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Texas Tort Reform

July 27th, 2009 · 33 Comments

Over at the Belmont Club, Richard Ramirez has a post citing a proposal by a physician for reform of the health care system. The proposal is thoughtful, with some excellent suggestions (which will never get implemented in today’s environment, sadly).

What caught my eye in the comments was a summary of the changes which tort reform has brought about in Texas by a commenter, Leo Linbeck:

I’m pretty familiar with tort reform in Texas, as my dad was the founding Chairman of Texans for Lawsuit Reform. TLR started in the mid-1990s after forty years of steadily increasing tilting of the civil justice playing field in favor of plaintiffs. There were two major inflection points in this fight:

The 1995 session (with George W. Bush was Governor)

Limited punitive damages
Reformed joint and several liability
Restricted venue shopping
Restored the Deceptive Trade Practices Act to its original purpose of protecting consumers in ordinary consumer transactions
Enacted a half dozen other reforms to curtail specific lawsuit abuses

The 2003 session (with George W. Bush was Governor)

Enacted comprehensive reforms governing medical liability litigation, including a $750,000 limit on non-economic damages
Initiated product liability reforms
Made the burden of proving punitive damages similar to criminal law, requiring a unanimous jury verdict
Comprehensively reformed the statutes governing joint and several liability and class action lawsuits
Imposed limits on appeal bonds, enabling defendants to appeal their lawsuits and not be forced into settlements (this is what pushed Texaco into bankruptcy in its famous lawsuit against Pennzoil)
Further limited the filing of lawsuits that should have been brought in other states or countries

The changes to medical liability in 2003 were extraordinary, and had a very substantial impact, including:

1. In August 2004, the Texas Hospital Association reported a 70% reduction in the number of lawsuits filed against the state’s hospitals.
2. Medical liability insurance rates declined. Many doctors saw average rate reductions of over 21%, with some doctors seeing almost 50% decreases. (Recent information provided to The Perryman Group during the course of this study suggests that premiums are declining even further in 2008.)
3. Beginning in 2003, physicians started returning to Texas. The Texas Medical Board reports licensing 10,878 new physicians since 2003, up from 8,391 in the prior four years. Perryman has determined that at least 1,887 of those physicians are specifically the result of lawsuit reform.
4. In May 2006, the American Medical Association removed Texas from its list of states experiencing a liability crisis, marking the first time it has removed any state from the list. A recent survey by the Texas Medical Association also found a dramatic increase in physicians’ willingness to resume certain procedures they had stopped performing, including obstetrics, neurosurgical, radiation and oncological procedures.

Last year, TLR commissioned a study by The Perryman Group to figure out the impact of these reforms (the above are excerpted from that report). Here are the economic impact findings of that study:

$112.5 billion increase in annual spending
$51.2 billion increase in annual output – goods and services produced in Texas
$2.6 billion increase in annual state tax revenue
$468.9 million in annual benefits from safer products
$15.2 billion in annual net benefits of enhanced innovation
499,000 permanent jobs
430,000 additional Texans have health insurance today as a result of the medical liability reforms

The complete Perryman Group report is here.

As these numbers show, tort reform can have a substantial impact on economic growth and wealth creation, and a huge impact on the healthcare system in particular. Any serious national healthcare reform must include comprehensive tort reform to reduce the practice of defensive medicine and other perverse incentives.

Which is why I do not consider the current proposals from the Obama Administration to be serious (other than being seriously flawed).

Our current re-invention of the health care system, for all its complexity, completely ignores the problem of runaway malpractice lawyers and the costs of defensive medicine. While not surprising, given the huge contributions to the Dems from attorneys, this deficit alone virtually guarantees a disastrous outcome should it be implemented.

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33 comments so far ↓

 

  • B. Durbin // Aug 7, 2009 at 11:54 AM

    In the 2003 session, somebody other than George W. Bush was governor (a typo, I am sure.)

