California SB 447 and MICRA Reform: Navigating the New Damages Framework in Personal Injury Cases
For four decades, California's Medical Injury Compensation Reform Act capped non-economic damages in medical malpractice cases at $250,000 — a figure set in 1975 that had never been adjusted for inflation. Simultaneously, California Code of Civil Procedure section 3291, which allowed prejudgment interest in personal injury cases, sat dormant for years without a corresponding mechanism that helped plaintiffs actually recover that interest before judgment. Two reforms passed in quick succession have substantially altered both frameworks.
SB 447, signed in October 2021 and effective January 1, 2022, amended CCP section 998 to allow plaintiffs in personal injury and wrongful death cases to recover prejudgment interest at 10% per year from the date of the defendant's receipt of a section 998 offer, provided the plaintiff ultimately obtains a more favorable judgment. The practical effect is significant: a case that takes three years from offer to verdict can now generate a prejudgment interest award that materially increases the defendant's total exposure. Defense counsel who declined section 998 offers on strategic grounds during the pre-SB 447 era must now rerun those calculations, because the carrying cost of rejecting a reasonable offer has gone up considerably.
The MICRA reform, passed as AB 35 and signed in May 2022, raised the non-economic damages cap in stages. For cases arising after January 1, 2023, the cap increased immediately to $350,000 (or $500,000 in wrongful death cases involving a health care provider), with scheduled annual increases of $40,000 until the cap reaches $750,000 (or $1,000,000 for wrongful death). Cases involving injuries that occurred before the phased dates remain subject to the prior $250,000 limit.
The interaction between these two statutes creates nuanced valuation problems. A medical malpractice case that also involves non-medical defendants — say, a products liability claim against a device manufacturer joined with a malpractice claim against a surgeon — may have different damages caps applying to different defendants. Defense counsel for the non-healthcare defendant may face the full common-law damages exposure, while the physician defendant benefits from the phased MICRA cap. A global settlement demand must account for these asymmetric exposure profiles.
Prejudgment interest under SB 447 applies to all personal injury and wrongful death actions — including medical malpractice — but there is an open question whether the statutory interest rate interacts with the economic damages calculation in a way that partially offsets the benefit of the raised MICRA cap. Courts have not yet fully resolved how to instruct juries on the relationship between future economic damages (which are often discounted to present value) and the prejudgment interest award (which runs forward from offer date). Practitioners should expect trial court variation until appellate guidance clarifies the framework.
From a practical standpoint, plaintiffs' counsel in malpractice cases should issue early and well-documented section 998 offers to start the prejudgment interest clock. Defense counsel should carefully evaluate their clients' exposure timeline — a case with a strong damages profile that lingers in litigation generates compounding interest costs that can exceed the value of discovery advantages gained by delay. The era of running out the clock as a defense strategy in California personal injury cases has become considerably more expensive.