Recently in MICRA Category

If the Legislature can shift its attention from dealing with the state rock to somewhat more important issues - such as taking steps to improve the economy - two scholars at the Pacific Research Institute recently proposed a simple step that would help a lot: tort reform.

Lawrence J. McQuillan and Hovannes Abramyan write that businesses are leery of locating or expanding in states whose legal systems encourage excessive litigation, and the recent U.S. Tort Liability Index report shows that California is ranked 41st out of the 50 states in the quality of its civil justice tort climate.

"Business leaders remain leery of California because of its sky-high tort costs and skewed courtrooms - business defendants lose at trial 65 percent of the time," the scholars point out.

Abusive lawsuits cost every American a hidden "tort tax" of about $2,000 a year in higher prices, fewer new products and reduced access to health care. And the current system is very inefficient at its intended purpose - less than 15 cents of every tort-cost dollar goes to compensate plaintiffs.

In 1975, California led the nation with its landmark medical-liability act MICRA. California lawmakers should again get serious and enact meaningful class-action and damage-award reforms, in special legislative session if necessary. This would be the best jobs bill and budget fix they could provide.

You can read the entire op-ed here.

As major federal health legislation makes its way toward possible passage early next year, its sponsors seem little concerned with putting in something that Americans really want -- limits on medical liability awards.

In back-to-back national polls, respondents have stated their clear desire that something be done on the medical litigation front so that health care dollars can be spent where they can do the most good.

First, The Associated Press found strong public support for curbing medical malpractice lawsuits as a way to reduce costs.

The poll, conducted in conjunction with Stanford University and the Robert Wood Johnson Foundation, found that 59% of Americans believe that at least half of tests ordered by doctors are unnecessary and are prompted by fear of lawsuits. A similar number, 54%, favor making it harder to sue doctors and hospitals in disputes over medical care.

The AP poll could be used to support President Obama's ideas for state-level demonstration projects as a way to test alternative liability laws, but a second poll, conducted by Rasmussen Reports, shows that 57% of voters think that putting specific limits on amounts that can be recovered from health care providers is the way to go.

The Rasmussen results more closely follow the approach that California has taken for more than three decades with its Medical Injury Compensation Reform Act, which limits non-economic damages in medical liability awards to $250,000 but places no restrictions on compensation for out-of-pocket losses. The leading federal bills to revamp the nation's health care system do not contain measures to limit jury awards against health care providers.

Such curbs could lead to huge benefits in the amount available to treat Americans. The Congressional Budget Office estimates that limits on malpractice jury awards could reduce the federal deficit by $54 billion over 10 years because physicians would order fewer tests as a safeguard against lawsuits.

That would pay for a lot of health care.

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Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be reached at gownby@cap-mpt.com.

Some lawmakers weren't satisfied with a report from the nonpartisan Congressional Budget Office in October that estimated savings of $54 billion over the next decade if new limits were imposed on medical malpractice lawsuits.

So they asked CBO officials to explain the figure -- and received a letter from CBO Director Douglas W. Elmendorf reaffirming the $54 billion in savings and an even larger impact from tort reform over the next 10 years.

The CBO previously estimated that tort reform would lower malpractice costs nationwide by about 6%. But now, CBO estimates a reduction in malpractice costs by 10%, if a package of tort reforms was implemented nationwide. Those reforms include a $250,000 cap on damages for pain and suffering, a $500,000 cap on punitive damages, and restricting the statute of limitations on malpractice claims, according to a Legal Newsline article. None of the reforms have been included in the House and Senate health care proposals.

"CBO's estimates of the likely effects of tort reform are based on research that links changes in malpractice costs to changes in health care spending, including not only the spending changes caused by providers' responses to changes in the medical liability environment but also the spending changes resulting from associated changes in health status," Elmendorf concluded in the letter to U.S. Sen. John D. Rockefeller IV.

"With all of those factors taken into account, the weight of evidence indicates that tort reform would reduce the utilization of health care services and, thereby, spending."

California's landmark Medical Injury Compensation Reform Act has for more than 30 years lowered malpractice insurance rates and encouraged more than 30 others states to enact similar reform measures, The Sacramento Bee's Dan Walters wrote in a recent column.

