Tort Reform Attracts Physicians to Texas
Cover Story – September 2013
Tex Med. 2013;109(9):20-30.
By Crystal Zuzek
Not a day went by that emergency physician Justin Hensley, MD, didn't order a CT scan during his residency at a North Carolina hospital.
"I had a 30-year-old patient who'd already had 20 CT scans. It's difficult for me to understand how that many scans could be justified on someone so young. But because of the liability climate in North Carolina, residents were instructed to order tests, regardless of their necessity," said Dr. Hensley, a member of the Texas Medical Association Committee on Emergency Medical Services and Trauma.
He and his wife, pediatrician Katherine Hensley, MD, resented having to practice defensive medicine.
"I knew I didn't want to live and practice in a state that lacks tort reform, where physicians are liability targets. That environment forces physicians to make medical decisions based on protecting themselves instead of doing what's actually right for the patients," she said.
The Tar Heel State's medical liability landscape left such a bitter taste in their mouths that the Hensleys chose not to remain there to practice. So they came to Texas, drawn by the landmark liability reforms TMA and other organizations secured for physicians and patients a decade ago.
"When we were finishing residency, we only looked at states that would provide us some semblance of protection from frivolous lawsuits. Having seen countless TV ads in North Carolina featuring lawyers actively recruiting patients who'd had less-than-optimal health care outcomes, we knew that we could never practice there," Dr. Justin Hensley said.
North Carolina's loss was Texas' gain. The husband-and-wife physicians selected Corpus Christi for their practice location in 2011. They say they made the right decision.
"During my residency training, a surgeon wouldn't touch any kid who came in with appendicitis until the patient had undergone a CT scan. My experience in Texas has been that surgeons will proceed with the appropriate procedure based on a clinical diagnosis. In Texas, I get to practice medicine according to what's right for the patient, not based on what keeps me from getting sued," Dr. Katherine Hensley said.
Sandra Williams, DO, an emergency physician at Houston's Ben Taub Hospital, attended medical school in Florida and also selected Texas because of its liability protections.
"The attending physicians and faculty members in Florida had to call multiple hospitals to find a specialist to treat a patient needing immediate medical attention. In Texas, specialists aren't afraid to take call, and I'm able to transfer patients to the care they need," she said.
These physicians are among tens of thousands who enjoy the positive effects of tort reform: a practice atmosphere in which patients benefit from improved access to physicians who can make appropriate care determinations based on the best interest of patients, and a legal atmosphere in which fewer lawyers seek jackpot justice.
Ten years ago, TMA, the Texas Alliance For Patient Access (TAPA), the Texas Medical Liability Trust (TMLT), the Texas Hospital Association (THA), physicians, and medical students banded together against personal injury trial lawyers and worked to pass landmark medical liability reforms. The Medical Malpractice and Tort Reform Act of 2003, House Bill 4, went into effect Sept. 1 that year. Twelve days later, Texas voters approved Proposition 12, an amendment to the Texas Constitution that validated the legislature's actions. HB 4 caps noneconomic damages in health care liability cases. Texas' $750,000 total cap includes a $250,000 limit on physician exposure for noneconomic damages such as pain and suffering. The tort reform act doesn't restrict economic damages.
TMA Executive Vice President and Chief Executive Officer Louis J. Goodman, PhD, says tremendous pressure mounted in the days leading up to passage of the tort reform act to agree to a noneconomic damages cap much higher than $250,000.
"TMA knew Governor Perry had promised the doctors a $250,000 cap, so we held firm and ultimately prevailed when the bill was signed and voters passed the constitutional amendment several months later," he said.
Fortunately, thanks to the work of TMA, TAPA, medical specialty societies, individual physicians, and other organizations, the state's tort laws have remained intact for the past 10 years. Tort reform has been an immense boon to the state, says Dr. Justin Hensley.
"Tort reform has done wonders for the state by attracting more physicians to practice here, improving access to care, and making it economically possible for physicians to continue caring for patients," he said.
