Texas Holds 'Em

How Lone Star Republicans stopped abusive medical-malpractice lawsuits

That high lonesome sound you hear ululating over the wide-open Texas prairies isn’t coyotes — it’s hungry trial lawyers, forced to subsist on 40 percent of a litigation pie that has gotten a little bit smaller of late.

When Texas Republicans finally took control of the Texas legislature in 2003, tort reform was among their cardinal concerns. But legislation was only part of the fight. Several bare-knuckled political battles, the constitutional amendment known as Proposition 12, and five Rick Perry appointments to the state supreme court have entrenched a battery of reforms, including a cap on non-economic damages in medical-malpractice cases and several measures designed to keep frivolous lawsuits out of court in the first place. The guys in the ambulances are raising a joyful noise; the guys chasing behind are raising hell.

Tort reform will be the cornerstone of Governor Perry’s legacy, and other governors should mark what it accomplished: Legislators had to approve emergency funds for the Texas medical board, which was overwhelmed by applications from other states’ refugee doctors. Politicians rarely boast about bureaucratic backlogs, but Perry is happy to note that thousands of physicians clog the pipeline for licensure. “I’ll take that problem,” he says.

Texas had seen new applications decline for years, but now they’re up 60 percent. The board has licensed nearly 11,000 physicians in the four years since tort reform was enacted. Regions where specialists were difficult or impossible to find have attracted new talent. The number of insurance companies has increased from four to more than 30. That new competition has driven malpractice-insurance premiums down by up to 20 percent for some doctors.

All of this is gratifying to the legislation’s author, former state representative Joe Nixon — himself a trial lawyer with the firm of Beirne, Maynard, and Parsons, as well as a senior fellow at the Texas Public Policy Foundation. “We had a neurosurgeon move to Corpus Christi. He was the only one they had — there wasn’t one there before him,” he says. “He’d been there a week when a man walked into his office with an abscess on his spine. He was put into surgery immediately. He had an hour — one hour — or he would have been certainly paralyzed, probably dead. Today, he’s alive and walking. The physician who treated him came to Corpus because of Proposition 12.” That doctor, Mathew Alexander, told the Corpus Christi Caller-Times: “Practicing defensive medicine is expensive and doesn’t provide good care. I know a lot of doctors are really bitter about it.”

Timothy George, a pediatric neurosurgeon, was also drawn to Texas in part by the friendlier legal environment. He says that tort reform makes it easier for him to recruit other physicians to his practice. George argues that reining in the lawyers will help lower health-care costs — not only by reducing doctors’ insurance premiums, but also by taking away the pressure to order unnecessary tests and procedures for no other reason than to head off potential liability. “Reducing cost puts less pressure on physicians to increase revenues to offset malpractice, allowing doctors to spend more time focusing on their care of patients. This reduces the leading cause of malpractice suits, which is negligence.”

Texas had flirted with tort reform before — legislation was passed in the 1970s, but the Texas supreme court declared it unconstitutional. Proposition 12, which won voters’ approval with a supermodel-slim margin, amended the state constitution to make explicit that the legislature, not the courts, would have the final say in medical-malpractice matters. In the House, Nixon combined a sundry selection of tort-reform initiatives, dealing with everything from medical malpractice to asbestos to the liabilities of charitable nonprofits, into an omnibus reform package.

With the law in effect, Texas still has no ceiling on economic damages — compensation for the plaintiff’s quantifiable, dollars-and-cents losses. Punitive damages also are available, though they’re sparingly awarded. But in medical-malpractice cases, non-economic damages — “pain and suffering” or “mental anguish” awards — are limited to $250,000 for a single doctor. Up to three doctors at a health-care facility (hospital, nursing home, or clinic) can be sued, for a total of $750,000 in non-economic damages.

And that has put a Texas-sized bee in the bonnet of the trial bar, the members of which are practically chewing their tassel-loafers in rage. West Texas plaintiffs’ attorney Charles Dunn, who swears that he has “never” — never — seen a jury award that was too high, is bitterly critical of the reforms. But he offers a backhanded compliment: “Lawyers won’t take these cases on a contingency fee when they’re capped, and that’s reduced the number of cases.” Reducing the number of cases was, after all, the point.

