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As any plaintiffs attorney in California who has handled medical malpractice cases knows, this work is not for the faint-of-heart, weak-of-resolve or thin-of-wallet. Representing victims of medical negligence presents complex challenges found nowhere else in the law. The reason there are very few plaintiffs firms still willing to represent malpractice victims is quite simple — it is generally an economically losing proposition. Why is this so? Given a number of recent studies that document the soaring increase of medical negligence, even at some of our best institutions, it would seem like such work would be a “target of opportunity” for plaintiffs lawyers. For the uninitiated, one needs to begin with an appreciation for the unique rules that control and shape medical malpractice litigation. The Medical Injury Compensation Reform Act of 1975 is the starting point. It is a comprehensive legislative package that was adopted during an extraordinary session of the Legislature called by then-Gov. Jerry Brown to respond to a perceived crisis in health care, precipitated by skyrocketing malpractice premiums. The four cornerstones of MICRA are: the limitation of attorneys fees (Business & Professions Code � 6146); the limitation on recovery for non-economic losses to $250,000 (Civil Code � 3333.2); the abrogation of the collateral source rule, permitting defendants to introduce evidence of collateral source recovery by the plaintiff (Civil Code � 3333.1); and the periodic payment of future damages that exceed $50,000 (Code of Civil Procedure � 667.7). ATTORNEYS FEES MICRA’s regulation of attorneys fees presents a significant disincentive to plaintiffs attorneys who are generally used to structuring contingent fee agreements on an escalating basis. Most plaintiffs attorneys structure those agreements to increase as the risk and costs of litigation increase –e.g. 33 1/3 percent fee, if case settles prior to trial; 40 percent fee if case goes to trial. MICRA turns this risk-spreading approach on its head. Under B&P � 6146, attorneys are limited to 40 percent of the first $50,000 in recovery, 33 1/3 percent of the next $50,000, 25 percent of the next $500,000, and 15 percent of any recovery exceeding $600,000. In other words, in a serious injury case, the attorney who finds himself having to take the matter to trial and footing the ever-increasing cost is guaranteed to get less than one-half of the typical one-third contingent fee. These fee limits are absolute. They cannot be waived by a client nor modified by a court. What’s more, the fee structure includes appeals. Unlike almost any other appellate situation where clients typically agree to a separate hourly fee for appeal, they are limited by the strict provisions of B&P � 6146. NON- ECONOMIC LOSSES Civil Code � 3333.2′s limitation on non-economic damages is, without a doubt, the greatest economic disincentive. Most laypersons — especially those victims of medical negligence — have a very difficult time understanding that the maximum recovery for all of their pain and suffering, inconvenience, physical impairment and disfigurement (aka “general damages”) is $250,000. While that sum might have been adequate in 1975, which would equal $900,000 today. The fact that the $250,000 limit applies to both past and future “general damages” ( Salgado v. County of Los Angeles (1998) 19 Cal.4th 629) works a further hardship. Several years ago, I spoke to a group of 150 Kaiser physicians and was astounded to learn how few physicians were even aware of the limitation on damages. But even more instructive were the numerous physicians in the audience who simply could not believe, nor were willing to accept as fair, MICRA’s damage limitation as it applied to child victims with serious injuries, or victims left with permanent paralysis. An intended consequence of this artificially low limit is to drive down settlement values on all types of medical injuries. If the maximum amount that an errant healthcare provider must pay for putting someone in a wheelchair for life is $250,000, then what’s a crooked wrist worth? Malpractice insurance carriers are rarely motivated to settle (unless there are injuries that result in large special damages) since they know that their insureds cannot be exposed, even at trial, to anything more than the $250,000 limit. COLLATERAL SOURCES Generally, a defendant in a tort case is precluded from introducing evidence of set-offs for benefits received by a plaintiff from independent sources (the “collateral source” rule). Civil Code � 3333.1 abrogates this rule by permitting a medical defendant to introduce evidence of the collateral benefits paid to, or on behalf of, the plaintiff. This, of course, further drives down the value of the case because the trier of fact will now be informed of all health insurance payments of medical bills, all disability and worker’s compensation payments, and Social Security benefits received by a plaintiff. In a rather limp attempt to inject some balance into the process, the statutory scheme does permit the plaintiff to respond by introducing the amounts that he/she has paid to secure the benefits (i.e., insurance premiums). Civil Code � 3333.1 does not automatically prohibit the so-called double recovery from collateral sources and the medical defendants. It is left up to the trier of fact to decide how this evidence should be applied in assessing damages. There is a modest silver lining for plaintiffs confronting the introduction of such evidence — it automatically wipes out any lien or subrogation rights that the collateral source would otherwise have. And this reimbursement/subrogation bar will apply even when there is a settlement (as contrasted with a