MICRA: Learn It or Lose It!

                                             By Fred J. Hiestand, Esq. 

Next year marks the thirtieth anniversary for California’s medical liability reform law. This should occasion celebration. After all, the Medical Injury Compensation Reform Act of 1975 (MICRA)— unlike, say, the recently discredited energy deregulation law—actually works.  MICRA does what lawmakers intended it to do: ensures a stable medical liability insurance environment so that access to health care is possible. President Bush, the U.S. House of Representatives, the American Medical Association (AMA), and 20 states reported to be “in crisis” by the AMA, all hail MICRA as a “model solution” to the liability ills now sweeping much of the country. MICRA accounts, to use one “bottom-line” measurement, for the difference between what the average OBGYN doctor in Los Angeles pays for medical liability coverage today—$75,000—and what his or her counterpart in Miami pays for the same coverage—$210,000.

Before we get too comfortable about MICRA’s success, however, we need to repel Senator Tom Torlakson’s (D-Antioch) promise to introduce a bill in the next legislative session to raise MICRA’s $250,000 ceiling on recoverable noneconomic damage in a medical malpractice lawsuit to more than $900,000. This increased figure is the product of factoring in inflation from the date of MICRA’s enactment. Underlying the arithmetic is an assumption that if $250,000 was the “right” maximum to pay for pain and suffering in 1975, its historically inflated figure is the right amount to pay now.

There are serious problems with the assumption underlying this inflation proposal. One is the reality of what has happened with medical liability awards in California since MICRA. They have outstripped inflation, both generally and in the much higher escalating health care sector. So while MICRA’s noneconomic damage ceiling has helped keep malpractice awards from skyrocketing, they have still grown at a greater rate (adjusted for inflation) and are larger than they were before MICRA took effect. Raising the MICRA cap to $900,000 would, then, result in a damage metastasis that plunges California back to the abyss of 1975 when, as Governor Jerry Brown stated in calling the Democrat-dominated Legislature into special session to solve the crisis, “The inability of doctors to obtain . . . insurance at reasonable rates is endangering the health of the people of this state and threatens the closing of many hospitals. [This] . . . could seriously limit the health care provided to hundreds of thousands.” Indeed, a leading medical malpractice plaintiff’s lawyer told the Legislature that doubling the MICRA “cap” to $500,000 would result in approximately 2000 new cases being filed annually, an additional potential liability for health care providers of $1 billion.

Another problem underlying the inflation proposal is that it ignores the difference between economic and noneconomic damages. Unlike economic damage (e.g., lost wages, the cost of medical and rehabilitation care) for which there is no MICRA “ceiling,” noneconomic damage (i.e., “pain and suffering”) is subjective; it defies any objective measurement. This undoubtedly accounts for jury awards all over the board when it comes to this category of damage in cases involving very comparable injuries for similarly situated plaintiffs. It also explains why, absent a ceiling, it outstrips the growth of economic damage and eventually threatens to “break the bank.” Placing an arbitrary figure on what to pay for pain and suffering to cope with these difficulties does not, however, make it “real” and entitled to an inflationary adjustment like measurable economic loss. No, the $250,000 limit on noneconomic damages for medical negligence was fair in 1975 and is fair today. This is evidenced by the federal government’s recent placement of this same ceiling on compensable pain and suffering payments from the federal fund for family survivors of 9/11 victims. Since no amount of money is ever enough to compensate a person for the pain suffered from loss of a loved one or of one’s own functions and feelings, some line must be drawn to conserve and marshal scarce resources for other pressing needs.

Although facts and reason usually are necessary to defeat a bad bill in the Legislature, they are unfortunately too often inadequate by themselves. This is especially so when, as here, the bad idea is animated by powerful forces. One force behind lifting the MICRA “cap” is the “hard case” where $250,000 is the only recovery possible and it seems too little. The other is when a powerful interest group would benefit economically from a change in law. Senator Torlakson’s inflation proposal has both: constituent parents of a 7-year-old girl who died from an infection accompanying a scratch on her knee shortly after being seen by a doctor at a hospital emergency room and then released to her parents; and the omnivorous fee-driven personal injury bar.

The parents of Jessie Geyer, who are limited by MICRA to $250,000 for the emotional pain they have suffered if it is proved that their daughter died as a result of medical malpractice, say their desire to lift the “cap” is “not about money.” It is instead, they say, to assure that in the future parents like themselves can find lawyers to take their cases and ensure that those responsible are held accountable. Although they did secure an attorney within six months of the tragedy of their daughter’s death and have filed suit, they apparently were told by some lawyers they consulted earlier that the MICRA “cap” and its sliding contingency fee scale made the case economically unattractive to prosecute. This self-interested assertion by lawyers is suspect since the successful plaintiff’s counsel (assuming a $250,000 recovery) would get almost $75,000 in fees under MICRA, a not inconsiderable amount (more than half of a legislator’s pay per year) considering that costs expended on the litigation are separately recoverable. And if the goal is to hold medical wrongdoers accountable, revocation or restriction of hospital and license privileges seems more effective than litigation.

There is no denying that personal injury lawyers would like to cut the heart out of MICRA by lifting or repealing its noneconomic damage ceiling, and they will spend mightily to persuade the Legislature, the governor, and the public to support their goal. Just five years ago they backed an unsuccessful drive by the then-speaker of the Assembly to raise the “cap.” In its last version, the speaker’s bill would have raised the “cap” prospectively from the year 2000, an idea that failed passage when it ran into opposition from CAPP and a united health care community. This time around, the personal injury lawyers apparently intend to beat the “access to justice” drum, contending that MICRA’s liability restrictions make it difficult to find lawyers to take meritorious cases. That argument, however, is bogus as shown by the steady “frequency” of medical malpractice claims filed in California over the past quarter century, which still exceeds that of many other states without MICRA-like reforms. It is also belied by data from the National Practitioner Data Bank, which shows the median payment in California for medical malpractice from 1990 to 2002 was $45,000, and the mean payment for that same period was $130,000. Lawyers obviously are taking medical malpractice cases with an estimated settlement or award value of less than the “cap” on noneconomic damage.

To be sure, considerable hypocrisy accompanies the personal injury lawyer’s claim that the MICRA cap on noneconomic damage is too stingy. Lawyers, it turns out, have no liability for pain and suffering damage to clients upon whom they have committed malpractice. Such is the majesty of the law that it protects lawyers from having to pay anything when they negligently inflict emotional distress on their hapless clients but compels doctors similarly situated to pay up to $250,000 for their patient’s emotional distress.

Senator Torlakson and his colleagues must hear all of this and more from the entire health care community if we are to avoid a repeat of the calamitous history that gave us MICRA 30 years ago. CAPP welcomes the opportunity to work with you and deliver our message to lawmakers and the public. MICRA, to paraphrase Will Rogers, “ain’t broke” and doesn’t need to be “fixed.” 

Mr. Hiestand was special counsel on medical liability to Gover-nor Jerry Brown when MICRA was enacted in 1975. He now serves as CEO and general counsel to Californians Allied for Patient Protection (CAPP) in Sacramento.