  • allan // Aug 16, 2009 at 9:27 AM

    CD4 wrote:
    Key Findings of the Robert Wood JohnsonFoundation study of Medical Malpractice Reform and Employer-Sponsored Health Insurance:

    “Tort reform has been championed as a way to reduce health care costs for consumers. But this analysis of health insurance premiums several years after states have enacted tort reform reveals families and individuals have not realized any savings, thus raising the question of why consumers should trade off legal rights without economic gain.

    1. Caps of noneconomic damages did not translate into lower health insurance premiums for consumers. Various types of analyses did not alter this finding.

    2. A survey of empirical research does suggest tort reform has constrained the growth of malpractice premiums for providers but, as these authors note, these premiums are a very small component of health care costs and do not have much impact on overall costs.

    3.From research by others, it is less clear whether doctors change the way they practice medicine after tort reform,

    Tort reform has not led to health care cost savings for consumers. Given the strength of this finding, the authors assert legislators need to reexamine whether tort reform offers consumers any benefits.”

    http://www.rwjf.org/pr/product.jsp?id=36768

  • R Preston // Aug 23, 2009 at 9:52 AM

    Can you please then explain why we are told that McAllen has the highest cost of health care per person in the US?

  • Mary Unger // Aug 24, 2009 at 2:47 PM

    odd. NO reduction in health care costs. I thought that was the idea behind tort reform.

  • Rob Starkey // Aug 25, 2009 at 3:46 AM

    Why would any reasonable person, other than attorneys who make money from lawsuits; not be in favor of tort reform. In response to a prior comment-since there was a documented 21% decrease in malpractice insurance cost, there was a significant cost reduction to health care users. We are the ones who ultimately pay for doctors malpractice insurance. Support tory reform!

  • Petersdraggon // Aug 27, 2009 at 12:40 PM

    I want to make sure there is enough money at stake for attorneys to be willing to risk their own money to be my advocate. The gov’t is the advocate of who can afford the most lobbyists and that could be the AMA but certainly not the individual. Some kind of cap on exhorbant awards makes since. BUT- who is going to represent us- some of the 100,000 per year that were victimized by mal-practice if attorneys are unwilling to take the gamble? It is a slippery slope to take away citizens access to the courts. Have you had to watch someone die the agonizing death of meso. cancer when a company hid knowledge of the damage it would cause for the sake of profits? Cutting off the wrong arm or leg, leaving sponges, hemastats, tools inside bodies, altering a life forever?
    I support exhorbant reward tort reform but don’t take away my access to the court system so only rich people have access as it was 200 years ago. That is going backward. A young person who hasn’t become or earning what he would eventually could is compensated at their current earnings. Working at McEE DEE’s- that is what you would get times 30 years or whatever. Nevermind you were going to school to be a doctor or lawyer. Bring about insurance & healthcare reform, go to a single payer system, take lifelong healthcare costs out of the compensation costs of litigations, reduce the amount of paperwork the doctor has to do, let him take a little more time and not be in a rush to a tee time. How about putting doctors in a larger pool to lower costs and weed out the bad ones- three strikes and your out!

  • Marcus Wilbanks // Aug 31, 2009 at 6:11 AM

    Peterdraggon – You obviously have some stake in the profits lawyers make from lawsuits against our doctors and Pharmaceutical companies. There is little gamble for any lawyer who takes a lawsuit to trial. Win or lose the taxpayer pays the court costs. It is easy to find some sympathetic juror to find fault in the defendant in any case. Then, the lawyer takes 50-60 percent of the settlement the damaged party is awarded. What helpful purpose does that serve? All it does improve the lawyers lifestyle at the malpractice insurance company’s expense. As far and the single payor system goes. It is not my responsibility to take care of YOU. It is YOUR responsibility to take care of YOU. If you want health insurance, get it. Just like if you want a new car, get it. In either case, don’t ask me to pay for it. Health care is not a right, it is a responsibility, YOUR RESPONSIBILITY, not mine.

