California dreamin’;

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Proponents of malpractice caps ignore another state’s experience

Sarasota Herald-Tribune (Florida)

It is a matter of faith among some that capping damages in medical malpractice lawsuits will eventually reduce insurance premiums for doctors.

Among the faithful is Gov. Jeb Bush, who has insisted that the Legislature approve a $250,000 cap on non-economic damages in medical-malpractice suits. Insurance executives and many doctors share this belief.

The evidence, however, doesn’t support their faith.

Many of those who favor capping non- economic damages say tort reform passed in California in 1975 proves their contention that such caps help reduce malpractice premiums. The California law approved 28 years ago included a $250,000 cap on non-economic damages, similar to the limit currently proposed for Florida.

What the California experience really proves, though, is that insurance regulation is the key to lowering premiums.

The Foundation for Taxpayer and Consumer Rights examined medical malpractice premiums in California after the Medical Injury Compensation Reform Act passed in 1975.

What the foundation discovered is that, after several years of decline, California’s malpractice premiums increased dramatically — faster than the national average.

Malpractice premiums did not decline again until California voters passed strict insurance regulation in 1988, in the form of Proposition 103.

Cap proponents say the decline occurred because the true effect of the caps couldn’t be measured until the California Supreme Court upheld MICRA in 1985.

But malpractice premiums experienced their single highest one-year jump the year after MICRA was validated by the high court, and they didn’t go down until after Proposition 103 took effect.

Since the early 1990s, malpractice premiums in California have held relatively steady.

Cap proponents would have the Florida Legislature believe that’s merely coincidence. They would have legislators believe that Proposition 103‘s provisions — allowing consumers to appeal premium increases, limiting insurance industry profiteering and waste, and instituting other accountability measures — had no impact on insurance premiums.

Yet, the evidence gathered in the Legislature’s recent special sessions has made it increasingly clear that Florida doctors are facing an insurance crisis, not a lawsuit crisis.

The solution to that crisis, we believe, lies with better insurance regulation, not caps on legal damages.

Consumer Watchdog
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