California, Here We Come

By | February 24, 2003

Earthquakes. Mudslides. Electricity and water shortages. The Los Angeles Clippers. California has its share of problems, no doubt. But there’s at least one thing going right in the Golden State. In 1975, California passed the Medical Injury Compensation Reform Act (MICRA), which has helped hold down malpractice litigation costs in the more than quarter century it’s been in place.

That is why, according to the Medical Liability Monitor, the annual malpractice premium for an ob/gyn practicing in Los Angeles was $57,473 in 2001. That’s a hefty price tag to be sure, but a pittance compared to the $166,638 a Miami ob/gyn gets charged for the same coverage. Additionally, data from the Monitor and the National Association of Insurance Commissioners show that since 1976, premiums have grown by 505 percent nationally, but by only 167 percent in California.

Texas, for example, saw a 500 percent increase in the size of judgments from 1998 to 1999, with 70 percent of the average judgment going for non-economic damages (“pain and suffering”). Eleven carriers have pulled out of the state and Gov. Rick Perry has declared medical liability an “emergency,” but it’s unclear whether any reforms will pass constitutional muster.

MICRA’s comprehensive package of reforms includes limits on plaintiffs’ lawyers contingency fees, a $250,000 cap on non-economic damage awards, a one-year statute of limitations, advance notice of a claim, periodic payments of future damages, and optional binding arbitration.

While some states have adopted elements of MICRA to good effect, no one has been able to duplicate its salutary effects perfectly. As litigation costs continue to soar, insurers — including bedpan mutuals — have raised premiums, and doctors aren’t taking it anymore.

From Pennsylvania to Washington, they’ve employed strikes, rallies and slowdowns to get their message across. And while states are taking action, the nation’s capital may hold the best chance for reform.

President Bush has made medical malpractice liability reform a priority, unveiling his MICRA-style proposal in Pennsylvania and mentioning it in his State of the Union address. And the Senate is now not only in Republican hands, but led by a former surgeon, Bill Frist of Tennessee.

So, for once, it appears that California may be a harbinger of good things — a change of pace indeed. But perhaps I’m bitter, having been born and bred in Chicago. My Cubs suffered not one, but two, heartbreaking playoff losses to California teams: the Padres in 1984 and the Giants in 1989.

I still live in the Windy City, where my dad, an independent agent, operates a one-man shop targeted at the growing Spanish-language market here. I’m delighted to be the newest member of the Insurance Journal team. I’ll be covering the Midwest for our daily news headline service, and I’ll contribute features to the print magazine, such as this issue’s look at the medical liability crisis.

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