Lawyers' Effort to Unravel MICRA is Threat to Health Care Cost and Access

By Jay D. Michael

It is clear from this year's concerted but unsuccessful legislative foray that the trial lawyers will not go away quietly when it comes to dismantling California's landmark Medical Injury Compensation Reform Act (MICRA). They undoubtedly will be back again next year, and as often as it takes, to tear down the law that restricts their access to huge lawsuit awards and protects Californians from the malpractice insurance crisis resolved by MICRA 22 years ago.

What gripes the lawyers is that the doctors took them on in 1975 and beat them - something many industries have attempted to do without success, and something most industries would like to do, but are wary. Reining in the trial lawyers is something every industry eventually must do if they hope to survive, because the lawyers are taking their one-third, and their greed is bleeding us all to death.

1995 Medical Malpractice Insurance Premiums

Source: Physician Insurers Association of America

What did the doctors achieve in 1975 that is so important to taxpayers? They clamped legal limits on contingency fees lawyers can collect in malpractice suits, capped recovery of non-economic damages (pain and suffering), curbed double recovery from collateral sources of payment, and allowed periodic payments of awards for future damages. They put no limit whatsoever on awards for economic damages, including the cost of lifetime medical care and lost earning potential, assuring that injured patients are adequately compensated.

These health care liability reforms cut down the number of frivolous, non-meritorious lawsuits against health care providers; held down litigation costs; reduced the number of unwarranted huge awards; stabilized the medical malpractice insurance market; caused a greater portion of awards to go to injured patients rather than lawyers, and kept insurance premium rates affordable. Lower premiums mean more doctors can afford to buy coverage, ensuring that injured patients are compensated and holding down health care costs by reducing the need to practice defensive medicine.

Medical Malpractice Awards Exceeding $300,000 in California

Source: Joint Legislative Audit Committee Report, 1975

Enactment of MICRA encouraged employers to mount the "payors revolt" of 1978-82, culminating in the health care cost containment movement and producing the managed care revolution of 1985 to the present day. While most health care professionals have concerns about many consequences of this revolution, it is unlikely to have occurred without two significant changes in the law governing health care liability - MICRA and the provision in ERISA (the federal Employee Retirement Income Security Act) granting immunity from liability to self-insured health care plans. The courts increasingly hold plans liable for patient injuries despite ERISA, making MICRA all the more important.

Assembly Bill 250, this year's run by the lawyers at MICRA, would punch major holes in the law by both raising the pain and suffering cap from its present $250,000 to $700,000 and creating exemptions under which there would be no cap at all. The fallout of such an action would be devastating, particularly impacting doctors and hospitals serving the most seriously ill or injured patients, public hospitals that care for the indigent, specialists and their patients in such high-risk fields as obstetrics, and teaching hospitals doing research to advance the boundaries of medical science. Trial lawyers would be the only real beneficiaries under AB 250.

MICRA succeeds because it has resisted almost all attempted changes. It is noteworthy that the law has undergone only a single change in 22 years - a 1987 increase in the lawyers' share of the $250,000 non-economic damage award to $74,167.

There is a lesson in the ongoing battle over MICRA. When the trial lawyers present a scheme they claim will improve the system, consider the source.

Editor's Note: Assemblymember Sheila Kuehl, author of AB 250, said on June 4 that she has shelved the bill for this year, but intends to pursue it next January, when the second half of the two-year legislative session begins. She said she was unable to gain a consensus among majority Democrats, but "the bill is very much alive." Mr. Michael said: "With the trial lawyers as an opponent, everything has about nine lives."

Professional Liability Suits Filed Per 100 Physicians in California

Source: Joint Legislative Audit Committee Report, 1975