Then vs. Now
Before tort reform, doctors were leaving or limiting their practices because of soaring liability costs. According to TAPA Director Jon Opelt, about 20 percent of the state's physicians hadn't been renewed by their insurance carriers and were in jeopardy of losing hospital privileges.
"Many doctors who still maintained liability coverage refused to accept patients with complex or high-risk problems, referring them to an increasingly shrinking pool of specialists. Emergency room services for head injuries, childbirth, and trauma involving small children were in shorter supply. All blamed the state's hostile medical liability climate," he said, citing results of TMA's widely publicized 2003 surveys.
In the run-up to reform, Mr. Opelt adds, 55 Texas counties had a net loss of physicians, and another 50 failed to add a single physician. Some 99 counties lost a high-risk specialist, and an estimated 5,000 high-risk specialists restricted their practices because of liability concerns.
Arlo Weltge, MD, clinical professor of emergency medicine at The University of Texas Medical School at Houston, says the difference in Texas' medical liability environment since tort reform was passed in 2003 is "night and day." (See "Tort Reform Lowers Premiums, Increases Number of Doctors.")
"It's scary to think back to what it was like before September 2003. Texas was in the midst of a medical malpractice insurance crisis. Many medical liability insurance companies left the state, and some physicians could no longer get insurance coverage. Access to care was in dire straits," he said.
He adds that the situation was so precarious that any predictable, but less-than-optimal, medical outcome could be the basis for filing a lawsuit.
"On average, it was taking three to five years to resolve medical liability suits. Many times, the cases against physicians were dropped or settled. But the experience was emotionally draining and unsettling," Dr. Weltge said.
"The sad truth is that all Texas doctors – even those who've never had to pay a cent in damages, even those who've never been sued – are experiencing shocking liability insurance rate hikes," then-TMA President Fred Merian, MD, wrote in a February 2003 column in The Dallas Morning News. "More than 85 percent of all claims are dismissed with no damages being paid, but those that remain often produce enormous awards."
Fast forward a decade. A new national study of all 2012 health care liability suit judgments and settlements by Diederich Healthcare reports Texas is at the absolute bottom in payments per capita. Diederich is a medical liability insurance company headquartered in Illinois.
Diederich's 2013 Medical Malpractice Payout Analysis shows that in 2012, Texans spent only $3.03 per person in liability suit payouts. In contrast, New York was at the top of the list, paying out $38.99 per person in 2012.
"I think this is a direct result of our 2003 liability reforms and just one more piece of evidence that our reforms are working and must be protected," Mr. Opelt said.
Albert Gros, MD, was chief of obstetrics and gynecology and a member of the board of directors at St. David's South Austin Medical Center before tort reform. He says astronomically high medical liability insurance premiums inflicted havoc on his specialty at the time.
"We lost about one-third of our obstetricians leading up to 2003. The four insurance carriers operating in the state either wouldn't underwrite our OBs or the liability premiums made it economically impossible for the physicians to survive," he said.
Before 2003, Dr. Gros says he paid about $50,000 annually for medical liability insurance. When he left active practice in 2010 to assume the post of medical director of St. David's South Austin Medical Center, he was paying about $25,000 a year.
"Tort reform made it possible for me to continue practicing another seven years. When doctors give up obstetrics prematurely, it creates a shortage of physicians who can care for pregnant women. Absent liability protections, physicians are also less willing to care for high-risk, uninsured patients," Dr. Gros said.
Mr. Opelt says the ranks of high-risk specialists have grown twice as fast as the state's population since 2003. Specifically, the number of rural obstetricians increased nearly three times faster than the state's rural population. Since the passage of tort reform, 46 counties, of which 39 are rural, added their first emergency physician.
Dr. Justin Hensley says Texas' tort laws immensely helped emergency physicians and their patients.
