California’s Medical Malpractice System Continues to Evolve

Last year, Governor Gavin Newsom signed AB 35, legislation to modernize the system for awarding damages in medical malpractice cases in California.

The legislation, put forth by Assembly Majority Leader Eloise Gómez Reyes and State Senator Tom Umberg, was supported by consumer groups, trial attorneys, healthcare insurers, and healthcare providers - marking the end to one of the longest-running political battles in California politics.

The measure was co-sponsored by the Consumer Attorneys of California and Californians Allied for Patient Protection. It made two significant changes to the Medical Injury Compensation Reform Act (MICRA) by restructuring MICRA’s limit on attorney fees and raising MICRA’s cap on noneconomic damages.

“After decades of negotiations, legislators, patient groups, and medical professionals have reached a consensus that protects patients and the stability of our healthcare system,” said Governor Newsom at the time he signed the bill into law last year.

Existing law places limitations on the contingency fee an attorney can contract for or collect. The current system ties the limits to the amount recovered. An attorney can collect 40% of the first $50,000 recovered, 33% of the next $50,000, 25% of the next $500,000, and 15% of anything that exceeds $600,000. This legislation instead ties tiered fee limits to the stage of the representation at which the amount is recovered.

Additionally, this legislation increases the existing $250,000 cap on non-economic damages and provides for future increases to account for inflation.

The legislation establishes two separate caps, depending on whether a wrongful death claim is involved. In a wrongful death case, the cap increases to $500,000.

Each January 1st thereafter, this cap increases by $50,000 until it reaches $1 million. If the medical malpractice case does not involve wrongful death, the cap starts at $350,000 and increases each year by $40,000 until it reaches $750,000.

“AB 35 provides a better system for both providers and patients, creating a fair process that will have a real impact on Californians for decades to come,” said Assembly Majority Leader Reyes.

“AB 35 happened because the two sides of the ballot measure campaign put differences aside, found common ground, and recognized a rare opportunity to protect both our healthcare delivery system and the rights of injured patients. We are immensely grateful to the Legislature and Governor Newsom for helping to codify this landmark agreement in law. California’s new modernized MICRA statutes will provide predictability and affordability of medical liability insurance rates for decades to come while protecting existing safeguards against skyrocketing healthcare costs. The modernized law will also bring greater accountability, patient safety, and trust by making it possible for physicians and patients to have a full and open conversation after an unforeseen outcome.

CMA is proud to have been part of this landmark achievement for the benefit of all Californians,” said California Medical Association President Robert E. Wailes, M.D.

“Injured patients deserve to be fairly compensated when their rights have been violated, and we commend the leadership of Governor Newsom to help get this done. Injured patients and their families are better off under the modified MICRA, and we look forward to continuing to serve in the best interest of our clients,” said Consumer Attorneys of California President Craig M. Peters.