LIMITS ON NON-ECONOMIC DAMAGES

MICRA Primer: Award Cap Equals Access to Care

Though the Medical Injury Compensation Reform Act (MICRA) contains seven main components, it is the $250,000 limit on non-economic damage awards in medical malpractice lawsuits that most people first think of when discussing the landmark legislation.

But how can a dollar amount established by the Legislature in 1975 still be relevant today? Actually, the law, set forth in Civil Code Section 3333.2, is still very relevant in two very important ways.

First, when critics of MICRA complain how the cap “has not kept up with inflation,” they do not volunteer that MICRA actually contains no limit on economic awards. This means that a jury or arbitrator’s award for future medical care, lost earnings, job retraining, and custodial care are in no way limited by the law. In fact, inflation can and usually is accounted for in such awards.

Data on medical malpractice awards over the decades since the passage of MICRA show that juries and arbitrators make awards for economic damages that more than compensate for inflation. Under MICRA, patients are fully compensated for all of their medical and economic losses.

The main way in which MICRA’s limit on non-economic damages is relevant to today’s Californians, however, has as much to do with the state’s “social safety net” than it does the civil justice system. The “safety net” – consisting of those who provide health services with little expectation of reimbursement – would be jeopardized without MICRA.

“An increase in the [MICRA cap] would likely have a negative effect on those services, because they will find it difficult to shift these costs to others,” says a top researcher. The costs associated with a higher limit on medical malpractice awards “are almost certain to cause a decrease in services for those dependent on the social safety net,” according to William Hamm, Ph.D., the former legislative analyst for California.

Hamm’s research has also sounded the alarm on how higher malpractice coverage costs, a consequence of lifting MICRA, could affect the supply of new physicians. “Raising the ceiling would have consequences that fall particularly in rural California and low-income areas,” Hamm says.

Add to the mix the effect that higher health costs would have on employers’ provision of health care insurance to employees, and the loss of the $250,000 MICRA cap could bring about a whole new round of hard times for patients.

When the Legislature passed MICRA in an emergency session in 1975, it was to solve a crisis in the supply of medical care. What should be remembered is that not only did MICRA solve a crisis then, it remains a lynchpin in a fragile system of health care access that persists today.