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How MICRA Affects a Medical Malpractice Case

MICRA, or the Medical Injury Compensation Reform Act, was signed into law by California governor Jerry Brown during his first governorship in 1975 with the intent to reduce medical malpractice insurance premiums. In the mid-1970s, the cost of malpractice insurance was so high, it was seen as a threat to the quality of the state’s healthcare. Many thought these high insurance rates would limit the availability of medical providers or cause physicians to go without insurance, leaving injured patients with uncollectible judgments in the event of actual negligence.

Whether MICRA is good public policy is up for debate. Most of MICRA’s provisions have never been amended and plaintiff’s lawyers – including those at HM – see MICRA as extremely unfair to malpractice litigants, depriving them of the chance to receive proper compensation for their complex cases.

There are a number of provisions to MICRA, though the main ones are covered below:

Limits on the Amount of Recoverable General Damages

In most tort lawsuits, the plaintiff can assert general damages for “non-economic damages” such as their pain, suffering, inconvenience and emotional distress. These are separate from special or “economic” damages that include concrete losses such as out of pocket medical expenses, future care costs, loss of earnings and other monetary damages the injured has suffered.

In medical malpractice cases, a plaintiff can still collect for general damages.

MICRA’s Cap On General Damages

However, as codified in Civil Code section 3333.2, MICRA only allows an injured person to recover a maximum of $250,000.00 in general damages. This is arguably MICRA’s most infamous detail because it was written in 1975 and has not been adjusted for inflation since. If it were, the  $250,000 cap from 1975 dollars would now be over $1,100,000 today.

inflationary pressures of MICRA

Since MICRA’s passage in 1975, the consumer price index has increased 335%. The cap on non-economic damages has not changed, while the cost of everything else continues to rise.


The Signifigance of MICRA vs. Other Lawsuits

There are no caps for general damage compensation in other lawsuits, such as in auto accident lawsuits. For example, if a high school student dies in an accident by a drunk driver, many might argue the family deserves significant compensation for such a loss. If a jury awards the plaintiffs $5,000,000 in general damages (assuming there are no special damages), that verdict could stand and become a judgment for $5,000,000.

However, if that same high school student passes away as a result of medical malpractice, even if the jury comes back with a verdict for $5,000,000 (once again, all general damages and no specials), the court must follow the law and will reduce that verdict to only $250,000 when it issues a judgment.

Again, special damages are separate and distinct. Because they are unaffected by the damages cap, they are key to getting awards in medical malpractice cases over $250,000. This is why it is absolutely critical that medical malpractice victims document all of their out of pocket expenses.  It is also critical that they keep thorough evidence showing what loss of earnings they may suffer on account of their injuries. This is usually done with W-2s if the plaintiff has a documented earnings history.

Statute of Limitations; Requirement to Give Notice Before Suing a Medical Provider

Under MICRA, a plaintiff in a malpractice case only has one year from the date they discover their injury was caused by negligence to sue a medical provider. The plaintiff also typically has three years from the date of the injury to bring their suit, whether they recognize the injury is from malpractice or not.

There are few exceptions that affect the statute of limitations. For instance, with misread mammograms, the patient is often considered “injured” when she is actually diagnosed with breast cancer – even though the mistake was made years prior. With details like these, it’s important for an attorney to accurately determination how long you have to pursue a claim. Moreover, anyone who seriously suspects they were a victim of malpractice should seek out an attorney as early as possible.

MICRA also requires that the defendant medical provider be given a 90 day notice of an impending lawsuit before the case is filed, as codified in Code of Civil Procedure section 364. Failure to do so will not stop the case from moving forward, but  is something that attorneys are supposed to do. If the statute of limitations would run within that 90 day notice period, sending the notice will extend the medical malpractice statute by 90 days.

Limits On Contingent Attorney’s Fees

Many tort cases are prosecuted by plaintiff’s attorneys on a contingent fee basis, meaning that the attorney is only paid when the client receives compensation. MICRA puts limits on the maximum amount attorneys can charge in medical malpractice cases. These limits are based on a sliding scale that gradually reduces the attorney’s percentage fee as the recovered sum grows. This is essentially an attempt to counterbalance the effects of the general damages cap by ensuring that the plaintiff’s whole settlement or judgment is not taken by fees.

Under Business and Professions Code section 6146, the maximum amounts an attorney can charge on a contingency in a medical malpractice case are:

(1) Forty percent of the first fifty thousand dollars ($50,000) recovered

(2) Thirty-three and one-third percent of the next fifty thousand dollars ($50,000) recovered

(3) Twenty-five percent of the next five hundred thousand dollars ($500,000) recovered

(4) Fifteen percent of any amount on which the recovery exceeds six hundred thousand dollars ($600,000)

Further, “recovered” here is defined as “the net sum recovered after deducting any disbursements or costs incurred in connection with prosecution or settlement of the claim.”  This means that in medical malpractice cases, the attorney’s fees are taken out after case costs are deducted, not from the gross settlement.  This is different from auto accident cases, for example, where attorney’s fees are commonly taken off the top before deducting costs.

While this part of MICRA is rather friendly for injured plaintiffs, there is still a damages cap to begin with.

Collateral Sources and Preclusion of Subrogation

In personal injury cases, if an insurance company pays money to an injured plaintiff’s healthcare providers, evidence of these payments is not allowed at trial under something called the collateral source rule. Yet these insurance companies can still assert liens to recover the amounts they paid. They are able to do this under subrogation clauses that are often written into contracts between the insured plaintiff and their insurance company.

MICRA prevents most insurance carriers from asserting liens in medical malpractice cases.  There are major exceptions, most notably for payments from federal government programs such as Medicare and Medicaid (which is administered through the California DHCS as MediCal). Overall, insurance companies cannot try to collect money out of medical malpractice recoveries under Civil Code section 3333.1. This is good news for the plaintiff.

The flip-side, however, is that the defense may introduce evidence of insurance benefits at the time of trial to reduce the plaintiff’s damages. For instance, if a plaintiff claims past medical expenses in his case, the defense can show how much of those expenses were paid by insurance and demand an offset against the claimed damages. This is all aimed at reducing the liability of the defendant healthcare provider. The plaintiff can still recover his out-of-pocket expenses, but not the amounts paid by insurance. The defendant will argue that those insurance payments are not part of the plaintiff’s “loss” since he did not expend his own money there. In recent years, healthcare providers have also attempted to apply this to future medical expenses, especially for persons receiving ACA (“Obamacare”) benefits.

This part of MICRA is confusing and rather difficult to understand. As with the other sections, there are nuances here too that are omitted for brevity, but even attorneys can struggle with some of the provisions in MICRA’s section 3333.1.





HMI team

When you work with us, you’ll see the difference. A lot of firms are quick to show you numbers, and it is absolutely true that your lawyer should have experience and a strong track record in the area that you require. However, we’ll take it one step further. We also believe that your attorney should put your needs, cares and desires first. Because you deserve more than just compensation for your losses - you deserve a true advocate.

HMI team