One of the first collective actions taken by California anesthesiologists and surgeons as a response to the COVID-19 pandemic was to cease elective surgeries and procedures. However, this was not the first time that such an historic shutdown had occurred in response to a crisis. In 1975, California physicians had reacted similarly to the sudden, breathtaking escalation in the cost of medical liability insurance across the state.
Larry Sullivan, MD, future CSA President (1999) and ASA Director, was then meeting the challenges of his first year at a private practice group in San Jose. He had just finished anesthesiology residency at Stanford. What a shock it was to receive a letter one day from the Northern California Physicians Council, which represented five NorCal county medical associations, and had been attempting to negotiate with the Travelers Indemnity Insurance Company. The letter informed Dr. Sullivan that his malpractice insurance would be increasing that year from $4,920 to $22,140!
The Travelers Company, which essentially monopolized malpractice underwriting in the region, was applying an unbelievable 350% premium increase to all its Northern California physicians over four practice “classes.” These tiers were based on the extent to which a practitioner’s income derived from surgery or anesthesia. Being in the highest class, anesthesiologists and all surgeons, including OB-GYN, were hit with the largest dollar increase.
At this time, California anesthesiologists typically earned somewhere around $50,000-$60,000, as the unit conversion value for billing was about $12. Thus, this additional cost of practice was inconceivable.
How did this become a sudden crisis in the spring and summer of 1975? What led medical malpractice insurance companies to issue such impossible rates? In Southern California, it was even announced that the existing policies of thousands of physicians would not be renewed.
The preceding decade had seen an escalating number of multimillion-dollar jury awards to medical malpractice plaintiffs for “pain and suffering” caused by alleged incidents. Unlike costs that could actually be calculated in damage awards—actual medical care, loss of earnings, and ongoing life assistance—“pain and suffering” was considered to be “non-economic damage,” without limits. Jury awards skyrocketed, and the number of lawyers specializing in medical malpractice law—now a highly lucrative field—grew dramatically.
Newspapers warned of the effects of this rising trend, with these headlines appearing in January and February of that year:
“New Bay Area Crisis in Medical Care: Doctors Might Halt Practice,” SF Chronicle
“Doctors Face Insurance Crisis-May Affect 8000 in Southland,” LA Times
“Insurance Rates Imperil Medical Care,” SJ Mercury News
In 1969, another future CSA President (1997), Ben Shwachman, MD, returned from service in Vietnam to practice in Los Angeles. He describes anesthesiology at the time as a modestly paid field that had trouble filling residency positions. It was not the esteemed and well-rewarded specialty that it has become in the decades since. As he recalls, during the 1960s, most of the country’s anesthesiologists were paying pennies a day for malpractice insurance. California, with rates of several hundred dollars per year, was considered an exorbitant outlier, but this was still affordable.
As jury awards began to balloon in the late 1960s and early 1970s, greatly outpacing the rate of national inflation, malpractice insurance premiums slowly grew into a major expense. This also drove a gradual increase in anesthesiologists’ fees, but to a far lesser extent. These diverging trajectories were aimed at an inevitable catastrophe. In 1975, the insurance industry, out of self-preservation, either withdrew from the California market, or priced coverage at stratospheric levels to protect its shareholders (but not its clients).
Organized medicine reacted by forming a Physicians Crisis Committee as an aggressive force to work with the California Medical Association (CMA) and the California Hospital Association (CHA) on an urgent solution. As the malpractice crisis continued to worsen, the state’s trial attorneys in Sacramento smothered any efforts to produce legislative reform.
California physicians, fearing financial ruin, were openly leaving the state or retiring from practice. Others decided to “go bare” by practicing without malpractice coverage. Not only was this considered ethically dubious, it also exposed associated colleagues and hospitals to collateral liability claims.
Based in San Francisco, Hugh Vincent, MD, was a nascent CMA leader who had yet to become a junior partner in his group. He remembers being caught up in the fear spreading rapidly through the medical profession. He and a few others began a crusade to energize doctors across the state to become impassioned advocates for legislative change. This was widely acknowledged to be the only viable solution.
These self-appointed crusaders traveled to Los Angeles, San Diego, and other cities to persuade often skeptical colleagues at medical association meetings. They descended on Sacramento to carry their message to elected representatives. They even sought the support of famous newspaper columnists Art Hoppe and Herb Caen, as well as imposing figures like Mayor Joe Alioto of San Francisco, who simply “wished them luck.”
Then, through the phenomenon of mass action, a dramatic show of solidarity unfolded. Anesthesiologists and surgeons across the state brought their struggle to public attention by refusing to perform elective surgeries until California’s elected officials addressed the crisis. As this collective (and not strictly legal!) action continued on for weeks, the CMA, which had initially been reluctant to get involved, organized an unprecedented public rally. On May 13, 1975, a vocal group of physicians and their supporters gathered at the Capitol to demand restorative action by the governor and legislature.
Anesthesiologists were at the forefront of this campaign to create tort reform laws, recalls Peter McDermott, MD (CSA President 1984; ASA President 1993). Dr. McDermott, who was then a partner in a small private practice in Ventura County, was among the physician demonstrators. He remembers “there was widespread support for doctors fighting against the damages to be imposed upon the public generally and the patients who would be victims of a system of benefit to lawyers. The leadership role anesthesiologists and CSA played in sacrificing time and money and participating in the efforts enhanced their status and reputation.”
Governor Edmund G. “Jerry” Brown, then in his first year in office, initially dismissed the concerns of these “rich doctors.” Eventually, however, he began to understand the enormous burden on the state’s physicians. On May 16, he called for a special session of the legislature to address the malpractice insurance crisis.
In those last weeks of May, the legislative machinery of Sacramento was in high gear, focused on this single issue. The backroom deal-making that eventually produced the Medical Injury Compensation Reform Act (MICRA) would become legendary. Opponents from the trial lawyers’ lobby vigorously questioned the constitutionality of many of the bill’s provisions, especially the $250,000 limit on non-economic damages. Although the young governor was under tremendous pressure to veto the legislation, he signed it into law on September 23, 1975, and has proudly cited this achievement ever since.
Over the past 45 years, MICRA has frequently been described in national discussions as a model of tort reform, and as a fair and effective example of medical cost containment. It has withstood recurrent judicial challenges and lawyer lobbying efforts, including public ballot initiatives, to overturn or weaken its provisions.
As with many moments of crisis, these events of 1975 have had lasting and profound effects, beyond changes in the law and in the nature of the medical liability insurance industry in California. The fight for MICRA transformed the physician’s role in society, greatly expanding patient and public advocacy. For those courageous anesthesiologists who championed these reforms, it also set them on a lifelong path as leaders of our profession.