It’s been called the Sacramento equivalent of the fall of the Berlin Wall. Or a peace pact in the Middle East.
Longtime enemies have suddenly brokered a historic compromise on the amount of money medical malpractice victims can receive for pain and suffering.
On most public policies, California is politically progressive. But on medical malpractice payouts, no state has been more regressive in nearly half a century.
We also see a rare example of how a governor and legislature can reach overwhelming bipartisan agreement on a contentious issue despite opposing sides being locked in their positions for decades.
The key to ending this war was the desire and ability of combative private interests to lay down their arms and negotiate. Virtually nothing of significance is done in the State Capitol without willing powerful interests – euphemistically called “stakeholders”.
Everyone wins this time, especially victims of malpractice.
California voters also benefit because they won’t be bombarded with a barrage of more than $100 million worth of spurious TV ads for and against a reform initiative backed by trial lawyers during the November ballot.
The initiative will be withdrawn if Governor Gavin Newsom signs the compromise legislation before the June 28 deadline. He will, and probably much sooner. The governor spurred interest to reach an agreement. The measure, AB 35, is speeding through the legislature.
On the one hand, litigators and consumer rights defenders. On the other, health care providers and insurers.
This war has been raging for 47 years, ever since the lawyers’ lobby politically wronged itself by not accepting a bargain offered by the sponsors of pain and suffering legislation. The lawyers miscalculated.
By 1975, doctors were threatening to retire or flee the state, and clinics were on the verge of closing because malpractice awards and insurance premiums were rising. New Gov. Jerry Brown and the Democratic-controlled legislature overreacted by capping pain and suffering awards at $250,000.
Trial attorneys erred in not seizing an offer to index the cap with annual inflation adjustments. The attorneys reasoned that if the cap was permanently set at just $250,000, Brown would veto the measure and, if not, the state Supreme Court would strike it down. But Brown signed it, and the court left the cap alone.
If there had been surges in inflation, that cap would be around $1.3 million today.
Victims have struggled to find a lawyer willing to handle a case with such a low maximum award. A winning lawyer can get about a third of the judgment. And after paying expert witnesses and other costs, a victim can win around $100,000 – for a lost limb, blindness or a deceased loved one. However, any actual economic loss is covered.
Lawyers fought back for decades without getting anything for the victims. In 1987, the legislature reaffirmed the cap but changed it to only slightly benefit lawyers. It was part of a legendary “napkin deal” – scribbled on a restaurant napkin by lawmakers and lobbyists.
In 2014, the lawyers failed miserably in their attempt to raise the cap to $1.1 million. They muddled the issue by trying to demand drug testing from hospital doctors. Voters rejected the initiative unbalancedly.
Both sides were arming themselves for another election battle this year, but neither wanted to spend the tens of millions needed. So they reasonably negotiated what they believe to be a lasting peace.
The deal is as follows: the ceiling will be raised gradually over 10 years, then indexed. The phasing-in was demanded by healthcare providers – especially clinics – to ensure they are not driven out of business by dramatic increases in rewards and bonuses.
In January, the cap will be raised to $350,000, then gradually increased to $750,000. If there is a wrongful death, the cap will initially be $500,000 and will increase to $1 million. Then there will be annual increases of 2%.
But lawyers and injured patients have won additional financial goals. They can collect separate maximums from two or three provider groups — up to $3 million in total for wrongful death.
During Thursday’s Senate debate, Judiciary Committee Chairman Tom Umberg (D-Santa Ana) claimed that the Legislature passes thousands of bills, but “only a handful” change things so significantly.
The measure went from 37 to 1.
It is unlikely that the deal would have gone through without some key players.
One was Nick Rowley, a wealthy lawyer from a rough rural background. Her newborn son died 14 years ago from alleged malpractice. He funded signature collection for the initiative with $7 million and was prepared to contribute an additional $40 million in the fall campaign.
“If we lost, I was just going to table another ballot measure,” Rowley told me.
This tenacity caught the attention of tired opponents.
Former state insurance commissioner Steve Poisner — a Republican while in office but now an independent — played a pivotal role. He wrote an opinion piece in December calling the cap a “gross injustice”.
Poisner phoned longtime friend Jim Brulte, a former head of Republican lawmakers and the state GOP, who is now a consultant. He asked her to help remove the clog. Brulte replied that he was on the other side advising medical providers.
But Brulte called a secret meeting with Poisner, Rowley and Dustin Corcoran, CEO of the California Medical Assn. It began weeks of intense negotiations quietly encouraged by Newsom.
“This deal wouldn’t have happened without the governor,” said Jamie Court, president of Consumer Watchdog, who has fought caps for years.
Nor would it have happened without a 2014 reform passed by the Legislative Assembly. The law allows initiatives to be withdrawn from a ballot if a compromise is negotiated and passed by lawmakers.
All of this shows what can be achieved when the only goal is good policy – not political gain.
Los Angeles Times