California legislation could augment liability
Without a federal framework on the role of AI in our nation’s health care system, states like California are taking the impacts of algorithms into their own hands, at the risk of creating another avenue for medical lawsuit abuse.
Medical Liability Monitor reports that Assembly Bill 2575 passed the California Legislature in late August and now sits with Gov. Gavin Newsom. The bill would prevent AI developers from avoiding liability by claiming a doctor should have caught and overridden a harmful AI-driven recommendation. While it intends to establish some protections for health care workers who use AI as a clinical decision-making tool, health care advocacy organizations fear it may still create a new avenue of risk to physicians who opt to use AI in patient settings.
The California Hospital Association opposes the bill, warning it could create bad liability incentives, get in the way of quality oversight, and discourage hospitals from adopting useful AI tools. That concern lines up with the American Medical Association’s own AI position, in its AI State Advocacy and Policy Priorities Issue Brief: physicians shouldn’t be held liable for AI failures they had no way of knowing about, nor should they be penalized for choosing not to use AI while the technology’s standards and oversight are still unsettled.
As AI becomes a bigger part of clinical care, inconsistent and incompatible state efforts could be the next battleground in the broader push against medical lawsuit abuse, and should be watched closely.
To read more about how California’s efforts could end up creating vulnerabilities for physicians who opt in to integrating AI into their patient care, click here.
Aging population to impact medical liability exposure
The medical liability landscape is shifting alongside the country’s demographics – as the population ages, claims are growing more costly.
The Medical Professional Liability Association’s Fall 2026 issue of Inside Medical Liability examines how an aging population is reshaping exposure across residential care, home health, hospice, and nursing homes. Citing CDC data, the report notes 65% of adult day services participants have two or more chronic conditions and 34% have Alzheimer’s or another dementia — raising the stakes for diagnostic and care-coordination errors. Citing CNA’s Aging Services Professional Liability Claim Report, the average total incurred cost in these claims rose 3.8% from 2021 to 2024.
The sharpest numbers come from the National Practitioner Data Bank: average indemnity payments for patients in their 70s rose 30% between 2021 and 2025, from $277,399 to $360,547, while the number of such payments grew 32%. As the report puts it, “an aging population and expanding care continuum are reshaping MPL exposures.”
For physicians navigating an already hardening liability market, this data underscores why reform must keep pace with demographic forces reshaping risk beyond physicians’ control.
To read more about the impact of older patients on health care and medical liability, click here.
Larger verdicts adding up for physicians
Fewer medical liability claims are being filed against physicians than at any point in more than five decades, yet premiums keep climbing – creating a disconnect that liability insurance providers say reflects how much a single verdict can now cost.
In an August 31 episode of Medical Economics‘ “Off the Chart” podcast, Robert White, president of The Doctors Company and TDC Group, did the math. One in 21 physicians was sued in 2025, the lowest rate since 1973. This is down from one in five in 1999, a decline White credits to the patient safety movement and to state-based medical liability reforms. At the same time, the average payment made on behalf of a physician reached $514,000 – the highest on record – and roughly 20% above 2022.
White noted that nuclear verdicts above $10 million now appear about once a week, and that only 7% of medical liability cases reach trial, with the defense prevailing in six of every seven. The seventh, he said, becomes the measuring stick that resets settlement values for comparable cases that never see a courtroom. By April of this year, three awards above $100 million had been recorded, and the largest on record remains a $963 million award in Utah.
With falling claim frequency no longer masking severity, White expects national rate increases of 1% to 3% each year. Behind these increases are health care costs that add up for patients and reduce access to care.
To read more about how claim frequency is falling while medical liability costs rise, click here.