The 78th Texas Legislature presents: Texas Tort Reform

Talk to any of the parties involved in Texas’ tort reform battle of 2003 and you’ll hear heated recaps similar to those of a close boxing match. When the 78th Legislature debated House Bill 4 and voters pondered Proposition 12, the ultimate rivalry match pitted heavyweight against heavyweight. Emotional accounts still echo in the halls of the Capitol, only they continue to grow in magnitude, polarizing players on both sides. Who can say which groups got the knockout and which still suffer the sting of defeat? Those involved certainly will as they consider where Texas stands now.

Let’s get ready to rumble

The buildup to the Medical Malpractice and Tort Reform Act of 2003 had been steadily increasing since the 1980s and addressed, to a point, in battles continuing through the next decade. When Texas crossed into the new millennium, an unstable malpractice insurance market and a recognized abuse of the court system in malpractice cases brought new attention to the chronic problem.

The Texas Medical Association published a study in 2001 that reported six out of every seven—or 86 percent—of medical malpractice claims in Texas were closed with no fault found on the part of the doctor. A 2002 report issued by the Senate Special Committee on Prompt Payment of Health Care Providers, chaired by Sen. Jane Nelson, R-Flower Mound, indicated excessive litigation was a key cause of rising medical malpractice premiums due largely to major increases in the frequency of these lawsuits and the severity of awards. In other words, the system unevenly benefited one side.

“While many view tort reform efforts as anti-lawyer, I did not,” wrote Rep. Joseph M. Nixon in an introduction for the Texas Tech Law Review on the legislation. Nixon was the chairman of the House Committee on Civil Practices at the time, and chief House author of H.B. 4. “Most trial lawyers zealously represent their clients to obtain the maximum recovery or defenses available under the law. However, when the law inequitably favors either side in a suit, legislators must act to bring the scales of justice into balance.”

Carriers of medical liability insurance began leaving Texas’ unpredictable market in waves, with the number of companies dropping from 17 to four within three years. Those that stayed hiked physician rates to lessen their losses, passing the cost onto health care providers.

“In the few years leading up to tort reform, TMLT was paying out more in claims than we were bringing in and saw it decrease profits greatly,” says Bob Fields, acting president and CEO of the Texas Medical Liability Trust. “That’s why so many carriers left Texas and this also meant dramatic rate increases for doctors. Even with the increases in rates, insurance companies still took serious losses.”

This meant physicians, especially those who provided high-risk services such as obstetrics or emergency care, faced few options due to the rapidly rising insurance rates in 2000 and 2002: limit your practice, retire early or leave the state despite a worsening physician shortage and a call for more obstetrics and gynecology providers in rural areas.

“At the time we did tort reform, I was considering stopping doing some of the procedures in my practice,” says Robert Hogue, M.D., a family physician in the rural community of Brownwood, Texas. Hogue served as TAFP President in 2003. “I do more procedures than most family doctors do, like obstetrics and general surgery. If tort reform didn’t happen I would have had to limit those practices.”

“[Tort reform] was important for me personally because of a philosophical issue of continuity of care and being able to provide a large amount of care for my patients without sending them here, there and yonder,” he adds.

In 2003, the three major political forces in Texas, Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Tom Craddick, all called for reform. Modeled after California’s Medical Injury Compensation Reform Act of 1975, H.B. 3 capped non-economic damages in medical malpractice cases at $250,000, among other health reforms. H.B. 4, another tort reform bill, contained measures protecting businesses. They were combined into one mega-bill, H.B. 4, and passed out of committee to enter debate on the House and Senate floors. After weeks of debate, it passed.

The next battle required a constitutional amendment to approve the non-economic damage cap, which advocates predicted would lower malpractice insurance rates, stop the physician exodus and increase patient access to care. Both sides spent thousands of dollars in advertisements to sway Texas voters and in September 2003 they approved Proposition 12—51 percent to 49 percent.

After the fight

Evidence of the legislation’s impact on health care has surfaced where trouble areas once were. The American Medical Association removed Texas from its medical liability crisis list, which Jon Opelt, executive director of the Texas Alliance for Patient Access, says indicates “we’re on the way to recovery.”

Opelt points to a drop in lawsuits, cut in half in some venues; the 15 rate cuts Texas medical liability insurance companies have made since September 2003 that total more than a 20-percent rate decrease; and the increase of carriers in the marketplace, with 34 new medical liability programs. TMLT alone, which makes up an estimated 50 percent of the market in the state, also provided a 20-percent renewal premium dividend starting Jan. 1, 2007, for a cumulative reduction from the company of more than 40 percent in 2007, according to the Texas Department of Insurance.

“Competition is generally good for consumers and good for the doctors,” Opelt says. “The new companies can only get business by offering better rates.”

Along with an influx of carriers is a dramatic increase in the number of physician license requests, including a “record number” from out-of-state doctors. The Texas Medical Board received 4,026 new physician license applications in fiscal 2006, which ran from Sept. 1, 2005 to Aug. 31, 2006. In 2001, the Board received only 2,446 applications. The numbers for half of 2007 have already nearly surpassed those for all of 2001—reaching 2,423 as of March with more than 2,700 licenses pending.

Out of the new licenses granted in 2006, 42 percent went to out-of-state physicians, 31 percent went to Texas physicians and 27 percent went to international physicians, according to statistics from TMA’s Medical Education Division.

