Dated Medical Malpractice Law Comes Under Scrutiny

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Wayne Volkmuth learned what a "250 case" was while conducting research shortly after the loss of his 7-year-old son, Ryan, who died three years ago during a dental procedure at a Palo Alto clinic.

The "250" refers to $250,000, the most Volkmuth could recover in a medical malpractice claim over his disabled son’s death, a limit set 34 years ago by California’s landmark medical malpractice law. It’s also the reason his case was turned down by most of the dozen medical malpractice attorneys he and his wife consulted.

"They basically said we can’t do this. They said we believe you have a strong case and we could prevail at trial, but in economic terms it makes no sense for us to take it on," said Volkmuth of Foster City, who eventually found an attorney to sue the clinic and its staff for wrongful death and negligence. The case is set to go to trial Oct. 26.

Medical malpractice reform is getting its moment in the spotlight during the ongoing debate to overhaul the country’s health care system.

President Obama mentioned reforming malpractice laws in his Sept. 9 address to Congress as a way to lower unnecessary medical costs incurred by physicians to protect against litigation. And last week, his administration announced grants of $25 million to states and health care systems to experiment with methods to reduce excessive judgments and high malpractice premiums.

While announcing the grants, Health and Human Services Secretary Kathleen Sebelius noted that medical malpractice premiums account for just 1 percent of overall health costs nationwide.

Mixed Reviews

California’s decadeslong experience with malpractice reform is either a national model or cautionary tale – depending on who you talk to.

The state’s Medical Injury Compensation Reform Act, which was passed by the Legislature in 1975 and signed by then-Gov. Jerry Brown, caps the amount of damages for non-economic or "pain and suffering" at $250,000, but leaves unlimited the amount plaintiffs can seek for other damages such as medical costs and lost wages. It also doesn’t restrict punitive damages, but such awards require proof of a conscious disregard for the safety of a patient and are difficult to obtain in medical claims.

For physicians and malpractice insurance companies, the law, often referred to as MICRA, has helped hold down insurance costs, prevent unreasonably high jury verdicts from sympathetic juries and kept doctors from fleeing the state.

At the same time, they say, the law allows them to be compensated for their true economic losses.

"California is the model for the rest of the country," said Dr. Dev GnanaDev, president of the California Medical Association, which represents about 35,000 physicians.

But patients and families who struggle to get an attorney to represent them contend the law stands in the way of justice.

"It’s really a nightmare if you’re an injured patient, or a patient’s family member, and don’t have large medical bills or large wage losses," said Jamie Court, president of Consumer Watchdog in Santa Monica. "There is no justice."

Unadjusted Cap

Critics object to the fact the $250,000 cap hasn’t been adjusted for inflation in 34 years. They also argue that because the law allows unlimited awards for economic losses, such as lost wages and ongoing medical costs, it discriminates against children and seniors, who have limited earnings if any, as well as against the families of those who died and did not have high medical costs.

"It’s economic suicide for a medical malpractice lawyer in the state of California to undertake too many or any cases that are capped at just 250,000," said Erik Peterson, a San Francisco medical malpractice attorney who agreed to take on the Volkmuth’s case, even at a loss.

"The cases are incredibly expensive, they’re well defended and when the defense gets to practice law knowing they have the parachute of MICRA," he said, "there’s very little incentive for the insurance companies to settle or even to be fearful."

A 2004 Rand Corp. study found the law has cut payments to plaintiffs who win at trial by 30 percent. The study, based on an examination of cases between 1995 and 1999, found that plaintiffs received about 15 percent less overall due to limits on attorney fees.

Nicholas Pace, a researcher with the Rand Corp. who led the study, said there hasn’t been enough unbiased research conducted to determine whether California’s medical malpractice law has had a direct impact on health care costs in the state.

"It’s hard to make a strong persuasive link between medical malpractice reform and significantly changing the amount consumers pay," he said.

Californians Allied for Patient Protection – a Sacramento group that represents many health care providers and medical malpractice insurance companies and was formed to protect MICRA – contends the loudest voices for amending the law to increase non-economic damages are those of personal injury attorneys. The organization cites a 2008 report that determined that doubling the amount to $500,000 would raise health care costs in California by $7.9 billion a year.

Better Patient Access

Supporters say the law has resulted in improved access to care for patients because it has persuaded doctors to stay in California without fear of skyrocketing insurance premiums.

Lisa Maas, executive director of Californians Allied for Patient Protection, pointed to her group’s research, which shows the average annual premium for a specialist in obstetrics and gynecology in Los Angeles was about $90,000 last year, compared to nearly $195,000 a year for the same specialist in Nassau and Suffolk counties of New York, a state without medical malpractice reforms.

But to Volkmuth, the idea of other states looking to California as a shining example of success in reforming medical malpractice laws makes him shudder.

"It’s ridiculous. You couldn’t pay enough to compensate us for what happened to us for the loss of Ryan," he said. "But this is the only course of action we have available to us to try to ensure liability."

Malpractice Reform In California

 Q: What is MICRA?
     ·    A: It’s California’s medical malpractice law – the Medical Injury
          Compensation Reform Act – passed in 1975 to control skyrocketing
          medical malpractice insurance premiums.
     ·    Q: What does it do?
     ·    A:
It caps non-economic damages, often referred to as "pain and
          suffering," that can be recovered in a medical malpractice trial to
          $250,000, a level that hasn’t changed since the law was passed. It
          also limits contingency fees that plaintiffs’ attorneys can receive
          based on a sliding scale.
     ·    Q: Has it worked?
     ·    A:
That depends on who you talk to. For many doctors and insurance
          companies, it has controlled medical malpractice insurance premiums.
          But injured patients, consumer groups and trial attorneys contend the
          law thwarts justice by making it difficult to sue. There is no clear
          evidence that the law has resulted in lower health care costs.
Source: Rand; Chronicle research.

Consumer Watchdog
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