Lawyers Trying to Put Big Hurt Back in State Health Care System

The media like to bill the upcoming battle over medical malpractice liability as a clash between two big special interests, doctors and lawyers. It makes the story easier to tell and highlights the fact that these powerful players have much to gain or lose if California law is changed.

But the issue involves more than “two bugs in a jar.” As California legislators begin debate over changes in the Medical Injury Compensation Reform Act, they would be wise to look beyond the effects on the groups highlighted in the press and examine the impact on the rest of us.

California has operated under MICRA for more than 20 years. The legislation was passed in the midst of a medical malpractice insurance crisis that saw doctors’ insurance premiums skyrocketing and threatened to force many providers out of work, particularly those in high-risk specialties such as obstetrics.

The problem was caused by an open door on medical malpractice lawsuits. Providers became frequent targets of frivolous claims, and their insurance companies often settled the cases to avoid a more expensive court battle. It was a very lucrative time for trial lawyers, who received a significant portion of the “victim’s” settlement.

The Legislature’s solution was elegantly simple. People injured because of medical malpractice could recover all their actual expenses, past and future, including medical costs, nursing care and lost wages. But costs that cannot be easily determined--so-called “pain and suffering” awards--would be limited to $250,000. In addition, legislators limited the percentage of these awards that lawyers could receive when they won a case.

The measure has only been changed once, in 1987, to give lawyers a bigger slice of the award--at the expense of the victims. Despite this, MICRA has turned out to be one of the best consumer protection measures ever passed by the Legislature. It has succeeded in keeping the cost of medical malpractice insurance under control. That has helped keep health care costs down.

And despite the protestations of the trial bar, the courts have not been closed to medical malpractice victims. According to one study, there are still 44% more malpractice claims per physician in California than in the other 49 states.

The Legislature soon will consider two bills brought by California’s trial lawyers that would create several exceptions to MICRA’s limit on noneconomic damages. Although the intent may appear noble, these bills really are an attempt once again to open the door to excessive, meritless litigation by taking the teeth out of MICRA. The impact on consumers and on the availability of health care in California would be disastrous, rivaling the crisis prior to 1975.

Without MICRA, it has been estimated, medical insurance premium costs would increase by more than $1 billion and take away another $500 million from those who are self-insured. That is only the start.

A recent study conducted at Stanford University estimates that, without MICRA protections, doctors will be forced to practice more “defensive medicine” in order to protect themselves in case of a lawsuit. Expensive, pointless tests and treatments are estimated to add between $5 billion and $9 billion to medical costs in California.

All this ultimately will be borne by health care consumers. Employers faced with rising health care costs will have to decide whether to pass the cost along to employees, reduce the amount of coverage or simply hire fewer workers. Health care providers that can’t afford increased insurance premiums either will go uninsured or simply close their practices, limiting access to care.

The issue of malpractice liability reform is more complex than a battle of two special interests. The real question is whether high-quality, reasonably priced health care will remain available to millions of Californians. MICRA has provided that assurance. With the changes underway in our health care system, this is no time to fiddle with a portion that works well.