*1 No. 24435. Feb. [S.F. 1985.] ROA, JR., al.,
FRANK et Plaintiffs Appellants, GROUP, INC., al., LODI MEDICAL et Defendants and Respondents. *3 Counsel Katz, Harlem, Katz, Dixon, Richard L.
Miller, A. Harlem & Robert and Appellants. E. Plaintiffs Laurence H. Tribe and Arthur Schwimmer Werchick, A. Wylie Arne F. David M. Michael Harney, Dillingham, Caldwell, Bashore, Train Aitken, Edwin Richard D. Glen T. Bridgman, Cardenal, John Goff, Gage, Sanford De Victoria J. Robert E. Cartwright, Pollock, Jerome I. Levine, Edward Hobart, R. Harvey G. Dana Ian Herzog, Nemerovski, Rice, Howard, Prim, Jr., Falk, Dirk M. Schenkkan B. Appellants. of Plaintiffs Curiae on behalf & Poliak as Amici Canady and Respondents. Defendants No appearance Greines, Horvitz Ludlam, Horvitz & Garrett,
Musick, & James E. Peeler Richland, L. John Todd, L. Horvitz, Kent & Ellis J. S. Thomas Levy, Willett, Maureen Huber, David E. Hassard, & Klein, Bonnington, Rogers Defendants behalf of Amici Curiae Fred Hiestand as Corcoran and J. E. and Respondents.
Opinion the constitution involving in a of cases
KAUS, J.
This is
the third
series
Reform Act
Injury Compensation
various
of the Medical
ality
provisions
Community Hospital
& Trust Co. v.
(MICRA). In American Bank
of 1975
670], we
upheld
683 P.2d
(1984)
hundred thousand dollars recovered. ($200,000). [([] The limitations shall recovery two hundred thousand dollars exceeds arbitration, settlement, or judgment, regardless of apply whether adult, infant, an or a responsible recovery is made is a person whether the for whom the mind, (c) ‘Recovered’ purposes of this section: unsound . For person [f] . . [f] [H] in con or costs incurred deducting any disbursements means the net sum recovered after by the incurred claim. Costs of medical care prosecution with or settlement of the nection disbursements charges are not deductible attorney’s office-overhead costs or plaintiff and the purpose. or costs for such ...” Code. stated, and Professions are to the Business section references Unless otherwise all I Roa, Jr., and Yvonne individually, This action was Frank brought by son, Roa, their minor Frank ad litem for Jean as individually guardian treatment Roa, for as a result of negligent suffered Joseph injuries allegedly Medical named the Lodi care birth. The complaint child’s during and nu- Inc., Lodi Community Hospital Dr. Gordon B. Roget, Group, merous Does as defendants. a settlement with two
After some discovery, negotiated plaintiffs Inc., defendants, and Dr. Roget. agreement the Lodi Medical Group, $495,000 $5,000 to the minor and parents. to the provided payment 3500,2 court sought approval Pursuant to Probate Code section plaintiffs total settlement, $500,000 the court that the represented advising The court found coverage. limits of these two defendants’ insurance policy the settlement reasonable and it. approved 3601,3 re- time, Code section
At the same to Probate pursuant from to their that the court of fees quested approve payment the court that they Plaintiffs informed the net of the settlement. proceeds the schedule be awarded under were aware that the maximum fee that could *5 amount to about in 6146 would of fees set forth contingency under their con- $90,800. however, believed that that They they explained, of the to 25 were entitled percent fee the tingency arrangement, attorneys $122,800—and court to award their asked the minor’s net recovery—about attor- this request, plaintiffs’ counsel this amount. greater Accompanying was unconsti- section 6146 filed and authorities that neys asserting points grounds. of powers tutional on due and protection separation process, equal had entered (1) The trial court found that and plaintiffs of the net be 25 fee would percent into an that the understanding yield would $122,800 that (2) and that the fee which percentage case and is fees in this and amount for attorneys’ “is á fair reasonable services legal pro- of no to the way disproportionate quality quantity not “were it also noted that vided to the in this case.” The court plaintiffs “(a) disputed claim for minor has a part: When a provides 2Section 3500 relevant estate, following persons have damages guardian not have a . . . and does the minor parents of parent Either if right compromise ... the claim . . .: [t] (b) is valid compromise or covenant living separate apart. are not and . . . The [t] court. . .” by superior . approved, upon filing petition, of a after it has been giving the “(a) making the order or court provides part: in relevant The 3Section 3601 thereof, claim], shall part as a compromise disputed of minor’s judgment [approving the costs, and . . . expenses reasonable authorizing directing and that such make a further order therein, money from the fees, paid shall be attorney’s approve and allow as the court shall ” incompetent person. minor or the benefit of the property paid or other to be or delivered for Code the existence of and Professions Business [section] be would awarded. by amount attorneys’ requested” plaintiffs however, to section 6146 and court, challenge the constitutional rejected stat- in accordance with the that it to award fees concluded was compelled $90,800. limitations. it a fee of utory Accordingly, approved order, constitu- reasserting their Plaintiffs from the appeal tional to section 6146.4 objections
II Plaintiffs, behalf, that section 6146 is uncon- and amici on their contend as of due a violation equal protection, stitutional denial process, We each (3) a violation of the doctrine. address separation powers of the contentions in turn.
A Plaintiffs’ claim the statute due rests on the that argument process to retain on the victims impermissibly right infringes counsel actions. represented Although in the fed retained counsel in civil actions is enumerated not expressly Constitution, eral or state our that the consti recognized cases have long Powell (See, tutional due does process right. embrace such guarantee appeal. questions may 4One amicus this Because plaintiffs properly whether maintain for the own use preserving trial court order has the settlement minor’s effect more requested by plaintiffs, “aggrieved” than the fee are not suggests amicus prosecute the trial court order their own behalf. Code Civ. appeal *6 dissatisfied, Proc., 902.) they have plaintiffs’ attorneys Amicus asserts that if were should § challenged the order themselves. Although attorneys question had from the order in may standing appeal well have 819]), (cf., 520, e.g., (1946) Estate it does not neces Merrill 29 Cal.2d 523 P.2d [175 of sarily plaintiffs Estate prosecute appeal. follow that not themselves this are entitled to (1962) 788, 783].) many of Lagersen plain While in Cal.App.2d Cal.Rptr. 210 791-792 [26 might of position ruling, tiffs’ themselves the trial court one aggrieved not consider 6146 are invalid because plaintiffs’ appeal contentions on is that the fee limitations of section they plaintiffs competent on the counsel. Plaintiffs impinge right malpractice to retain incentive argue statutory place, attorneys that if the in will have less of an limits remain who are pursue recovery against remaining additional defendants not covered opportunity pursue plaintiffs deprived settlement. We should conclude that not be they “ag argument by a that are not appeal this substantive on threshold determination grieved” as a matter of law. ethics, whether, professional juncture have no as a matter We occasion to decide at this attorney conflict on the fee potential of interest between and their may appeal separate called for of their We hold that the representation issue interests. note amicus been filed properly by plaintiffs. be We that numerous briefs have maintained issue, ade- assuring competing viewpoints sides of the on both constitutional that the quately represented. 926 (1932) 45, 158, 170-171,
v. Alabama 287 U.S. 53 S.Ct. 68-69 L.Ed. [77 55, 527]; 668, 84 (1958) A.L.R. v. Small Claims Court 49 Cal.2d Mendoza 9].) 6146, however, 673 P.2d Section does not in any way [321 counsel, abrogate retain but limits the simply compensation an obtain attorney may when he an under contin represents injured party fee gency arrangement. uncommon, limits on in
Statutory
fees are not at all
either Cali-
attorney
state,
fornia or
throughout
fees have
country generally.
attorney
been
long
both in workers’
legislatively regulated
compensation proceedings
(Lab. Code,
4906)
Code,
910,
(Prob.
and in
matters.
probate
§
§§
Some states have
maximum fee schedules which
to all
adopted
apply
per-
(see,
sonal-injury
fee
American Trial Law-
contingency
arrangements
e.g.,
yers
350];
v. New Jersey
(1974)
Ct.
