6 Findings on Medical Malpractice Caps

A new report has found medical malpractice damages caps in place across the country help control healthcare costs, and raising the medical malpractice cap in California would significantly raise the price of healthcare within the state.

The report was written by two directors of Emeryville, Calif.-based Berkley Research Group: Bill Hamm, PhD and Paul Wazzan, PhD.

The report made the following findings concerning medical malpractice caps across the nation:

1. Medical malpractice damages caps reduce liability insurance costs. The researchers determined medical malpractice damages caps cause medical liability insurance premiums to be lower. This occurs because when damages caps are in place there is not as much of an incentive for individuals and their attorneys to file meritless lawsuits. In addition, when damages caps are in place the average medical malpractice award is lower which reduces the insurer's costs and keeps medical malpractice premiums lower.  

2. Medical malpractice damages caps reduce healthcare costs. When noneconomic damages caps are in place, physicians do not have to practice defensive medicine and order tests that are medically unnecessary just to make them less vulnerable to medical malpractice lawsuits. Because fewer tests are performed on patients, healthcare costs are lower.

The California Medical Injury Compensation Reform Act places a $250,000 cap on noneconomic damages in medical malpractice cases. A voter initiative has qualified for the November ballot in California, which may lead to the cap being raised to $1.1 million.

The report made the following findings concerning California's current cap on noneconomic damages in medical malpractice cases and the effects of raising the cap:

1. No reduction in access to courts. Supporters of the voter initiative to raise the damages cap in California have stated the cap prevents access to the court system for many individuals with medical malpractice claims because attorneys will not take on their cases with the small monetary incentive involved. The researchers found no evidence the $250,000 damages cap has prevented individuals with meritorious claims from accessing the court system.

 2. Awards have increased. Supporters of the voter initiative to raise the damages cap in California have stated the cap needs to be raised to adjust for inflation. The researchers found damages awards in medical malpractice cases in California have increased at a rate that is more than two times the rate of inflation since 1975 when the $250,000 damages cap was adopted by the state.  

3. Costs would increase. The researchers determined if the damages cap in California is raised to $1.1 million it would significantly increase the price of healthcare within the state because there will be more lawsuits filed with larger awards. Increasing the cap would also cause healthcare providers to pay more to provide their services while not improving medical outcomes. 

4. Reduction in access to care. The researchers found raising the noneconomic damages cap in California would reduce patients' access to healthcare within the state. Raising the cap would make healthcare and health insurance more expensive, which would prevent many individuals from being able to afford the care they need. Raising the cap would also reduce the number of physicians available to provide care and physicians who are available will be discouraged from performing high-risk procedures for fear of exposing themselves to medical malpractice liability.

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