California Pre-Settlement Funding: Prop 213 and Case Value (2026)

What This Guide Covers

California is the largest personal-injury litigation state in the U.S., with a plaintiff-friendly liability landscape in most contexts and a sophisticated funding market. But two California-specific rules materially reshape case value for a subset of plaintiffs: Proposition 213 (Civil Code § 3333.4), which bars uninsured drivers from recovering non-economic damages, and the Medical Injury Compensation Reform Act (MICRA, Civ. Code § 3333.2 as amended by AB 35 in 2022), which caps non-economic damages in medical-malpractice cases on a scheduled escalator. This guide walks through both rules and how they interact with pre-settlement funding.

This is a plain-English explainer, not legal advice. Only your California-licensed attorney can evaluate the specific facts of your case against these statutes.

Is Pre-Settlement Funding Legal in California?

Yes. California has no dedicated funding statute. Non-recourse pre-settlement advances are enforceable under general contract and consumer-protection law. The California Supreme Court has not directly addressed pre-settlement funding, but the practice is well-established in the state's plaintiff market, and California courts routinely honor properly-drafted assignments at disbursement.

General consumer-protection oversight comes through the California Department of Financial Protection and Innovation (DFPI) and the Attorney General's office under the California Consumers Legal Remedies Act and Business & Professions Code § 17200 (unfair competition). Unconscionable pricing or deceptive practices can be challenged; standard industry practice by reputable funders has not attracted meaningful enforcement.

Proposition 213: The Uninsured Driver Rule

Proposition 213 was enacted by California voters in 1996 and is codified at Civil Code § 3333.4. The rule: an uninsured driver injured in an auto accident is barred from recovering non-economic damages (pain and suffering, loss of enjoyment of life, etc.) — even where the other driver is entirely at fault.

Who is affected

• Drivers who were operating a motor vehicle without insurance at the time of the accident.
• Drivers convicted of DUI in the accident.
• Fleeing-the-scene drivers.

Who is not affected

• Passengers (unless the passenger owns the uninsured vehicle).
• Pedestrians and bicyclists.
• Drivers whose insurance was in force at the time of the accident.
• Drivers whose policy lapsed for reasons the courts have treated as excusable (subject to specific fact patterns).

The practical effect on case value

Non-economic damages typically dominate the value of a serious auto injury — pain and suffering alone often accounts for 60% or more of the settlement. A Prop 213 case with the same medical bills and lost wages as a non-Prop 213 case can settle for a small fraction of the comparable value. Economic damages (medical bills, lost wages, out-of-pocket) are still fully recoverable, but the non-economic ceiling is gone.

Funders underwriting a Prop 213 case size the advance to the economic-damages recovery — typically 10x–20x smaller than a comparable non-Prop 213 case. For borderline cases (where the plaintiff arguably had coverage at the time), your attorney's judgment on the Prop 213 question is central to the funding conversation.

MICRA and the 2022 AB 35 Amendment

MICRA (originally 1975) caps non-economic damages in medical-malpractice cases in California. The historical cap was $250,000 — long the lowest in the country. AB 35 (2022) replaced the flat $250,000 cap with a scheduled escalator:

Case type	Starting cap (2023)	Escalation	Ultimate cap
Non-death (personal injury)	$350,000	$40,000/year for 10 years	$750,000
Wrongful death	$500,000	$50,000/year for 10 years	$1,000,000

The escalators apply cumulatively — a case filed today has a higher cap than a case filed last year, and future cases will have higher caps still. The 2022 reform also allowed separate caps for a physician defendant and an institutional defendant, further expanding recovery in cases where both are separately liable.

Practical implication for funders: California medical-malpractice cases are more valuable under AB 35 than under the pre-2022 MICRA cap, but they are still capped relative to comparable cases in other states. Funders underwrite the case against the applicable AB 35 cap, not the theoretical uncapped value.

California's Comparative Fault Rule

California is a pure comparative negligence state (Li v Yellow Cab Co., 13 Cal. 3d 804 (1975)). A plaintiff can recover even if 99% at fault, though recovery is reduced by the plaintiff's share of fault. This is one of the most plaintiff-friendly comparative rules in the country and matters for funding underwriting on contested-liability cases.

Statute of Limitations Highlights

• Personal-injury tort actions: 2 years from injury (Code Civ. Proc. § 335.1).
• Medical malpractice: 3 years from injury OR 1 year from discovery, whichever is earlier (Code Civ. Proc. § 340.5).
• Wrongful death: 2 years from date of death (Code Civ. Proc. § 335.1).
• Government claims: administrative claim required within 6 months of injury before suit (Gov. Code § 911.2).

The 6-month government-claim requirement is the biggest trap: plaintiffs whose injury involves any government or public entity must file a formal government claim within six months or lose the claim entirely. Missing this is a career-defining error for an inexperienced attorney.

UM/UIM in California

California requires carriers to offer uninsured motorist coverage; policyholders may reject in writing. Given the state's high rate of uninsured drivers (California DMV estimates around 15% of drivers are uninsured), UM/UIM is one of the most valuable coverages a California driver can carry. See our companion piece on UM/UIM coverage for the mechanics. Prop 213 does not bar UM/UIM claims; it bars non-economic damages against the at-fault driver in the tort case.

Medical Liens in California

California recognizes hospital liens under the Hospital Lien Act (Civ. Code § 3045.1 et seq.) for hospitals that provided emergency and continuing care. Medi-Cal has broad statutory recovery rights under Welfare & Institutions Code § 14124.70 et seq., subject to Ahlborn apportionment. ERISA plan liens apply per federal law. See our companion pieces on funding and medical liens for the general framework.

Rate Norms in California

California has no funding-specific statute and no rate cap. Market pricing tracks the national range: 2.0%–3.5% monthly, typically with a 2–3x hard cap. Advance sizes track case category — an uninsured Prop 213 case supports a much smaller advance than an insured driver's case with the same injury; MICRA-capped medical malpractice cases are advance-sized to the AB 35 cap plus economic damages; pure comparative fault means even contested-liability cases can support meaningful advances. Underwriting principles align with our general framework on how funding works. For a state comparison, see our Pennsylvania guide and, for coverage-related underwriting, the 50-state coverage matrix. Attorneys can review process at our attorney resources.

The Bottom Line

California is a large, sophisticated market for pre-settlement funding, with case value shaped by two state-specific rules (Prop 213 for uninsured drivers, MICRA for medical malpractice) and one plaintiff-friendly rule (pure comparative negligence). Non-recourse funding is legal, enforceable, and available for the full range of case types — but the specific offer reflects the interplay of these rules. Plaintiffs whose cases sit within the standard California framework and who need working capital during the wait have a functional funding market to draw on.

If your case is in California and you would like an offer that reflects the actual applicable rules, apply for a pre-settlement advance. Decisions typically come back within 24 hours of your attorney providing the file.