trial) where the plaintiff can “demonstrably show that the recovery was reduced to reflect collateral source contributions.” ( Graham v. WCAB, (1989) 210 Cal.App.3rd 499). PERIODIC PAYMENTS Finally, MICRA drives down the value of plaintiffs’ cases by providing that future damages that exceed $50,000 are not to be paid in a lump sum, but rather by periodic payments (C.C.P. � 667.7). The case law interpreting the statute has almost uniformly concluded that an annuity purchased by the defendants (which can almost always be done for far less money through a life insurance carrier willing to take some risk on the actuarial likelihood of the plaintiff’s premature death) will satisfy the periodic payments. Once again, the plaintiffs’ attorney has his or her fees further limited since those fees relating to future damages are almost always determined by the lower cost of the annuity’s purchase price. EXPERTS, SHMEXPERTS Unfortunately, MICRA’s “four cornerstones” are only the starting point for understanding the impediments that make handling plaintiffs’ cases economically unattractive. Every medical malpractice case requires proof that the health care provider breached “the standard of care.” Long before MICRA, the courts consistently required that the standard of care, almost always, must be determined by the testimony of expert witnesses (see BAJI 6.30). In and of itself, this rule makes sense. Who of us would know the standard of care for treating a suspicious appendix? However, in practice, this means that any medical malpractice case will be very expensive to litigate. While in the “old days” physicians may have been most reluctant to testify against their brethren (or sistren), that is no longer true. The pressure of plummeting pay for many physicians, as well as an increasing and sincere desire to “clean up the profession,” has caused many physicians to offer themselves as experts. However, it comes at a price. Hourly rates for top-notch experts in various specialties often exceed $550 per hour. And plaintiffs’ attorneys cannot put off spending money for experts. To file a case without having first obtained a detailed and thorough evaluation regarding standard of care, its breach and causation is simply “nuts.” While the statutory scheme no longer requires that attorneys file a “Certificate of Merit” along with the filing of a suit, as a practical matter, plaintiffs attorneys absolutely must know that the case is a “slam dunk” on standard of care and causation or he/she is courting disaster. Even “slam dunk” cases will be met with forceful opposition by the defense; “iffy” cases will ultimately meet with disaster. (A word to the wise: When that initial medical/legal evaluation is performed, it is worth every minute of the attorney’s time to meet personally — face to face — with the expert (unless you have a pre-existing relationship). It is far too easy in a telephone conversation for any expert to color their responses with answers that they think you want to hear. Eyeball-to-eyeball right from the beginning is the way to go.) A FEW MORE IMPEDIMENTS Unlike in many other tort actions, an insurer for a medical defendant cannot settle malpractice claims without the insured’s written consent (B&P Code � 801(e); H&S Code �1306). Since all settlements over $30,000 and all judgments and arbitration awards must be reported to the California Medical Board, which then conducts an investigation into the physician’s competence, many physicians — especially those nearer to the beginning of their careers — may be extremely reluctant to grant consent, even when their errors are blatant. Finally, it has become increasingly popular for health care providers to insert arbitration clauses in their client services agreements. Arbitration for medical cases is favored by statute and has been singled out for special treatment by the Legislature. See, for example, C.C.P. � 1295(e), declaring that such contracts are not contracts of adhesion if they comply with the minimum notice set forth in � 1295(a) and (b). Arbitrating medical malpractice claims will add additional expense as the arbitrators obviously charge for their services. Since arbitrators are almost always retired judges (or at least experienced lawyers), one must anticipate that the awards will be more conservative since the arbitrator already knows, and appreciates, MICRA’s limitations. Outside of the recently revamped Kaiser system, which now employs an Office of the Independent Administrator, it may take months to obtain agreement on an arbitrator and an arbitration date. Such delay is costly. CONCLUSION The reality is that for the experienced plaintiffs attorney, it is only the catastrophic medical injury case that requires significant future care and/or involves demonstrable economic losses that is worth pursuing. While insurance carriers may revel in the fact that they have chased away many plaintiffs attorneys, the reality is a sad one. My office hears every day from unfortunate victims whose lives have been significantly altered by medical incompetence, yet they cannot find a lawyer to take their case — it’s simply not “big” enough. It has been almost three decades since MICRA was put in place. Practically every year brings attempts in our Legislature to raise the damage limits for malpractice victims. None have been successful. Those forces bent on “tort reform” may be in political ascendancy, but I guarantee you that when it is their spouse or child who becomes victimized by sub-standard medical care, those same reformers will react quite differently. Stan Casper is a founding partner of Casper, Meadows & Schwartz in Walnut Creek and a former president of the Contra Costa County Bar Association.

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