But since MICRA was enacted in the mid-1970s, plaintiffs' lawyers have fought -- unsuccessfully -- to weaken the law and overturn its $250,000 limit on recoverable non-economic damages.

As Walters wrote, the plaintiffs' lawyers have failed in their efforts to modify or repeal the cap even when their bills were carried by speakers of the state Assembly.

Advocates of the cap have urged President Barack Obama and Congress to make it part of national health care. As Walters notes, the Congressional Budget Office has said that such a cap would save $54 billion in health care costs over a decade, and other estimates are higher.

He writes:

"Obama has been noncommittal, but (House Speaker Nancy) Pelosi and other Democratic leaders of Congress, as a gesture toward the national trial lawyer lobby, included a provision in their bill that would give 'incentive payments' to states that establish a 'fair resolution' process for malpractice claims but only if a state 'does not limit attorneys' fees or impose caps on damages.'"

"It's likely to be a major issue when House and Senate leaders try to iron out a compromise bill, and if it survives, (Attorney General Jerry) Brown, who aspires to return to the governorship in 2010, may have to decide whether the cap he supported in 1975 will be repealed."

Walters' column prompted nearly two dozen comments after it was posted on Monday. Some of the comments cut right to the heart of the matter:

"The Lawyers should be capped at no more than 10% of the judgment overall; this would include all costs and time billed," wrote one individual. "The only ones who benefit from no CAP (are) the trial lawyers."

Wrote another: "The threat of excessive litigation is still so strong that today doctors are forced to practice what has become known as defensive medicine: Doctors order lots of extra, costly tests just to protect themselves from litigation."

And a third added: "Repealing the cap would be a huge mistake for California. What we really need to do is extend it to product liability as well as other non-medical service providers. That might be a good first step in showing the rest of the country that California is business-friendly."

In politics, just like in war, success comes not just from anticipating a direct response to your latest move, but also from looking far across the theater for your adversary's counter-measure.

So it was no surprise when, after getting the attention of federal policymakers on the benefits of putting some legal reform into a national health-care package, backers of reform found their own flanks attacked.

"Medical malpractice insurers . . . take advantage of [a federal] antitrust exemption to maximize their profits, to the detriment of doctors who buy their coverage," a group of personal injury lawyer-backed organizations recently told federal lawmakers. "Millions of consumers and their health-care providers would benefit if real competition were restored in the health insurance and medical malpractice insurance markets," a letter from the Consumer Federation of America and others told U.S. Rep. John Conyers (D-MI) in support of H.R. 3596.

What these lobbying groups conceal from their audience when attacking medical professional liability insurance providers, however, is that the overwhelming number of U.S. physicians get their liability protection from companies they themselves own and govern. In California, for example, four major doctor-owned companies actively compete for the bulk of private practice physicians in the state.

These companies, all staunch supporters of the state's landmark Medical Injury Compensation Reform Act, help account for physician liability protection rates that are as much as half of those found in comparable states not protected by MICRA.

Moreover, an analysis by the Congressional Budget Office refutes the lawyer-backed groups' contention that rates for the two types of insurance targeted -- health and medical professional liability -- would fall under H.R. 3596 and its Senate counterpart, S. 1681. "Enacting the legislation would have no significant effect on the premiums that private health insurers would charge," according to the CBO. "[S]tate laws already bar the activities that would be prohibited under federal law if this bill was enacted."

In "The Art of War," Sun Tzu promoted sowing division among one's adversaries. So when advocates of federal medical liability reform showed that a decline in defensive medicine would save billions of health care dollars, they likely knew better than to expect a response on the merits.

But in the end, the trial lawyers' weak attempt to drive a wedge between doctors and the companies that American physicians themselves own and direct betrays a further escalation of their tactics -- to outright deception.

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Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be reached at gownby@cap-mpt.com.

Civil justice reform still has a place in the health care reform proposal, former House Speaker Newt Gingrich and Wayne Oliver, vice president of the Center for Health Transformation, wrote in a piece published today in Politico.

The authors wrote that "perhaps no other piece of health care reform is known to provide as much savings and fix the problem of defensive medicine, skyrocketing medical malpractice insurance premiums, and how those costs are passed along to the consumer."

They added that a recent report from the non-partisan Congressional Budget Office, which concluded that enacting such reforms could save up to $54 billion in the next decade, is just "a drop in the bucket in terms of savings if civil justice reforms were enacted."