lished. Over 60 years Calhoun v. Massie U.S. ago, 474], L.Ed. 40 S.Ct. an who had successful represented claimants in an action raised a similar due against United States process to a limited fee recov- challenge provision federal law which eries to of the amount recovered. In percent rejecting challenge, Justice Brandéis “For of a Con- century explained: nearly three-quarters gress has undertaken to control in conditions under which some measure the claims been in against Government Its has purpose prosecuted. *7 to in part protect claimants from extortion or and just bargains improvident to the from and While part protect Treasury frauds imposition. [Citation.] in the common need for the of and the recognizing agents service such be denied the presentation of claims and that would often parties op- of such services if fees were portunity securing prohibited [ci- tation], has that the causes which rise Congress gave manifested its belief enactment, to laws against and maintenance are the champerty persistent. By
927 time, time of claims placing to of laws the assignment from prohibiting services, has Congress limitations the fees chargeable upon properly the Govern- against both the of claims stirring up unjust to sought prevent of prosecution to the to methods ment and reduce adopt improper temptation been sometimes success have contracts for fees large contingent upon which . such . . resem- constitutionality legislation to encourage. supposed of been settled. long has the in its nature the exercise of police power, bling 173-174 added, (253 U.S. at (Italics omitted.) pp. fn. [64 [Citations.]” United States (1895) 157 U.S. Frisbie v. 845-846]; see, pp. e.g., L.Ed. 586]; Yeiser v. Dysart 658-659, 160, 657, 15 S.Ct. 165-166 L.Ed. [39 779, 399]; Margolin 540, 775, 45 S.Ct. (1925) 267 541 L.Ed. U.S. [69 180, 64]; 93, 176, United States S.Ct. (1925) L.Ed. U.S. [70 121].) These deci- Estate Goodrich (1907) P. Cal.App. [93 of on ceilings establish to amici’s contentions—legislative sions that—contrary or to subject in no attorney “constitutionally suspect” fees are respect judicial “strict” scrutiny.5 dissent—attempts judicial the invoke “strict argument 5One amicus—in an embraced to right been as scrutiny” Noting on a the maintain a lawsuit has viewed different tack. that to grievances of aspect right petition government one to the for redress First Amendment (see, 222-223 L.Ed.2d Mine Workers v. Illinois Bar Assn. 389 U.S. 430-431, 353]), 51-54 Buckley 88 S.Ct. in v. Valeo 424 U.S. and that invalidated, 659, 706-707, Court, alia, 612], Supreme inter on First L.Ed.2d the S.Ct. grounds, statutory Amendment the of his own funds a candidate could limits on amount office, seeking argues in how much should spend public amicus that “the decision of necessary attorney desiring to spent, spend, [plaintiffs] and is to is one which [on fees] constitutionally to petition speech Amendment entitled rights exercise First of much, creative, Although logic clearly proves argument make for themselves.” its too fees, any no how preclude it would a on matter imposing state from limitation be, unconscionably high not might position such fees a even amicus does embrace. of Amendment activities contingency pursuit The use of with the First in connection Indeed, historically subject Cali- governmental regulation has been the and restriction. long prohibited lobbyists, including great completely a number of fornia—like states—has with most attorney-lobbyists, using contingency fee agreements from connection Code, (f) lob- [“No “hardcore” First Gov. subd. § Amendment activities. ...(f) way contingent byist Accept accept any agree any payment shall or to defeat, or See any proposed legislative enactment or outcome administrative action.”]. Survey Dame Maggio, Lobbying—Multistate Statutory 38 Notre Law. generally legislation. 85-86.) any validity such We are which questions unaware decision course, lobbyist prohibit the use of contin- provision, Of unlike the section 6146 does actions, percentage but on the of a gency simply places fees medical limits on contin- represents plaintiff plaintiff’s that an retain when he gency basis. the extent the dissent’s—First Amendment contention To that amicus’—and low permit 6146 are too proposition particular rests on that fees allowed lawsuit, bring argument parallels plaintiff’s claim- the effective exercise of the by making difficult process right his due to counsel it discussed below—that statute denies provides no basis to impossible attorney. explain, an As we the record factual to secure support such claim. Furthermore, no claim the statute on its face for the same there is merit to the that reason Although may be that the continued unconstitutionally poor plaintiffs. it against discriminates litigants, rich availability poor than to contingency important is more contracts impinge on a showing without a fee limits at here are so low as factual issue
928 contend, however,
Plaintiffs attorney even if limitations on statutory are fees the section 6146 generally permissible, by limits established invalid because the statute authorized fees are so low that in practice will make it for to retain an to impossible injured persons attorney represent The them. of the is in measure by fees statute adequacy permitted large matter, an and no to empirical showing have made support Furthermore, factual claim. a of the section comparison permitted by with 6146 the fees under schemes noted statutory authorized the numerous .6 above that section Under the suggests unusually 6146’s limits are not low circumstances, we of certainly permit cannot hold that amount the fees ted renders the statute unconstitutional on its face.
Plaintiffs nature of the fee alternatively challenge scale” “sliding schedule, that the re- asserting decreasing permitted larger percentage client, coveries creates a conflict of interest and between attorney reducing plaintiff’s ability lawyer, to obtain a finding there is no basis for that the statute works an against invidious poor. logically argued discrimination It statute—by can as be that the limiting the charge fees an can when he a on a represents contingency client basis— operates to the of poor plaintiffs. benefit noted, (1) 6As section 6146 of contingency up percent authorizes fee of to 40 the first $50,000 (2) recovered, $50,000, percent (3) 3314 of 25 percent the next of the next $100,000, (4) percent $200,000. and 10 of any exceeding amount Jersey Under New upheld Lawyers Jersey Supreme schedule in American Trial v. New Ct., supra, 350, 330 provided something A.2d which of a model section permissible (1) $1,000, (2) maximum percent fees were: 50 percent of first 40 $2,000, (3) percent $47,000, (4) $50,000, next 3314 percent of the next 20 of the next $100,000. percent 10 any 3.) amount over 330 The A.2d at fn. New Jersey rule permitted also request exceptional an additional fees situations. schedule, Under that the fee for the this have settlement in case would been limited to $66,400, approximately $90,800 by Although rather than the permitted section 6146. schedule, (as Jersey (see 1984)), New as J. modified in 1984 Rule 1:21-7 amended Jan. N. instances, greater variety does authorize somewhat fees than 6146 in a the dis- parity deny attorney. does not in itself demonstrate that section fee limits access to an 6146’s fee, The federal generally designate applicable statutes single, percentage maximum regard without recovery. the amount of the Federal Tort Claims Act limits fees to filed, percent judgment of a and 20 settlement obtained after a court action has been 2678.) percent any recovery (28 prior filing. obtained to such The Social Se § U.S.C. curity Act percent recovery. authorizes reasonable fees not in of 25 of the claimant’s excess (42 406(b)(1).) U.S.C. perhaps § The Veterans Benefit Act contains the most restrictive provision, limiting anyone assisting fee that to a by obtained claimant mere (38 $10. against U.S.C. Although provision upheld has been constitutional § challenge (e.g., numerous decisions Frisbie United States 157 U.S. 165- v. 657, 658-659, 586]), recently enjoined L.Ed. federal district court its [39 S.Ct. one application, concluding practical that the effect this low limit substantial doubts as raised continuing (National viability. the statute’s constitutional Assn. Radiation Survivors v. (N.D.Cal. 1984) Supreme Walters has F.Supp. The United States Court noted (Walters probable jurisdiction in the case Assoc. Survivors Walters National Rad. — — 588]) stayed U.S. L.Ed.2d the district court’s S.Ct. has [83 — (— injunction pending [stay review of the decision. U.S. L.Ed.2d S.Ct. 11] — — J.]; granted Rehnquist, [request U.S. 105 S.Ct. vacate 238] L.Ed.2d court].) stay denied *9 As a number of commen- a award. incentive to attorney’s higher the pursue inherent however, of interest are conflicts have potential tators explained, MacKinnon, Contingent fee generally in all arrangements. Mitchell, Eco- 196-200; An & Schwartz (1964) Fees Legal pp. for Services Litigation Personal-Injury Fee in Contingent nomic the Analysis of hand, a contingen- whenever 1136-1139.) On the one 22 Stan.L.Rev. of the regardless flat rate for either a cy agreement percentage fee provides recovery, an increase of or a with recovery declining amount percentage spending to settle lawyer’s quickly, “it be to the may advantage [the case] in value increment the claim where the as little time as on small possible client, is trial, to the not or while significant through rigorous bargaining (MacKinnon, su- to the ...” lawyer. significant perhaps compensatory hand, according rate is 198.) On the pra, graduated other “[w]here the increase in ... recovery to the of at which is attained litigation stage trial, example, fee or start lawyer bring the rate of lead the to suit may that %, 33Vá actually doing his rate from to without increase solely 25% a increment work the likelihood of comparable much additional and without Furthermore, no matter how the {Ibid.) percentage to the client.” particular calculated, lawyer of the in the financial position difference “[t]he to take a willingness in their may and client make a complete disparity same way no at all. In the large recovery risk on a as against recovery have an may use of the eventual on claim delay increase than it and claimant injured different on the entirely impact uncompensated as one does other claims and this busy regards who is with lawyer, Thus, of a at p. series which are on the vine. ...” ripening {Id. affect embodied in section arrangement scale though sliding it interests does attorney’s diverge, in which the and client’s settings create basic conflict of interest problem. rec- Indeed, has been sliding-scale approach section 6146’s decreasing as a number studies ommended form of preferable regulation Bar As of American Association have examined the an question. report fee more to the order to relate the attorney’s commission explained: “[I]n case less to handling amount of work and involved in legal expense a de- injury, economic status and fortuity degree plaintiff’s in the fees, generous reasonably maximum schedule of creasing attorney’s access thus unlikely deny potential plaintiffs lower recovery ranges basis.” on a state-by-state (Rep. should set representation, legal Annual (1977) 102 ABA Rep. on Medical Professional Liability Com. HEW, on Medical also Com. Malpractice See of Sect’s. Dept, Rep. 851. 34-35; Kohlman, Fee Contract Contingency An pp. Equitable reasons, Legis- & these Bar fn. For just State J. 295-298 statutory lature could have determined that rationally aspect scale sliding fees. scheme would the fairness promote schedule does not certainly on a vic- unconstitutionally impinge tim’s to counsel.
