For nearly 50 years, California's Medical Injury Compensation Reform Act (MICRA) remained largely unchanged. Originally enacted in 1975, MICRA was designed to stabilize the healthcare system by limiting certain damages in medical malpractice lawsuits and helping keep malpractice insurance costs under control.
In 2022, California passed Assembly Bill 35 (AB 35), resulting in the most significant MICRA updates since the law was created. These changes officially took effect on January 1, 2023, and continue to gradually increase over the next decade.
If you are a physician, dentist, nurse practitioner, physician assistant, healthcare practice owner, or healthcare organization operating in California, understanding these changes is more important than ever.
What is MICRA?
MICRA stands for the Medical Injury Compensation Reform Act. It was originally passed in response to rising medical malpractice insurance costs that threatened access to healthcare throughout California.
One of the most well-known components of MICRA was the $250,000 cap on non-economic damages in medical malpractice cases. That cap remained unchanged for almost 50 years.
Non-economic damages include things such as:
Pain and suffering
Emotional distress
Loss of enjoyment of life
Disfigurement
Loss of companionship
It's important to note that MICRA has never capped economic damages, which include:
Medical expenses
Future medical care costs
Lost wages
Loss of future earning capacity
Why Did California Change MICRA?
Over time, many argued that the original $250,000 limit no longer reflected today's economic realities because it had never been adjusted for inflation.
After years of debate between patient advocacy groups, healthcare organizations, insurers, and physician groups, a compromise was reached through AB 35 to modernize the law while maintaining stability within California's healthcare system.
The New Non-Economic Damage Caps
Beginning January 1, 2023, the caps started increasing and will continue to rise annually through 2033 before transitioning to a 2% annual inflation adjustment.
Current Caps
For medical malpractice cases filed under the new law:
Cases NOT involving wrongful death:
2023: $350,000
2024: $390,000
2025: $430,000
2026: $470,000
The cap will eventually reach $750,000 by 2033.
Wrongful death cases:
2023: $500,000
2024: $550,000
2025: $600,000
2026: $650,000
The cap will eventually reach $1 million by 2033.
After 2033, both categories will increase annually by 2% to account for inflation.
A New Concept: Multiple Caps May Apply
Under the old MICRA law, there was one single cap regardless of how many defendants were involved.
The new law allows for separate caps in certain situations.
Potentially separate caps may apply to:
Healthcare providers
Healthcare institutions
Unaffiliated providers or institutions involved in separate negligent acts
This means overall exposure in some cases could be substantially higher than it was under the original MICRA rules.
Changes to Attorney Fees
AB 35 also changed contingency fee structures.
Previously, attorney fees were based solely on the amount recovered. The new law ties fee limits more closely to the stage of litigation at which a case resolves, whether through settlement, arbitration, or trial.
What Does This Mean for Healthcare Providers?
Healthcare professionals should expect that malpractice claims may become more expensive to defend and settle over time.
Potential impacts include:
Higher claim severity
As damage caps increase, the value of malpractice claims may rise.
Increased pressure on insurance premiums
Medical malpractice insurers will likely continue adjusting premiums to reflect increased exposure.
Greater emphasis on risk management
Healthcare organizations should proactively strengthen their risk management programs, including:
Improving clinical documentation
Standardizing informed consent procedures
Enhancing patient communication
Updating policies and procedures
Conducting regular staff training
Reviewing supervision protocols for advanced practice providers
Reevaluate your insurance coverage
Now is a good time to review:
Medical professional liability limits
Excess liability coverage
Corporate entity coverage
Tail coverage requirements
Coverage for employed and contracted practitioners
California's MICRA modernization represents one of the biggest shifts in healthcare liability in decades. While the law still provides important protections for healthcare providers, increased damage caps mean the financial stakes are higher than they were in the past.
Healthcare providers should view this as an opportunity to strengthen risk management practices and ensure their insurance programs adequately reflect today's evolving liability environment.
As malpractice exposures continue to change, being proactive—not reactive—can help protect both your practice and your patients.
