Modern Physician

Almost unanimously, doctors across the country agree their salvation from burgeoning malpractice premiums lies in a $250,000 cap on noneconomic damages.

They typically cite as a model of effective reform California’s Medical Injury Compensation Reform Act of 1975, or MICRA.

But even as Congress and many states consider enacting MICRA look-alikes, the 28-year-old California law is little understood and subject to intense debate on whether it keeps premiums in check or restricts patients’ rights.

For starters, it is rarely explained why a cap on noneconomic damages is so important. Richard Anderson, M.D., chairman of the Doctors Co., a malpractice insurer in Napa, Calif., that operates in all 50 states, explains that economic damages encompass healthcare costs and lost wages and are fairly predictable, while noneconomic damages, which make up 52% of all payouts, comprise things such as pain and suffering that are unpredictable and can balloon into millions of dollars.

This unpredictability, he says, makes it difficult for insurers to assess future risks and set premiums. The increasingly common $1 million-plus payouts of today, he says, are mostly for pain and suffering.

”I really don’t think there is anything else that can be done that would be as effective as a cap on noneconomic damages,” he says.

Due to MICRA, Anderson says California premiums are one-third lower than in other states. The gap in high-risk specialties is even wider, with a San Francisco OB/GYN paying $33,000 in premiums vs. $210,000 for a Miami OB/GYN.

Consumer groups attack these claims. The Center for Justice & Democracy argues that California premiums are actually just 8.2% below-and rising faster than-national averages. The Foundation for Taxpayer and Consumer Rights asserts that what really slowed down premiums was a 1988 California law, Proposition 103, that limited insurers’ ability to raise premiums.

Tort reform advocates say these claims are false. But the debate goes on, with opponents also saying caps on noneconomic damages are not fair to malpractice victims who have no income and cannot win high economic damage awards.

They cite the death in February of Jesica Santillan, whose heart-lung transplant at Duke University Medical Center in Durham, N.C., had the wrong blood type. Santillan, 17, an immigrant from Mexico, did not have a job. If her family sued, they would have to collect under pain and suffering.

References to Santillan’s case anger Anderson. ”Jesica Santillan was desperately ill. She would have died without the transplant,” he says. ”Why is it that we need to punish the surgeon?”

North Carolina does not have a cap. But in California in 2000, the family of another 17-year-old girl who died of undiagnosed congestive heart failure saw their award reduced from $1.5 million to $250,000 due to the cap, trial attorneys say.

Tort reform advocate Fred Hiestand, who co-wrote MICRA as an aide to former Democratic Gov. Jerry Brown, argues the $250,000 limit, which has not changed since 1976, is still an adequate amount for something as amorphous as ”pain and suffering.”

He recalls that Brown told him at the time: ”If people are suffering pain, they should turn to religion, sex or drugs. Money is a false god.”