Finally, that the fee section 6146 plaintiffs suggest because limits of apply actions, to only medical the statute to drive malpractice operate will most out of into competent attorneys medical other malpractice litigation areas of personal injury they that this to an uncon- practice; argue amounts stitutional infringement a victim’s to counsel. Once malpractice have again, failed to make to the factual any support showing addition, could, premise course, their In a contention. similar claim be raised with to respect every statutory which creates provision legislative seen, limits on in attorney fees a field. As we have such statutes particular Suffice it to that we know of no which commonplace. say authority that due suggests process a uniform fee schedule requires single, for all areas of practice.
B We turn to the Here equal claim. con protection plaintiffs’ principal tention—somewhat related to final due on the process argument—rests assertion that the in Legislature arbitrarily selectively acted sec imposing tion 6146’s attorney fee limits in medical actions. malpractice
In American Bank and Barme against we which explained background MICRA was and there need to discussion adopted is no that here. repeat brief, the found Legislature that the cost of medical insur- high malpractice ance was premiums to curtail the medical care availability threatening in the state and which creating injured by situation medical patients, well find insurance to malpractice, might that there was no cover liability had they sustained. meet those damages Legislature To problems, enacted a series measures aimed medical insur- reducing malpractice ance costs. In American it Bank and Barme we found that was entirely rational for limit enacted Legislature measures application field, to the medical it in that malpractice since was the “crisis” particular area which Legislature alleviate. hoped
Plaintiffs contend that does not to section 6146. reasoning They apply maintain that while the in American Bank measures issue statutory Barme were directly related to the costs borne mal- reducing insurers, effect, practice defendants and their section 6146 no such has it limits the that simply plaintiff’s judgment percentage paid Plaintiffs insist that since plaintiff’s attorney. contingency fee is by definition from the and since a paid recovery, jury may plaintiff’s (see consider such Krouse v. Gra- properly assessing fees damages 1022]), the 562 P.2d (1977) 19 79-82 Cal.Rptr. ham Cal.3d They costs at all. not rechice defense limitations on such fees will statutory costs, it have should if to reduce such wanted Legislature suggest rather than charge, fees attorneys may limited the defense malpractice plaintiffs.7 obtained contingency fees embodied We cannot that the agree contingency limits first of MICRA. In the no to the objectives 6146 bear rational relationship the costs will not reduce it is that such limits suggest unrealistic place, *11 of mal- in the number large to defendants their insurers malpractice nat- A is quite cases that are resolved settlement. through plaintiff practice to will him yield person- concerned with what a settlement urally proposed an to take a smaller only section 6146 ally, because permits a lower settlement, agree a be more likely bite of will plaintiff from the settle- since net lower recovery settlement he will obtain the same have determined that ment. could Legislature reasonably Accordingly, to reduce insurance costs.8 would serve provision malpractice Second, the on fees have limits Legislature may imposed contingency also frivo- either instituting in this area as a means of from attorneys deterring high lous to hold for unrealistically suits clients out encouraging settlements. that there is no evidence to suggest contend Although plaintiffs in the that unregulated pose problems fee contingency agreements special field, context— themselves another malpractice stress—in plaintiffs that togo that an of medical cases unusually high percentage for result in be many explanations trial defense verdicts. While there may unre- have believed that this could phenomenon, Legislature rationally fee huge attorney gulated contingency contracts—calling potentially if so leading many plain- awards cases are at least some in won—play part (See, tiffs to unsuccessful. claims that pursue malpractice ultimately prove Beck, course, 1009, 1016.) Of even DiFilippo e.g., F.Supp. lawsuits, incur and their when defendants win such insurers ultimately they Thus, by plaintiffs’ considerable in the action. reducing expense defending MICRA, directing the of Gov enacting Legislature adopt provision 7In Board did 1, Legislature by July “report ernors of the State Bar to and make recommendations to 1976, consistent equitable compensation on an of defense counsel regulating method attorney fees.” policies regarding regulation plaintiff’s with the embodied in this article 1, Sess., 24.2, (Former (c), ch. § enacted Second Ex. § subd. Stats. recommended that appointing study problem, State Bar After a committee fees, Legislature former Legislature respect repealed take and the no action with to defense (c) (Stats. § subdivision 1981. ch. Legislature the limits claim have restricted legitimately 8Plaintiffs cannot that should settlement, reasonably have for the could contingency Legislature to cases of pro from any strongly discourage plaintiffs’ that feared such restriction would moting settlements. attorneys’ claims, incentive to their clients to encourage pursue marginal section 6146 bears a to the again rational relation legislative objective insurance costs. reducing section 6146’s
Finally,
limits are
related to the MICRA scheme
rationally
costs,
another
yet
order to reduce
insurance
respect.
MICRA
on,
a number
incorporated
that
limits
provisions
place special
reduce,
or that at least
tend to
malpractice plaintiff’s recovery, pro-
visions
(See,
to other
applicable
personal injury plaintiffs.
Code,
3333.2,
(b)
Civ.
subd.
for noneconomic losses
[limiting
§§
$250,000]; 3333.1,
(a)
subd.
admission of evidence of “col-
[authorizing
lateral
benefits”].)
source
have concluded
Legislature may reasonably
that a limitation on
field was an
means
contingency fees
“appropriate
diminished
from
protecting
already
such
compensation”
further
reduction
St. Vincent
fees.
Johnson v.
high contingency
Inc.,
Hospital,
602-603.)
N.E.2d
there is no
Accordingly,
merit to
initial
plaintiffs’
claim.9
equal protection
*12
Plaintiffs alternatively contend that the statute violates equal protection
’
because it
limits on the
but
places
attorneys may
fees that plaintiffs
charge
seen,
no limits on
we have
there
imposes
already
counsel’s fees. As
defense
are a host of statutes—both in
California and
other jurisdictions—that
similar limits on
place
fees without
fees that
contingency
limiting attorney
instances,
Here,
are earned on some other basis.
as in those
the Legislature
could have
(1)
determined that
need
there was
special
protect plaintiffs
fees,
from
and
having
(2)
recoveries diminished by high contingency
“to reduce the
methods of
which
temptation
adopt improper
prosecution
contracts for
fees
have sometimes been
large
success
contingent upon
sup-
Massie,
(Calhoun
American Bank and
we
Barme.
in American Bank
noted that of the
state
passed
challenges
malpractice legisla
courts that had
to recent
equal protection
on
tion,
(See
only
challenge.
Carson was one of
36 Cal.3d at
three that had sustained
fn.
suggestion
plaintiffs’
10The dissent’s
which draws a distinction between
that a statute
attorney
defendants’
“content discrimination”
fees violates the First Amendment’s ban on
(post,
939-941),
pp.
by any authority,
shortsighted.
unsupported
quite
but is also
attorney
provisions authorizing
plaintiffs
Numerous statutes contain
successful
to recover
(See, e.g.,
fees under
in which
defendants
not so recover.
circumstances
successful
component
that
Finally,
argue
decreasing-sliding-scale
seriously injured
more
unconstitutionally
against
section 6146
discriminates
the lower percentage
that in
light
victims.
They suggest
it
recoveries,
makes
the provision
which the statute authorizes
for higher
to undertake
who
be willing
more difficult
to obtain an
will
attorney
noted,
have already
awards. As we
additional effort
to obtain such
required
however,
that the sliding-
could
have concluded
Legislature
reasonably
flat
than the traditional
scale
in fact
more
fees
approach
produces
equitable
a “wind-
fee,
does not obtain
to ensure that an
contingency
attorney
helping
and guaranteeing
fall”
because his client
is very seriously injured
simply
the lion’s share of any
that the most
will retain
seriously injured plaintiffs
secured on their behalf.11
C
Plaintiffs’
final
6146 violates
separation
claim is
inherent
doctrine.
that in
of this court’s
They
power
powers
argue
light
unfairness
overreaching
review
fee contracts and to
prevent
Bushman
State Bar
(see,
563-564
11 Cal.3d
of attor
312]),
522 P.2d
Cal.Rptr.
appropriateness
question
But,
committed
as we have
fees is a matter
to the
branch.
ney
solely
judicial
seen,
limits
in a
variety
bodies have
legislative
imposed
re
authority
fields
our
California
throughout
history.
expressly
Applicable
futes the claim that the
has no
to act
this setting.
Legislature
power
Goodrich,
Brydonjack
Estate
See
732.
Cal.App.
generally
v. State Bar
1507].)12
P.
66 A.L.R.
Cal.