And other states notice, too. The Connecticut Legislature is debating a similar non-economic damage cap. In a March article in the Connecticut Business News Journal, Ken Ferrucci, director of government relations for the state’s medical society told the paper “University of Connecticut and Yale medical school graduates are not staying in Connecticut, but are setting up practices in states like California and Texas where more physician-friendly malpractice reforms have been enacted.”

“What Texas did in 2003 has been good in other states because it’s given them hope,” says Diana Ewert, AAFP senior manager of state government relations. “The number of [lawsuit] filings has dropped drastically and the number of [physician] applications has risen.”

Despite the positive numbers, Ewert says reform is an issue for some, but not a priority for most, and she admits that there is a general consensus that federal reform will not happen. “States are working with bits and pieces, trying to get through what they can,” she says.

The number of family medicine physicians in Texas increased 10 percent between 2003 and 2006, and the number of obstetrics and gynecology providers increased 4 percent during the same period, reversing a two-year decline between 2001 and 2003, according to the TMB May Reports. Donald Patrick, M.D., J.D., executive director of the Board, says almost every other category in which to place physicians coming to Texas has increased, from geographic origin to specialty. He also says so many applications coming in have created a traffic jam “like I-35 at rush hour,” causing up to a six-month wait to be licensed.

Part of the problem is a lack of funding. In the last biennium the Board received about $15 million of the $55 million raised through physician licensing and re-licensing fees while the remainder went to general revenue. In his 2007 state of the state address, Gov. Rick Perry spoke of “honest budgeting” to “end the practice of raising a fee for one purpose and diverting the funds to another purpose.” He said, “the solution to this is simple: either we spend fees for the purpose they are collected, or we give the money back.” H.B. 15 by Warren Chisum, R-Pampa, which passed the House and was being debated in the Senate at the time of publication, gives more money to the Board to support hiring six more full-time employees to decrease the licensing wait. Despite the increased stress on the system, Patrick, who practiced as a neurosurgeon in Austin for 30 years, is glad to see the rise in physician applications.

“I think we’re getting quality doctors coming in and filling in specialties we didn’t have covered before,” Patrick says. “They have to go into smaller communities where they’re needed.”

Opponents of tort reform say that the quality of doctors has gone down, but Patrick says there is no evidence of that. “[The number of complaints] hasn’t changed substantially and, if anything, it’s gone down percentage-wise.”

From 2005 to 2006, the number of complaints received by the Board dropped from 6,038 in 2005 to 5,211 in 2006, and the number of investigations opened dropped from 2,231 to 2,032 during the same time. There has been an increase since 2001 in both categories—563 more complaints in 2006 than in 2001 and 667 more complaints in the same period—that can be attributed to the growth in the number of physicians in Texas.

The main opponents to tort reform question if the reforms have really improved quality of care and patient access to care. Jay Harvey, president of the Texas Trial Lawyers Association, highlights a 2006 study by the American College of Emergency Physicians that gave the Texas emergency care system a C grade overall. The system was given a D+ in access to emergency care and quality and patient safety, a D in public health and injury prevention, and an A+ in medical liability environment.

“This means that poor care that’s difficult to get and poor public safety plus good medical liability rates gets the passing grade,” Harvey says. “This is evidence that tort reform has not benefited patients in Texas.”

But TLMT’s Fields says “having more doctors and more hospitals means better access to care for patients” and TAPA’s Opelt says trial lawyers often wrongly hold themselves out as the sole protectors of patients instead of recognizing the roles of “stringent peer review” and a “vigilant medical board.”

“Trial lawyers tend to blend two concepts that aren’t mutually inclusive: patient compensation and patient protection,” he says. “A lawsuit never suspended the license of a physician or brought sanctions against a physician. That’s all done through the medical board. The lawyer’s interest is in recovering money for the patient. The board’s interest is in revoking the licenses of bad doctors.”

And, Board Director Patrick says, “If you want money, call the trial lawyers, if you want redress of grievances, call us.”

Possible rematch?

After the passing of the 2003 legislation, the collective sigh of relief resounded in the medical community. The fight was over. However, a rematch is already in the works.

Though TTLA’s Harvey says we should all be on the same side when it comes to access to care, “the battle will be between insurers of health care providers and patients for rights to access the courts,” he says. “These cases are about what happens to patients. This is a patient issue, not a trial lawyer issue. This is about patients who have been harmed.”

TTLA will keep advocating bills “for patient access and patient protection,” Harvey adds. They threw the first punch to the 2003 legislation as Senate Bill 468, by Sen. Rodney Ellis, D-Houston, passed out of committee. The bill would allow patients or their families to raise medical liability cases more easily if injury or death resulted from emergency care. Claimants would have to show “clear and convincing evidence” that the health care provider “deviated from the degree of care and skill” normally given in similar circumstances. As it stands in the 2003 bill, claimants must show that the health care provider acted with “willful and wanton negligence.”

Fields says that each legislative session holds the potential to reverse gains seen in access to health care, insurance availability, rate reductions and increased dividends if any part of the tort reform language is changed or weakened. To him, this is a match-up between the health care industry and trial lawyers.

“There is a constant battle from here on to the future,” Fields says. “Trial lawyers will try to change the bills in 2003 so they and their clients will receive higher verdicts. Every year the health care community needs to continue to talk to legislators about how important it is not to touch the tort reform legislation we passed in 2003.”