  • Tort Reform - Page 3 // Sep 1, 2009 at 5:05 AM

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  • MRB // Sep 1, 2009 at 7:20 AM

    “Why would any reasonable person, other than attorneys who make money from lawsuits; not be in favor of tort reform.”

    Because it’s not necessarily reasonable that lobbyists should decide the value of a person’s lost quality of life without ever hearing the evidence.

    “There is little gamble for any lawyer who takes a lawsuit to trial.”

    This is completely false, at least with regard to medical malpractice. The lawyer for the plaintiff spends tens of thousands in out of pocket costs plus hundreds of hours of potentially uncompensated time. That’s why almost all med mal lawyers have their cases vetted by a consulting expert before even filing.

    “Win or lose the taxpayer pays the court costs. It is easy to find some sympathetic juror to find fault in the defendant in any case.”

    One sympathetic juror does not win a case. You need more than that. The taxpayer will pay court costs regardless of whether this or that case is there or not. Are you arguing individual litigants in all the many types of cases heard should be solely responsible for funding judges’ and clerks’ salaries?

    ” Then, the lawyer takes 50-60 percent of the settlement the damaged party is awarded. What helpful purpose does that serve? All it does improve the lawyers lifestyle at the malpractice insurance company’s expense.”

    Actually, it’s typically more like 33-50%. However, the jury’s award doesn’t include an attorney’s fee, that’s a separate negotiation between the plaintiff and their lawyer. Really none of society’s business. However, the judgment will be the same regardless of what the lawyer gets paid.

    Which leads back to your question about whose responsibility is it? If you’re grievously injured as a result of malpractice and thus uninsurable, who should pay for your future care? The insurer of the party who caused the harm, or the taxpayer through Medicare/Medicaid?

    If you’re interested in personal responsibility, tort reform doesn’t make much sense. Unless you are exempting liability insurers from the concept.

  • MRB // Sep 1, 2009 at 7:33 AM

    “In response to a prior comment-since there was a documented 21% decrease in malpractice insurance cost, there was a significant cost reduction to health care users. ”

    So a lobbying group for tort reform’s numbers are accurate because they say they are? How about in states that have tort reform that have lost jobs? Can we then attribute it to that? I would venture to say that you can also find claims in Texas that their low taxes are responsible for all these jobs.

    If tort reform was such a savings, and such a healthcare panacea, then California would be healthcare nirvana, having had tort reform for 3 decades. Along with numerous other states. California would have the lowest healthcare costs in the country, which it doesn’t.

    There is literally no evidence that a physicians’ savings, if the insurer decides to pass them on, from not paying the full value of legit claims saves the individual consumer a dime. For a couple of reasons. One, physicians don’t set their salaries for the most part, like other professionals. They’re paid on schedules set by Medicare/Medicaid and the health insurers. CMS (Medicare/Medicaid) puts little stock in these cries of exorbitant premiums, estimating that on average less than 5% of a physicians’ overhead is liability premiums. Even if physicians wanted to pass any savings on, (and who says they d0), they couldn’t. Second, there’s no guarantee these “savings” last, for the simple fact that while tort reform may lessen your large payments on legit claims if you’re an insurer, it doesn’t regulate the stock market, where the bulk of your money is made. Rates rise and fall in states with and without “reform” at about the same pace, in time with the stock market/bond market/real estate. That’s how most all insurance works. During the 90s, malpractice insurers actually took underwriting losses because they were making it up on the float in the market. That ended on 9/11, hence we have a “crisis”. Just like the crashes of the 80s and 70s precipitated crises.

    As for the guy whose dad founded the TLA, I hope you realize that most all those organizations were funded with tobacco industry seed money. You can google the tobacco industry documents and see the tens of millions funneled through various large law firms to these organizations. While it’s fun to talk about lawyers’ greediness and self interest, remember, your money comes from somewhere too.

