Capitol Alert: Darrell Steinberg's medical damages bill surfaces late in session

With just a few days remaining in the 2012 legislative session, Senate President Pro Tem Darrell Steinberg has filled in a shell bill aimed at overturning, or at least altering, a hotly contested 2011 state Supreme Court ruling on medical damages in personal injury cases.

The revised bill - backed by attorneys who specialize in such cases and opposed by business, medical and insurance groups - cleared the Assembly Judiciary Committee Tuesday on a party-line, 6-3 vote. It had earlier passed the Senate with a brief framework that Steinberg had promised would be fleshed out later.

Enacting the legislation, Senate Bill 1528, has been the highest priority of Consumer Attorneys of California this year.

Steinberg and other proponents insisted that the bill doesn't overturn the decision, Howell vs. Hamilton Meats, or a predecessor ruling on which it was based. But opponents told the committee that it would have that effect, and could also undermine the state's landmark law - signed by Gov. Jerry Brown during his first governorship in 1975 - that limits pain and suffering damages in medical malpractice cases to $250,000.

That suspicion fueled an outpouring of opposition from medical groups. "There's no problem that needs to be solved here," Kaiser Permanente lobbyist Teresa Stark told the committee. The personal injury lawyers have tried to change the pain and suffering limit, known as MICRA, on numerous occasions, but failed each time.

The bill's chief focus is the Howell case, in which the Supreme Court ruled that when an injured party's medical costs are covered by a negotiated insurance settlement, often a fraction of the original medical provider bill, the plaintiff cannot demand the larger total.

Insurers say the ruling saves them and their policyholders as much as $3 billion a year, but by limiting medical damages to actual payouts, it also reduces fees that contingency fee plaintiffs' attorneys can charge.

Ostensibly, SB 1528 doesn't overturn the Howell case, but settles what Steinberg and the lawyers say is an ambiguity in the ruling - its effect on plaintiffs covered by Medi-Cal and other managed care plans. Without clarifying legislation, Steinberg said, insurers "get away with" lower judgements. The bill would allow plaintiffs covered by managed care programs to recover full costs of care, rather than the negotiated lower amounts.