Nixon celebrates the effect of the cap, but he argues that states interested in emulating Texas’s success should look first to another part of the legislation. “I think one of the best things we did is to put up a hurdle at the beginning of the lawsuit,” he says. “We’ve required that, within 120 days, an expert report be filed by a doctor, in the same or a similar field, who says that there was a breach in the standard of care and that that breach was the proximate cause of damages. If you don’t have that report, your case is dismissed. . . . I think that report has made a bigger difference than the caps.” Plaintiffs can pay doctors to write those reports, just as they pay expert witnesses.

Other Texas attorneys have pointed out that this legislation is only one factor in a complex evolution: The state supreme court is dominated by conservative Perry appointees. These justices have subjected tort claims, and medical-malpractice claims in particular, to much closer scrutiny than had been the custom in the days of Democratic dominance. David Anderson, a professor of law at the University of Texas and a critic of the med-mal caps, calls this “judicial tort reform.”

In a study comparing Texas with other states, Anderson took a single litigant — Wal-Mart, the most-sued tort defendant in the country — and compared its record in Texas to its history in other states. “Wal-Mart wins about half the time in the rest of the country. In Texas, during the period we studied, they won 100 percent.” Though Anderson agrees “something had to be done” about the system’s excesses and endorses some of the other Perry-era changes, he calls the caps on non-economic damages “a disaster.”

 
“It’s just about ended medical-malpractice [lawsuits] in Texas,” Anderson says. “Nobody can afford to sue. You have somebody who’s a paraplegic — he gets his medical expenses and his lost wages, but there’s a hell of a lot he has not been compensated for.” He mentions one intriguing alternative to a fixed cap: a British-style breakdown of injuries by type and severity. A plaintiff with a lost finger would have a lower cap than would one with a lost leg. A slight limp is one thing; permanent paralysis is another.

The lack of compensation for real but difficult-to-quantify damages is the most convincing of the anti-reformers’ arguments, and even Nixon is sympathetic. “Mental anguish, disfigurement — these are real things,” he says. “What we weighed on the other side of the scale was not fairness — $250,000 is an arbitrary number.” Rather, after listening to voluminous testimony from the state’s physicians, Nixon came to the conclusion that the torrent of medical-malpractice cases — and the resulting spike in insurance premiums — was reducing Texans’ access to health care.

“A doctor’s income is limited by what he can recover from insurance or Medicare. They can’t pass along losses to other patients, and they can’t increase prices because of Medicare or insurance. So a judgment against an obstetrician in Tyler effectively gets paid by all obstetricians in the state, because they share the risk,” he says. “Gynecologists wouldn’t do obstetrics. They said, ‘We’re not delivering babies anymore, because we can’t afford the insurance.’ Doctors were moving out of areas of the state. If a neurosurgeon were coming to practice in the [Rio Grande] Valley, it would cost him $250,000 to buy malpractice insurance before he bought a stethoscope — and the same guy would only have to pay $50,000 in San Francisco. So we had no neurosurgeons in the Valley. The best they could do was to stabilize you and put you on a plane to Houston or San Antonio. San Antonio didn’t have enough neurosurgeons to have one on call 24 hours a day — and it’s the ninth-largest city in the U.S. That’s what we were weighing when we put in the caps.”

Emily Lucid, an emergency physician, moved from Pittsburgh to the suburbs of Austin. Tort reform was a less-immediate issue for her — emergency physicians are generally employees of hospitals and don’t pay for lawsuit insurance out of pocket — but the fear of baseless lawsuits has been a fact of daily life even in situations like hers.

“There’s no question that tort reform made doctors breathe a little easier,” she says. “Just to know we’re not going to be hit for these massive amounts of money is good. But it’s not just money. Being sued is an issue in and of itself. It implies you’re not a good doctor. These lawsuits can consume your life, and make it difficult to keep practicing.” Lucid argues that the quality of care in Texas is more than ably defended by the state’s board of medical examiners. “They’re very . . . thorough,” she says with a nervous laugh. “Doctors coming here better be prepared.”

Before tort reform, Texas had the 48th-lowest ratio of doctors to residents out of the 50 states. When that figure is next measured, Nixon says, Texas expects to have climbed into the 30s. Not bad for four years’ work. And where are all of those doctors coming from? New York, Florida, Tennessee, and other states that have done nothing to address lawsuit abuse. The Lone Star State is greeting those new doctors with a chorus from Lyle Lovett: “You’re not from Texas, but Texas wants you anyway!”

Reprinted by permission of National Review, 215 Lexington Avenue, New York, NY  10016.