Gingrich and Oliver also point to California as an example of a successful state-based civil justice reform solution.

"California passed civil justice reforms more than 30 years ago, and malpractice premiums in several specialties are now as much as 50% lower than those in states such as New York, Pennsylvania, and Florida," they wrote.

California's landmark law, the Medical Injury Compensation Reform Act, has ensured injured patients receive fair compensation while preserving their access to health care by keeping doctors, nurses, and health care providers in practice and hospitals and clinics open. For more information, go to www.micra.org.

Care to save $54 billion? That's how much a new report from the non-partisan Congressional Budget Office estimates could be saved over the next decade by imposing new limits on medical malpractice lawsuits, according to news reports.

Requested by Sen. Orrin Hatch, the report found that significant changes to medical tort law could also reduce government spending on programs such as Medicare and Medicaid by $41 billion over 10 years and reduce budget deficits by $54 billion over that same time period, USA Today reported.

Douglas W. Elmendorf, director of the nonpartisan Congressional Budget Office, wrote that newly available research prompted CBO to update "its analysis of the effects of tort reform," according to The Washington Post. The agency's conclusion: A package of reforms that included a $250,000 cap on damages for pain and suffering and a $500,000 cap on punitive damages "would reduce total national health care spending by about 0.5 percent."

"A finding like this from the independent, expert, and credible Congressional Budget Office ought to end once and for all the bogus personal injury lawyer attacks against well-crafted laws establishing certainty and limits in medical liability," said CJAC President John H. Sullivan. "These laws can make it possible to direct huge amounts of money into taking care of people's health instead of feeding court battles and trial lawyer bank accounts." To read Elmendorf's letter to Sen. Hatch, click here.

Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform, said in a statement that "neglecting to include medical liability reform benefits only the plaintiffs' lawyers. Including it benefits every American participating in our health care system."

Shrugging off a recent failed legal challenge to California's Medical Injury Compensation Reform Act, an organization of lawyers formerly affiliated with the State Bar has passed a resolution calling for a change in MICRA's limits in certain cases.

But in the midst of intense public interest in the issue of health care availability, the personal injury lawyers' push to change MICRA has done nothing to show how such a change would benefit Californians.

In August, the California Supreme Court declined to review a lower-court ruling that fully backed MICRA. The state high court's action in Van Buren v. Evans showed that the justices found no novel issues in the Fifth District Court of Appeal's support for MICRA in the face of the personal injury lawyers' campaign to paint the 1975 legislation as constitutionally flawed. Then, in September, the Conference of Delegates of California Bar Associations (which is now funded by voluntary contributions, not state bar mandatory dues) voted to pursue an idea that MICRA's cap of $250,000 for non-economic damages in medical malpractice cases should be eliminated if a defendant rejects an offer to settle for that amount and then loses at trial or arbitration for more.

The personal injury lawyers' activity over the summer gave them a fresh opportunity to go before the media with their opposition to MICRA, which at times includes the mythical proposition that the law keeps people with meritorious cases from finding attorneys. In a well-reported TV segment that aired in the state capital, however, a Sacramento pediatrician clearly articulated the message that MICRA benefits all Californians by keeping medical professional liability costs down.

"MICRA stabilized that situation and provided a mechanism of compensating patients fairly, while still preserving access for patients to quality, affordable medical care," Dr. Paul Phinney said in the segment that aired August 10. Dr. Phinney is a physician with Kaiser Permanente and is active in the leadership of the California Medical Association.

Dr. Phinney explained the risks to patient care if the law were changed: "The more money that is pulled out of health care into the pockets of personal injury lawyers, the less money is available for health care."

Trial lawyers may pursue legal appeals and trade-association resolutions to voice their opposition to MICRA, but when plain-speaking doctors like Dr. Phinney get their chance to be heard, the public ends up the winner.

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Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be reached at gownby@cap-mpt.com.

President Barack Obama has pledged to consider civil justice reform as part of national health care reform, but he doesn't need to reinvent the wheel. In a commentary in The Kansas City Star, Newt Gingrich and Wayne Oliver note that several states have tested civil justice reform ideas for years, with impressive results: Civil justice reform measures have improved access to care, reduced costs, and strengthened those states' economies.

