Calif. malpractice ruling will have minimal impact on insurance rates, lawyers say

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A new ruling, which affirmed California’s cap on medical malpractice damages, will not significantly impact providers’ insurance rates, legal experts said.

On Thursday, the California Supreme Court upheld a lower court’s decision to cut a $4.25 million malpractice award for pain and suffering to the $250,000 state limit for noneconomic damages.

Marisol Lopez, whose 4-year-old daughter died of melanoma, and her legal team argued that the physician assistants who “negligently overlooked” her daughter’s malignant mole operated outside of the scope of their license and were not properly supervised. Thus, the cap didn’t apply.

California Supreme Court Justice Goodwin Liu disagreed with that interpretation, claiming that allowing medical malpractice plaintiffs to avoid the cap in this way would be at odds with its purpose to “control and reduce medical malpractice insurance costs by placing a predictable, uniform limit on a defendant’s liability for noneconomic damages.”

“The opinion dealt with a very technical aspect of the law—it’s not like this was a case where there was a big constitutional challenge,” said Christopher Ryan, of counsel at Dickinson Wright. “I don’t think this decision, by itself, will have much impact on rates.”

Around half of U.S. states have malpractice caps on either financial or noneconomic damages, ranging from $250,000 to around $3 million, depending on the severity of the injury. Many states have struck down caps after deeming them unconstitutional, which has led to higher severity and frequency of malpractice claims, said John Hall, founding partner of Hall Booth Smith.

“This case will help maintain California’s current insurance rates and insulate them from significant increases seen nearly everywhere else,” he said.

California’s statutory cap stems back to the 1975 Medical Injury Compensation Reform Act, which states that damages for noneconomic losses shall not exceed $250,000 in any malpractice claim based on professional negligence.

It aimed to prevent doctors from leaving the industry or not performing risky procedures because they couldn’t afford alleged rising malpractice premiums. The law has drawn criticism from patient advocates, who claim that it’s unjust. In addition, more lawyers have refused to take on cases due to the cap, advocates argued. The evidence is mixed as to whether caps keep medical malpractice insurance rates in check, experts said.

“You could probably find an equal number of studies on both sides of the issue,” Ryan said.

As for the California case, there are reasonable arguments for excluding unsupervised PAs from a cap on noneconomic damages, Liu wrote in the opinion. But that would be up to the legislature to decide and out of the court’s purview, he said.

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