California’s landmark Medical Injury Compensation Reform Act (MICRA), a fixture since 1975, has undergone its first significant overhaul with the enactment of Assembly Bill No. 35 (AB 35). The original law, which imposed a $250,000 cap on non-economic damages in medical malpractice lawsuits, was designed to curb soaring medical malpractice insurance premiums during what was perceived as a crisis period in the 1970s. However, nearly fifty years later, this cap has been criticized as outdated and insufficient to cover the non-monetary losses suffered by malpractice victims.

AB 35, which took effect on January 1, 2023, introduces a progressive, two-tiered system for damage caps, with provisions for annual increases and inflation adjustments starting in 2034. The reform reflects a historic compromise between the California Medical Association and the Consumer Attorneys of California, signaling a shift towards balancing the scales of justice for those affected by medical negligence.

Under the new legislation, non-economic damage caps for personal injury cases have risen to $350,000 for 2023, with a planned incremental increase of $40,000 annually until it caps at $750,000 in 2033. For wrongful death cases, the starting cap has been set at $500,000, increasing by $50,000 each year until it reaches $1,000,000 in 2033.

One of the most groundbreaking elements of AB 35 is the introduction of a “stacking” provision. This allows plaintiffs to pursue the full cap amount against up to three separate categories of defendants in a single lawsuit—such as a healthcare provider, a healthcare institution, and an unaffiliated provider or institution. In practice, this could elevate the potential recovery in personal injury cases to as much as $1.05 million and $1.5 million for wrongful death cases in 2023.

The implications of these changes are profound, particularly in complex cases involving multiple defendants. Victims of medical malpractice now have a significantly enhanced ability to receive compensation that more accurately reflects their pain and suffering. Furthermore, while the caps on non-economic damages have been raised, economic damages, which include tangible losses like medical expenses and lost wages, remain uncapped, ensuring that victims can still seek full restitution for these costs.

The modernization of MICRA is a response to longstanding criticisms that the original caps disproportionately affected those with catastrophic injuries but little to no income loss, such as children, retirees, and homemakers. By implementing a structured increase and allowing for the possibility of stacking caps, California aims to provide a fairer system for compensating all victims of medical malpractice.

Despite these changes, the debate over the fairness and effectiveness of damage caps in medical malpractice cases is likely to continue. Critics argue that any cap on non-economic damages arbitrarily limits compensation for suffering and pain, which are inherently subjective and vary greatly from one individual to another. Proponents, however, maintain that these caps are essential for controlling insurance costs and ensuring the availability of healthcare services.

As the effects of AB 35 unfold, the legal and medical communities will closely monitor its impact on malpractice litigation and insurance premiums. For now, California’s approach represents a significant step towards addressing the limitations of a decades-old system and adapting to the evolving needs of its citizens.