California has one of the longest track records in the US on substantive tort reform. For decades, California had a cap on pain and suffering. That cap was $250k and dated back to 1975. Before many of our readers were even born.  

What does that mean? 

Payouts for professional liability are often divided into economic damages and non-economic damages. 

Economic damages are line items that can be measured – such as lost income, medical expenses, the future cost of care, and so on. If a patient cannot work because they were injured by medical negligence and that person was making $100k a year, there’s a formula to determine, over time, the “lost wages.” If a patient injured by negligence needs to have a life care plan for activities of daily living and rehabilitation, there are calculations to determine, over time, how much that will cost. 

Non-economic damages are softer numbers. Frequently it means payment for “pain and suffering.” Pain and suffering are in the brain of the beholder. If the sky is the limit, lawyers will argue that payment for pain and suffering should touch the clouds.  

In most states that have implemented some version of tort reform, a cap is placed on non-economic damages. In those states, there is no cap on economic damages. If medical negligence causes a young patient to become a quadriplegic, those economic damages will be a throat-clearing number. But the number for pain and suffering (in a tort reform state) will be modest. 

In California, since 1975, that number for pain and suffering has been stuck at $250k. 

For doctors practicing in California, that cap has kept professional liability premiums level and reasonable. 

Over the decades, plaintiff’s lawyers tried, unsuccessfully, to get this cap raised. They argued that this number has not kept pace with inflation. It is among the lowest in the nation. Also, California is among the most expensive states in the nation for living expenses. All good arguments. All failed.  

Physicians argued that raising this number would cause med mal premiums to spike, making it more expensive to deliver care. It would also cause a physician exodus.  

This year, trial attorneys with patients’ rights groups and physicians drew another line in the sand.  

With neither side budging, California voters were set to settle the issue in November. A ballot measure would ask voters to tie the limit to inflation, immediately increasing it to about $1.2 million. The two sides had collectively raised about $35 million in what was expected to be one of the most fiercely contested ballot measure campaigns this year. 

Before the battle began, the two sides came to an accommodation. There will not be a referendum.  

[S]upporters of raising the limit agreed to withdraw the measure from the November ballot. Instead, they supported a new bill in the state Legislature that would gradually increase the limit over the next 10 years. The bill has the support of the California Medical Association, the Consumer Attorneys of California, Californians Allied for Patient Protection, state legislative leaders and Democratic Gov. Gavin Newsom, who said he would sign it into law. 

Here are the mechanics of the bill. 

Next year, the cap for non-economic damages for those who are negligently injured would rise from $250k to $350k. It would rise to $500k for those who die (from negligence). These caps would rise every year until they reach $750k for injured patients and $1M for families of deceased patients. Thereafter it would rise 2% each year to “keep up with the cost of inflation.” 

But wait. There’s more. The potential to double-dip. 

The new limits would apply to medical providers and institutions. So, if both doctor and hospital are sued, there’s a potential maximum $350k for pain and suffering from suing the doctor. Another $350k from suing the hospital in parallel.  

But wait. There’s even more.  

Patients can win damages from a third provider or institution if they are unaffiliated with the first two. It’s not clear what unaffiliated means. But expect to see shotgun suits where every provider in the chart is named.  

The new limits would only apply to cases filed after January 1, 2023.  

What will happen to professional liability premiums?  

The California Medical Association is sanguine about near-term hikes. 

Gradually raising the limit over 10 years makes sure medical malpractice insurance premiums don’t rise too quickly for doctors, said Dustin Corcoran, CEO of the California Medical Association. 

Whether premiums spike or stay stable is a math question soon to be solved by actuaries.  

We’ll see. 

As I opened, there have never been caps for economic damages in California. The caps for pain and suffering that were locked in place since 1975 are set to increase.  

What do you think? 

Jeffrey Segal, MD, JD

Chief Executive Officer and Founder

Dr. Jeffrey Segal, Chief Executive Officer and Founder of Medical Justice, is a board-certified neurosurgeon. Dr. Segal is a Fellow of the American College of Surgeons; the American College of Legal Medicine; and the American Association of Neurological Surgeons. He is also a member of the North American Spine Society. In the process of conceiving, funding, developing, and growing Medical Justice, Dr. Segal has established himself as one of the country’s leading authorities on medical malpractice issues, counterclaims, and internet-based assaults on reputation.

Dr. Segal was a practicing neurosurgeon for approximately ten years, during which time he also played an active role as a participant on various state-sanctioned medical review panels designed to decrease the incidence of meritless medical malpractice cases.

Dr. Segal holds a M.D. from Baylor College of Medicine, where he also completed a neurosurgical residency. Dr. Segal served as a Spinal Surgery Fellow at The University of South Florida Medical School. He is a member of Phi Beta Kappa as well as the AOA Medical Honor Society. Dr. Segal received his B.A. from the University of Texas and graduated with a J.D. from Concord Law School with highest honors.

In 2000, he co-founded and served as CEO of DarPharma, Inc, a biotechnology company in Chapel Hill, NC, focused on the discovery and development of first-of-class pharmaceuticals for neuropsychiatric disorders.

Dr. Segal is also a partner at Byrd Adatto, a national business and health care law firm. Byrd Adatto was selected as a Best Law Firm in the 2021 edition of the “Best Law Firms” list by U.S. News – Best Lawyers. With over 50 combined years of experience in serving doctors, dentists, and other providers, Byrd Adatto has a national pedigree to address most legal issues that arise in the business and practice of medicine.