LIMITS ON ATTORNEY CONTINGENCY FEES

MICRA Primer: The Cap on Contingency Fees

Of all the provisions of the Medical Injury Compensation Reform Act of 1975, only one has been legislatively modified: The limitation on the contingency fee that an attorney may earn representing a plaintiff in a medical malpractice case.

The so-called “Napkin Deal” (worked out at Sacramento’s Frank Fat’s restaurant among trial lawyers and tort reform advocates in 1987) raised the contingency fee scale to their current levels. The deal, ultimately approved by the Legislature, was given in exchange for higher legal thresholds for seeking punitive damages against a health care provider.

Under Business and Profession Code Section 6146, a contract for a contingency fee to represent any person seeking damages against a health care provider may collect 40 percent of the first $50,000 recovered. The scale then allows collection of 33 percent of the next $50,000 recovered, 25 percent of the next $500,000, and 15 percent of the next $600,000.

The trial lawyers took a public relations hit in agreeing to modify MICRA only as it applies to their own fees. And though they aren’t about to make that mistake again, their recent arguments to raise MICRA’s limits on non-economic damages are still tied to their own income. That is, in the last public debate on MICRA, those who wish to modify its provisions said that in cases involving only non-economic damages, the $250,000 on pain-and-suffering awards is just too low to attract lawyers to take an injured party’s case.

But since 80 percent of all medical malpractice claims against doctors are closed with no payment, can one really argue that there are not enough suits against physicians? Under Section 6146, a lawyer can earn nearly $75,000 pursuing a case of wrongful death with damages capped $250,000. California law provides for methods for the winning claimant to recover substantial additional costs – such as paying for expert witnesses – if the defendant turns down a reasonable early offer to settle.

When MICRA again becomes a focus in the Legislature, don’t expect any overt efforts to increase the contingency fee schedule. But just as certainly, the motivation to change MICRA will still be about trial lawyer income.

For more information on MICRA, contact Gordon Ownby, CAP’s general counsel, at gownby@cap-mpt.com.