Cap on Fees for Lawyers in Malpractice Suits Upheld

A closely divided state Supreme Court on Thursday upheld a state law capping lawyers’ fees in medical malpractice suits.

The 4-3 ruling was the third affirmance of sections of a major legislative overhaul of malpractice law, adopted in 1975 because of a threat that medical care would be curtailed in the face of spiraling malpractice judgments.

Writing for the majority, Justice Otto Kaus said caps on lawyer fees are used often and their validity is “well established.” There are limits on what lawyers may collect in probate matters, for instance, and for lawyers pressing claims for veterans and Social Security benefits.

Kaus said the majority was not expressing a view on the legislation’s wisdom, but merely concluding that the Legislature had the authority to adopt it.

Sought to Limit Awards

Passed at the height of the malpractice crisis of the mid-1970s, the Medical Injury Compensation Reform Act sought to limit medical malpractice awards and reduce malpractice insurance premiums. It allows defendants who lose malpractice lawsuits to pay damages over a long period of time, rather than in lump sums. It also limits what third parties could collect in malpractice cases. Both of those provisions were upheld last year.

Sliding Scale

A third provision caps what lawyers for plaintiffs in malpractice cases can collect. The limits are based on a sliding scale ranging from 40% of the first $50,000 recovered, to 10% of any judgment over $200,000.

In dissent, Chief Justice Rose Elizabeth Bird wrote that the provision calls into question the “fairness of the judicial process itself” and wrote that it “discriminates against the most severely injured victims, particularly those of limited means.”

Comparison of Fees

Bird pointed out that for a $1-million judgment, the victim’s lawyer in a malpractice case would get about $150,000, less than half what a lawyer could expect in fees for winning a $1-million judgment outside the medical malpractice area.

“Attorneys may avoid these problems by refusing to represent medical malpractice victims,” Bird wrote in a dissent joined by Justice Stanley Mosk and Court of Appeal Justice Eugene McClosky, sitting by special designation.

“Only those lawyers not sufficiently competent or well-established to attract unrestricted business have any financial incentive to represent a severely injured medical malpractice victim.”

Thursday’s case (Roa vs. Lodi Medical Group, S.F. 24435) stemmed from a suit by parents of an infant who suffered brain damage during birth at Lodi Community Hospital. The parents agreed to settle the suit for $500,000.

The problem arose because of their agreement to pay their lawyer $122,800. Although the Superior Court judge viewed the fee as reasonable, he refused to award it, concluding he was barred by the malpractice act. He awarded the lawyer $90,800 instead, in accord with the legislation, a ruling affirmed Thursday.