"Since I teach residents, I feel that this will help decrease the cost of medicine over time, as doctors no longer have to over-test. This also helps decrease wait times in the emergency department, as we no longer have to keep beds occupied by patients waiting for the results of unnecessary testing," he said.
Dr. Weltge agrees that Texas' tort laws are particularly beneficial to emergency physicians.
"Texas' tort system provides legitimate protections for emergency physicians and on-call physicians who are providing federally mandated care and who are, in reality, responding to the sickest and most critically injured patients, often … without a complete medical history," he said.
Many specialties and subspecialties have benefitted from tort reform in Texas. David Teuscher, MD, a Beaumont orthopedic surgeon and former member of the TMA Board of Trustees, says tort reform has made a big difference in his practice's ability to recruit.
"My group finally was successful in recruiting a fellowship-trained foot and ankle orthopedic surgeon after a long drought. That was impossible before HB 4 and Proposition 12," he said.
Preserve Texas' Tort Laws
While Texas achieved a stout reform package that has proved lasting, physicians must continue to thwart legal battles waged by the trial lawyers.
Dr. Gros was a member of TMA's Council on Legislation in 2003 and served as chair beginning in 2009. He says he spent most of his time on the council "either implementing or protecting tort reform," calling it "a subject near and dear to my heart." He hopes Texas' tort laws will continue to prevail in the face of opposition.
"Preserving tort reform is crucial to improving quality of health care and patient access, while increasing the physician workforce and the number of insurers in Texas. If tort reform is diluted, in a worst-case scenario, we could return to the situation we had before 2003," he said.
Dr. Weltge urges physicians to remain vigilant in promoting tort reform's benefits and defending its provisions.
"The health care system in Texas has improved in Texas due in large part to the state's tort laws. Physicians must continue to sing praises of our tort laws to their patients and lawmakers," he said.
Physicians need to be plugged in politically to ensure tort reform endures, Dr. Teuscher warns.
"In order to preserve the improved access to care that our Texas patients now enjoy, we must continue to support and elect judges, senators, representatives, and governors who understand the importance of a stable medical liability climate," he said.
Crystal Zuzek can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by email.
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Tort Reform Survives Session – Again
Before the 2013 legislative session, TMA and the Texas Alliance For Patient Access (TAPA) anticipated trial lawyers would attempt to modify or repeal the noneconomic damages cap, the heightened emergency care negligence standard, and other cornerstones of tort reform. Fortunately, for the fifth successive legislative session, Texas' medical liability lawsuit reforms emerged unscathed.
TMA and TAPA supported House Bill 1869 by Rep. Four Price (R-Amarillo), which changes the way health care plans receive reimbursement following liability lawsuits and increases monetary awards to injured parties. The law protects the paid or incurred provision, which limits claimants' recovery of medical care expenses to the amount they actually paid or incurred.
TMA and TAPA also advocated legislation aimed at facilitating charity care.
Senate Bill 61 by Sen. Jane Nelson (R-Flower Mound) creates a military limited volunteer license that allows active and retired military physicians in good standing who do not hold a Texas medical license to render charity care in Texas. The legislation stipulates care must be provided at a clinic that primarily treats indigent patients, and volunteering physicians may not receive payment for services.
House Bill 746 by Rep. Trent Ashby (R-Lufkin) permits and regulates the deployment of health professionals across state lines during natural disasters. The law protects volunteer health care professionals and their sponsoring disaster relief agencies from liability unless guilty of criminal conduct or the infliction of intentional harm. Both SB 61 and HB 746 took effect Sept. 1.
TAPA Director Jon Opelt says TAPA, TMA, and other health care organizations worked to defeat several bills that overtly threatened tort reform.
Among them was Senate Bill 1193 by Sen. Donna Campbell, MD (R-New Braunfels). The bill would have removed confidentiality protections for those who file a complaint with the Texas Medical Board (TMB), as well as those physicians who review TMB complaints. Mr. Opelt says SB 1193 would have put the confidentiality of the peer review process at risk.
