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What Is the New MICRA and What Does It Change?

TJ Payne - Jun 14, 2022

Click here for part one of this story: What is MICRA and How It’s Likely to Change

The MICRA reform conversation draws towards its conclusion following California’s governor Gavin Newsom’s May 23rd signing of Assembly Bill 35 (AB 35). While stakeholders on either side of the measure had initially pushed in either direction, the ratification of AB 35 marked a compromise that is due to keep both sides at bay for at least the next 10 years.

“…don’t panic… We’re going to continue insuring people,” says Gina Harris, claims executive for the Western region for ProAssurance. A sentiment echoed by Lucy Sam, a San Francisco-based regional vice president for underwriting also with ProAssurance.

“Having predictability and the fact that we can forecast from a carrier’s perspective, as well as from a consumer’s perspective is very important,” says Sam.

With AB 35 being signed into law it has displaced FIPA, a ballot-based measure that sought similar changes with more extreme results.

What Does AB 35 Change?

CaliforniaCapitol

California’s newly ratified Assembly Bill 35 is a legislative alternative to a ballot-based proposal for the overhauling of MICRA. MICRA has been criticized as outdated and in need of a financial overhaul for decades, with previous caps on payments being locked down since MICRA’s inception in 1975. Highlights of the modified MICRA law include:

  • Raised cap on pain and suffering awards to $350,000
    • Increase over 10 years to $750,000
  • In cases involving a patient’s death, the cap on pain and suffering awards would increase to $500,000
    • Increase to $1 million over the next decade
  • After 10 years the cap would be adjusted annually by a 2% cost of living increase

What is FIPA?

Ballot

FIPA was another attempt at overhauling the Californian medical malpractice system, though FIPA planned to operate at a ballot-measure level rather than at the legislative level. Critics of FIPA warned that besides the fear that there would be no legislative recourse to resolve issues stemming from FIPA, the immediate effects would make the medical industry in California untenable, requiring a medical liability insurance price “increase of 80 to 120 percent, almost overnight.”

The Doctors Company (TDC), noted that FIPA:

  • Effectively eliminated the cap on noneconomic damages.
  • Abolished periodic payments.
  • Required defendants to pay unlimited attorneys’ fees for successful plaintiffs (in addition to any indemnity payment).
  • Extended the statute of limitations.
  • Allowed double recovery of medical damages.
  • Removed all limits on attorneys’ contingency fees
  • Been retroactive, meaning it would have applied to the more than 12,000 open MPL claims in California.

 

Why Does Maintaining MICRA Matter?

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Proponents of MICRA argue that it created a system where healthcare providers, hospitals, and clinics could all afford to be open without fear that a single claim could tank their business, meanwhile keeping their insurance rates in a sustainable range. HIV/AIDS specialty services. They feel that FIPA and the outright repealing of MICRA would increase medical costs and reduce access to services for needy and at-risk populations.

“MICRA is especially critical in protecting access to specialty and high-risk services, including:

  • OB/GYN and other women’s healthcare.
  • Rural healthcare.
  • Low income healthcare services.
  • Community clinics.
  • HIV/AIDS specialty services. " - TDC

Click here for full statements by TDC and ProAssurance

 


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