California Governor Signs Legislation Raising Non-Economic Damages Cap on Medical Malpractice Awards

On May 22, 2022, California Governor Gavin Newsom signed into law Assembly Bill 35 (“A.B. 35”) resulting in major changes to the state’s Medical Injury Compensation Reform Act (“MICRA” or “the Act”). These changes include among other changes, an increase to the cap of noneconomic damages awarded to plaintiffs in medical malpractice lawsuits. Originally enacted in 1975, MICRA established a $250,000 cap on non-economic damages awards. The Act went into effect during a time when doctors were rapidly leaving California due to rising insurance premiums resulting from high medical malpractice awards.

With A.B. 35’s enactment, plaintiffs under MICRA will see a new non-economic damages limit. Starting on January 1, 2023, cases not involving a patient’s death will have a new limit of $350,000, with an increase over the next 10 years to $750,000. Meanwhile, cases involving patient death will have an increased limit of $500,000 with incremental increases over the span of 10 years to $1 million. Both patient death and non-patient death cases will see a 2% annual increase after the ten year mark to account for inflation. Other notable changes included with the signing of A.B. 35 is the creation of three separate categories for which non-economic damages could be awarded, including one for recovery against a medical institution, recovery against a medical provider, and another for recovery from an unaffiliated provider. The creation of multiple categories could result in a patient holding multiple parties liable and receiving more than $350,000 in a case not involving death. Notably, medical institutions and providers would each only be liable under one category.

A.B. 35 also make changes to plaintiff’s contingency fees with attorneys representing them in cases brought under MICRA. The legislation will also establish additional discovery and evidentiary protections for expressions of sympathy, regret, including statements of fault, made prior to the filing of a lawsuit or demand for arbitration.

Prior to A.B. 35, MICRA had been the subject of decades-long dispute among trial attorneys, health care providers and the insurance industry. It had also been the subject of multiple proposed amendatory legislation and constitutional challenges in the courts. In 1997, lawmakers introduced two separate bills to increase or even eliminate the cap under certain circumstances, but these bills failed to pass. Additionally, a 1999 bill that would have provided a cost-of-living adjustment to the cap and a similar bill introduced in 2014 also did not garner enough support to pass the legislature. MICRA has also seen challenges in the courts including, earlier this year in Lopez v. Ledesma, No. S262487, 2022 WL 553421 (Cal. Feb. 24, 2022), where the California Supreme Court ruled that the liability cap also applies to physicians’ assistants practicing under the supervision of a doctor.

Other than being hotly debated in the California legislature and the court system, interest groups have also sponsored ballot initiatives in an effort to amend MICRA. In California, ballot initiatives can be proposed by state citizens without the support of the governor or the state legislature. They are often used as a way of presenting specific issues and putting them to a vote. Ballot measures, such as those involving MICRA, have been noted to be extremely expensive particularly when there are competing campaign contributions from sophisticated interest groups and involve an issue that is continuously presented to voters. The most recent ballot initiative regarding MICRA was the “Fairness for Injured Patients Act” (FIPA), which was born out of negotiations among rival interest groups representing doctors, patients, and medical malpractice attorneys. FIPA would have increased the non-economic damages cap from $250,000 to $1.2 million and effectively would have removed the damages cap altogether if a patient died or suffered a catastrophic injury leaving them paralyzed or disfigured. FIPA was scheduled to go to California voters in November 2022. Prior to FIPA, MICRA also saw challenges in 2014 when a ballot initiative known as “Proposition 46” sought to increase the damages cap. A.B. 35 was introduced as a compromise to avoid the high campaign costs of competing interest groups lobbying for or against FIPA, and in an effort to avoid the $1.2 million cap that FIPA would have set. Given the signing of A.B. 35, FIPA will now be removed from the state-wide ballot in November.