"Without confidentiality, patients, families, friends, and health care providers may fear retaliation and choose not to file a complaint, thus reducing the medical board's ability to protect the public," he said.
TAPA and TMA also opposed House Bill 2644 by Rep. Chris Turner (D-Arlington). The legislation excluded premises liability and work-related injuries from the definition of a health care liability claim. Mr. Opelt says TAPA recognized the need to study the issue in the interim.
"The bill was heard late in the session, and the stakeholders did not have sufficient time to craft a compromise. The bill would have expanded the definition of claimant and permitted multiple suits for the same event, which we did find troublesome," he said.
Mike Hull, TAPA general counsel, monitored about 200 bills this session that had the potential to affect tort litigation relating to medical liability. He says he's pleased tort reform emerged untouched this legislative session.
"I think that TAPA, TMA, and the medical specialty groups have devoted substantial time in the interim to meeting with legislators and educating them about the connection between access to care and tort reform. Personal injury trial lawyers face a substantial burden when attempting to persuade legislators to modify tort reform when doing so will limit access to care," he said.
Tort Reform Prevails in Court
Although tort reform drew additional physicians to Texas and had other positive effects on the state's health care system, the favorable liability environment is in danger from forces seeking to overturn it. Legal challenges have come in federal and state courts.
TMA, the Texas Alliance For Patient Access (TAPA), and other organizations coordinate efforts and file legal briefs to support tort reform's provisions and protections. So far, tort laws have weathered several legal trials.
Mike Hull, TAPA general counsel, says many factors contribute to the ability of tort reform's provisions to withstand challenges at the state and federal court levels.
"There has been a concerted effort by the voters to elect judges who favor a level judicial playing field. Additionally, TAPA, TMA, and the medical community have been proactive in defending tort reform against court challenges. Finally, our legislators have been very interested in passing laws that will sustain court challenges," he said.
While Texas' tort laws have proven resilient, that hasn't stopped trial lawyers from attempting to weaken or dismantle them. They tried to strip away emergency medical protections embedded in tort law. An appeals court decision this year affirms tort reform's heightened "willful and wanton" standard of proof in cases involving emergency care. The higher standard for liability requires trial attorneys to show gross, rather than simple, negligence.
In Amber and Anthony Gardner v. Children's Medical Center of Dallas, attorneys argued the heightened standard of proof violates the equal protection clauses of the Texas or U.S. constitutions. The jury ruled in favor of the hospital, and Dallas Court of Appeals Justice David Lewis later affirmed the judgment.
On July 1, 2011, the Texas Supreme Court upheld the "paid or incurred" provision in House Bill 4 in Haygood v. Escabedo, which stemmed from a traffic accident. The law allows patients in a medical liability lawsuit to recover only what they actually owe for a medical service, not the amount billed.
In August 2010, the Texas Supreme Court issued an opinion in Marks v. St. Luke's Episcopal Hospital that disqualified the plaintiff, Irving Marks, from damages because he failed to obtain a timely expert report on a broken bed. He alleged the bed caused him to fall while recuperating from back surgery at the Houston hospital.
The court held Mr. Marks' claim constituted a health care liability claim, not a simple negligence claim. The court's ruling reversed a 2009 decision that medical liability law did not cover Mr. Marks' claim. Mr. Marks argued he should be allowed to claim unlimited damages.
Ultimately, the court determined that plaintiffs can't package medical liability and simple negligence cases as a dual claim to dodge the expert report requirement or to sidestep the noneconomic damages cap. TAPA filed a brief that aided in a favorable outcome in the case.
In March 2010, the Texas Supreme Court ruled that a Texas woman who discovered a sponge was left inside her during a hysterectomy no longer had the right to sue the hospital and doctor because the error wasn't detected for more than 10 years. TAPA, TMA, and the Texas Hospital Association filed a brief in the case, Methodist Healthcare System of San Antonio v. Rankin. The court held the 10-year statute of repose (similar to a statute of limitations) for health care liability claims is constitutional and doesn't violate the open courts provision of the Texas Constitution.
