Controversy Grows Over California Malpractice Cap

Kathy Olsen won her medical malpractice suit but ended up feeling like a loser.

Last year, a San Diego jury found that medical negligence was involved in the care given to her son Steven, now 5, care that left him blind and permanently disabled with severe brain damage. In addition to awarding $4.3 million for past and future medical bills, the jury handed down a verdict of $7 million for “pain and suffering.” But because of a $250,000 California cap on malpractice awards for pain and suffering, the trial judge reduced the award to that figure, much of which went to pay legal fees.

Olsen, now awaiting the outcome of an appeal of the verdict by the University of California Board of Regents, said she is frustrated by the state’s malpractice law. “The law didn’t work for us,” she said.

She is not the only one who feels that way.

Twenty years after the landmark law putting a monetary “hard cap” on general damages for medical negligence took effect, the state’s malpractice system is more controversial than ever.

In recent months, Californians angry with the malpractice system have demonstrated in wheelchairs and on crutches, dumped manure at a congressman’s office, testified against organized medicine at legislative hearings in Sacramento and stuffed photos and case histories into a coffin and delivered them to a senator’s office.

California’s malpractice law also has been pushed to center stage in the national debate over medical negligence. Last year, federal legislation containing a California-type cap was approved by the House of Representatives but was defeated in the Senate. Its chief proponent, the American Medical Assn., said it will try to revive the legislation this year. A similar cap remains part of the Republican “Contract with America,” the GOP legislative battle plan.

At the core of the controversy is the California Medical Injury Compensation Reform Act, or MICRA.

Written at the height of a malpractice insurance crisis in the mid-1970s, when premiums were shooting out of sight and doctors were turning away patients, MICRA was devised in large part to protect doctors and hospitals from big jury awards.

Although the law also sharply limits attorney’s fees in malpractice cases, most of the controversy stems from the $250,000 cap on general damages, the provision that required the judge in the Olsen case to erase the $7-million jury award.

Juries can be told at judges’ discretion about the cap but often are not.

General damages, widely known as compensation for pain and suffering, are a catchall category that includes the day-to-day physical and emotional problems that a boy such as Steven Olsen most likely will face now and later in life.

Critics point out that payments for attorneys, court costs and things such as fees for expert witnesses are included within the $250,000 cap. Moreover, they say the cap is not indexed for inflation, and the purchasing power of $250,000 is about a third of what it was two decades ago.

Because general damages are so subjective, they are far more controversial than payouts for economic damages, which may be used solely for future medical costs and loss of earnings.

Doctors and insurance companies say hard caps on pain and suffering and attorney’s fees are the fairest and sanest way to limit potentially runaway malpractice awards. There are no limits on damages for medical bills and loss of income directly related to patient injuries, if they can be proven, MICRA supporters say.

They also argue that $250,000 is fair compensation for pain and suffering.

“You can never make a person whole, even if you shower them with money,” said Jay Dee Michael, president of Californians Allied for Patient Protection, an association of doctors, hospitals and insurers organized to defend the malpractice law. “Our goal is to make sure they get adequate compensation for economic loss.”

But patients complain that they can’t find a lawyer to take their cases because attorneys tell them that only the most egregious cases make money.

One who did find a lawyer is Rosemary Green. The Florida woman’s husband died after his lungs were accidentally switched during a transplant operation at UCLA Medical Center. She said she was warned to expect an emotionally draining fight when she filed suit against the university a year ago.

“As time goes on, you feel like the system jerks you around,” she said. “I just get angrier.”

“The rage this kind of thing engenders is unfathomable until you have lived through it,” said Linda D. Ross, a Los Angeles businesswoman turned malpractice activist.

Ross won an arbitration award of $150,000 from Kaiser Permanente in a case that involved the death of her mother. Convinced that her mother’s death could have been avoided, Ross had hoped to win a financial judgment large enough to force a change in the procedures that she said contributed to her mother’s death. But Ross said she quickly ran up against the pressure of the cap and decided to settle. Still, she continues her fight to change the law by testifying at government hearings, contending that the award was little more than “a slap on the wrist” for Kaiser.

