MICRA MODERNIZATION

Historic MICRA modernization law puts patients first and prioritizes the stability of affordable access to health care.

Governor Gavin Newsom on May 23, 2022, signed Assembly Bill 35 into law, and in doing so put an end to a decades-long political battle and ushered in a new era of stability around malpractice liability.

The bill, which passed through the California Legislature with nearly unanimous support, will ensure that health care is accessible and affordable, while balancing compensation for Californians who have experienced health care related injury or death. The modernized law will also bring greater accountability, patient safety and trust by making it possible for physicians and patients to have a full and open conversation after an unforeseen outcome.

“This historic moment happened because the two sides of the ballot measure campaign put differences aside, found common ground, and recognized a rare opportunity to protect both our health care delivery system and the rights of injured patients,” said California Medical Association (CMA) President Robert E. Wailes, M.D. “We are immensely grateful to the Legislature and Gov. Newsom for helping to codify this landmark agreement in law.”

Since California’s landmark medical malpractice reforms – the Medical Injury Compensation Reform Act (MICRA) – were enacted almost 50 years ago, they have successfully struck a balance between compensatory justice for injured patients while maintaining an overall health care system that is accessible and affordable for Californians. California’s physician and provider communities have repeatedly defended MICRA through expensive battles at the ballot, in the courtroom and in the legislature.

This year, we were again facing another costly initiative battle. The so-called Fairness for Injured Patients Act, which had qualified for the November 2022 ballot, would have obliterated existing safeguards for out-of-control medical lawsuits and would have resulted in skyrocketing health care costs.

But for the first time in a generation, we were met with an opportunity to achieve a meaningful consensus between competing interests through a revised framework that would protect both the rights of injured patients while keeping MICRA’s essential guardrails solidly in place for patients and providers alike.

Californians Allied for Patient Protection (CAPP), the Consumer Attorneys of California, Nick Rowley—author and primary funder of the November ballot measure—and both sides of the initiative fight worked together with the Legislature and Gov. Newsom to craft an agreement that puts patients first and prioritizes the stability of affordable access to health care.

“CMA is proud to have been part of this landmark achievement for the benefit of all Californians,” said Dr. Wailes. “We look forward to a new era of long-term stability around MICRA that will allow California’s physician and provider communities to focus on other ways to improve access to care and public health for all Californians.”

As part of the agreement, FIPA’s proponents removed it from the November ballot, precluding another costly and unpredictable ballot fight in November.

Under the modernized MICRA law reflected in AB 35, which will go into effect on January 1, 2023, the underlying principles of MICRA were preserved – ensuring access to care and protecting our health care delivery system from runaway costs. Important guardrails of MICRA will continue unchanged, including advance notice of a claim, the one-year statute of limitations to file a case, the option of binding

arbitration, early offer of proof for making punitive damage allegations and allowing other sources of compensation to be considered in award determinations.

The element that has garnered the most interest surrounds changes to the limit on noneconomic damages in medical malpractice cases, which has been $250k since 1975. As opposed to the ballot measure, which would have effectively eliminated the cap on noneconomic damages, under the agreement:

• Cases not involving a patient death will have a limit of $350k on the effective date of January 1, 2023, with an incremental increase over the next 10 years to $750k and a 2.0% annual inflationary adjustment thereafter.

• Cases involving a patient death will have a limit of $500k on the effective date of January 1, 2023, with an incremental increase over the next 10 years to $1 million and a 2.0% annual inflationary adjustment thereafter.

Under FIPA, the cap would have immediately jumped to $1.35 million, and would have at least doubled malpractice premiums overnight. This would have had a chilling impact on the entire health care system, creating a trickle-down effect that would be borne primarily by lowincome patients who would face higher costs and restricted access to care.

The new law will also create three separate categories for a total of three possible caps in each case. A health care provider or health care institution can only be held liable for damages under one category regardless of how the categories are applied or combined. The new categories include:

• One cap for health care providers (regardless of the number of providers or causes of action)

• One cap for health care institutions (regardless of the number of institutions or causes of action)

• One cap for unaffiliated health care institutions or providers at that institution that commit a separate and independent negligent act

Other critical MICRA guardrails that will remain in place with modest updates include the ability to pay awards of future damages over time and limits on plaintiff’s attorney’s contingency fees.

AB 35 also establishes new protections that allow physicians to convey expressions of sympathy, apologies and statements of fault, to transform the existing culture of blame and punishment that suppresses information, into a culture of safety that focuses on openness and information sharing.

Often, a patient’s decision to file a medical malpractice lawsuit is triggered by a failure in communication, not negligence. The modernized framework establishes new evidentiary protection for all pre-litigation expressions of sympathy, regret or benevolence, including statements of fault, by a health care

provider. Allowing physicians and patients to have a full and open conversation after an unforeseen outcome leads to greater accountability, patient safety and trust.

CMA and the provider community remain united and committed to the principle of high-quality health care that is accessible and affordable to all Californians. For decades, we accomplished those goals in part by focusing our political resources on protecting MICRA against regular attacks. By creating long-term stability around MICRA, we can shift our focus, political influence, and resources to affect other positive changes for physician practices and improve access to care and public health for all Californians.

The AB 35 MICRA modernization is a balanced proposal that preserves its essential guardrails, strengthens provider protections and provides for fair compensation for injured patients. This chart below provides an at-a-glance look at the protections of AB 35 versus what physicians would have faced had FIPA been approved by voters.

Learn more at cmadocs.org/micra.