In federal court, a class action lawsuit filed in February 2008 in Marshall attacked the constitutionality of Texas' noneconomic damages cap. Attorneys for individuals involved in 11 ongoing legal cases consolidated them into one class action suit, Emma Watson, et al. v. Hortman, et al.
Defendants included health care professionals and trial court judges named as class representatives who enforce the cap under Texas law. TAPA coordinated the defense.
The lawsuit alleged the noneconomic damage cap violated the right to trial by jury, right to petition, right to due process, and equal protection under the U.S. Constitution. The plaintiffs asserted Texas' noneconomic damages cap violates the Fifth Amendment. They alleged the state effectively "commandeers" medical liability plaintiffs' fair and proper compensation for noneconomic injuries that exceed the damages limitations. They also contended that capping jury awards disproportionately affects the young, old, poor, and unemployed. They maintained that the costs to litigate a medical liability suit are extraordinary and that the limitation on noneconomic damages presented a financial barrier to some claimants who attempt to access the courts.
In March 2012, U.S. District Judge Rodney Gilstrap ruled Texas' cap on pain and suffering awards in health care lawsuits is constitutional. In doing so, he dismissed claims that a cap on damages unconstitutionally takes private property and that it bars access to the courts.
"The court's decision removes any lingering uncertainty about the constitutionality of the voter-approved cap on noneconomic damages," said Mr. Hull. "A trial lawyer victory would have gutted the benefits of reform and been a big blow to the delivery of health care."
The Dallas Court of Appeals reaffirmed the federal ruling in the Watson case last year. In Prabhakar v. Fritzgerald, the court concluded the noneconomic damages cap did not violate the Texas Constitution. The appeals court also agreed with the federal district court judge that the noneconomic damages cap did not violate the right to trial by jury, equal protection, or right of access to the courts.
The courts continue to weigh some legal issues related to medical liability reform. The statute of repose as it applies to minors is at issue in Tenet Hospitals v. Elizabeth Rivera.
Ms. Rivera visited the hospital's emergency department in 1996, complaining of upper respiratory symptoms, cough, and fever. She was nine months pregnant at the time and returned to the hospital the following day and gave birth to her daughter via an emergency cesarean section.
Ms. Rivera sued the hospital in 2011 on behalf of her daughter, alleging the child sustained injuries at birth as a result of alleged negligence.
The hospital moved to dismiss the case, citing Texas' 10-year statute of repose. The trial court ruled in the hospital's favor, but the court of appeals reversed that decision, saying the statue of repose violates the open courts provision of the Texas Constitution as applied to minors injured before their eighth birthday.
TAPA asked the Texas Supreme Court to hear the case and filed a brief in support of Tenet Hospitals this year.
Two cases in the Corpus Christi and Amarillo courts of appeals examined whether Texas' noneconomic damages cap and wrongful death damages cap work in tandem. TMA and TAPA contend they do, but plaintiff's attorneys argue only one cap should apply in a wrongful death or survival case. The wrongful death cap, indexed for inflation, is approximately $1.8 million plus medical bills.
In THI of Texas at Lubbock I, LLC v. Perea and Rio Grande Regional Hospital v. Villarreal, the appeals courts sided with TAPA and TMA, determining defendants in "cap within a cap" cases can plead the wrongful death damages cap and the noneconomic damages cap. Mr. Hull says he expects the Texas Supreme Court to weigh in on the issue eventually.
Should the high court side with plaintiff's attorneys, Mr. Hull says, the decision would limit patient access to care in the state.
"We had a wrongful death damages cap in place for 25 years before tort reform, and it didn't improve access to care. It had no impact on the number of suits filed or the amount of payouts in medical liability lawsuits. Access to care would be in jeopardy if the court were to ignore the noneconomic damages cap," Mr. Hull said.
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