Kaiser concedes that it erred, but Trischa O’Hanlon, a senior attorney for Kaiser Permanente, calls the judgment more than a slap on the wrist. The settlement, she says, triggered an upgrading of training at the Kaiser Foundation Hospital in Fontana, where Ross’ mother was treated, as well as new procedures imposed to ensure that physicians see needy patients in a timely fashion in the wake of the Ross case, she said.

“This law is an absolute, unmitigated disaster,” said San Francisco attorney Robert V. Bokelman. The malpractice specialist said it costs him $100,000 to bring a major malpractice case, which can involve years of litigation, sometimes far-flung expert witnesses, and a team of lawyers and researchers. “We have to be extremely selective in the cases we take. I get, on the average, five telephone calls a day, and we accept only five to 10 cases a year.”

Before MICRA, attorneys sought fees of 30% to 40% on damage awards, as they still are allowed to do in other personal injury suits. Under MICRA, the attorneys can receive a maximum of 15% on awards of more than $200,000.

“I probably take one out of every 30 or 40 cases referred to me,” said Woodland Hills attorney Chuck Mazursky. “I really would like to take every case that comes to me that is meritorious, but because of the expense involved and the limited recovery, I have to make an economic decision.”

Harvey Rosenfield, a consumer activist who has written a book about the malpractice system, said the cap has produced a profit bonanza for the insurance industry.

During 1990, California malpractice insurance companies, some of them owned by doctors, paid out only 36 cents for every $1 in premiums that they took in, Rosenfield said.

So many people claim to be victims of California’s malpractice law that a Los Angeles consumer group, Consumers for Quality Care, began a “casualty of the day” campaign in April that involved releasing a case study each workday that detailed a medical mistake and a person’s unhappy brush with the legal system.

The campaign lasted until August, stopping only when the AMA-backed federal legislation failed.

For Kathy Olsen, the law has been a constant irritant, repeatedly rubbing raw the emotional wounds resulting from her son’s plight.

Steven, then 2, fell during a family hike. A twig went through his mouth and out his cheek, creating an infection that eventually went to his brain.

Olsen, 39, said she pleaded with the staff at Children’s Hospital in San Diego for a CT scan of her son’s brain. They refused, and by the time he was tested and doctors discovered the problem, it was too late to prevent permanent brain damage, she argued in her successful suit.

The hospital was not named in the suit. Attorneys for a medical group named in the original suit have settled with her. The University of California Board of Regents, which employed one of the physicians who diagnosed Steven, is appealing the judgment. The university contends that its physician exerted a reasonable standard of care.

Today her son’s medical problems sharply limit his ability to walk, learn and socialize with other children.

While $4.3 million is a lot, Michael D. Padilla, the San Diego attorney who handled the case for the Olsens, said payments will be spread out over 60 years.

“Steven is going to need every dime of that money if he lives 60 years,” Padilla said. “There will be doctors’ bills, nursing care, modifications to homes he will live in. That is all based on economists’ projections of what medical costs will be 50 years from now. We have to just hope they are right.”

Rosemary Green, on behalf of her husband, is filing a malpractice suit that is well above the $250,000 cap. She said she was motivated in part by a desire “to have someone learn from this.”

Her husband Frank was suffering from end-stage lung disease when he left his family home in Florida for the transplants that he hoped would change his life.

But his surgeons, by their own admission, “mistakenly” switched Frank Green’s new lungs. The left donor lung was put into his right chest cavity. Doctors then said they tried to “salvage the situation as best we could” and sewed Green up with the right lung where the left one should have been, according to a medical review of the case.

He died nine days later.

Internal UCLA documents obtained by The Times concede that a mistake was made, but UCLA has denied negligence in its response to the suit and refuses to comment on the case.

“It’s such a long, tedious process,” said Green, 48, who lives in West Palm Beach. “It’s not the money; it’s the justice. I want them to own up to what they did and learn from it.”