Giving Thanks for MICRA

The holiday season is a time for giving thanks. In a world filled with serious problems, it is easy not to appreciate some of the good things that make life better than it could be. Number one on this list for California physicians is MICRA, the Medical Injury Compensation Reform Act of 1975.

The dramatic benefits of MICRA came back to me while reading the October 7, 2005, issue of Medical Economics magazine (1). An article titled “Malpractice: Where Does Your State Rank?” reviewed a study by the Kaiser Family Foundation using 2003 data (the most recent available), which ranked states in two categories: number of paid claims per 1,000 active physicians, and average malpractice payments. Before I give you the numbers, reflect on where you think California is likely to place in each of these rankings?

In number of paid claims per 1,000 active physicians, California ranks 31st out of 51 (includes the District of Columbia). California has 14.1 paid claims per 1,000 active physicians compared with 30.5 in Indiana (ranked 1st), 30.2 in Pennsylvania (ranked 2nd), and 28.4 in Florida (ranked 3rd and most often compared with California socially). Interestingly, the other Pacific states all rank slightly behind us: 13.6 in Alaska, 12.7 in Hawaii, 11.8 in Washington and 11.6 in Oregon. San Diego’s neighbor to the east, Arizona, is among the highest (7th) with 24.1 paid claims per 1,000 active physicians.

The big winner for us is in average malpractice payments per award. California ranks 46th! Given our high cost of living, this is truly staggering. Our average paid claim is $172,626. Hawaii is number one at $501,161. Twenty-two states have average paid claims above $300,000, including Florida, Oregon, and New York. The only states lower than us are Louisiana (barely), New Mexico, Vermont, Michigan, and Utah.

We all have MICRA to thank for these amazing numbers. The best-known provision of MICRA is the cap on non-economic damages. Interestingly, 17 states have such caps, and not all fared nearly as well as California. Our cap of $250,000 for non-economic damages is fair but is among the lowest in the nation. There are other provisions of MICRA that also contribute to our malpractice-friendly environment and make practicing medicine here relatively reasonable. These are:

• Limits on Attorney Contingency Fees: In an action against a healthcare provider for professional negligence, an attorney’s contingency fee is limited to 40 percent of the first $50,000 recovered, 33 percent of the next $50,000, 25 percent of the next $500,000, and 15 percent of any amount exceeding $600,000. This reduces the plaintiff attorney incentive for high awards.
• Periodic Payments of Future Damages: A healthcare professional may elect to pay a claimant’s future economic damages, if over $50,000, in periodic payments. This avoids a claimant’s wasting of an award prior to actual need. Since the payments are generally made by the insurance company, this allows the company to spread out the damages, a critical factor in keeping insurance premiums down.
• Evidence of Collateral Source Payments: A defendant in a medical liability action may introduce evidence of collateral source payments (such as from personal health or disability insurance) as they relate to damages sought by the claimant. If a defendant introduces such evidence, the claimant may also introduce evidence of the cost of the premiums for such personal insurance.
• Statute of Limitations: In California, a claim for alleged medical negligence must be brought within one year from the discovery of an injury and its negligent cause, or within three years of injury.
• Advance Notice of a Claim: To further the public policy of resolving meritorious claims outside the court system, MICRA requires a claimant to give a 90-day notice of an intention to bring a suit for alleged professional negligence. If the notice is given within 90 days of the expiration of the statute of limitations, the statute is extended 90 days from the date of the notice.
• Binding Arbitration of Disputes: Patients and their healthcare providers may agree that any future dispute may be resolved through binding arbitration. California statute requires specific language for such contracts and also provides that such contracts be revocable within 30 days.

This elegant package of provisions is considered a model for the nation. MICRA was passed in 1975 but was held up in court challenges until 1985 when it was finally implemented. The main credit for MICRA rests with organized medicine (the California Medical Association and its county medical societies). A repeal of MICRA remains a high priority for the California trial attorneys, who by the way are not starving. Also, California patients suffering alleged medical negligence are being fairly compensated. The defense of MICRA requires constant vigilance, which includes education of state legislators (mostly attorneys) who turn over rapidly.

Give thanks this holiday season for MICRA, for the San Diego County Medical Society, and CMA. If you have hesitated to renew your dues for 2006, write the check today. The savings to you in our state, no matter the size or nature of your practice, are enormous compared with physicians in other states we might consider practicing in.

Reference: Rice, Berkeley. Malpractice: Where does your state rank? Medical Economics. October 7, 2005. pp72-75.