California Governor signs bill increasing patient payments in medical malpractice suits

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California Governor Gavin Newsom signed legislation this week increasing the monetary awards given to patients in medical malpractice cases in the state. Newsome touted the legislation as the first substantive change to California's medical malpractice system in decades.

The bill, AB 35, was supported by consumer groups, trial attorneys, health insurers and healthcare providers, and is co-sponsored by the Consumer Attorneys of California and Californians Allied for Patient Protection.

It makes two significant changes to the Medical Injury Compensation Reform Act (MICRA) by restructuring MICRA's limit on attorney fees and raising its cap on noneconomic damages.

WHAT'S THE IMPACT

Existing law places limitations on the contingency fee an attorney can contract for or collect. The current system ties the limits to the amount recovered. An attorney can collect 40% of the first $50,000 recovered, 33% of the next $50,000, 25% of the next $500,000, and 15% of anything that exceeds $600,000. 

The new legislation instead ties tiered fee limits to the stage of the representation at which the amount is recovered.

The legislation also increases the existing $250,000 cap on non-economic damages and provides for future increases to account for inflation. It establishes two separate caps, depending on whether a wrongful death claim is involved. 

In a wrongful death case, the cap increases to $500,000. Each January 1st thereafter, this cap increases by $50,000 until it reaches $1 million. If the medical malpractice case does not involve wrongful death, the cap starts at $350,000, and increases each year by $40,000 until it reaches $750,000.

THE LARGER TREND

Slightly more than 40% of family physicians were named in a malpractice lawsuit in 2021, and, while that number is significant, it's an eight percentage-point decrease from two years prior, according to March data published by Medscape.

At 43%, failure to diagnose or delayed diagnosis was the top reason for lawsuits in 2021, consistent with the findings from 2019. Poor outcome/disease progression came in second (23%), followed by wrongful death (14%), complications from treatment/surgery (13%), and failure to treat or delayed treatment (11%).

Other reasons included an abnormal injury suffered by the patient (9%), poor education and documentation of patient instruction (6%), errors in medication administration (4%) and lack of informed consent (2%).

The most common amount paid annually for malpractice insurance was between $5,000 and $9,999 (27%), the report found. Malpractice insurance premiums can differ depending on location, the litigation climate, specialty and the extent of the chosen coverage. Physicians in Rhode Island, Pennsylvania, New York and New Jersey pay the highest malpractice costs, whereas those in North Dakota pay the lowest.

Eighty-four percent of the family physicians surveyed said the lawsuits brought against them were unwarranted. In 39% of cases, the lawsuit was settled before trial, and in 13% of cases the physician was dismissed from the suit within the first few months. In only 3% of cases did a judge or jury return a verdict in the plaintiff's favor.
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com