New York Times, USA Today Examine California’s Medical Malpractice Insurance Law

The New York Times today examines the cap on jury awards in medical malpractice lawsuits under California's Medical Injury Compensation Reform Act of 1975, on which some federal proposals to limit jury awards in medical malpractice cases are modeled. The law puts a $250,000 cap on jury awards for pain and suffering in malpractice cases. According to the Times, President Bush, the American Medical Association and insurers say that a federal cap similar to MICRA could benefit doctors, insurers and patients by lowering malpractice insurance premiums for doctors. Some of the state's largest insurers have calculated that in current dollars, premiums have fallen 40% since the law took effect, the Times reports. However, it is "not so clear" whether the cap on jury awards is solely responsible. The Times reports that the "greatest drops" in malpractice premiums did not come until after the state instituted price controls on such premiums in 1988. That measure, known as Proposition 103, prohibited annual increases for malpractice insurance premiums of greater than 15% per year and required insurers in the state to rebate earlier premiums, which led to a freeze on premiums for several years. Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, said the price controls are the reason premiums have decreased. "Caps don't have any effect on premiums. If you don't limit what the insurers can charge, they will just make more profit as the cost of claims goes down," Court said (Treaster, New York Times, 3/5).

USA Today yesterday examined the history and current results of MICRA. In 1975, malpractice insurance premiums for California doctors had increased from $1,046 to $22,702 per year over the previous seven years. California physicians made up 10% of doctors nationwide, but paid 25% of the nation's malpractice insurance premiums. Legislators blamed "overly generous juries" for the premium increases, noting that there was one jury verdict of over $1 million per month on average. As a result, the state's Democratic-controlled Legislature passed MICRA in a special session. There is "substantial evidence" that MICRA "works" but the law's effectiveness may discourage lawyers from taking cases involving low-income workers, stay-at-home mothers and parents of children who die in infancy because potential jury awards may not be large enough to cover a lawyer's expenses, USA Today reports (Kasindorf, USA Today, 3/4).