*13
648,
412,
(1978)
Christiansburg
434
417-422
L.Ed.2d
Garment Co. v. EEOC
U.S.
[54
Proc.,
653-657,
action];
[private
1021.5
rights
S.Ct.
civil
Code Civ.
§
98
694] [federal
action].)
attorney general
Surely,
suggest
does not intend to
that all such statutes
the dissent
are unconstitutional.
63,
(1939)
P.2d
124 A.L.R.
Superior
11Thecase of Echlin v.
Court
Broussard, J., Grodin, J., Lucas, J., concurred.
BIRD, C. J. dissent. I strongly
Unlike other sections of the Medical
Reform Act
Injury Compensation
(MICRA)
court,
which have been
by this
section 6146 of the Busi-
upheld
ness and
(hereafter
6146)
Professions Code
the fairness
implicates
of the judicial
itself.
American
&
process
Bank
Trust Co. v.
(Compare
Community
(1984)
Hospital
Out of practical necessity, all use fee ar virtually contingent Reder, rangements cases. Fees in Contingent Litigation with Special to Medical in The Economics Malpractice, Reference of Medical 1978) Malpractice edit. Contin (Rottenberg p. [hereafter Fees]', gent Health, see Welf., also U.S. &Ed. Dept. Rep. Secretary’s Com. on Medical (1973) HEW Malpractice p. Report].) [hereafter fact, for clients of limited “the means offers the arrangement (Fracasse realistic hope claim.” v. Brent establishing legal 6 Cal.3d Aronson, 9]; 494 P.2d see also Cal.Rptr. Attorney-Client Fee and Review Arrangements: Regulation Fees, 284, 286; 231; A.B.A.J. Contingent Schwartz & Mitch ell, An Economic Analysis Fee in Contingent Personal-Injury Litiga 1125, 1125-1126; Ranii, tion 22 Stan.L.Rev. ABA Report Suggests 1; in Tort Changes System, (Dec. 1984) National Law J. col. ABA Goals, Agenda: 1984) Shepard (Oct. Outlines His 70 A.B.A.J. 38p. [“The *14 is the to the of our truly key many, many courthouse citizens.”].)
Section 6146 burdens on the of heavy severely injured imposes ability to obtain It forth a scale legal sliding sets adequate representation. of fee limits—the the the greater recovery, lower the allowable percentage. The effect of this on in is to low limits fees approach impose drastically those precisely cases which to make require large recovery plaintiff For, $1 million recov- economically whole. a case example, involving the allowable rate be than half of the 33 Vs ery, would about less percent, field. medical malpractice outside the available generally rate that is percent General, 32; Auditor also Cal. HEW Report, at see (See p. generally, p. Crisis in California [here- Insurance The Medical Malpractice General].) the Auditor Report after to further dis- interact with section of MICRA
Other provisions The collat- severely injured plaintiffs. from attorneys courage representing 3333.1, (a)) substantially can Code, subd. (Civ. eral source provision § fee, decreasing without award, the contingent and thus damage reduce Proc., (Code Civ. The payment provision workload.1 attorney’s periodic and, addition, the attor- delay could have the effect 667.7) same may § $250,000 limit on noneconomic Further, for years.2 ney’s compensation re- Code, without (Civ. 3333.2) recovery reduces sharply damages § action- of the malpractice the most difficult aspects lieving attorney causation.3 negligence proving cases, may medical
Since section 6146 affects only victims. medical malpractice to represent avoid these problems by refusing to attract or well-established those Only lawyers sufficiently competent a severely incentive to represent unrestricted business have financial any Fees, Contingent (See victim. injured 219.)4 p. legal rep- to obtain ability high quality
Section 6146 a victim’s hampers is most es- cases where such representation resentation in those precisely on resources legal can be to concentrate sential. Defendants expected 3333.1, (a) of evidence concern permits the introduction 1Civil Code section subdivision insurance, malpractice plain disability to medical ing payments, such as collateral source provision does not damage award that amount. This jury The then reduce the tiffs. causation, damages. attorneys’ job proving negligence, plaintiff lessen involving awards of provides that in cases of the Code of Civil Procedure 2Section 667.7 must, order $50,000 request party, of either damages,” upon the court more in “future plaintiff dies before If the paid periodic the award be award, installments. portion that this remainder, damages for loss of future exception of entire with the receiving the CommunityHospital, Co. v. American Bank & Trust to the defendant. earnings, reverts fn. supra, 36 Cal.3d since the statute open question, impact fees is precise of section 667.7 paid lump in a could that the explicitly preclude possibility does not judgment. at the time of sum including plaintiff and recently, both lawyers polled noteworthy percent that 60 3It is in the will be introduced 99th malpractice bill which attorneys, opposed a medical defense unfairly restrict felt that it would Seventy-nine opposed those to the bill Congress. percent of (Reskin, Lawyers Oppose Medical damages injured patient an can recover. scope Bill, (Jan. 1985) Malpractice 71 A.B.A.J. percent a 100 gross lawyer may that a retain of a percentage limit on the 4“[A] *15 Fees, supra, (Contingent p.at recovery.” marginal earnings per gross dollar of tax on covered cases. to work on Obviously, powerful disincentive such a tax creates fn. from re- cases. The statute potential high recovery prohibits plaintiffs Hence, in mismatch kind. contest becomes a sponding legal lopsided with tort victims on the end. losing
This is the fact that medical problem aggravated by malpractice plaintiffs are even more in need of than other per- high quality legal representation sonal injury Even MICRA’s has plaintiffs. sponsor acknowledged principal that “a case is difficult to demands a malpractice great extremely prove, deal of research into causal factors exhausts a tremendous amount and time (Keene, on the Malpractice Medical part attorney.” California’s Crisis, (Warren in A Issue Guide to the Medical Legislator’s Malpractice 1976) & Merritt Medical Malprac- edits. 29-30 pp. [hereafter California’s Crisis].) tice
Further, in the risk of zero and the fees collected recovery is high, successful or her work on cases must also for his attorney compensate (See, the unsuccessful at Report, supra, ones. Auditor General’s p. no of medical of with percent recovery]; cases malpractice disposed Fees, trial, to Contingent at claims that go p. malpractice [of obtain zero percent gross recovery].)5 Plaintiffs advance three that section They argue constitutional arguments. 6146: on for redress of their to infringes right petition government discriminates the content of and between grievances litigants according courts; (2) due by views seek to to the violates they process present on the to retain counsel and ex- infringing victims right malpractice client; and and conflict of interest between an acerbating violates fee limitations only equal protection by arbitrarily applying cases, cases, medical to the in those and malpractice victims manner burdensome to severely injured malpractice particularly with limited means.
I. infringe Plaintiffs that the fee limits urge imposed for redress of griev- constitutional petition government malpractice cases is majority imply high 5The that the rate of zero medical ante, (Maj. opn., at due to an inordinate number of frivolous or meritless claims. likely litigation for explanation The more is that there is a “salient difference between (Green, Malpractice liability.” Medical and other forms of accident Propensity Litigate, Malpractice, of Medical in The Economics technical, highly complex and Propensity Litigate].) Modern medicine is [hereafter and the date an significant lag wrongful there is often a the date of the act time between gathering prov evidence and injury perceived. present special These difficulties in factors (Id., 196-197.) ing pp. negligence in medical cases.
937
legal representa-
anees.
contend that their
to obtain
They
ability
competent
tion,
medical
which is essential for the effective
of a
malpractice
prosecution
Further,
is
that selective
they suggest
impo-
burdened.
complaint,
heavily
for
due to
seeking damages”
injuries
sition
restrictions on
“person[s]
(§ 6146,
added)
discriminates
italics
malpractice
impermissibly
wish to
they
to the content
views
among litigants according
present
Only
at the
the courts.
from
hiring
prohibited
rate,
market
while defendants are free to
any amount—by contingent
pay
fee or otherwise—which
be
to obtain
necessary
quality representation.6
the 1st and 14th Amendments to the
right
petition
protected
I,
United States Constitution and article
section 3 of the California Consti-
It
tution.
of access to the courts for the resolution of
encompasses
civil
Transport
(See,
between
v.
disputes
private parties.
e.g., California
Unlimited
508,
642, 646,
Trucking
(1972)
404
510-511
L.Ed.2d
U.S.
[30
United
Union v.
Bar
609];
92
Transportation
Michigan
(1971)
S.Ct.
401
576,
339, 343,
1076];
City
Long
U.S.
578-579
L.Ed.2d
S.Ct.
91
[28
Beach
527,
86,
(1982)
v.
31
532-534
645 P.2d
Bozek
Cal.3d
Cal.Rptr.
