OLR Research Report

February 24, 2003




By: Jerome Harleston, Senior Attorney

You want (1) a summary of the bills imposing monetary limits in medical malpractice cases, including their effective date and whether they have retroactive application; (2) an explanation of how the caps work, including whether they limit punitive and other damages; and (3) an indication of whether the cap imposed in California and other states lowered premiums.

Damages in liability cases are classified as economic and non-economic. Economic damages include actual monetary losses due to negligence such as medical bills, lost wages, and loss of future earnings. Noneconomic damages refer to money awarded to a victim for unquantifiable losses such as pain and suffering or loss of consortium. Consortium is the legal right of one spouse to the company, affection, and assistance of the other. Punitive damages may also be awarded with the intention of punishing an egregious offender.

Two bills imposing limits on medical malpractice awards have been introduced. Proposed Bill (PB) 5958 limits to $250,000 non-economic damages in medical malpractice cases. The requirement would be effective October 1, 2003 and prospective in application. PB 5958 was referred to the Public Health Committee. PB 5175 limits non-economic

damages in medical malpractice cases to (1) $500,000 for awards made before January 1, 2010, (2) $750,000 for awards made between January 1, 2010 and January 1, 2017, and (3) $1 million for awards made on or after January 1, 2017. PB 5175 would be effective October 1, 2003 and prospective in application. It was referred to the Judiciary Committee.

Twenty-six states, including California limit non-economic damages in medical malpractice cases. They are:

1. Alaska 2. California 3. Colorado

4. Florida 5. Hawaii 6. Idaho

7. Indiana 8. Kansas 9. Louisiana

10. Maine 11. Maryland 12. Massachusetts

13. Michigan 14. Mississippi 15. Missouri

16. Montana 17. Nebraska 18. Nevada

19. New Mexico 20. North Dakota 21. Ohio

22. South Dakota 23. Texas 24. Virginia

25. West Virginia 26. Wisconsin

California places a $ 250,000 "cap" on non-economic damages in medical malpractice cases (Cal. Civil Code 3333. 2). Non-economic damages is defined as compensation for pain, suffering, inconvenience, physical impairment, disfigurement, and other non-pecuniary injury.

The cap on non-economic damages was held to be constitutional in Fein vs. Permanente Medical Group, 38 Cal. 3d 137, 695 P. 2d 665, 211 Cal Rptr. 368). It applies whether the case is for injury or death, and allows only one $ 250,000 recovery in a wrongful death case. There is case law authority for allowing separate caps for the patient and a spouse claiming loss of consortium (See, Atkins vs. Strayhorn, 223 Cal. App. 3d 1380, 273 Cal. Rptr. 231)

California also limits the amount attorneys in medical malpractice cases can collect under a contingency fee arrangement to 40 % of the first $ 50,000, 33 1/3 % of the next $ 50,000, 25 % of the next $ 500,000, and 15 % of any amount that exceeds $ 600,000 (Cal. Bus. and Prof. Code 6146). These limits apply regardless of whether the recovery is by settlement, arbitration, or judgment. If the contingency fee arrangement is based on an award of periodic payments, the court must place a total value on the payments based on the projected life expectancy of the claimant, and then calculate the contingency fee percentage.

Finally, medical malpractice insurance rates in California must be approved prior to their use.

According to a 2002 U.S. Department of Health and Human Services Report, Confronting the New Health Care Crisis, medical malpractice insurance premium in California have risen much more slowly than in the rest of the country. California rates rose 167% since it enacted the cap in 1975, while rates in the rest of the country rose 505%. Whether this is attributable to the cap on non-economic damages, prior approval of rates, or a combination of both is not clear.

In a 2002 Robert Wood Johnson Foundation funded report, The Medical Malpractice Insurance Crisis: Opportunity for State Action, the author, Mimi Marchev, states that the data are inconclusive as to whether there has been an increase in medical malpractice claims greater than the growth in population, the number of doctors and hospitals, or technological advancements.

The author also states “the data are inconclusive as to the efficacy of tort reform as remedy for periodic malpractice insurance crises. Previous rounds of tort reform have not prevented periodic malpractice insurance crises. Tort reform does not address the issue of patient safety.”