California MICRA, post-AB 35.

For forty-seven years, California's Medical Injury Compensation Reform Act — universally shortened to MICRA — capped non-economic damages in medical malpractice cases at $250,000. That figure was set in 1975, when a gallon of gas cost 57 cents and the median California home sold for $41,600. By 2022 the same $250,000 had lost roughly four-fifths of its purchasing power, and a generation of catastrophically injured patients had recovered ceiling awards that no longer reflected anything the original Legislature would have recognised as compensation.

MICRA was enacted in response to a perceived medical malpractice insurance crisis. Carriers had begun withdrawing from the California market, and Governor Jerry Brown signed AB 1XX in September 1975 as part of a special session package. The cap survived constitutional challenge in Fein v. Permanente Medical Group (1985) 38 Cal.3d 137, where the California Supreme Court held the limit did not violate equal protection or due process. From that point forward, MICRA was the immovable feature of every California medical malpractice analysis — feared by claimants, prized by carriers, and the explicit reason hundreds of meritorious low-economic-damage cases were never filed.

By the late 2010s, a coalition of trial lawyers and patient advocates had drafted a ballot initiative — the “Fairness for Injured Patients Act” — that would have removed the cap entirely and indexed it retroactively to inflation. Faced with the prospect of an uncapped post-initiative landscape, the California Medical Association, the hospital lobby, and the Consumer Attorneys of California negotiated a legislative compromise. AB 35, signed by Governor Newsom on May 23, 2022 and effective January 1, 2023, withdrew the initiative and rebuilt MICRA as a phased-cap regime.

The world before AB 35

Before January 2023, every California medical malpractice case operated under a single rule: regardless of the severity of the injury, the number of defendants, or whether the plaintiff was a child rendered quadriplegic at birth or an elderly patient killed by an overdose, non-economic damages could not exceed $250,000. Economic damages — medical bills, lost wages, future care — remained uncapped, but for many patients (children, retirees, homemakers) economic damages were modest and the non-economic figure was the only meaningful component.

The practical effect was to render dozens of categories of malpractice economically unviable to litigate. Defence costs in a contested medical case routinely exceed $200,000, and contingency-fee firms could not justify the workup of a case where the realistic ceiling was a quarter-million dollars. Birth injury, geriatric, and stay-at-home-parent cases were the most affected.

The cap also did not adjust for inflation. By 2022, $250,000 in 1975 dollars was worth roughly $1.4M in 2022 purchasing power — meaning the real value of the cap had collapsed by about 82%. California was an outlier even among cap states; most jurisdictions either had no cap at all, a higher cap, or an indexation mechanism.

What AB 35 actually changed

AB 35 amended Civil Code §3333.2 to replace the flat $250,000 ceiling with two parallel schedules — one for cases where the patient survives and one for wrongful death. Each schedule begins at a higher floor in 2023, climbs through annual statutory increments to 2033, and then pivots to a 2% annual CPI-style adjustment thereafter. The bill also created a structured per-defendant-category framework allowing plaintiffs to recover up to three separate caps in cases involving providers across institutional and individual lines.

The statute preserved the historic carve-outs for economic damages and punitive damages — both remain uncapped — and clarified that the cap applies after, not before, comparative fault reduction. AB 35 also modernised the periodic-payment provisions in CCP §667.7, raising the threshold above which structured payments may be ordered and giving plaintiffs more control over the discount rate.

Cap schedule

Multiple defendants and stacking

One of the least-discussed but most consequential features of AB 35 is the creation of category stacking. Pre-2023, a single $250,000 cap applied across all defendants combined — whether the plaintiff sued one physician or seven defendants spanning a hospital, a radiology group, and three individual doctors. AB 35 carved that single cap into up to three categories: one against any unaffiliated healthcare institution, one against unaffiliated healthcare providers, and one against providers and institutions that share affiliation with the first category.

In a fully diversified multi-defendant case, the practical ceiling on non-economic damages can therefore be three times the headline cap — meaning a 2026 wrongful death case with appropriate institutional and individual defendants can support up to $1.95M in non-economic damages, not $650,000. This restructuring may prove more valuable to high-severity plaintiffs than the headline cap increases themselves.

Exceptions and carve-outs

MICRA does not apply to elder abuse claims that satisfy the heightened standard under Welfare & Institutions Code §15657 — recklessness, oppression, fraud, or malice. The California Supreme Court confirmed in Delaney v. Baker (1999) 20 Cal.4th 23 that qualifying elder abuse falls outside the cap, which has long made elder abuse pleadings strategically valuable in nursing-home and skilled-nursing cases. Battery claims, intentional misconduct, and pure ordinary-negligence claims unrelated to professional medical judgment also fall outside MICRA.

The cap also does not apply to claims against non-healthcare-provider defendants — for example, a product-liability claim against a device manufacturer arising from the same incident — and does not bind federal claims (e.g., EMTALA claims litigated under federal substantive law).

Settlement and litigation leverage

The most visible effect of AB 35 in 2023 and 2024 was a tier of cases that simply began to be filed again. Birth injury, geriatric, and homemaker death cases that would have been declined under the pre-2023 cap now clear the economic threshold for contingency representation. Defence reserves on high-severity cases have approximately doubled, and aggregate settlement values in catastrophic single-defendant cases have moved roughly in line with the cap increase plus the increased risk premium from category stacking.

For lower-severity cases, the change is more modest: where pre-2023 settlements often anchored at the $250,000 ceiling, post-AB 35 settlements anchor at the prevailing year's cap and adjust downward for comparative fault and causation risk.

How California compares

California now sits in the middle of US damages-cap jurisdictions. Texas, by contrast, retains a hard $250,000 cap per individual provider with a $500,000 aggregate, none of which is indexed. Florida has no medical malpractice non-economic cap after the state Supreme Court struck down its version, though HB 837 (2023) reshaped Florida tort practice in other ways. Several states (Wisconsin, Maryland, Colorado) maintain caps with annual indexation similar to AB 35's post-2034 mechanism. For a comparator outside the US, see our explainer on the Canadian Andrews cap.

Frequently asked questions

Related

• California settlement-value reference
• Texas medical malpractice caps (§74.301)
• Florida HB 837 tort reform (2023)
• Andrews cap (Canada) — comparator

Sources

• California Civil Code §3333.2 (as amended by AB 35, 2022)
• California Code of Civil Procedure §667.7 (periodic payments, as amended)
• AB 35 (2022) — text and legislative history, California Legislative Information
• Fein v. Permanente Medical Group, 38 Cal.3d 137 (1985) — original MICRA constitutional challenge
• Delaney v. Baker, 20 Cal.4th 23 (1999) — elder abuse carve-out
• Welfare & Institutions Code §15657 — Elder Abuse Act heightened-pleading standard
• Consumer Attorneys of California — AB 35 implementation guidance
• California Medical Association — AB 35 summary and member guidance