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Does tort reform protect groups, too?


Two California cases could redefine the term "health care provider" and have a troubling effect on malpractice premiums and access to care.


Does tort reform protect groups, too?

Two California cases could have a troubling effect on malpractice premiums and access to care.

By Berkeley Rice
Senior Editor

California's Medical Injury Compensation Reform Act of 1975 (MICRA) caps non-economic damages—typically awarded for "pain and suffering"—at $250,000. That's one reason California has the country's lowest median malpractice payment ($41,500), and why the AMA and President Bush want the rest of the country to adopt similar tort reform proposals. It's also one reason why California's trial lawyers have been trying for years to breach MICRA's protective wall—without success so far.

But two pending malpractice cases present a new challenge to MICRA. Both resulted in large verdicts against HealthCare Partners Medical Group, which employs more than 360 physicians practicing at 35 different locations throughout Los Angeles County. Both suits originally named physicians employed by HPMG as well, although some were later dropped as defendants.

One case (Allen v. Los Alamitos Medical Center) involved failure to diagnose an infection that led to the patient's death. The jury awarded the deceased's family about $1.5 million, including $800,000 in noneconomic damages. In the other case (Lathrop v. HealthCare Partners Medical Group), a woman sued for failure to diagnose breast cancer, and was awarded $2.5 million, including $2.1 million for past and future pain and suffering, of which HPMG was liable for 58 percent.

Normally such awards would be reduced to the $250,000 cap under MICRA. But the plaintiffs' attorneys argue that MICRA applies to individual health care providers, not to large corporate entities. The trial judges in both cases ruled that HPMG hadn't established that it qualified as a health care provider under MICRA. HPMG has appealed those rulings, and the appellate court is expected to decide the issue some time in 2003.

In a brief filed in support of HPMG, the California Medical Association argues that the state legislature intended that MICRA would protect physician groups as well as individual doctors. An appellate ruling to the contrary, the CMA argues, would result in a "dramatic" increase in liability premiums for medical groups, which currently provide care for nearly 80 percent of the state's managed care patients. Such an increase would have a "devastating" effect on the many groups already in financial trouble.

"If these lower court decisions are upheld," says Susan Penney, CMA legal counsel, "it would absolutely destroy our tort reform law, since most physicians now practice in some sort of group setting, There's no reason why liability for a group should be larger than that for individual physicians, particularly when the group's liability is entirely derived from the actions of its physicians."

Attorneys for the plaintiffs argue that huge groups like HPMG should not be protected by MICRA because they're corporate entities, not licensed health care providers. "The average physician doesn't need to worry about this decision," says Jeffrey Haas, who represents the plaintiff Lathrop. "HealthCare Partners is not a three-doctor clinic. It's a very large medical conglomerate." Steven Heimberg, who represents the Allen family, adds: "MICRA was meant to protect those who deliver medical care, not the big corporations that arrange for it and act as middlemen between the doctors and the HMOs."


Berkeley Rice. Does tort reform protect groups, too?. Medical Economics Dec. 9, 2002;79:62.

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