[183
137],
943,
vacated
(1983)
other
Litigants the courts not to advocate petition only changes Mine (See, but also to obtain public policy, monetary compensation. e.g., Workers v. Illinois Bar 426, Assn. (1967) 217, 223 389 U.S. L.Ed.2d [19 431, 353]; 88 Railroad Trainmen v. Bar 1, S.Ct. Virginia 377 U.S. 89, City 1113, 1196]; L.Ed.2d Long 84 S.Ct. 11 A.L.R.3d [12 Bozek, Beach v. Court 534; Payne Superior 31 Cal.3d at v. 17 Cal.3d 565].) 553 P.2d Cal.Rptr. matter,
aAs general commercial activities. Legislature may regulate Williamson Lee (See, Co. Optical v. U.S. Public 563, 572, United States Steel Utilities 461];
L.Ed. Corp. S.Ct. majority by analogizing contingent 6The ban on dismiss this contention to California’s ante, Code, 5; legislative lobbyists. for (Maj. opn., fees (f).) Gov. subd. § fn. First, analogy This persuasive is not for there is no evidence that such several reasons. selectively a ban disadvantages any political process. hope I would group interest in the contingent attorney injury litigation a total ban on personal fees in would wealthy raise concerns even but majority, clearly prevent for the since it would all victims Second, from pursuing “contingent claims. term in the context of this case fee” as used lobbyist attorneys, lobbyists is somewhat different from its use in the statute. Unlike do not normally readily vie to specific money, percentage recover a sum of of which could Third, paid lobbyists applies to them. across the board to ban on fees representatives viewpoints. Surely, majority argue of all would not that a ban on con tingent lobby victims would be those who on behalf of medical permissible. *17 (1981) 169, 1381].) Com. 29 Cal.3d 629 P.2d Cal.Rptr. [175 However, economic to the effective exercise of a activity that is essential First Amendment to serve a necessary be restricted where right may v. Valeo compelling governmental Buckley interest. For example, 706-708, 612], U.S. 51-54 L.Ed.2d 96 S.Ct. Supreme [46 Court struck down candidate could limit on the amount a statutory political on his because spend The First Amendment was campaign. implicated po- litical for the use of the advocacy of funds to required expenditure pay 696-699]; (Id., electronic see also media. 35-39 L.Ed.2d pp. pp. [46 290, 296, Against Rent Control v. 454 U.S. fn. Berkeley Citizens 492, 499, Here, context, 434].) L.Ed.2d in the S.Ct. judicial [70 no less essential to the exercise expenditure money attorney fees is of First Amendment rights.
In what to that addresses a directly be the decision appears only reported First Amendment a federal district court issued challenge, preliminary fees in cases where injunction enforcement a limit barring veterans seek death Ass ’n Radiation and benefits. National disability 1302, 1323-1327, 1329, (N.D.Cal. 1984) Survivors v. Walters 589 F.Supp. — — Assoc, Walters National L.Ed.2d Rad. Survivors U.S. [83 —— noted], 105 S.Ct. U.S. L.Ed.2d jurisdiction [prob. 588] — — J.], 105 S.Ct. U.S. L.Ed.2d [stay granted by Rehnquist, 11] Wal- S.Ct. to denied by vacate [request stay 238] court] [hereafter ters].)7
The Walters
“While the
warrants extensive
opinion
quotation.
Supreme
here,
Court has never
its cases
addressed the
directly
question presented
establish the
to
associa-
that
First Amendment
principle
rights
petition,
tion and
individuals to obtain
efforts
speech protect
by organizations
effective
of their constituents or themselves.
legal representation
partic-
ular, it has held that the
First Amendment rights
petition, speech,
to,
union,
association
advise
union members’ efforts
protect
through
to
injured
lawyers
workers
obtain
advice and to recommend
legal
specific
[citation]; a
its mem-
union’s
of a salaried
employment
represent
[citation];
bers workers’
and to
counsel
employ
compensation litigation
members,
members to attorneys,
furnish names of
represent
injured
and to
clients for counsel
accept compensation
soliciting
[citations]
....
The Court has
that the
underlying
declared
explicitly
principle
series of cases should be
First Amendment rights:
applied broadly
protect
Walters,
maximum,
$10
drastically
7The fee
lower than the limits allowed
constraint
However,
protect
was enacted to
argued
section 6146.
it
that the limit in Walters
agency, the Veteran’s
they
dealing
government
with a
overreaching
veterans from
when
Administration,
veterans’ interests.
very purpose the advancement of
which has as its
is that
our decisions ...
through
‘. . . .
common thread running
[S]
courts is a
access to the
collective
undertaken to obtain
activity
meaningful
However,
of the First Amendment.
fundamental
within the
right
protection
associations of
deny
would be a hollow
if courts could
promise
the costs of
their members to meet
workers or others the means of enabling
Union,
401 U.S. at
[supra,]
United
legal representation.’
Transportation
protects
585-86,
individuals
Compare majority. They cases principal upon by ante, 926-927.) (See decided before at None addressed 1930. maj. opn., pp. that, to as right considering This omission is not surprising petition.8 one commentator at has the First Amendment was argued, largely forgotten (See Rabban, that time. The Amendment in its Years Forgotten First Yale L.J. 90 521 & fn. contrast, were all decided after
By cases relied upon by plaintiffs United and en- States Court had taken on the task Supreme interpreting (See, cases cited guarantees of free and forcing petition. speech ante, Walters, 926-927.) at Patel’s 589 F.Supp. pp. Judge opinion of First Amendment carefully jurisprudence analyzed body I concluded that limit on the right petition. an fee infringed believe her conclusion is sound. (1920) 253 170 majority place 8The reliance on v. Massie U.S. particular [64 Calhoun 474], that constitution Supreme L.Ed. 40 S.Ct. in which the Court concluded “[t]he police ality [attorney regulation] resembling . . nature the exercise . its 846], (Id., quoted by majority,
power, long p. p. has been at at settled.” L.Ed. ante, recently relying reasoning, ignore In on the more articulated majority this line of principle actually which affect of First Amendment freedoms cannot laws the exercise legislative compe- merely they be sustained because deal with evil within the state’s some Assn., (Mine L.Ed.2d at tence. Workers v. Illinois Bar 389 U.S. 430-431].) pp. Since counsel is essential to the effective exercise of an representation by access, and to individual’s First Amendment rights petition obtain counsel can be restricted where to achieve only necessary compel- state interest. ling be attorney-fee limitation should subjected particularly vigorous since it
scrutiny also runs afoul of the constitutional ban content discrim- ination. the exercise of First Amendment regulating rights, govern- Police De- ment be heard. may choose what views pick may partment Chicago Mosley v. L.Ed.2d U.S. 95-96 [33 & 212, 216-217, Planning Environmental 2286]; 92 S.Ct. Information Council Superior Court Cal.Rptr. Cal.3d 197 [203 1086].) 680 P.2d
Section med- discriminates facially against desiring prove persons ical It negligence. by “any restricts the fees that paid person *19 seeking damages in or damage against connection with an action for injury a health care such neg- based provider upon person’s alleged professional (Italics added.) . . . .” It leaves intact a defendant’s to ligence pay or otherwise—of amount consistent with law.9 fees—contingent any general Two The first is justifications are advanced in of section 6146. support that the limits are to ensure receive a necessary greater per- that plaintiffs the statute serves the overall centage The second is that recovery. of MICRA—the of medical insurance. purpose malpractice preservation Neither of these withstands strict justifications scrutiny. defendants, 9If the it would still be statute also restricted the use of fees practical effect challenge. vulnerable to a would have no since Such additional restrictions hourly per arrangements. defendants utilize diem fee noteworthy It defendants has led some disparate plaintiffs is that the treatment of plain- specifically commentators to intended to restrict conclude that the fee restrictions were Schweinfurth, (See Injury tiffs’ access to the Medical Com- courts. Jenkins & California’s
pensation Challenge Equal Act: An Protection So.Cal.L.Rev. Reform Fees, MICRA]; Contingent p.at fn. 696 see also [hereafter [“[T]he California’s is, in limiting attorney intentionally, discourage effect of use of time quite fees to claims.”].) compelling when the prosecuting malpractice argument appears particularly This forthrightly provisions, which restrictions are viewed in the context of other MICRA expense of medical provide special providers relief to healthcare and their insurers at the Code, (See, damages in malpractice on noneconomic e.g., victims. Civ. 3333.2 § [limit actions]; Code, rule [abrogation 3333.1 of the collateral-source malpractice § medical Civ. actions]; Proc., payment of medical [periodic in medical Code Civ. 667.7 § malpractice judgments].) where—as here—a Normally, question legislative motivation does not arise restric- However, scrutiny. subject since facially discriminatory. tion Such enactments are to strict ante, 932), (see recognize problem point this at I majority maj. opn., have declined to suggested facially difficulty. distinguished have out this additional Some commentators purpose restricting subjected be to the neutral content should restrictions enacted Tribe, (See, pp. American Law 591- scrutiny. strictest form of Constitutional 594; 111-115.) pp. Ely, Democracy Distrust of their is a Allowing retain a greater percentage However, interest. it is not a one. As legitimate explained compelling Walters, in in the con- the court such a is disfavored argument paternalistic Walters, (See text of the First Amendment. F.Supp.
It is for the an individual entirely by sup- state inappropriate “protect” his or her pressing exercise of a First Amendment right.