The authors name California's landmark medical malpractice compensation reform law as an example of legislation that ensures injured patients receive fair compensation while preserving their access to health care by keeping doctors, nurses, and health care providers in practice and hospitals and clinics open.

For more than 30 years, the Medical Injury Compensation Reform Act "has saved health care consumers tens of billions of dollars," they wrote, citing Californians Allied for Patient Protection.

In contrast, states without liability reform continue to suffer shortages of providers, leading to the closing of hospitals, clinics, and trauma centers, leaving patients with no doctors in their immediate vicinity.

Gingrich and Oliver conclude:

"We don't need to 'study' what works. Those studies have already been written. We don't need demonstration projects. We can already see the results of civil justice reform. Instead, we need real solutions and those solutions exist. Serious health care reform must include civil justice reform."

Tort reform works, former Missouri Governor Matt Blunt wrote in an op-ed in today's Wall Street Journal. By passing reforms, including capping noneconomic damages in medical malpractice cases and cracking down on "venue shopping," Missouri's economy has improved and medical malpractice claims are now at a 30-year low. The state's experience, Blunt wrote, shows that "the time to get behind national tort reform is now."

When Blunt took office in January 2005, runaway lawsuits were driving up the cost of doing business in Missouri and forcing doctors and other business owners to close their doors. In its annual ranking of states according to their legal environment, the U.S. Chamber Institute for Legal Reform ranked Missouri among the 10 worst.

Since then, Missouri has moved up to 31st on the list.

California, however, hasn't made such gains on the annual list. California's legal environment remains mired in the bottom ten states, last year coming in 44th, in part due to a lack of venue requirements and its treatment of class action lawsuits.

However, California's landmark legislation, the Medical Injury Compensation Reform Act of 1975, has stabilized medical malpractice insurance costs, assured public access to physicians and hospitals, and secured a fair legal procedure for plaintiffs to adjudicate their claims. More blog posts on MICRA can be found here and more information is available here.

The key component of MICRA is a $250,000 limit on non-economic damages awarded in a medical professional liability trial or arbitration.

Malpractice-lawsuit fears begin the minute someone walks into the doctor's office with, say, a bump on his or her head.

"If I don't get a CAT scan, this is that one case where I'll end up in court," the doctor might think, Cecil Wilson, a physician who is president-elect of the American Medical Association, told The Wall Street Journal in an article examining tangible and unseen health-care costs.

Indirect costs that stem in part from medical professionals looking for legal protection play a far larger role in health-care spending, doctors and some analysts told the paper. And they are one reason medical liability is bubbling as an issue as Congress reviews whether to pass a health-care overhaul.

"There are significant savings that can be achieved in our health-care systems if we have prudent medical malpractice reform in place," Sen. Orrin Hatch said in a statement.

Many states have passed laws in recent years aimed at curbing liability claims, the Journal reported. A law passed in Texas in 2003 caps liability awards at $250,000 for noneconomic damages such as pain and suffering, a move that has led to fewer malpractice suits being filed, according to several prominent plaintiffs' attorneys there. According to Texans for Lawsuit Reform, medical-liability-insurance rates have declined an average of 21% in the state since the law change, with almost a quarter of doctors seeing a 50% decrease.

The driving component of California's landmark legislation, the Medical Injury Compensation Reform Act of 1975, is a $250,000 limit on non-economic damages awarded in a medical professional liability trial or arbitration.

In an amicus brief opposing a recent legal challenge to MICRA, CJAC General Counsel Fred Hiestand wrote that MICRA is a piece of well-crafted legislation that has stabilized medical malpractice insurance costs, assured public access to physicians and hospitals, and secured a fair legal procedure for plaintiffs to adjudicate their claims. Click here for more information.

While California's personal injury attorneys continue to strike out in their legal attempts to overturn the state's Medical Injury Compensation Reform Act, they're testing a venue that may be more receptive: Their own bar group.

During the State Bar of California's Annual Meeting September 10-13, the Conference of Delegates of California Bar Associations will consider a proposal to eliminate MICRA's limit on medical malpractice awards for non-economic damages when there has been an offer by the plaintiff to settle for that limit ($250,000). If the defendant declines the offer and the plaintiff subsequently wins a higher amount, MICRA's limit would not apply. Though the Resolutions Committee of the conference found "no similar resolutions" in its history, the proposal certainly cannot be considered without recalling what happened when the State Bar -- in which membership is mandatory for all the state's active attorneys -- entered the MICRA fray.

