For nearly fifty years, Californians harmed by medical negligence faced one of the most restrictive damage limits in the country. On January 1, 2023, that changed. Assembly Bill 35 (Stats. 2022, ch. 17) significantly updated the Medical Injury Compensation Reform Act of 1975, commonly known as MICRA, increasing the amount injured patients and their families can recover. If you or a loved one has been harmed by a health care provider, here is what the reform means and how it may affect your case.

The Old Rule: A $250,000 Cap That Never Changed

When MICRA was enacted in 1975, it limited recovery of non-economic damages in actions against health care providers for professional negligence to $250,000 (Civ. Code, § 3333.2). Non-economic damages compensate for losses that do not come with a receipt, such as pain, suffering, disfigurement, physical impairment, emotional distress, and the loss of a loved one's companionship. The California Supreme Court upheld the cap in Fein v. Permanente Medical Group (1985) 38 Cal.3d 137.

The cap was never adjusted for inflation. Over the decades, its real value fell dramatically, leaving many seriously injured patients — as well as children, retirees, and others with limited lost earnings — with recoveries far below the true extent of their harm.

What AB 35 Changed

AB 35 emerged from a negotiated agreement among patient advocates, health care providers, and lawmakers, and it was enacted in lieu of a proposed ballot initiative. The legislation made several important changes.

The amended statute now distinguishes between cases involving injury and cases involving death (Civ. Code, § 3333.2):

• Injury cases: The cap began at $350,000 on January 1, 2023, and increases by $40,000 each January 1 until it reaches $750,000.
• Wrongful death cases: The cap began at $500,000 on January 1, 2023, and increases by $50,000 each January 1 until it reaches $1,000,000.

After reaching those amounts in 2033, both caps will adjust by 2% each year for inflation. For 2026, the cap is $470,000 in injury cases and $650,000 in wrongful death cases. The cap that applies is the amount in effect at the time of judgment, arbitration award, or settlement — not when the claim was filed (Civ. Code, § 3333.2).

Before AB 35, a single cap generally applied no matter how many providers were responsible. The amended statute creates three separate categories of defendants, each subject to its own cap (Civ. Code, § 3333.2):

• Health care providers, such as physicians, nurses, and other licensed practitioners, collectively;
• Health care institutions, such as hospitals and clinics, collectively; and
• Unaffiliated health care providers or institutions that are separately responsible for the harm.

As a result, in a case involving negligence by defendants in all three categories, total non-economic damages in 2026 can reach up to $1,410,000 in an injury case and up to $1,950,000 in a wrongful death case. Determining which category each defendant falls into — and whether defendants are truly "unaffiliated" — can significantly affect the value of a claim.

MICRA has long limited contingency fees in medical malpractice cases. AB 35 replaced the prior sliding scale with simpler limits: 25% of the recovery if the case settles before a lawsuit or demand for arbitration is filed, and 33% if the recovery comes after a lawsuit or demand for arbitration is filed (Bus. & Prof. Code, § 6146).

AB 35 also expanded protections that generally prevent a health care provider's expressions of sympathy, regret, or benevolence about an adverse outcome — and in certain circumstances statements reflecting fault — from being used as evidence of liability (Evid. Code, § 1160). The goal is to encourage open communication between providers and patients after an unexpected outcome. Patients should understand that what a provider says in these conversations may not be admissible later, which makes independent review of the medical records all the more important.

What Did Not Change: Economic Damages Remain Unlimited

The MICRA cap applies only to non-economic damages. There is no cap on economic damages, which include past and future medical expenses, rehabilitation and therapy, in-home care, lost wages, and loss of future earning capacity. In cases involving catastrophic injury, economic damages often represent a substantial portion of the total recovery, and careful documentation of future needs — often through life care planners and economic experts — is essential.

Other features of MICRA also remain in place. For example, defendants may introduce evidence of certain collateral source payments, such as health insurance benefits the plaintiff has received (Civ. Code, § 3333.1), and a court may order that large awards of future damages be paid periodically rather than in a lump sum (Code Civ. Proc., § 667.7).

Not Every Claim Against a Health Care Provider Is Subject to MICRA

MICRA's cap applies to actions based on a provider's "professional negligence." Claims that rest on different legal theories may fall outside the cap. For example, the California Supreme Court has held that claims for reckless neglect under the Elder Abuse and Dependent Adult Civil Protection Act are distinct from professional negligence (Delaney v. Baker (1999) 20 Cal.4th 23). Whether a particular claim is subject to MICRA depends on the facts and is often contested, which is one reason early legal analysis matters.

What the Reform Means for Your Case

For patients and families harmed by medical negligence, AB 35 means:

• Potentially greater compensation for pain, suffering, and loss, especially in cases involving multiple responsible parties.
• Caps that continue to increase each year, so the timing of a settlement or judgment can matter.
• A greater ability to pursue cases that may not have been economically viable under the old $250,000 limit, including cases involving children, retirees, and others whose losses are primarily non-economic.

Because the amended law creates multiple caps, applies different amounts to injury and death cases, and continues to adjust each year, evaluating a medical malpractice claim requires careful analysis of every potentially responsible party and the role each played.

Do Not Wait to Act

AB 35 did not change California's strict filing deadlines for medical malpractice claims. In general, a claim must be filed within one year after the patient discovers, or reasonably should have discovered, the injury, and no later than three years after the date of injury, subject to limited exceptions (Code Civ. Proc., § 340.5). California also requires that the health care provider receive at least 90 days' written notice before a lawsuit is filed (Code Civ. Proc., § 364). Claims against public hospitals and other government entities are subject to even shorter claim-presentation deadlines.