By Suzanne Sprague, KERA 90.1 reporter
Dallas, TX – Suzanne Sprague: In the early 1970's, as the Watergate scandal rocked the country and the economy sagged into a recession, a young obstetrician in California faced a professional crisis. John Whitelaw had left the military to join a private practice in Sacramento with three other doctors when he learned the group was having trouble getting medical liability, or malpractice, insurance.
Dr. John Whitelaw, MD: And I didn't even know that that was even a big deal practically at that time until my partners gave me a little education on what it meant to be sued or what the liability was if you were sued. So it was a real wakeup call for me.
Sprague: Malpractice premiums in California had skyrocketed and one major insurer had left the market. So in 1974, lawmakers passed the Medical Injury Compensation Reform Act, or MICRA, to stem the rising cost of insurance premiums. MICRA limited attorneys' fees in medical malpractice cases. And, it capped the amount a patient could receive for pain and suffering, or non-economic damages, at $250,000. Dr. Whitelaw, who is now the president of the California Medical Association, says MICRA kept him in the Golden State.
Dr. Whitelaw: MICRA made insurance affordable and available in California and it stabilized our professional liability climate here and allowed us I think to benefit form a mild increase in costs as opposed to the dramatic increases elsewhere.
Sprague: During MICRA's three decades, California has become the darling of the medical liability insurance industry. And a number of the state's insurers continue to monitor it through the group Californians Allied for Patient Protection, or CAPP. Danielle Walters is CAPP's executive vice-president.
Danielle Walters, Californians Allied for Patient Protection: Once MICRA was enacted, California basically went from basically paying 28% of the nation's medical malpractice premiums, to paying about 10% of the nation's malpractice premiums. And 10% is just about what our population figure is so it's just about where it should be in comparison to the country.
Sprague: Statistics like these delight Texas State Senator Jane Nelson, who chaired an interim legislative committee on how to address rising medical liability rates here.
Texas State Senator Jane Nelson: I am convinced that what was enacted in California has worked well and we need to try it here in Texas.
Sprague: Nelson has introduced a measure that, like MICRA, caps non-economic damages at $250,000 and limits attorneys' fees in high-dollar suits. Nelson believes if SB12 becomes law, it'll discourage attorneys from filing illegitimate or multi-million dollar claims, which she says are driving up malpractice insurance and slowing the wheels of justice.
Nelson: The message we want to send is if you've truly been injured and have a legitimate claim, then we're going to get rid of all of these frivolous lawsuits that are clogging up the court so that people who are truly injured have access that they need.
Sprague: National Republicans agree, which is why pending federal tort reform is also modeled after MICRA. But the law remains controversial in California. Doctors groups and insurance companies support it. But lawyers and consumer advocates say it's brought nothing but trouble.
Doug Heller, FTCR: MICRA did not lower the premiums of doctors. It's never saved money for doctors. It's only limited the rights of patients.
Sprague: Doug Heller is a senior consumer advocate with the Foundation for Taxpayer and Consumer Rights in Los Angeles.
Heller: In fact, between 1975 and 1988, those first 13 years of MICRA, the total impact was a 450% premium increase. If that's called a success by the insurance companies, well, then they have got their minds screwed on wrong because it was clearly a failure.
Sprague: For a few years after MICRA was enacted, California doctors saw some savings. But when the economy stagnated, premiums began to climb. MICRA-advocates say that's because the law hadn't fully kicked in. It was tied up in court. But Doug Heller insists MICRA failed.
Heller: Everybody around the country is looking to California as the model for malpractice insurance reform. But they're looking at the wrong law. MICRA didn't save doctors any money. Only insurance regulation saved money.
Sprague: In 1988, California voters approved a ballot measure known as Proposition 103. It required insurance companies to get the state's approval before they changed premium rates for auto, home and medical liability insurance.
Heller: What you find, which is perhaps most valuable is that insurance companies don't grab for as much money here in California because they know they're going to have to justify it so you see much more moderate approach by insurance companies.
Sprague: Since 1988, doctors' malpractice premiums have jumped 61% in the United States. But in California, the figure has dropped two to five percent. MICRA supporters attribute the decline to the end of MICRA's legal battles, not to insurance regulation. Still, some groups continue to lobby against MICRA because they say it's unfair to patients whose injuries have cost far more pain than money.
Bruce Brusavich, Consumer Attorneys of California: So it is particularly cruel - to children, to women, because they still traditionally earn less, and especially stay-at-home moms, who have no earning loss and many times they have no need for future medical care so their entire loss is capped at $250,000.
Sprague: Bruce Brusavich, who's the president of Consumer Attorneys of California, says California lawyers routinely discourage small malpractice claims because the cost of litigating them exceeds the $250,000 cap their clients could collect. So, he says, many injured patients never receive any money from a negligent doctor or are forced to accept unfavorable settlements. But Danielle Walters with Californians Allied for Patient Protection says trial lawyers have no proof to back up that conclusion. She's convinced anyone who needs a lawyer can get a lawyer.
Walters: The only thing we have seen is plaintiffs attorneys lobbying against medical liability reforms claiming they have turned away cases and I would make the case that for every case they have turned away, one of the 200,000 attorneys in our state has picked up and pursued.
Sprague: Walters' own statistics show there has been a decline in the number of malpractice lawsuits filed in California since MICRA passed. And that's what Senator Jane Nelson would like to see happen in Texas, but her bill is backed by doctors because they believe it will lower their insurance premiums. As California is learning, there's no guarantee that will happen in a down economy. The largest insurer there recently filed for a 15% rate increase. And in three other states with MICRA-type laws, malpractice premiums have increased to the point that the American Medical Association has deemed they have an insurance crisis, just like Texas. For KERA 90.1, I'm Suzanne Sprague.
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