David Yates Jul. 23, 2014, 10:08am

SACRAMENTO, Calif. (Legal Newsline) - A landmark act constraining the amount of money plaintiffs attorneys and their clients can reap from medical malpractice lawsuits has come under fire by California trial lawyers - an expensive battle that may end up spreading to other states.

Enacted in 1975, the Medical Injury Compensation Reform Act, which caps non-economic damages at $250,000, has become a model for more than half the states in the country.

The movement to inflate the MICRA cap gained substantial momentum on May 15, when a ballot measure, known as Proposition 46, netted the 500,000-plus signatures required to qualify for the November ballot.

Prop 46, which seeks to quadruple the current cap on medical liability lawsuits to $1.1 million with annual increases going forward, has spurred Golden State watchdog groups such as California Citizens Against Lawsuit Abuse into action against the forces they believe are pushing the initiative forward - trial lawyers.

"The trial lawyers are the ones most solidly behind it," CALA Executive Director Tom Scott said. "They're the ones that paid to get the signatures on the ballot. The trial lawyers are the ones that want it passed, period."

Consumer Attorneys of California, the lead faction backing Prop 46, believes adjusting the cap for inflation will motivate doctors to do their jobs better.

"As the many medical negligence victims backing Proposition 46 will attest, this ballot measure is about making sure the tragedy that struck them or a loved one won't happen to someone else," said Eric Bailey, communications director for CAOC.

"One way to achieve that is through the courts, which provide a deterrence effect and consumer protections. One provision of Proposition 46 raises California's medical negligence cap to account for more than 38 years of inflation, restoring an element of fairness and accountability that can help nudge the medical profession to improve its practices and end this cycle of needless deaths."

Since MICRA's inception, legal watchdog groups like CALA contend the act has simultaneously worked to lower the cost of medical liability premiums to keep physicians in state and curb the number of frivolous suits filed, ultimately putting an end to the medical crisis that embroiled the state in the early 1970s.

"People have no historical perspective on what was going on in healthcare in California in the 1970s," Scott said. "The way to stop the nightmare from occurring was MICRA. MICRA has been very successful for the past 30 years. The statistics are there."

By 1975, Golden State malpractice carriers announced premiums for some physicians would increase by as much as 400 percent, according to information provided by the California Medical Association - one of the primary opponents of Prop 46.

A Feb. 22, 1975, article in the Los Angeles Times reported 8,000 physicians in seven southern California counties faced loss of their malpractice insurance coverage.

On May 13, 1975 CMA led hundreds of medical personnel in a capitol rally, calling on then (and now) Gov. Jerry Brown to convene a special session of the legislature to deal with the crisis. Five months later, MICRA was signed into law.

One of the statistics CMA points to in order to substantiate MICRA's success is a July 1, 2010 Medical Liability Monitor survey, which showed obstetricians and gynecologists practicing in New York (a state without med-mal caps) ranked first in average annual medical malpractice premiums paid, while OB/GYNs in 10 central and northern California counties paid among the nation's lowest rates.

The survey also found Los Angeles County OB/GYNs paid an average annual medical liability premium of $49,804, compared to that of Long Island doctors of the same profession who paid $196,111.

By limiting awards for non-economic damages and reducing the number of lawsuits filed against doctors and hospitals, the MICRA cap has reduced medical liability insurance premiums by as much as 38 percent, according to the Hamm-Frech-Wazzan report.

The report, updated and re-released in January, estimates raising the MICRA cap past $1 million would increase the cost of providing health care to Californians by nearly $10 billion per year because a higher cap would increase the number of lawsuits, the size of jury awards and the number of needless medical tests performed to defend against the possibility of being sued.

Despite MICRA's impact, the ratio of med-mal suits to doctors could be interpreted as surprising, depending on which side of the argument a person falls on.

In 2011, an estimated 2,583 medical liability lawsuits were filed in California - home to 95,041 physicians that year. The numbers work out to one suit filed for every 37 doctors, according to the report.

Golden State physicians may currently enjoy lower premiums, but Scott foreshadows that if Prop 46 passes, history may repeat and California will find itself in the midst of an all too familiar health care crisis.

"We are going to see same kind of effect in the '70s where people just closed up shop," Scott said. "Prop 46 will not help this state move forward. If anything, it will send it in the opposite direction. MICRA has worked. The statistics are there."

In addition to prompting a doctor exodus, Molly Weedn, a CMA spokesperson, argues upping the cap on non-economic damages would mean a $1,000 a year increase in health care costs for the average family of four.

"Californians will see increased health care costs and decreased access to care," Weedn said. "Physicians may be forced to leave California and move to states where malpractice rates are affordable - or reduce or eliminate services."

With millions of Californians recently insured through the Affordable Care Act, both Scott and Weedn are in agreement that now is not the time for Prop 46.

"This is not the time for Prop 46," Scott said. "The timing for this initiative could not be worse. It's just nuts. I wish we weren't having this battle. There are a lot more important issues California needs to deal with."

Whether or not the passage of Prop 46 will revert California to a time similar to the mid 1970s remains a matter of debate and speculation.

But no matter what side of the argument a person falls on, California isn't the only state to claim to reverse its medical fortunes by limiting non-economic damages.

And if trial lawyers pop the cap on MICRA, what spills out could have repercussions for other states that have adopted the model, according to one insider.

In 2003, Texas adopted the MICRA model and has since experienced an exponential influx of physicians with every passing year, says Jon Opelt, director for Texas Alliance for Patient Access.

"The Texas Medical Board is on pace to receive a record 5,100 applications for licensure," Opelt said. "That is 11 percent more than last year which surpassed all previous years."

For 2012, the Hamm report lists California and Texas at fourth and third respectively for lowest payments made per medical liability claim, coming in at $171,538 and $138,429.

Minnesota, a non-cap state, finished first for highest paid ($704,371).

The report cites Texas as an example of the "efficacy of caps on non-economic damages awards." In 2004, Texas' average payment for med-mal claims was $214,939.

"By adopting a $250,000 cap on non-economic damages, Texas was able to reduce the average to $138,429 in 2012 - the third lowest among states," the report states.

However, despite the reported success, Opelt believes there's a chance California voters could approve the measure, creating a "legitimate concern" that the passing of Proposition 46 will catch the eyes of trial lawyers trapped in med-mal capped states and lead to a domino effect.

"If proposition 46 passes, it would put pressure on other states to increase their cap," Opelt said.

CALA agrees.

"If this thing passes, trial lawyers just got a green light from the eighth largest economic power - they will make a run across the United States to get rid of or inflate caps," Scott said.

"What happens in California doesn't stay in California."

Reach David Yates at elections@legalnewsline.com

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