    Finally, philisophically, I fail to see why anyone who believes in “responsibility” and individual freedoms would support government controlling yet more of our lives. Particularly abrogating a right which is enshrined both in the Declaration of Independence and the Constitution. The power granted to our citizenry in the form of a jury is a huge part of what makes America great. These people are not purchased with “fact-finding” junkets to the Bahamas, not wined and dined at Washington’s or your state capitol’s finest steak restaurants. They’re people like you and I, chosen among the voters, to decide even matters of life and death, much less the value of the harm caused by someone’s negligence. For those with a libertarian bent, this should surely bother you a little bit. Would you take away a jury’s power to impose the death penalty on a murderer? If not, why would you limit their ability to determine negligence and assess damages?

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  • RooForLife // Sep 4, 2009 at 3:04 PM

    MRB: If tort reform was such a savings, and such a healthcare panacea, then California would be healthcare nirvana, having had tort reform for 3 decades.

    Wrong CA problems is spending billions in free healthcare for illegal immigrants for many years. I tried to provide links before to support this position but was considered spam.

  • John B // Sep 16, 2009 at 11:23 AM

    In 2006, the state’s 26,497 commercially insured doctors saved roughly $49 million in premiums, an average of about $1,811 each, according to the Texas Alliance for Patient Access. A typical doctor may have 300-600 patients giving a savings of $3 to $6 each.

  • giulia iannitelli // Sep 17, 2009 at 4:42 AM

    Allan, you mean the study by Robert Wood Johnson Foundation who gave University of Chicago over $15,000,000 (Michelle Obama’s former employer). This comes right from their annual report online. Other recipients received a drop in the bucket compared to this. Hard to believe their survey results are not bias.

    From their annual report…..
    Bridging the Gap: Research Informing Practice and Policy for Healthy Youth Behavior

    To improve understanding of school, community, state and national policies and environmental factors affecting youth diet, physical activity, obesity, and tobacco, alcohol and drug use, and to evaluate the effectiveness of interventions to prevent youth obesity and tobacco use.
    Program Sites
    University of Illinois at Chicago Health Research and Policy Centers

    Chicago, IL

    $15,959,747

    (4 years)

  • Hello // Sep 23, 2009 at 9:40 AM

    Any savings no matter how little is good! It all adds up in the end. Convince me that the $50 million John Edwards made from being a medical malpractice lawyer did not empose a cost on the healthcare system. Funny, how his $ is near those of the Insurance execs who are greedy but individual malpractice lawyers haven’t been called out on their windfall profits!

  • Fairandbalanced // Sep 30, 2009 at 4:42 PM

    Some limit on damages for pain and suffering might be sensible if it a) did not cap damages for loss of future earnings and costs of litigating the claim, b) did not apply when life expectancy was reduced, c) the cap depended on remaining life expectancy (evaluated prior to the treatment), rising for longer periods of pain and suffering, (d)provided an effective means of expediting cases that was fair to plaintiffs (very unlikely), and e) other fixes I undoubtedly have not noticed.

  • CMT // Oct 1, 2009 at 8:41 AM

    @giulia iannitell.

    First of all, the University of Chicago where Michelle Obama worked and the University of Illinois at Chicago where RWJ foundation gave a grant and two very different institutions. So your conspiracy theory falls on its face right there.

    Second, giving grants to improve public health is the whole point of the RWJ foundation, so even if they had given a grant to the University of Chicago it would be entirely consistent with their mission.

    Third, throwing out accusations of bias against one of the most respected medical foundations in the country, when your counter argument is a report written by Ray Perryman, the economist you call whenever you need a right wing slant to something is just silly.

    Fourth, nowhere in this post does it say anything about tort reform improving care, reducing costs or covering more people. Since 2000, healthcare premiums for families in texas have risen 91%. One quarter of texans have no health insurance and areas like McAllen have the most expensive healthcare in the country. I think one of the final sentences in this post is very telling.

