and the medical field, in the future.

For more information about this topic, please contact one of our business attorneys at 619.238.1712