TORT REFORM TURNED UGLY: CALI CAP ON PAIN AND SUFFERING NOW BELOW $10,000

A few months ago, a woman contacted our law office to discuss a tragic accident involving the death of her seventy-five-year-old mother, the alleged victim of medical malpractice.

In California, victims of medical malpractice may recover compensatory and, in rare cases, punitive damages. Compensatory damages may be economic or non-economic damages. Economic damages include lost wages, medical expenses, and life care expenses. Non-economic damages are assessed for the injury itself, such as pain and suffering, physical impairment and disfigurement, reduced enjoyment of life due to disability or loss of a loved one, and emotional distress and embarrassment, among other things. Punitive damages are only awarded in the event of conduct committed that is “vile, contemptible, or despicable” to members of a normal society.

Based on the facts of the case, there were little or no economic damages – lost wages, medical bills, or future medical expenses. Although punitive damages were possible, they were not likely. Instead, it appeared that any recoverable damages would likely consist of non-economic damages only.

Unfortunately for the victim in this case, what we commonly refer to today as “Tort Reform” came to California in December of 1975, when the California Legislature enacted the Medical Injury Compensation Reform Act (MICRA). One of the primary components of MICRA was establishment of a $250,000 cap on non-economic damages, which the California Legislature deemed “fair” and “reasonable” at that time. This feature of MICRA was codified at California Civil Code Section 3333.2.

Shockingly, the California Legislature did not adjust the $250,000 cap for inflation. Therefore, 35 years later, the cap on non-economic damages remains $250,000. That begs the question: If $250,000 was “fair” and “reasonable” in 1975, then what would be “fair” and “reasonable” today? Obviously, everything we buy has dramatically increased in price in the last 35 years. Here are a few examples:

According to the United States Bureau of Labor and Statistics (BLS), based on the Consumer Price Index (CPI), $250,000 in December of 1975 equates to $1,020,475.97 in August of 2011, an increase of 408%. Accordingly, if the California Legislature had accounted for future inflation in the statutory cap, victims of medical malpractice would be entitled to recover over $1,000,000 in non-economic damages today. Instead, taking 35 years of inflation into account, the value of the statutory cap is worth only 24.5% of what it was worth in 1975 dollars. Stated another way, due to inflation, the value of the cap today is the equivalent of the California Legislature having passed a statutory cap of $59,370.10 in 2011.

Of course, the numbers above explain the value of the $250,000 cap on non-economic damages using the CPI formula used by the BLS today. However, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living. According to ShadowStats.com, if we use the CPI as calculated using the methodologies in place in 1975, $250,000 in December of 1975 equates to a cap of less than $10,000 today. That value is likely to decrease even more dramatically in the next several years as a result of the Federal Reserve Bank’s limitless willingness to inflate the currency supply in an endless money-printing experiment aimed at staving of monetary deflation. In short, Californians’ right to recover for non-economic damages suffered as a result of medical malpractice has inflated almost entirely away.

Next time you read about the wrongful death of a fellow Californian like the woman in this case, think about what her life was worth. To her family and friends? Priceless. To the California Legislature? Less than $10,000.

California should amend MICRA to account for inflation.