    “As these numbers show, tort reform can have a substantial impact on economic growth and wealth creation.”

    Just not on healthcare quality, cost or coverage….

  • Vegetarian Bodybuilding // Oct 8, 2009 at 7:54 AM

    Texas style tort reform is not the answer. They have the strictest tort laws but still have outrageous healthcare premiums.

  • Norris Hall // Oct 10, 2009 at 4:41 PM

    Texas tort reform is an excellent example of how government can intervene in a free market out of control and set arbitrary rules and limits to excessive profits.
    Hopefully conservatives will read your article and see that government intervention can result in cost savings and benefits for the entire health care industry.
    Unfortunately we know that tort reform contributes only 0.5% of the total US health care bill.
    The three biggest components are
    1. Hospital fees
    2. Physician fees
    3. Drug costs

    It’s time for the government to step in and put limits on doctor and hospital fees as well as drug and insurance industry profits. That’s the only real way to get runaway medical costs under control.
    You can be sure we will get the same positive results as you have shown when government puts caps on lawyers

  • Will // Nov 24, 2009 at 2:17 PM

    Great idea! Lets deny people access to the courts!

    It’s not like you all have ultra right wing judges on the bench already that can throw out judgments.

    Get serious, Tort reform is about maximizing profits, not lowering costs — and worst of all, its at the expense of the injured.

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  • cliff norman // Feb 26, 2010 at 2:36 PM

    The 2003 session (with George W. Bush was Governor)

    This is incorrect. George W. Bush was President. He was elected in a very controversial election in 2000. Perry was the Gov.

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  • Greg Baumgartner // Apr 20, 2010 at 1:59 PM

    I am sorry to say that there appears to be inaccurate statistics regarding insurance savings. what port reform did was provide record profits for the insurance carriers. The doctors I know have had their premiums increase steadily since 2003 and received no reductions after tort reform. the falsehoods used to sell this bill are many.

    When Texas has proven is the lawyers are not the problem for skyrocketing medical costs.

    As George Bush was once quoted as saying something like-you can fool some of the people all of the time and were concentrating on those folks.The benefits of Tort reform have been limited to record profits for insurers at the cost of consumers rights.

  • Mark Angelo // Jun 19, 2010 at 7:49 AM

    Texas Tort Reform went too far. Most that voted for it did not understand the specifics. I was one of those people. Now that it hits home with a life long injury because of poor medical practice, I now see how the cap has made it impossible financially to sue for even the worst medical practice. The $250,000 cap minus lawyer fees, minus court fees leaves you around $75,000 for a lifetime injury. Not to mention most reputable law firms won’t touch it because it is not worth their time. This just gives doctors a get out of jail free card when they mess up. I wish I could get one of those for my business! The cap was copied from the California cap which was based on 1975 economics. $250,000 in 1975 is now worth around $70,000 or less in 2010. It just doesn’t go very far with 2010 medical costs. I’m all for keeping frivolous law suits out of the courts, but real injuries with life long effects because of poor medical practice need to be taken more seriously and compensated with adequate dollar settlements or court awards.

  • Paul Flanery // Jul 2, 2010 at 9:35 AM

    I am all for tort reform. However, it has not resulted in the prices doctors and hospitals charge for medical care. I thought that was what tort reform was all about!

  • hana // Jul 4, 2010 at 1:40 AM

    I belive tort reform has helped Texans in many ways and Californians should learn from that. The reform has stopped many lawyers from taking cases that were abusing the system. The case of the lawyers in California creating suits against companies who may not have everything created for the handicapped is a good example. The groups getting millions for saying they had been discrimenated against is too far reaching. Lawyers are able to realize how they can take advantage of a situation if there is an opening.