In 1997, the Bar's Board of Governors endorsed legislation in the state Assembly that would have increased MICRA's liability limits. Though the legislation did not pass, the State Bar's action prompted then Gov. Pete Wilson to veto the State Bar's funding legislation. In his veto message, Wilson listed financial and policy decisions made by the organization -- including its support of the MICRA bill -- that went beyond the role of the attorney-governance organization. Wilson described the State Bar as "bloated, arrogant, oblivious and unresponsive."

Unlike in 1997, the MICRA resolution up for consideration at this month's meeting is before the Conference of Delegates, an entity that is voluntarily funded and separate from lawyer governance.

Indeed, when the Conference of Delegates moved to separate from the State Bar itself, the State Bar Journal in 2002 described the separation as giving the conference "the independence it desires while at the same time protecting the bar from the kind of political fallout which has resulted from some controversial positions taken by the conference in past years."

The Conference of Delegates says that its work results in "improving the laws and the administration of justice in California and advancing the science of jurisprudence." If that is true, then the proposal to circumvent MICRA clearly is beyond the body's mission.

Perhaps only in the insular confines of a lawyers' trade group could one equate undermining MICRA's three-decade record of protecting Californians' access to medical care with the "science of jurisprudence" or say that promoting sue-and-settle gamesmanship "improves" the law.

In fact, the proposal to remove the MICRA cap is just bad policy. Nowhere does the resolution address MICRA's benefits in reducing defensive medicine, thereby keeping billions of dollars in the system to provide essential care to patients. Nor does it explain how to avoid higher healthcare costs for consumers and taxpayers without MICRA's benefits.

Those attorneys who truly care about making the law work for the people of California would do well to remind the Conference of Delegates that it should stick to its mission. Falling for the personal injury lawyers' trick to eliminate MICRA's protection against runaway verdicts for a select few (thus jeopardizing the availability of care to the many) could again make the legal profession appear -- in a word -- "oblivious."

Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be reached at gownby@cap-mpt.com.

Among the anecdotal-based criticisms of the Medical Injury Compensation Reform Act (MICRA) is that California's $250,000 cap on non-economic damages in medical professional liability cases acts as some kind of bar to the justice system. That's not enough money to attract a lawyer, the argument goes.

There's just one problem: The claim does not stand up to actual scrutiny.

According to researchers led by former California Legislative Analyst William Hamm, "empirical evidence provides no support for the hypothesis that MICRA (including the $250,000 cap) has reduced access to the court system." That conclusion, contained in a comprehensive study of MICRA's effects on the health care delivery system in California, finds support in three findings:

• Hamm and his researchers looked at estimated medical liability lawsuit filings on a per capita basis in California from 1968-2007. The team found that per-capita filings were generally higher in the period beginning in 1986 (when MICRA had finally cleared its main legal challenges) than in late 1960s to early 1970s -- before MICRA.

• The study looked at a general decline in per-capita medical liability lawsuit filings since 1993. Significantly, Hamm's team found that the incidence of non-medical liability personal injury lawsuits - which are not affected by MICRA -- decreased at a faster rate than the incidence of medical malpractice suits.

• Hamm and his team looked at claims data provided by a medical professional liability company, which showed that in the period before the California Supreme Court's action upholding MICRA, medical malpractice claims frequency was 23.4%. But in the 20 years after MICRA was affirmed, Hamm found, the rate decreased only slightly, to 22.9%. "This data supports our finding that MICRA has not had a significant impact on the rate at which medical liability lawsuits are filed," Hamm stated.

At trial, judges warn juries that what the lawyers say in their arguments is not actual evidence. Seems the same is true when the personal injury attorneys talk about MICRA.

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Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be reached at gownby@cap-mpt.com.

After some months of speculation on whether President Obama would include federal tort reform in his promised plan for overhauling the nation's health care system, it now appears that California-like solutions to the problem of high medical costs are not being contemplated.

"I'm not advocating caps on malpractice awards, which I personally believe can be unfair to people who have been wrongfully harmed," Obama told delegates at the American Medical Association on June 15. The driving component of California's landmark legislation, the Medical Injury Compensation Reform Act of 1975 is a $250,000 limit on non-economic damages awarded in a medical professional liability trial or arbitration.