Moreover, section recovery. 6146 is not a necessary protect plaintiff’s Section 6146 will of meritorious often to force the settlement operate early claims, in a resulting reduction cases. plaintiff’s recovery many 944-946.) post, serious with pp. Curiously, injuries cases involving recoveries, from mer- potentially large attorneys may discouraged taking itorious cases to trial even to do increase the so though might significantly recoveries, In plaintiff’s recovery. cases smaller involving potential 6146 may increase the fee since the fee sched- actually attorney’s contingent floor, ule set out in section 6146 can be “to as well as expected provide (Comment, Ethics and Eco- ceiling, rate percentage charged.” Of nomics: (1983) 16 Akron Contingent Fees Services Percentage Legal L.Rev. Economics].) Ethics and [hereafter
It is also that section 6146 MICRA’s overall argued serves purpose view, medical preserving limits on contingent insurance. will reduce the amount of that insurers are damages required pay. that the Assuming arguendo preservation malpractice premiums *20 interest, is a state fee limits are no means nec- compelling to serve essary that interest. little,
Section 6146 will if Since attorney relief to insurers. provide any, fees are out of paid fee limitations plaintiff’s recovery, merely reappor- tion the award between the and her Juries are attorney. his or plaintiff pro- hibited from fees in awards. considering attorney making damage (Bauguess v. Paine 22 942].) 586 Cal.3d 634 P.2d Cal.Rptr. The available evidence that Cal- indicates is effective. prohibition MICRA, therein.) at and sources cited p. ifornia’s Section 6146 can relief to and their insurers only by defendants provide to settle claims for amounts far below their actual value forcing plaintiffs Indeed, and/or by the number of claims filed. at the time that reducing enacted, MICRA was General the Auditor out that pointed “[u]nless amount of settlements to increase malpractice continuéis] any future there will be little on medical rates as a if effect result of limitations on fees.” attorney contingency (Report imposed General, Indeed, added.) Auditor at italics because section p. 6146 run defense with an incentive to costs in cases provides attorneys up
942 947), be (see section post,
with recoveries potentially large p. to increase expected malpractice premiums. Amendment right First infringes
Section significantly plaintiff’s Therefore, claim. and does on the content of a plaintiff’s so based petition state interest. it must be shown to be to achieve a necessary compelling 6146 is invalid. met section Accordingly, Defendant has not this burden. II. to due Next, right contend that section 6146 violates plaintiffs’ clauses, state, are the most federal and of law. “The due process process unfairly to act oppres- basic substantive checks on government’s power (Hale Cal.Rptr. Cal.3d sively.” Morgan be “reasonable 512].) Due that legislation P.2d process requires 399.) The limits im- (Id., “arbitrary p. proper,” oppressive.” Legislature’s pur- be related to the rationally must posed the statute. poses enacting at- plaintiffs’ conclude that majority limiting compensation not in any because it “does receive violate due
torney may does not process ante, (Maj. opn., to retain counsel.” way abrogate of certain However, with the right section 6146 does interfere significantly 934-938.) (Ante, at pp. victims of medical to retain counsel. Further, and their between plaintiffs it exacerbates the conflict of interest fee arrangement. inherent attor- number of existing cite a majority support holding, ante, at (Maj. withstood legal challenge. opn., limits which have ney-fee the severe However, can in no way compared these limits limits section 6146. imposed by *21 in
First, regulated attorney legislatively note that fees are majority matters. and probate California in both worker compensation proceedings noted, easily distinguishable these schemes are As one commentator has MICRA, Under the 945.) at (California’s p. from section 6146. Act, have to negli- do not injured parties prove Workers’ Compensation Hence, risk of a Code, 3600.) faces far less (Lab. attorney gence. § Moreover, attorney’s reasonable the statute provides zero recovery. “[a] which takes into to fix a fee fee,” flexibility a judge which allows effort of the of the case and the time and consideration the complexity Code, is Code, 4903.) attorney Under the an Probate (Lab. attorney. § Code, 900, (Prob. work done for the estate. actual §§ for the compensated could fail to receive 910, attorney compensation an 911.) way The only if he or she Code also allows a to rec- judge does no work. The Probate (Prob. an award of fees. an services ognize attorney’s extraordinary Code, (a).) short, fee restrictions the workers compen- subd. § from and to discourage attorneys sation contexts are not probate likely fields, the risks in those work is relatively simple, since the working legal low and to the ser- is available which is commensurate compensation vices performed.
Contrast in a this situation with that of the plaintiff’s action with a receive no com- The will contingent arrangement. indicates that unless there is a in the case. One pensation study over 400 case which attorney hours are on the spent average malpractice Fees, results a “zero (Contingent after trial. recovery” fn. Faced with fee limitation and other the combined effect of the (§ 3333.1), MICRA the collateral source provisions (e.g., provisions $250,000 Code, 3333.2), (Civ. on noneconomic and the ceiling damages § Proc., 667.7), installment periodic (Code attorneys Civ. provision many § can be expected cease to victims with valid claims. represent malpractice result, As a the most be unable to secure clients severely injured rep- resentation, if their or difficult factual especially cases involve complex issues, problems testimony. proof, expensive expert York) New majority stress that in some states New Jersey (e.g., limits on the fees available to in all personal injury ante, However, action have been rather than upheld. (Maj. opn., to the to the New lending support majority’s Jersey reference position, New York of section schemes two of the most highlights pernicious aspects 6146.
First, section 6146
one narrow
out and
a burden
singles
imposes
subclass of
find
unre-
personal injury
Attorneys may
victims.
still
ample
stricted work elsewhere. When the risks and cost associated with general
work
personal injury
are not as
as for medical
and the
great
malpractice,
potential
is much
common sense tells us that attor-
compensation
greater,
contrast,
will abandon
neys
the medical
field.
the New Jer-
By
and New
sey
York schemes restrict broad
attor-
leaving
fields
practice,
(See,
little room for
neys
Lawyers
American Trial
Ass’n
escape.
Ct.,
350, 351,
New
Jersey
S.
66 N.J.
A.2d
fn.
tort
3] [all
claims];
actions other than
Gair v. Peck
at As 944 schemes, 6146 has
Second, York section unlike the New and New Jersey Section 6146 difficult cases. fees in exceptionally no provision higher the difficulty limits even where from exceeding would prohibit plaintiff be retained at the could not or her case is so that a great lawyer of his Jer- Ass’n v. New Lawyers Trial máximums. American (Compare specified Ct., fee limits in part 316 28 [upholding S. A.2d sey supra, Peck, circumstances]; Gair v. in special because exceptions permitted [same].) 53 160 N.E.2d at p. under the brought for actions fee limits Similarly, imposed limits by from the imposed Tort Claims Act are distinguishable Federal against to claims Tort Claims Act applies section 6146. The Federal immunity, sovereign federal Because of government. concepts While itself. against tort claims any has been free prohibit government have been allowed, on those claims some limitations such claims are now contrast, section By as reasonable exercises of the police power. justified for representation of individuals to contract 6146 to limit the operates by cannot be justified The limitations in actions between parties. private (Maj. from frauds and Treasury imposition.” references to “protecting] Massie, ante, 253 U.S. at p. Calhoun opn., atp. quoting interferes with the Instead, 843].) directly at L.Ed. p. in a legal on one party an unfair disadvantage judicial process imposing dispute. related sufficiently because it is
Section 6146 violates due process re- plaintiffs’ Instead of protecting it was enacted to achieve. purposes number of coveries, reducing Instead of it to reduce them. operates limiting claims claims, of meritorious frivolous it restricts the number access to adequate representation. victims’ to dis- often operate 6146 will indicate that section calculations Simple an rather than in a reduction in a manner which results courage litigation illustrate the point. An serves recovery. example increase in a plaintiff’s would result case which a medical malpractice This assumes example $250,000 verdict after trial. (Id., importantly, More under MICRA. fn. than is available in the case before this court exceptional limits in awarded in attorney fees to be excess Jersey’s New rule allows N.J.Super. 577 Jersey (See Lawyers Ass’n v. New S. Ct. Trial
cases. American 28].) A.2d 19 limit under the federal statutes which prescribed percentages The maximum $100,000 in this case. 28 U.S.C. § [Federal over attorney fees of would allow percent any percent a fee of 25 after court action provides for Tort Claims Act action]; 406(b)(1) Security provides Act 42 U.S.C. § to such recovery.obtained prior [Social event, any recovery].) as percent plaintiff’s not in excess for reasonable fees 944) from statutory distinguishable sec- discussed, (dis. these schemes are post, opn. tion 6146.