  • Linell // Aug 11, 2010 at 2:52 PM

    Agreed with Mark Angelo. My husband died in a County Jail due to negligence and although the deposition phase of the lawsuit pretty much proved this, because of Texas Tort Reform the County only had to prove it’s equipment was “working” and not that a qualified person interpreted it (i.e., read in EKG). We could only sue for 100K and the case was dismissed even though the evidence provided the EKG was not interpreted by a qualifying doctor and even though the doctor signed a paper he had examined my husband, he lied. That case is now with the Texas Medical Association and they are investigating.

  • jewels // Oct 27, 2010 at 11:31 PM

    This past tort reform has not brought economy relief. It has only granted a license for malpracticing medical facilities (especially governmental) to commit more malpractice.

    Why would any reasonable person want to reduce economical strain of medical practicioners? It is assumed they are providing medical help to the public out of their good nature to man to begin with (not for love of high income and status). If the past tort has reduced malpractice insurance premiums by 21% and is not having an active roll in reducing insurance premiums for the general public, then what use is it?

    Who would support a tort that not only has very little benefit to those who it is mainly assumed to protect and support med staff in their venture to accumulate wealth, and feel relieved to practice medicine without accountability? My 9yr old daughter’s toxicology interpretation suggests the 1072ng/g of Fentanyl found in her tissue (after more than 70 days gestation) was put there by intention or gross neglagence. My first hand experience in this case includes proof (in addition to an autopsy) that neglagence killed my daughter’s liver approx 42 days prior to her homecide(voluntary or involuntary), torchered her with mismanaged medication (causing possible blindness), and eventually exposing her to such murderous individual(s) who ended her life in November of 2009.

    There hasn’t been a law firm in the state of Texas yet that will consider investing to litigate her case even with the mound of medical evidence I can provide, because and I quote, “the new tort passed about 7yrs ago in the state of Texas caps uneconomical damages…litigation which will cost more in medical expert fees than what can possibly be recovered… leaving the client with no compensation…possibly risking recovery of attorney’s fees.”

    Damages should not be capped if it is the only thing that makes a case equitable enough to be tried. Where is the justice for the siblings of the victims, who cannot sleep at night afraid they may never wake? Where is the justice for the mothers of the victims, who with each passing year becomes more pale and grows lines on her prematurely aged face from lack of light outdoors (because she feels the world is stacked against her children)?

    How can we continue to let hospitals get away with malpractice?

  • Mark Angelo // Jul 2, 2011 at 7:12 AM

    Tort reform in Texas has gone too far. The laws are too stringent and way out of line for today’s financial standards.
    Infact, most law firms in Texas won’t touch a malpractice law suit unless the victim is almost completely disabled but not enough that the state takes over care. Anything less is not worth pursuing. With most cases, the $250,000 cap is just not cost effective to pursue legal action. It is a Get-Out-Of-Jail-Free-Card for physicians in Texas. No wonder they are migrating back to our wonderful state. For those of you who support such stringent Tort laws, obviously have not had it hit close to home. You should pray to God it never does! And by the way, my medical insurance premiums have increased 25% 2 years in a row.

  • Paul // Jul 28, 2011 at 10:19 AM

    Tort reform was a good thing for doctors, clinics, hospitals, and tax revenue. The lower cost to Texans for Medical Care hasn’t been realized, even though medical liability insurance rates have dropped. Perhaps if Hospitals and Doctors posted prices charged, Price List, that may help in bringing prices down. Shouldn’t the medical profession post their prices , like anyother business, so people could shop prices !

    Who was it that was responsible for the paying patient to be taken out of the paying picture. Ins. and private insurance pay hospitals and physicians direct, taking the patient out of any realization of the total medical cost.

  • Paul // Aug 9, 2011 at 8:12 AM

    Tort reform has not stopped the medical profession from excessive charges, running tests, visits, etc. thereby milking the system. Tests, procedures, are ordered and done that are not always required. Unnecessary tests increase the cost to patients, not to mention the danger to the patient. All these excesse tests and charges begins to look like, just money generators !!!