The president did acknowledge the need to reduce defensive medicine (i.e., tests and procedures ordered in an attempt to prevent lawsuits), which has been described as a significant cost nationwide. "Doctors feel like they are constantly looking over their shoulders for fear of lawsuits," Obama told the AMA. But instead of limiting awards, which has proven effective in reducing medical professional liability costs and thus increasing patient access to care in California, the president encouraged "broader use of evidence-based guidelines."

"Replicating best practices. Incentivizing excellence. Closing cost disparities. Any legislation sent to my desk that does not achieve these goals does not earn the title of reform," Obama told the doctors at the Chicago meeting.

As a large number of parties engage in addressing the nation's health care delivery system, finding a solution that reduces unmeritorious lawsuits -- and the defensive medicine they promote -- will remain one of their core challenges.

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Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be reached at gownby@cap-mpt.com.

As the California Civil Justice Blog reported May 27, the California Court of Appeal has spoken clearly on the biggest legal challenge to California's landmark Medical Injury Compensation Reform Act in some 20 years. Though unpublished, the opinion in Van Buren v. Evans strongly backs the legality of MICRA's limit of $250,000 on non-economic damages in medical professional liability suits.

But the Fifth Appellate District Court did not rest simply on the fact that MICRA was upheld by the state Supreme Court more than 20 years ago. Instead, the three justices on the Fresno-based court referred to the underlying basis for the Legislature's enactment of the set of laws: The medical malpractice insurance crisis of 1975.

Van Buren is a medical malpractice suit against a surgeon and her medical group by a patient who claimed that medical errors caused him permanent injury. A jury awarded the plaintiff $2.5 million in non-economic damages, which the trial court reduced to $250,000 under MICRA. In addition to contending that the statutorily-mandated reduction denied his client his right to a jury trial, Mr. Van Buren's lawyers said that it violated his right to equal protection under the law.

After citing the Supreme Court's rejection of the jury trial argument in 1987, the Court of Appeal turned to the contention that the Legislature with MICRA treated Mr. Van Buren differently. "The United States Supreme Court has of course recognized that a legislature could not legislate at all if it could not draw classifications and treat one class of persons differently from others." So long as they promote a legitimate state purpose, the court explained, such classifications are legal unless they undermine fundamental personal rights or are drawn upon inherently suspect distinctions, such as race, religion, or heritage.

Mr. Van Buren's attorney argued that the cap deprived his client of equal protection of the laws because the $250,000 in non-economic damages does not have the same purchasing power that $250,000 had in 1975. But the Court of Appeal pointed out: "The statute does not address purchasing power. It addresses the maximum amount of non-economic damages that a plaintiff may recover in an action against a health care provider based on professional negligence. That amount is the same for every plaintiff."

Besides, the court continued, the law simply requires that a classification bear a rational relationship to a conceivable legitimate state purpose. The cap, the Court explained later in its decision, "was to address serious problems for the health care system in California."

* * *

Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be reached at gownby@cap-mpt.com.

The 5th District Court of Appeal in an unpublished opinion unanimously upheld the constitutionality of the state's landmark Medical Injury Compensation Reform Act of 1975.

The case, James Van Buren v. Sian Evans, M.D. and Yosemite Surgery Associates, involved a $2.5 million noneconomic damages award to a plaintiff against a doctor and the doctor's assistant. A Superior Court judge lowered the award to $250,000 pursuant to MICRA.

The plaintiff argued that MICRA's $250,000 cap on recoverable noneconomic damages deprived him of his constitutional rights to a jury trial and to equal protection of the law.

In its amicus brief, CJAC General Counsel Fred J. Hiestand noted that MICRA's noneconomic damage ceiling fully complies with the U.S. and California constitutions. The brief also argued that MICRA is a piece of well-crafted legislation that has stabilized medical malpractice insurance costs, assured public access to physicians and hospitals, and secured a fair legal procedure for plaintiffs to adjudicate their claims.

In its ruling, the court wrote: "... appellant contends that the Legislature does not have [the authority to limit recoverable damages] -- only a jury does. This argument was made and rejected more than 20 years ago. ... We reject it again."

