Trial lawyers and their allies filed a proposed ballot measure with the State Attorney General’s office on July 24, 2013: (1) seeking to raise the cap on non-economic damages awards in medical malpractice cases in California; (2) requiring both random and mandatory drug testing of physicians; and (3) imposing a mandatory duty on health care providers to report to the Medical Board: (a) any physician who appears to have been impaired by drugs or alcohol while on duty; and (b) any physician who appears to have failed to follow the appropriate standard of care where there was an “adverse event.”

The initiative, entitled “The Troy and Alana Pack Patient Safety Act of 2014,” will make it more lucrative for plaintiff’s lawyers to file lawsuits against health care providers. The initiative would change California’s landmark Medical Injury Compensation Reform Act (MICRA) by increasing the cap on non-economic damages from the current $250,000 set in 1975 to nearly $1.2 million. It would also require annual adjustments for inflation based on the Consumer Price Index. The initiative proposes to amend Section 3333.2 of the California Civil Code, and the cap lift would apply to any non-economic damages award “not…resolved by way of a final settlement, judgment, or arbitration award as of January 1, 2015.”

Among those advocating for the change are the Consumer Attorneys of California, Consumer Watchdog of California, Justice for Patients, and NetZero co-founder and internet entrepreneur Bob Pack of Danville, California. Mr. Pack’s minor children, Troy and Alana, were struck and killed while walking on a sidewalk by a driver who, it was alleged, was overmedicated by prescription drugs. Carmen Pack, their mother, was injured and lost unborn twins. The driver was accused of being a doctor-shopping drug addict. She was eventually convicted of second-degree murder and imprisoned for 30 years to life.

The initiative is opposed by Californians Allied for Patient Protection. In 2010 CAPP released a study showing that doubling the cap to $500,000 would add a $9.5 billion burden to the healthcare system. Lisa Maas of CAPP said the group is in the process of revising its estimate based on the newly proposed legislation. Mass said, “It’s fair to say that $9.5 billion number is going to go up when we crunch the numbers some more.” The California Medical Association has spoken out against raising the MICRA cap, President Dr. Paul Phinney stating that raising the MICRA cap would increase lawyer fees without improving quality of services. The CMA is in the process of analyzing the remainder of the initiative. The Civil Justice Associate of California spokesperson Todd Roberson said that the timing couldn’t be worse, as the healthcare system is struggling with implementing major changes required by the Affordable Care Act.

California Assemblyman Barry Keene, who originally sponsored MICRA, now deems the law “oppressive” and in need of revision. Because the cap was not inflation indexed, the original $250,000 limit on malpractice awards for pain and suffering, mental anguish and quality of life is reportedly equivalent to just $58,000 in 2013 dollars.

MICRA, in its present form, provides the following:

• Unlimited economic compensation for damages such as present and future medical costs, lost wages, future earnings, custodial care and rehabilitation;
• Limits on attorney contingency fees on a sliding scale;
• Up to $250,000 to be awarded for non-economic damages;
• Binding arbitration to settle disputes;
• A requirement of advance notice of claims;
• A statute of limitations on claims;
• Introduction of evidence of collateral source payments (such as from personal health insurance) to be considered in determining damages, to help prevent a double recovery; and
• Periodic payments for future damages.

The Troy and Alana Pack Patient Safety Act would include the following changes to California law:

• Mandatory random drug and alcohol testing for physicians:
  • on a random basis by a hospital for any physician with privileges
  • on a mandatory basis following an adverse event:
    • for any physician who treated or prescribed for the patient in the preceding 24 hours
    • for any physician who was providing any care or treatment for the patient during the event
  • (new Business & Professions Code, Section 2350.25, which has been referred to by its detractors as the “Pee in a Cup Act”);
• Mandatory use by all licensed health care providers of the electronic Controlled Substance Utilization Review and Evaluation System (C.U.R.E.S) database, prior to prescribing or dispensing a Schedule II or Schedule III controlled substance to a patient for the first time or, when the patient has an existing prescription for such medication, the health care provider “shall not” prescribe any additional controlled substances until the provider determines that there is a “legitimate need” (new Health and Safety Code, Section 11165.4;
• Requiring every health care provider having “any information known to him or her which appears to show that any physician may be or has been impaired by drugs or alcohol while on duty, or that any physician who was responsible for the care and treatment of a patient during an adverse event failed to follow the appropriate standard of care” to report to the Medical Board (new Business & Professions Code, Section 2350.20); and
• Raising the $250,00 cap on general damages to approximately $1.2 million with annual increases based on the CPI.

The “Findings and Declarations” provisions of the proposed Act purport to state that “at least one in ten physicians suffers from drug or alcohol abuse during his or her career” and that “one-third of all hospital admissions experience a medical error—and physician impairment may be a contributor to such patient harm.” The proposed Act also decries the fact that no law exists requiring health care providers to report their colleagues for suspected medical negligence.

The Act would also carry a number of penalties and evidentiary presumptions in civil proceedings for violation of the Act. Failure to submit to drug/alcohol testing “within 12 hours after the physician learns of the adverse event” may be cause for suspension of the physician’s license. If the Medical Board finds that the physician was impaired during an adverse event, the Board shall inform the patient (or the patient’s family if the patient is deceased) of its determination. Professional negligence would be presumed against any physician who either tested positive, or who refused or failed to be tested (new California Civil Code, Section 1714.85).Failure to use the CURES database as required “shall be cause for disciplinary action by the health care practitioner’s licensing board.”

The costs of the drug and alcohol test are to be borne by the individual physician, and an annual fee will be imposed on all physicians to pay for program enforcement.

Mark Kiefer is a partner in the Los Angeles office and a member of the firm’s healthcare practice group.