California Healthcare Providers, Trial Attorneys, Legislators Reach Deal to Increase MICRA Cap

Stakeholders in the decades-long battle over California’s noneconomic damages cap for medical liability jury verdicts announced they have reached a compromise between healthcare, legal and consumer advocates on legislation to modernize the Medical Injury Compensation Reform Act (MICRA). Signed into law in 1975, MICRA established a $250,000 cap on medical malpractice awards for things like pain and suffering, which proponents argued was necessary to balance compensatory justice for injured patients with important legal and financial protections for healthcare providers. The cap has never been adjusted for inflation.

The new legislative framework will extend the long-term predictability and affordability of professional liability insurance for those providing medical care in California, while providing a fair and reasonable increase to limits on noneconomic damages for medical negligence beginning January 1, 2023, and gradual increases thereafter.

“We have long advocated for policies that protect both patients and the essential guardrails established under MICRA that ensure broad-based access to care for all Californians,” said Lisa Maas, executive director of Californians Allied for Patient Protection (CAPP), a broad-based organization of physicians, dentists, hospitals, community clinics, health centers, nurses, emergency providers and other healthcare professionals dedicated to protecting access to healthcare by defending MICRA. “Today’s announcement demonstrates a unified commitment by all stakeholders to put the interests and well-being of Californians first.”

The compromise legislation will most notably increase MICRA’s noneconomic damage cap to $350,000 for non-death cases and $500,000 for wrongful death cases on the effective date January 1, 2023, followed by incremental increases over 10 years to $750,000 for non-death cases and $1 million for wrongful death cases, after which a 2% annual inflationary adjustment will apply.

The compromise legislation comes after the Changes to Medical Malpractice Lawsuits Cap Initiative — also referred to as the Fairness to Injured Patients Act — qualified for California’s Nov. 8, 2022, electoral ballot as an initiated state statute. If voters had approved the initiative, the Fairness to Injured Patients Act would have increased the state’s noneconomic damage cap based on inflationary changes since 1975, as measured by the Consumer Price Index. The cap would also be adjusted for inflation annually thereafter. The initiative would have also let judges and juries decide whether compensation above the noneconomic damage cap is appropriate in cases involving catastrophic injury or death. If the compromise is signed into law by June 29, the ballot measure will be withdrawn.

Californians were last asked to approve or deny a ballot initiative modifying MICRA’s damage cap in 2014. Health insurance companies, medical professional liability insurance companies, medical associations and hospital associations spent more than $69 million in opposition to the changes. Voters overwhelmingly voted against the initiative, 67% to 33%. More than $43.8 million had been raised to oppose the Fairness to Injured Patients Act as of January 2022.

“CAOC has fought tirelessly alongside thousands of injured patients for the last 50 years to make sure they are fairly compensated when their rights have been violated,” said Craig Peters, Consumer Attorneys of California president. “After decades of impasse, we have finally reached an historic agreement with medical providers that finally updates California’s Medical Injury Compensation Act of 1975 to prioritize patients’ access to justice and quality healthcare.”

The legislative compromise will create three separate categories of caps, which could apply depending on the facts of each case. Additionally, a healthcare provider or healthcare institution can be held liable for damages under only one category, regardless of how the categories are applied or combined. The new categories include:

• One cap for healthcare providers, regardless of the number of providers or causes of action.

• One cap for healthcare institutions, regardless of the number of providers or causes of action.

• One cap for unaffiliated healthcare institutions, or a provider at that institution, when they commit a separate and independent negligent act.

“This balanced proposal modernizes and updates MICRA while preserving its essential guardrails, strengthening provider protections and providing for fair compensation for injured patients,” said Dustin Corcoran, California Medical Association chief executive officer and chair of the Campaign to Protect Access & Contain Costs. “This framework is essential to our shared goal of health access for all Californians. We look forward to working with the legislature and the Newsom Administration to enact this historic proposal.”