945 Studies indicate that who settle before trial receive approximate plaintiffs Lillard, (Danzon 75 of their verdict. & Settlement Out ly percent potential (1983) Court: The Medical Claims J. Disposition Malpractice Legal that, MICRA, Stud. most plain Plaintiffs and amici note prior tiff in which the attorneys attorney employed contingent agreements to trial received if the case greater percentage recovery proceeded than if it settled to 33 if the case before trial—typically percent percent settled and 40 if the went to trial.11 more case percent $250,000
Prior to the enactment of section case hypothetical $150,000 which went to trial would for the yield approximately plaintiff $100,000 for the received a that the plaintiff’s attorney, assuming attorney If to trial for 75 percent contingent fee. the same case had settled prior $187,500, of its value or percent would have received plaintiff approx- $125,062 $62,437, imately and the a 33VS plaintiff’s attorney assuming percent fee. Since the for the attorney increase compensation $37,000, be over in- might had a plaintiff’s attorney obviously strong centive to MICRA to more prior fully ensure that the victim was compen- sated for his or her injury. $183,350 $250,000
Under section 6146 a verdict would to the yield plain- $66,650 tiff and to the received attorney plaintiff’s attorney, assuming the maximum fee If section 6146.12 the case settled permitted by prior $187,500, trial for 75 value or percent attorney its plaintiff’s might charge to the or her according of section 6146 rather than his guidelines former fee schedule to avoid the loss of income caused MICRA. Under scenario, $128,975 $58,525. would receive plaintiff and his (See Note, Economics, Ethics and Akron L.Rev. are intended to eliminate the dispropor-
[“While [maximum schedules] recoveries, tionate fee an take from they might large practice floor, tend to well rate provide as as a on the ceiling, percentage charged”].)
Hence, MICRA, trial, after if the case settles before com- attorney’s However, is not pensation less than if the case had to trial. significantly gone $55,000. reduced in a plaintiff’s recovery almost plaintiff case which settles before trial recover little more than half case, 11Inthis percent contingent and their had contracted for a 25 “reasonable,” expressly fee. The trial court and would noted that that fee was have been awarded were it imposed by not for the restrictions section 6146. hypothetical recovery 12This possible does not take into account the reduction in which 3333.1, results application abrogates from the of Civil Code which the collateral smaller, source rule. When be even with applied, plaintiff’s section 3333.1 is will corresponding plaintiff’s attorney’s reduction in fee. *24 terms or and less in absolute his her actual smaller damages—a percentage 6146. than would have been received to the enactment of section prior conflict illustration how 6146 exacerbates the This demonstrates fee arrange- of in contingent interest between and their ante, MICRA, a (See 928-929.) although After maj. ments. at pp. opn., trial, his her significantly recovery by going increase plaintiff might involved in not cover the might expenses increase marginal witnesses, exhibits, trial conducting in producing expert marshalling case a meritorious itself. The on a settle pressure plaintiff’s attorney is overwhelming. before trial with
Thus, of settlements section 6146 will a number produce greater However, both to the injured lower it do so a heavy price recoveries. will at Rather than attorney. helping and his or her with the plaintiff relationship contend, will often result as the section 6146 victim majority in ethical dilemma a smaller for the and a recovery significant plaintiff size, increase “Limits on fees decrease settlement attorney. contingent the likelihood litigation the likelihood that a case is and decrease dropped, at the on litigation to verdict. . . . constraints will limit expenditure [F]ee Lillard, (Danzon & Settlement cost of reduced to plaintiffs.” compensation Claims, Malpractice Out Court: The Medical Disposition Stud, fore those exactly contrary J. These results are Legal cast majority.13 demonstrates, likely plaintiff is whether following 13As a reduced table pre-MICRA fee on a large of the case or small. All calculations based value trial, attorney if the case percent VA to the percent schedule of 40 to the after and 33 of the maximum fees application is settled before trial. Post-MICRA calculations assume allowable under section 6146. damages. ceiling on noneconomic $250,000
*Civil Code section 3333.2 imposes damages trial Thus, $1 who settles before plaintiff million in injured case with filed, for reducing As the number of claims it that health care appears believed providers prior MICRA the use arrange- ments medical filing cases claims which encouraged Introduction, would otherwise not have been made. Rottenberg, 7; Comment, Economics Medical Recent Medical Malpractice, First Malpractice Legislation—A Tulane L.Rev. Checkup *25 670.) p.
In at least one the health care were respect, providers probably right. fees have “[Contingent indeed ‘contributed’ to the recent mal- [medical limited, e., extent; crisis to practice] one but very they i. have important opened courthouse door for who could those not otherwise afford an (Aitken, attorney.” Medical The Malpractice: Alleged “Crisis” in Perspec- tive 36.) Western St.U.L.Rev.
While discouraging frivolous and meritless suits is a state in- legitimate terest, there is no evidence that the number of frivolous claims in the med- ical field or malpractice is that such contribute high, claims to the cost of medical malpractice On the premiums. difficulty in contrary, proving medical and the malpractice high risk of zero make recovery attorneys very selective about the (See Comment, cases to they willing Recent pursue. Medical Malpractice Legislation—A First Checkup, supra, Tulane Introduction, 671; L.Rev. at p. Rottenberg, The Economics of Medical 7-8; at Malpractice, supra, to pp. Propensity Litigate, supra, at 194- pp. 197.) Even insurers have that acknowledged attorneys reject the vast ma- jority malpractice (See, claims they see. Criteria Lawyers Use in Cases, Accepting Medical Rejecting Malpractice Malpractice Digest Paul [published by St. Fire and Marine Insurance for its medical Company liability 1978) 2; insurance policyholders], (Sept/Oct see p. generally to Propensity Litigate, supra,
The absence of any evidence that to the of MICRA prior enactment there was an inordinate number of frivolous medical claims filed malpractice strongly suggests section 6146 to actually operates discourage the filing of meritorious claims. The to reduce re- attempt premiums by ducing number of meritorious malpractice claims filed is the sort exactly of “arbitrary and oppressive” legislative action which due process guar- $97,400 may receive less under section 6146 than he or she would have before MICRA. attorney’s $300,000, Plaintiff’s may be percent reduced over to less than 25 of the former available attorneys fee. It little wonder may unwilling pursue to such claims at all. injured plaintiff ($50,000) $5,625 recovery may a case with a small receive less under section 6146 prior plaintiff’s attorney than to recovery MICRA. The may small greater percentage MICRA, receive recovery because of the “floor” effect of after (See Economics, 6146. Ethics and 16 Akron L.Rev. at 22 Cal.3d at Morgan, supra, must to Hale v. antees operate prevent. 398-399.) pp. fact, in- section 6146 work rather than lowering premiums, from discourages attorneys representing
crease them. While section 6146 it en- extensive damages, in cases plaintiffs involving to these cases. very their utmost time defense devote courages cases, defense attor- to settle While the costs involved encourage plaintiffs basis, afford to undertake extensive who are on a diem can neys, paid per Thus, can exert even defendants costly discovery prior settlement. or to minimum cases for a settle greater pressure suits drop completely.
Hence, the increased defense than malpractice rather lowering premiums, mismatch, and created legal costs which result from this legislatively increase may operate which are the insurance paid directly by companies, at- be for What rational can there possibly basis malpractice premiums. an incentive to increase creating lower tempting malpractice premiums by the cost defense? malpractice section reduce plaintiffs’ fee limitations imposed by
recoveries, and their conflict of interest between exacerbate the does not clients, The statute and restrict the of meritorious claims. filing plain- to the legislative protecting bear a reasonable relationship purposes Thus, it violates tiffs’ and lowering malpractice premiums. recoveries federal Constitutions. due state and process guarantees
III. California clause of the protection Section also violates equal I, (Cal. Const., 6146 creates several clas- art. Section Constitution. § First, med- by who are injured it affects those tort victims only sifications. most Second, seriously burdens the ical it malpractice. disproportionately Third, only restrictions it medical victims. injured malpractice places not defendants. plaintiffs, or interme- strict that this court should argue apply Plaintiffs amici 6146 violates equal pro- section diate to determine whether judicial scrutiny interests—the affects two fundamental assert that that section They tection. Trucking v. (see, Transport e.g., petition government California Unlimited, 642, and the 646]) 510-511 L.Ed.2d 404 U.S. supra, Claims v. Small (see, e.g., to retain counsel .right due Mendoza process 9])—and on a suspect classifies (1958) 49 Cal.2d P.2d Court Serrano v. Priest (see basis—wealth 5 Cal.3d 597-598 [96 Cal.Rptr. 1187]). 487 P.2d 41 A.L.R.3d As I discussed hold previously, would that the fee limits only impli- cate the and due but them rights petition also violate process, indepen- dently Moreover, section 6146 equal guarantee. protection selectively burdens if not group defined—practically, intentionally—on suspect plain- grounds. several are burdened Although groups modest means truly unable to escape its restrictions. For these tiffs of the sole plaintiffs, feasible method financing protracted expensive is to litigation “borrow” from the hoped-for recovery. Fees, ante, Contingent contrast, and discussion By defendants, affluent as well plaintiffs, as can evade the limits contracting for legal services on an basis. hourly
Plaintiffs correctly observe that in fun reviewing affects legislation damental rights, court has regarded disparate imposition burdens to wealth according (See, as an additional factor strict warranting scrutiny. Priest, Serrano view, 593-598.) Cal.3d In my plain at pp. tiffs’ argument for some However, level of heightened scrutiny has merit. I find it unnecessary reach this contention since section 6146 cannot *27 withstand any level of meaningful judicial review.