Van Buren v. Evans - Opinion.pdf

Whether the current economic crisis is a painful but temporary period for the nation or is a symptom of what some are calling The Great Disruption, the future of health care for Americans will figure into either scenario.

And even if the country stays with some version of the status quo, in which employers are the largest purchasers of health care, or Washington devises some other formula, it would be unwise push aside health care liability reform as not being part of an improved national system. The data from California show why.

In a recently updated study, former California Legislative Analyst William Hamm quantifies the economic benefits arising out of the main provisions of the state's Medical Injury Compensation Reform Act (MICRA).

In "MICRA and Access to Healthcare," Hamm and his co-authors note that states that have caps on non-economic damage awards (similar to California's limit of $250,000 for non-economic damages in medical malpractice suits) have medical liability insurance premiums that are 17% lower that states without such caps. They also cite a Congressional Budget Office finding that if caps and other MICRA-like reforms were adopted at the federal level, medical liability premiums would average 20% to 30% less than under current law.

By adding other factors to the equation, such as reduced "defensive medicine" (tests and procedures performed to benefit a medical chart, not necessarily the patient's health), Hamm pegs the benefits of liability reform at $7.9 billion -- in California alone. "When healthcare providers are forced to pay more for malpractice insurance, these costs ultimately are passed along to the payers -- employers providing health insurance, workers, and taxpayers," Hamm says.

Take these figures and apply them to 50 states, and it becomes pretty hard for any policymaker to ignore the benefits that California-like medical liability reforms can bring to making health care affordable for all Americans -- in whatever kind of economy we end up with.

Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be reached at gownby@cap-mpt.com.

The legal briefing is complete in the personal injury lawyers' attempt to overturn California's landmark Medical Injury Compensation Reform Act, but before calling it a day, the challengers couldn't resist the old talking point that MICRA never actually brought down doctors' medical professional liability rates.

Too bad they didn't just review a little legal history first.

In their response to the amici curiae briefs filed by MICRA's supporters (including CJAC), lawyers for the appellant in Van Buren v. Evans claim that the 1988 passage of Proposition 103 (the "Insurance Rate Reduction and Reform Act") triggered the drop in doctors' rates, not MICRA.

But in claiming that MICRA did not help physicians because their rates remained high for years after its 1977 passage, the appellants completely forget that the landmark set of statutes faced years of court challenges. How could the ratemakers factor in MICRA's benefits before the courts even applied its provisions?

It is well accepted that the last major hurdle to MICRA's enforcement was 1985's Fein v. Permanente Medical Group, in which the California Supreme Court finally declared MICRA's $250,000 limit on medical malpractice awards for non-economic damages constitutional.

According to a newly updated report by William Hamm, former legislative analyst for the State of California, "Until these challenges were resolved, insurers could not be certain that the cost of medical liability claims would go down, thereby allowing them to reduce insurance premiums."

Rates for California physicians moderated lower in the second half of the 1980s (long before Prop. 103's own legality was affirmed) and have remained consistently lower than in comparable states without similar protections. But California has MICRA to thank for those results, not Prop. 103.

And in the end, it's not the physicians and other providers who have benefited, but rather the millions of Californians who might otherwise have been priced out of their medical care. As CJAC's brief said of the Van Buren attack on MICRA: "The issue presented poses a choice between continued access to health care for Californians or interruption of that care, a choice between continued opportunity or imminent danger."

Oral arguments in the case are expected later this year.

Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be contacted at gownby@cap-mpt.com.

James Van Buren v. Sian Evan, M.D. and Yosemite Surgery Associates.pdf

While President Obama and Congress strive to boost the economy through upgrades in health care technology, why not consider a legal upgrade as well, such as adopting the provisions of California's Medical Injury Compensation Reform Act?

Congress has considered MICRA-like reforms in the past (including a $250,000 cap on medical malpractice awards for non-economic damages), but has always met resistance not only by lobbyists for personal injury lawyers but sometimes by those who simply feel that health care liability is a state -- not a federal -- issue.

But with a federal investment in electronic medical records a big part of the current economic stimulus plan, there is a renewed rationale for national standards on medical malpractice liability.

It's happened before. When Congress saw the advantages of electronic data interchange in the processing of health care insurance reimbursements, it passed the Health Care Portability and Accountability Act so that there would be national standards for the privacy of protected health information.

