Virginia’s Med-mal Damages Cap Remains In Place Pending Review

In an unexpected move, the Virginia legislature elected not to expand the liability and exposure of Virginia hospitals and health systems. Instead, Gov. Spanberger has until April 13 to sign, veto or amend a fact-finding reconciled bill. (Editor’s note: As of the April 9 press time for this issue, Spanberger had not yet acted on the bill.)

If enacted, the reconciled bill requires Virginia hospitals and health systems that self-insure or maintain other retained-risk arrangements to submit detailed disclosures about their malpractice claims, litigation outcomes, and financial exposure to state legislative leaders beginning Sept. 1.
This data would then be made publicly available and will likely shape future debates over the medical malpractice damages cap.

Background

For nearly three decades, Virginia’s medical malpractice damages cap has been codified in Va. Code § 8.01-581.15. The cap has increased annually by $50,000 since its inception and currently sits at $2.7 million for all damages for claims brought from July 1, 2025, through June 30, 2026. Under the existing statutory schedule, the cap will continue to increase annually, up to a hard ceiling of $3 million for any act of malpractice occurring on or after July 1, 2031. This cap has historically served as a cornerstone protection for Virginia hospitals and health care providers, helping to keep malpractice liability insurance coverage accessible and premiums manageable. However, following Virginia’s most recent election, the plaintiffs’ bar has undertaken significant efforts to change this structure.

SB 536 (first and second versions)

The Virginia legislature was initially considering a narrow, single-issue bill. Senate Bill 536 would amend § 8.01-581.15 to clarify that the total amounts recoverable under the damages cap would not include any prejudgment interest. In short, its purpose was to resolve uncertainty about whether plaintiffs could collect prejudgment interest on top of or within the statutory cap. The bill was subsequently amended to include a carve out for state-owned hospital systems, passed and sent to the House of Delegates for consideration.

SB 536 (third version)

In the House of Delegates, the House Courts of Justice Committee transformed the bill into an aggressive overhaul of Virginia’s entire medical malpractice environment. Among other things, the bill sought to: (1) raise the damages cap from $3 million to $6 million (indexed to inflation); (2) allow plaintiffs to recover up to two years of prejudgment interest; (3) expand the statute of limitations to allow malpractice claims not reasonably known or discoverable to the patient to be brought beyond the standard two-year period; and (4) require nursing homes to carry professional liability insurance of at least $3 million per patient occurrence. The bill in its revised form then passed the House and was sent to the Joint Conference Committee, which was tasked with reconciling the Senate and House versions of the bill.

Reconciled bill

The reconciled bill abandoned all the House’s proposed changes to the damages cap, statute of limitations, and the nursing home insurance requirements. As such, and for now, the existing cap schedule under § 8.01-581.15 remains unchanged. However, the reconciled bill includes a new statutory scheme (summarized below) that may lay the foundation for future increases to the damages cap. This reconciled bill was subsequently passed by both chambers and is headed to the governor’s desk for her signature, veto or amendment. If enacted in its current form, the below details the most significant changes to the medical malpractice landscape.

Reporting by commercial insurers

Every insurer writing medical malpractice liability insurance policies covering health care providers in the commonwealth must disclose, for the preceding calendar year, detailed information in four categories: (1) premium data, (2) claims activity, (3) claim payments and litigation costs, and (4) insurer financial condition.

Reporting by self-insured hospitals and health systems

Every hospital or health system licensed in Virginia that maintains self-insurance, captive insurance, risk retention arrangements, or other retained financial risk for medical malpractice liability must disclose the following information for the preceding calendar year: (1) the number of physicians and health care providers covered, (2) claims activity, (3) malpractice expenditures, and (4) total malpractice liability expenditures for the reporting year expressed as a percentage of the hospital’s total patient service revenue.

In addition, both commercial insurers and self-insured hospitals must provide a list of verdicts in which the jury award exceeded the statutory cap. All disclosures must be made to the chairs of the House and Senate Committees for Courts of Justice and to the ranking delegate and senator of the minority party serving on such committees and be provided in aggregate form that does not allow identification of any individual physician, hospital, insurer, patient, or specific claim.

Deadlines

The initial disclosure is due on or before Sept. 1, 2026, covering the 2025 calendar year. Subsequent annual disclosures are due on or before March 31 of each year for the preceding calendar year.

Automatic sunset

The new reporting statute contains an automatic expiration provision: the passage of new damages caps. This confirms the legislative intent that the reporting requirement is an interim, data-gathering mechanism designed to inform — and likely precede — a future legislative overhaul of the cap.

Strategic implications

The near-term news is favorable. The existing damages cap schedule remains intact, and the malpractice liability exposure is unchanged for the foreseeable future. However, the 2026 session made clear that the cap is under significant pressure, and future efforts to increase the cap are likely using the information required to be reported under this new law.

Moving forward, hospitals should prepare for debates with the plaintiffs’ bar to increase the damages caps. Every hospital or health system in Virginia that maintains self-insurance, captive insurance, or any
retained-risk arrangement should also start preparing to submit its initial disclosure by Sept. 1. They should also use this interim period to audit their malpractice claims histories, insurance coverage levels and reserve adequacy in anticipation of a future cap increase.

In light of the Virginia legislature’s review of cases exceeding the medical malpractice damages cap, experienced representation continues to be important.

Originally published by Virginia Lawyers Weekly