Study Examines Effect of California Caps on Medical Malpractice Damages
California's 1975 law capping noneconomic damages in medical malpractice cases at $250,000 has reduced jury awards by 30% on average, according to a study released Monday by the Rand Institute for Civil Justice, the Los Angeles Times reports. The Medical Injury Compensation Reform Act, which also capped lawyers' fees on a sliding scale, has been hailed by proponents of national tort reform as a model for federal legislation. For the study, Rand examined jury awards in 257 California malpractice cases between 1995 and 1999. The study found that:
- In 45% of cases, judges had to reduce noneconomic damage awards handed down by juries, which are not required to comply with the $250,000 cap. The average reduction was $366,000.
- Noneconomic damage awards for patients with the most severe injuries, including brain damage or paralysis, were reduced by an average of $1 million each.
- Infants' noneconomic damage awards were reduced 71% of the time (Girion, Los Angeles Times, 7/13). Injury cases involving noneconomic reductions of $2.5 million or more usually involved infants and young children with critical injuries.
- Overall, 58% of cases involving the death of a patient resulted in total jury awards that had to be reduced by a median of 49%, compared with 41% of cases involving injuries, which saw median reductions of 28% (AP/Washington Times, 7/13).
- Cases in which a patient died of medical abuse or neglect, noneconomic damage awards were reduced by an average of 51% (Friedman, Los Angeles Daily News, 7/12).
- Without the caps, the original verdicts handed down by the juries would have produced plaintiff awards totaling $421 million. Under the law, total awards were reduced by 30% to $295 million.
- In addition, plaintiffs' attorneys saw their fees decrease 60% from $140 million based on the average contingency fee of 33% to $56 million based on the law's sliding scale (Rundle, Wall Street Journal, 7/13). The law prohibits attorneys' fees of more than 40% of the first $50,000 of any amount recovered, 33% of the next $50,000, 25% of the next $500,000 and 15% of any amount in excess of $600,000 (Rand research brief, 7/12).
- Despite the overall 30% reduction in total awards, injured patients' recoveries fell only 15% because of the cap on attorneys' fees.
According to the Wall Street Journal, the findings "give ammunition to both sides of the national debate" over malpractice and tort reform (Wall Street Journal, 7/13). "It's clear that those who are most catastrophically injured pay the biggest price," Robert Peck, president of the law firm Center for Constitutional Litigation, said. He added, "The study demonstrates that the vast majority of medical malpractice victims do not get noneconomic damages above $250,000. But if you do, you are the most severely injured. It shows the irrationality of that kind of cap" (Los Angeles Times, 7/13). Nicholas Pace, lead author of the study, said, "It turns out that a lot of what this law does is shift costs to the plaintiff attorneys, making them pick up a part of the tab for these cases" (Wall Street Journal, 7/13). Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights, said, "What the study indicates is that people, regardless of the legitimacy of their claim and the seriousness of their injury, are seeing their recovery arbitrarily reduced -- and in some cases, quite dramatically."
Julie Pulliam, a spokesperson for the American Insurance Association, said the study "confirms our thinking all along about the value of the law, that it does have an impact on what plaintiffs are receiving, and it has a definite impact on what the plaintiffs' lawyers are receiving. We believe it's a good thing" (Los Angeles Daily News, 7/12). Dr. Jack Lewin, CEO of the California Medical Association, said, "The report doesn't point out that thousands of very sick babies are born in very dangerous deliveries that are malpractice risks." He added that an achievement of the law is "[k]eeping malpractice rates down and making doctors available to take care of these people" (Los Angeles Times, 7/13). The study is available online.