A federal standard that balances an injured plaintiff's right to recovery with the need to keep health care affordable to every one of the nation's citizens would be just the kind of economic stimulus the nation needs. Not only would national MICRA-like reforms strengthen the health care safety net, they also would make American businesses more competitive by lowering employee health benefit costs.

With many of the components in the federal stimulus plan based mostly on economic theory, including a program with a proven track record, like MICRA, would add an element of certainty to this historic effort to move the country forward.

Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be contacted at gownby@cap-mpt.com.

California has had a long, successful tradition of allowing parties to enter into contracts specifying that should any future dispute arise between them, the disagreement will be resolved through private, binding arbitration.

Californians use arbitration agreements in a variety of settings, including real estate transactions, automobile repairs, even fee disputes between lawyers and their clients. A provision approving such agreements between physicians and their patients is part of the landmark Medical Injury Compensation Reform Act of 1975 (MICRA).

In Washington, however, there's a movement to amend the Federal Arbitration Act to preclude parties from contracting for arbitration before a dispute arises. One bill heard in the last Congress, S. 1782 sponsored by Sen. Feingold (D-Wisconsin) would have prevented such clauses in employment, franchise, and "consumer" disputes. It is certainly likely that the issue will be approached again with the new Congress sworn in this month.

But what such attempts fail to appreciate is the benefit that all parties receive when arbitration has been agreed upon before a dispute has even taken place.

For example, when arbitration -- which allows parties to resolve disputes at significantly lower transaction costs than through court -- is factored into a business transaction, the cost of the goods or services can be reduced at the outset. Another benefit to pre-dispute arbitration agreements is that they promote a smooth, less emotional environment for a continued relationship. This is especially true in health-care relationships such as assisted living and health maintenance organizations.

Finally -- and Congress should pay attention to this -- it is no coincidence that the use of arbitration in California coincides with our judges' ability to control their civil trial calendars. Without the availability of this beginning-to-end alternative resolution system, overcrowding would again handicap the country's civil justice system -- with serious consequences to our national economy.

Preserving pre-dispute arbitration -- whether in California or nationwide -- promotes the public policy of giving citizens freedom of choice when dealing with others. Take away that choice, and we'll have nothing but uncertainty in return.

Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be contacted at gownby@cap-mpt.com.

With ample evidence showing how California's Medical Injury Compensation Reform Act helps physicians manage their costs and keep their doors open, MICRA has not seen a direct legislative challenge in nearly a decade. And it has been roughly twice that long since MICRA cleared its last major legal challenge.

That changed this year when a brief filed with the California Court of Appeal asserted that the landmark legislation passed in 1975 violates the state's Constitution by muddying up what should be separate legislative and judicial powers. MICRA's challengers in the case, Van Buren v. Evans, basically contend that when the Legislature put a $250,000 limit on non-economic damages in medical malpractice cases, it infringed on the right of a jury to evaluate damages and makes its own award.

The underlying Van Buren case is a medical malpractice suit against a surgeon and her medical group employer by a patient who claims that diagnostic and surgical errors caused him permanent incontinence of the bowel. A jury agreed with the plaintiff and awarded him $2.5 million in non-economic damages. At the defendants' request, the trial court reduced those damages to $250,000 under MICRA. Mr. Van Buren's lawyers say that such a reduction denies their client his right to a jury trial.

MICRA's backers are vigorously disputing the attack and are armed with language from a variety of appellate cases supporting the Legislature's solution to the 1975 crisis. The Court of Appeal is still receiving briefs and oral arguments have not yet been scheduled.

As a backdrop to the legal arguments, however, is the need to appreciate how the limit on non-economic damages has done its part to keep Californians healthy.

Given that claimants in medical malpractice cases may receive unlimited awards for medical care, lost earnings, and other economic damages, would it really such a good idea to revert to a time when medical professional liability insurers had to triple their premiums for physicians or leave the California market all together? And just who will tell the medical clinic patient that her local provider will have to reduce hours or shut down because the equilibrium between liability expenses and medical services fostered by MICRA was upended by the lawyers?

In upholding the provisions of MICRA in years past, the courts have noted the Legislature's right to address the health care crisis that Californians faced in the mid-1970s.

The question now is whether anyone wants to risk another such crisis today.

Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be contacted at gownby@cap-mpt.com.