California Malpractice Cap Generates Big Spending

Bob Pack wanted to go after the HMO doctors for recklessly prescribing painkillers to a drug-abusing nanny who ran over his 10-year-old son and 7-year-old daughter as they were heading for ice cream one early fall evening in 2003.

But under California’s 1970s-era medical malpractice law there was a $250,000 cap on pain and suffering. Instead of pursuing a case because of the cap, he settled so he could care for his wife, who lost the twins she was carrying in the crash.

“It would have been too difficult to tackle a private trial,” he said.

A November ballot initiative named after his children — Troy and Alana — seeks to raise the cap to $1.1 million. The campaign has prompted a ferocious fight between doctors and attorneys over the rights of injured patients with roughly $66 million raised so far in one of the state’s more expensive ballot initiatives.

The campaign, with spending totals rivalling some of the most competitive U.S. Senate races this year, underscores the effect that reforms passed in California have on the rest of the nation. The 1975 malpractice law was the first in the nation, paved the way for roughly 30 states to adopt some limits on medical malpractice payouts and used as a template for national proposals.

Nearly $57 million has been raised by Proposition 46 opponents, while backers have raised at least $9.1 million, as of Wednesday.

Trial lawyers and patient advocates say the malpractice law is long past due for an update. They say victims of medical negligence have trouble finding lawyers willing to take their cases and those who do discover that California has one of the nation’s most restrictive payouts.

Doctors, hospitals and medical liability insurers say raising the cap would drive up medical costs, force doctors out of state and reduce access to medical care. They say it would add uncertainty to the health care system.

Gov. Jerry Brown signed the bill that created the cap during his first term in office. It was a time of skyrocketing malpractice insurance costs that forced physicians to retire early or leave California.

The law made California rates among the lowest in the nation today. According to the California Medical Association, the average doctor in the state paid $26,511 last year in premiums compared with $99,290 in Connecticut and $137,412 in New York, two states without caps.

Under Proposition 46, the new limit would raise the cap to the amount that it would have been if it kept pace with inflation and would make future annual adjustments. The measure also requires doctors to submit to random drug and alcohol tests and require doctors to check a statewide database before prescribing drugs in an attempt to curb pill shopping.

President George W. Bush proposed a national cap of $250,000 in 2005 to stop huge damage awards as a way to reduce overall health care spending. Democrats said ceilings would simply shield bad doctors.

In 2009, the Congressional Budget Office concluded that limiting liability would lead to savings of 0.5 percent to 1 percent on health care spending, a negligible amount because so many states already have caps.

In California, the nonpartisan Legislative Analyst’s Office projects that Proposition 46 would increase overall health care spending by 0.1 percent to 0.5 percent if voters approve it Nov. 4.

Thanks to JUDY LIN Associated Press