California’s Medical Malpractice History

Before the Medical Injury Compensation Reform Act of 1975 (MICRA), California faced a medical malpractice crisis. The crisis arose when juries began awarding extreme financial compensation causing medical malpractice premiums to skyrocket more than 300%. MICRA placed a $250,000 cap on non-economic damages and did not cap damages for lost wages. In 1999, a California bill sought to increase the $250,000 cap to reflect the cost of living. In order to maintain the current cap in 1975 dollars, the cap would increase to $753,000 by the year 2000. However, the bill was not passed and the current cap on non-economic damages remains at $250,000.

Since MICRA was established, California has become one of the most stable medical malpractice markets in the country. MICRA has served as the national model for state and federal liability reform efforts.

California Medical Malpractice Summary

Claims made policies are the most common policy type in California and have a maximum maturation length of 5-6 years. Claims made coverage provides coverage for claims that arise while the policy is in effect if the insured had coverage at the time of the incident. The typical limits of liability in this state are $1,000,000 per occurrence with a $3,000,000 aggregate limit. Most hospitals require their doctors to carry these same limits of liability.

Many factors are taken into consideration when determining which carrier to choose. Such factors include, AM Best rating, the year the company was founded, coverage trigger, and free tail provisions. There are three types of insurance carriers in the state; they include: Stated Admitted Carriers, Surplus Lines Carriers and Risk Retention Groups. Over the past few years, fewer claims have been filed allowing some carriers to give out dividends and reimbursements to their insured.

California Insurance Companies:

• Norcal Mutual Insurance Company
• The Doctors Company
• Medical Protective Company
• Medicus Insurance Company