Texas Tort Reform

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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12 thoughts on “Texas Tort Reform

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

  2. 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.

  3. “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.

  4. 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.

  5. 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


    (4 years)

  6. 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!

  7. 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.

  8. 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.

  9. 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?

  10. 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.

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