State Cap on Damages Appeals to President

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Los Angeles Times

For a long time, the only thing President Bush found to like about California was the reflectable glow of our governor.

But lately, in speeches such as Wednesday’s State of the Union address, he has alluded to one of our great legal innovations as just the thing to solve a big national problem.

That problem is medical malpractice lawsuits, which we’re told are a major culprit in soaring healthcare costs. Dr. Bush’s prescription is a federal statute modeled on the 1975 California law that cracked down on malpractice claims.

The Medical Injury Compensation Reform Act, or MICRA, supposedly has kept California malpractice premiums low in comparison with other states, without limiting access to the courthouse for deserving patients one bit. It also has purportedly put a leash on all those greedy and unscrupulous lawyers who pocketed the money that should have gone to patient care.

It all sounds too good to be true — and it is.

MICRA‘s effect on malpractice premiums is almost impossible to measure, but the signs aren’t encouraging. It has shut the courthouse door to huge numbers of deserving patients and, worse, harmed certain types of victims, including women and the families of dead children, more than others. Certainly, it has put a leash on unscrupulous lawyers — but on scrupulous ones too.

Its appeal to the president is that it sounds good. But then Bush’s version of the healthcare mess is his usual bozoid oversimplification of the truth.

According to the White House transcript of a speech on medical costs delivered last month to, I’m sure, a randomly chosen audience, it goes like this: “Many of the costs that we’re talking about don’t start in an examining room or an operating room. They start in a courtroom. (Applause.)”

So let’s take a look at MICRA, which a panicky Legislature passed after the state’s dominant malpractice insurer had jacked up rates by more than 300% for two straight years, provoking a “crisis.” (The insurer later settled a lawsuit alleging rate rigging by agreeing to refund $47 million to overcharged physicians.)

MICRA imposes a $250,000 cap on noneconomic damages — what is commonly called “pain and suffering” — and imposes a sliding scale of maximum fees on lawyers, who used to collect an average one-third of jury awards (but who also paid for trial expenses for this uncommonly costly litigation out of their own pockets).

That may sound generous enough. But the cap isn’t indexed to inflation; thus, the relative value of the $250,000 ceiling has declined by more than two-thirds since 1975.

Moreover, juries normally aren’t told in advance that any noneconomic damages they award in excess of $250,000 will be thrown out, so their efforts to strike a fair balance between economic and noneconomic recoveries can be easily tripped up by the law.

A few categories of cases aren’t affected by MICRA. Those with heavy economic losses, such as damage to a breadwinner’s ability to work or debilitating injuries to a child or young adult, are still in the game. So too are those in which a crippling injury will require years of specialized medical care — cases involving brain damage, for instance.

But patients whose damages can’t easily be pigeonholed as lost wages or future medical bills are out of luck. “The people most disenfranchised are seniors, stay-at-home moms and children without economic damages,” says Ken Sigelman, a San Diego doctor and plaintiffs’ lawyer. “Cases of the death of a retired person, even with a surviving spouse, or the death of a child simply can’t be handled economically.”

According to studies at the Santa Monica think tank Rand Corp. and elsewhere, women are among the biggest losers. Jury awards to women in malpractice cases traditionally tilt toward noneconomic damages, so MICRA tends to deprive them of a greater share of their recoveries than men. Compounding the injustice, the most common medical injuries women suffer are harder to score in dollar terms. That’s because many claims result from obstetric or gynecological procedures that may affect a patient’s fertility or sexual lifestyle.

“Medical errors in these cases can leave women perfectly able to work, but have a severe impact on their lives and sense of self,” says Lucinda Finley, a law professor at the University at Buffalo in New York who studied 213 malpractice verdicts reached in California from 1992 to 2002.

This troubling outcome may be for naught. Although California malpractice premiums are lower than the national average, the real reason may not be MICRA but Proposition 103, a 1988 measure that rolled back all casualty insurance rates by 20% and required the approval of the state insurance commissioner for any rate increase. Malpractice rates rose sixfold between 1975 and 1988 despite MICRA — but have held roughly steady since Proposition 103‘s passage.

In many ways, this is unsurprising. A few eye-catching jury awards notwithstanding, medical malpractice cases are generally among the hardest and costliest to bring to court. Of those that make it before a jury, more than 70% are won by the defendant doctors.

Still, that leaves us with the question of why noneconomic damages are worth compensation at all. Some critics of the tort system argue that pain and suffering are in the eye of the beholder, and that’s life, right?

Finley, for one, disagrees. “The noneconomic aspects of life are very real, and as human beings we are more than wage earners and medical-bill payers,” she says. “We are mothers and fathers and husbands and wives, and some things that make life worth living aren’t economic. It’s part of what it means to be human.”

Consumer Watchdog
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