To the pass equal protection rational basis test under the California Con stitution, legislative classifications must a bear “substantial and rational” (Brown relation to legitimate a v. Merlo (1973) state 8 855, purpose. Cal.3d 872-873, 882 388, 212, 505].) 506 66 Cal.Rptr. [106 P.2d A.L.R.3d In statute, the determining purpose the court decides whether reviewing the goal asserted is realistically Bray (1978) conceivable. 21 (Cooper Cal.3d 848 604].) And, 582 P.2d the Cal.Rptr. court must [148 conduct “a serious and genuine judicial inquiry into the correspondence between the classification (Ibid., and the legislative italics in goals.” orig inal; see also Newland v. Board Governors 19 Cal.3d 711 of 620, 566 Cal.Rptr. 254].) P.2d [139 Carson v. Maurer
In 12 N.H. 925 A.2d A.L.R.4th Carson], the New 1] [hereafter Court overturned Hampshire Supreme similar contingent scale medical representing malpractice plaintiffs. “intermediate” Applying the court reasoned that scrutiny, “[t]he of regulation attorney’s solely fees the area of medical inev itably will make such cases less attractive to bar. plaintiff Consequently, ‘will at least somewhat deter [the of causes litigation legitimate statute] actions, of thus creating to individuals’ ac potential impediment injured ” (Id., cess courts and 839.) counsel.’ at p. 581], A.2d
Also, Pa.Commw. 294 Heller v. Frankston 6146 on separation the court invalidated fee similar legislation issue, did not reach the protection the court grounds. Though equal powers Carson, (Id., A.2d in favorable manner. p. it cited supra, 12.)14 fn. First, it of section 6146.
Three are advanced justifications support ensuring that section 6146 the legitimate purpose asserted serves Malprac Medical (California’s the bulk the recovery. receives plaintiff Crisis, However, there is no 31.) if is the purpose, tice supra, for special contingent rational basis to out medical single Court, 374-375 Cal.2d (Cf. supra, treatment. Echlin v. Superior the evil fees where of some but not all regulation [invalidating fees];15 also see to be avoided was characteristic all sought Carson, 424 A.2d at supra,
Indeed, effect by per- reach negates any protective section’s narrow work from by seeking great avoid the restrictions mitting attorneys to fee restrictions. By tort are not covered majority by victims who contrast, enough do leave been on this rationale statutes that have upheld wholesale abandonment areas unrestricted of private practice permit New (See, Trial Ass’n v. Lawyers of covered American plaintiffs. Peck, Ct., 350; 160 N.E.2d S. 330 A.2d Gair v. Jersey cases, is the negligent the statute only person such “protected” rep- is unable obtain liability defendant who because plaintiff escapes resentation. medical malprac- burdens special imposed assert that the majority mal- reducing justified
tice victims legitimate purpose *28 settle willing to It is that plaintiffs might practice premiums. hypothesized in fees. they if smaller percentage lower total recoveries pay (See v. St. Vincent Hos Johnson upheld 14Two courts have similar fee limits. (D.Del. 1981) 585, 602-603]; v. Beck DiFilippo pital, Inc. Ind. N.E.2d 1009, 1012.) why decisions are more suggest no these F.Supp. majority The reason minimum, gravity the of the At a with the California Constitution than Carson. consistent statutory classifications under relatively of the suspect affected interests and the character However, neither of these necessity judicial of review. meaningful score the for a level judicial process. fairness of the impact fee limits on the courts considered full of selective Echlin, of the nature of on the basis this court struck down a which classified 15In statute money contingent fee other than Attorneys were to receive a fees contract. who natural, or constitutional The “no intrinsic protected were court found not statute. (Echlin Superior statute void. justifying and held the distinction such discrimination” Court, 375.) explain why section majority adequately fail supra, p. at Cal.2d of contract for agreements no form only contingent but other which restricts fees, at issue in Echlin. arbitrary invalid as the statute attorneys’ of as payment not (See 10.) maj. opn. p. fn. at ante, (See 931.) However, maj. at opn., ignores p. argument reality created this statute.
Section 6146 is with grossly underinclusive regard objective It is not reducing that defendant and fees premiums. disputed legal plaintiff (See consume about the same dollar. proportion premium California’s MICRA, at 687.) Furthermore, fn. to a p. according systematic fees, study medical fees are malpractice attorney plaintiff significantly (See Hence, than defendant greater fees. HEW at Report, supra, p. there is no rational basis for costs while cutting by restricting plaintiffs defendants leaving free from restrictions.
Indeed, restrictions defense fees would a far yield greater potential reduction on than premiums restrictions on Defense equivalent fees. plaintiff fees paid $1 out of insurance funds. A directly reduction the fee could $1a reduction yield contrast, in premiums. fees are out By plaintiff paid the plaintiff’s The costs to the recovery. any insurance company given amount of are the same of the size regardless fee. MICRA, generally, 943.) Hence, at p. relation be- California’s tween fees plaintiff and premiums is—as the admit— majority impliedly and indirect. speculative
Second, the majority suggest con- Legislature may limit properly tingent ante, fees order to discourage frivolous suits. (Maj. opn., 931.) However, this is not purpose consistent with the reach narrow the statute. The danger frivolous suits is not confined the medical Indeed, area. the exceptionally difficult and character of risky medical malpractice litigation lawyers with an extra incentive to provides screen out frivolous claims.16
Finally, out that majority point in medical ac- plaintiffs tions are subject to various other of MICRA provisions that limit their re- Hence, coveries. have Legislature may reasonably concluded that a “[t]he limitation on this field an contingency was means of ‘appropriate protecting diminished already of such from fur- compensation’ ante, ther reduction by high contingency fees.” (Maj. opn., 1 6ironically, *29 the majority grasp high support at the rate of zero recoveries to the notion there special problems that are unregulated of malpractice fees in the medical It area. suggested high that the incidence of might unusually large failure indicate an proportion that of frivolous claims were filed. theory This creative ignores seriously the disputed by anyone—that fact—not a once rate known, of lawyers failure becomes choosing take it into to accept account in whether or not a Naturally, high case. a risk of discourages attorneys bringing failure from frivolous claims yield fees, which no yield recoupment high discovery which no for the trial preparation costs attorneys handling which must incur such cases. to majority,
This exhibits kind cruel humor. the theory According of victims’ malpractice compensa- the reduced Legislature, having severely tion, by from further reductions prohibiting decided to “protect” plaintiffs Unfortunately them from the market for paying legal rate representation. Legislature for for the majority’s theory—the victims—and malpractice services the omitted to ensure that could obtain adequate legal plaintiffs retain a would actually rates section that specified plaintiffs of recoveries. higher percentage higher rational basis for
If MICRA’s other anything, provisions provide above, As sev- rates the medical area. explained recovery decreasing reduce without provisions plaintiff’s eral these ante, Hence, to obtain the his or her at p. workload. attorney’s elsewhere, have would to attorneys same fees that are available to them rates. charge higher percentage view, level of any meaningful judicial
In the statute withstand my cannot on medical malpractice The selective restrictions scrutiny. imposition be hire reconciled ability rationally victims’ to cannot competent attorneys I hold that section with of the asserted would any Accordingly, purposes. Constitution.17 6146 violates the the California equal protection guarantee IV. not defend- of medical By inhibiting ability plaintiffs—but directly for section 6146 implicates ants—to contract legal representation, malprac- effort to lower misguided the fairness judicial process. to based on access the courts tice section 6146 restricts victims’ premiums, claims, reduces the the content rather than the merit of their and discrimi- to below a actual damages, far negligence plaintiff’s victims, those of limited nates the most severely injured against particularly guise plaintiffs. means—all under the “protecting” malpractice and vio- rights Section 6146 First Amendment infringes fundamental of the Con- guarantees lates both the due and the equal protection process case about the rate at majority guidance plaintiffs 17The provided have also no against attorneys representation they permitted which will with their be contract settled, present have against defendants remaining defendants. While the claims limited to litigated. If the against claims the other defendants remain be representation any recovery, the level attorneys percent of further paying their curtailed, afford to continue severely assuming the can undoubtedly will to be have against representation attorney may collect for representation. Section 6146 limits fees an defendant, (italics single “a health care it added). to a provider” Since statute refers separately apply presumed imposed must limitations defendant, recovery. aggregate than to the against individual rather recoveries each *30 stitution. The between its and the means used to relationship purposes achieve those is so tenuous and harm and the caused purposes speculative, so that it cannot withstand provision apparent, judicial scrutiny.
By upholding do a to victims majority grave injustice of medical this state and to well-established principles constitutional law.
Mosk, J., J.,* and McClosky, concurred. 8, 1985, for a was denied and the Appellants’ petition rehearing May J., J., was modified opinion Bird, Mosk, to read as above. C. printed were of the that the opinion should be petition granted.
*Assigned by Chairperson of the Judicial Council.