SACRAMENTO, Calif. (Legal Newsline)- As congressional lawmakers hammer out legislation to overhaul the U.S. health care system, they ought to look to California's landmark medical malpractice law as a successful model for cutting unnecessary heath care costs, experts told Legal Newsline.

The 34-year-old California law -- the Medical Injury Compensation Reform Act of 1975 -- caps non-economic damages in medical malpractice cases at $250,000. The law also puts limits on attorney contingency fees and provides for periodic payments of future damages.

"California is the perfect model for federal medical malpractice reform," said Lisa Maas, executive director of Californians Allied for Patient Protection, which supports keeping the current cap in place. "MICRA is considered the gold standard in terms of what other states look to for in tort reform in the medical liability area."

The state's trial lawyers over the years have led a bevy of unsuccessful legal challenges against the law, which Maas credited with keeping medical malpractice insurance premiums for doctors in California lower than in many states without liability caps, including New York.

"Every element of MICRA has been found to be constitutional in California," Maas said. "It works: it protects access to health care, it makes sure hospitals and clinics can stay open and doctors, nurses and other health care providers continue to practice."

MICRA, as the law is frequently called, was born out of a special legislative session called by then-Gov. Jerry Brown, currently the state's Democratic attorney general. The session was aimed at skyrocketing medical liability costs that were driving physicians from the Golden State.

Legal reformers and industry groups credit the long-standing law for keeping doctors in high risk specialties such as obstetrics and neurosurgery in California, reducing insurance costs and preventing runaway damage awards.

"It is definitely holding down (health care) costs in California compared to other states," said John Sullivan, executive director of the Civil Justice Association of California, the state's leading tort reform group.

"It would make sense" for Congress to enact MICRA-like legislation "as long as it does not disrupt the elements of MICRA that exist in this state or in states that have their own versions," Sullivan said.

Critics of the law, which withstood legal scrutiny as recently as this year, say the $250,000 cap has not been adjusted for inflation since it was enacted more than three decades ago.

In August, the California Supreme Court declined to hear a MICRA challenge. James Van Buren alleged in a Merced County case that the law violates his constitutional rights because, among other things, the $250,000 cap set in 1975 does not have the same buying power today as it did then.

"The law is not a carte blanche, get-out-of-jail free card for doctors," said Andrew LaMar, a spokesman for the California Medical Association, which represents physicians. While MICRA restricts non-economic damage awards, there are unlimited awards for lost wages and medical costs.

"For that the sky is the limit," LaMar said. "Physicians are not getting a free ride. If someone makes an awful mistake ... someone has the right to sue."

A 2004 study by the Rand Institute for Civil Justice found that damage awards were 15 percent less than they would have been without the award caps, while attorney's fees were slashed by 60 percent. The study also noted that the law reduced med-mal defendants' overall liabilities by 30 percent.

Californians Allied for Patient Protection cites a study that increasing the damage award cap to $500,000 for such things as pain, suffering, emotional distress, or mental anguish would increase health care costs in California by nearly $8 billion per year.

"In a time in California when we are looking to cut costs and we're seeing cuts to education and social services, MICRA is one of those pieces of legislation that works," Maas said.

On Tuesday, the U.S. Senate Finance Committee approved an $829 billion plan that requires every American to have health insurance.

The plan is one of five health care overhaul proposals working its way through Congress. None of the Democrat-backed measures contain tort reforms.

The Senate Finance Committee plan would, among other things, expand Medicaid, create a new health insurance exchange and provide tax credits to help low- and middle-income earners to purchase health plans. The plan would also bar insurers from charging more or denying coverage because of pre-existing conditions or dropping coverage when someone becomes seriously ill.

Federal budget officials say the plan would reduce the federal deficit by $81 billion by reducing federal health care spending and by raising $121 billion in taxes on insurers, drug companies and medical device companies.

Jay Timmons, executive vice president of the National Association of Manufacturers, said his trade group is "disappointed" that the federal bill does not contain medical malpractice reforms.

"We are disappointed that the bill does not address the costly issue of 'defensive medicine' through medical malpractice reform in any meaningful way," he said in a statement Tuesday.

The director of the nonpartisan Congressional Budget Office, Douglas Elmendorf, said in a letter to members of the Senate Finance Committee last week that legal reforms would save federal taxpayers billions of dollars annually.

He estimated that enacting a $250,000 cap on damages for pain and suffering and a $500,000 cap on punitive damages and restricting the statute of limitations on malpractice claims would save taxpayers about $54 billion over the next decade.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.