Cover memo for Senate Bill 193, December 9, 2003

2004 Legislative Initiatives: Cover Memo with Draft Bill 12/10/03 Medical Malpractice (Ken Masters, Don Hogan) Bill Status Today the Medical Malpractice Coalition had a press conference to announce their bill. We do not yet have their final draft, but have seen preliminary drafts. Some of the issues raised are: (1) Is the proposed $350,000 noneconomic damages cap too low; . (2) Should there be limits on lawyer’s contingency fees? If so, are the limits proposed in the bill taken directly from the California law enacted nearly 30 years ago and unchanged since, too low? (3) There is no change of venue provision because of the political issues raised. Should there be a change of venue provision? (4) There is no requirement of mediation because many courts are requiring this now, fear of increasing costs, and the ability to require this contractually. Experience at Johns Hoplcins Hospital shows that early mediation is an effective tool in resolving cases. Further, emergency room patients are not subject to the contractual mediation provisions. Also the court required mediation comes later in the process, after the expenses of discovery have been incurred. Should there be a requirement for mediation early in the process? Elements of the Legislation (1) Lowers damages cap from $635,000 to $350,000 and also eliminate annual $15,000 escalator effective June 1 , 2004; (2) Limits total noneconomic damages in wrongful death cases to the amount of the cap. Today with more than one plaintiff, total recovery can be for two and one-half times the amount of the cap, currently nearly $1.6 million; (3) Limits past medical expenses to the amount actually paid, not the amount billed; (4) Limits future medical payments to amount allowed for Medicare reimbursement, adjusted for inflation; (5) Lost future earnings must be based on the amount earned less taxes to be paid; (6) Future economic damages over $100,000 must be paid by periodic payments; (7) Periodic payments can be secured by purchase of an annuity from a well-rated insurance company, with provisions for the security of the annuity for the plaintiff; (8) Limits on attorney contingency fees: (a) 40% of the first $50,000; (b) 33 1/3% of the next $50,000; (c) 25% of the next $500,000; and (d) 15% of any amount over $600,000. (9) Attorney fees for awards subject to periodic payments are payable when the periodic payments are made; and (10) Attorney fee splitting is only allowed when more than one attorney actually works on a case, and subject to filings with the Health Claims Arbitration Office. Violating attorneys are subject to court disciplinary proceedings.