California Hopes Lie in Decade-Old Legislation

California doctors and hospital administrators are keeping their fingers crossed that legislation passed 10 years ago but only recently upheld by the state Supreme Court will protect them from another malpractice insurance crisis like the one now brewing on the East Coast.

So far, compared to the problems faced in Florida and New York, the situation in California is relatively quiet. But things may not remain that way much longer, according to some experts.

“We’re in pretty good shape because the 1975 legislation recently was declared to be constitutional,” said James E. Ludlum, a Los Angeles attorney who was a key figure in the push for new laws that ended the malpractice crisis in California a decade ago.

Those decisions, all handed down since late last year, include a $250,000 limit on non-economic loss such as pain and suffering, periodic rather than lump-sum payments for judgments over $50,000, a sliding scale of fees for plaintiff attorneys, and a provision allowing defendants to introduce evidence that the injured party had received other benefits such as medical insurance or disability payments.

Situation Changing

But while the legislation reduced the frequency and severity of claims in California for several years after it was passed, the situation is gradually changing, Ludlum said.

The number and size of malpractice verdicts against doctors and hospitals have been rising, Ludlum and other experts noted. They added that the big problem now is that insurance premiums are also rising, giving fear that the day may come when those premiums become unaffordable.

“If and when there is a crisis and insurance rates skyrocket, they will be going up from a much higher base, and the confusion that follows will be much more severe and widespread as both physicians and hospitals face the decision of whether to continue to be insured,” Ludlum said.

A 1983 report prepared by Medical Underwriters of California said that while the situation is not as acute as in Florida or New York, “the rapid rise in the number and average costs of large cases . . . almost ensures that malpractice premium rate increases and restrictions in choices of coverage will occur.”

Brain-Damaged Infants

The report, which dealt with verdicts and settlements of $50,000 or more for medical malpractice injuries of all kinds, noted that suits resulting from the birth of brain-damaged infants are the chief reason for the rapid growth in the size of malpractice awards.

Of the 66 awards of $50,000 or more, 17 were for birth injuries. But the $20.6-million total of the 17 awards comprised 40% of the money amount handed down in all 66 cases, according to the report.

The total amount of all malpractice awards and settlements paid out in 1983 by the state’s five leading insurance carriers was $117.1 million. In 1980, the comparable figure was $68.7 million.