In its decision filed on June 9, 2015, the Court of Appeal of the State of California First Appellate District (“Appellate Court”) refused to overturn a lower court’s ruling that reduced a California medical malpractice jury’s verdict for noneconomic damages from $1 million to $250,000, which has been the statutory cap on noneconomic damages in medical malpractice cases in California since 1975.
In 1975, California enacted the Medical Injury Compensation Reform Act of 1975 (MICRA). Section 3333.2 of MICRA provides, in part: “(a) In any action for injury against a health care provider based on professional negligence, the injured plaintiff shall be entitled to recover noneconomic losses to compensate for pain, suffering, inconvenience, physical impairment, disfigurement and other nonpecuniary damage. [¶] (b) In no action shall the amount of damages for noneconomic losses exceed two hundred fifty thousand dollars ($250,000).”
The $250,000 cap on noneconomic damages in California medical malpractice cases has not increased since it was enacted in 1975. In the November 4, 2014 California general election, California voters defeated Proposition 46, which, in part, would have modified MICRA’s noneconomic damages limitation to reflect inflation, raising the cap to approximately $1.1 million as of January 1, 2015, and calling for annual adjustments thereafter.
In the case decided by the Appellate Court, the plaintiff challenged the reduction of the amount of the noneconomic damages awarded to her by the jury on multiple constitutional grounds: as violating equal protection, due process, and the right to jury trial. The plaintiff offered evidence before the lower court that since 1975, inflation has caused a roughly four-fold devaluation of the dollar, and if the cap was adjusted for inflation, the $250,000 noneconomic damages cap enacted in 1975 was worth $1.06 million in 2012 dollars (in other words, the $250,000 cap in 2012 dollars equaled only $59,000 in 1975 dollars).
The plaintiff’s attorney submitted evidence outlining how the costs incurred (approximately $103,000) and legal fees (approximately $450,000, based on hourly rates between $250 and $650 an hour) far exceeded the total jury award after the reduction under MICRA ($321,562 net award). MICRA also limits contingency fees in medical malpractice cases: 40% on the first $50,000 recovered, 33 1/3% on the next $50,000, 25% on the next $500,000, and 15% on any recover exceeding $600,000.
The Appellate Court noted that during the 1980s, the California Supreme Court upheld numerous provisions of MICRA against equal protection challenges, including the noneconomic damages cap, concluding that the damages cap was rationally related to the California Legislature’s declared purpose of responding to an insurance crisis. However, the plaintiff alleged that since the 1980s, circumstances had changed and therefore MICRA’s noneconomic damages cap is no longer rationally defensible.
The Appellate Court held that the plaintiff had failed to demonstrate that the relevant factual premise for MICRA’s noneconomic damages cap (and all the other provisions of MICRA) is “totally altered;” the plaintiff had failed to demonstrate that the underlying circumstances that gave rise to the medical malpractice insurance problem that reached crisis proportions in the 1970’s no longer exist; and, the plaintiff had failed to demonstrate that the fundamentals of California’s health care system and its interface with California’s tort and insurance systems that gave rise to the declared insurance crisis no longer exist, rendering MICRA’s provisions of no plausible utility.
In addressing the plaintiff’s equal protection argument, the Appellate Court stated that MICRA’s noneconomic damages cap does not wholly deny compensation to medical malpractice plaintiffs (i.e., there is no limitation on the recovery of actual damages, such as medical costs and lost wages, and there is only a partial limitation on the recovery of noneconomic damages). The Appellate Court further stated that while there is significant debate about the wisdom and efficacy of damages caps in controlling medical malpractice insurance costs, it is a matter of legitimate debate.
With regard to the plaintiff’s due process argument, the Appellate Court stated that so long as MICRA is rationally related to a legitimate state interest, policy determinations as to the need for, and the desirability of, the enactment are for the Legislature. The Appellate Court further stated that no California case has ever suggested that the right to recover for such noneconomic injuries is constitutionally immune from legislative limitation or revision. Furthermore, in response to the plaintiff’s argument that it is constitutionally required that noneconomic damages be potentially sufficient to cover attorney fees, the Appellate Court stated that while MICRA’s noneconomic damages cap may well influence an attorney’s decision to take or reject a medical malpractice case on contingency, the cap does not violate a due process right to court access.
In response to the plaintiff’s argument that MICRA’s noneconomic damages cap interferes with her right to trial by jury, the Appellate Court stated that the scope of the right to trial by jury is not immutable, even as to rights that existed at common law. The Appellate Court further stated that the Legislature retains broad control over the measure, as well as the timing, of damages that a defendant is obligated to pay and a plaintiff is entitled to receive, and that the Legislature may expand or limit recoverable damages so long as its action is rationally related to a legitimate state interest – MICRA’s damages cap is a legal limitation on recoverable damages and does not impair the jury’s fact-finding role, according to the Appellate Court.
Source Chan v. Curran, A138234.
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