AB35 is compromise legislation negotiated by numerous stakeholders concerned with updating MICRA while preserving its salutary purposes. It has just been enacted and will take effect in 2023. AB35 significantly changes the MICRA cap on noneconomic damages, updates the contingency fee statute, and makes a minor change to the periodic payments statutes. AB35 does not affect the MICRA statutes concerning collateral source payments, the statute of limitations, arbitration, and notice of intent to sue. The new law also provides further privilege protections for benevolent statements (such as pre-litigation expressions of sympathy, regret, and acceptance of fault) by healthcare providers.
Beginning Jan. 1, 2023, there will be different MICRA caps on noneconomic damages for personal injury and wrongful death cases. The personal injury cap will start at $350,000, increase by $40,000 per year for 10 years, and then increase 2% per year thereafter unless the statute is further amended. The wrongful death cap will start at $500,000, increase by $50,000 per year for 10 years, and then increase 2% per year thereafter.
For the first time, there may be multiple noneconomic damages caps applied in a single case. All healthcare providers share one cap, affiliated healthcare institutions share another cap, and unaffiliated institutions have a separate cap. (For example, where a patient sues multiple surgeons, a hospital and its nurses, and a skilled nursing facility (SNF) and its nurses, the surgeons share one “provider cap”, the hospital and its nurses share one “institution cap,” and the SNF and its nurses–if unaffiliated with the surgeons or the hospital–share a third cap.)
The threshold for requiring periodic payments of future damages increases from $50,000 to $250,000 under the new statute.
AB35 also provides for contingency attorney fees of 25% of the recovery for cases that settle before a civil complaint is filed or arbitration is demanded, and 33% of the recovery after a complaint or arbitration demand is filed. The new statute allows the court to grant a higher contingency fee upon a showing of good cause.
Horvitz & Levy’s MICRA Manual will be updated to reflect these historic changes. A mid-year update is planned for release in June of this year.
