Governor Vetoes Bad Liability Bill

Action Special Report
June 19, 2009

Responding to a request from the Texas Medical Association, Gov. Rick Perry vetoed   legislation that would allow hospitals to hire physicians. TMA asked the governor to veto the bill because it would have weakened the landmark liability lawsuit reforms the governor, TMA, and its member physicians fought so hard to pass in 2003.

The bill, House Bill 3485, would have modified the state's Corporate Practice of Medicine Act and allowed government-owned hospitals in any county with fewer than 50,000 residents to hire physicians directly. Supporters said it would allow hospitals in underserved areas to attract physicians.

However, at the last minute, the Texas Trial Lawyers Association managed to add wording that diluted the liability reform law.

That prompted TMA President William H. Fleming III, MD, to ask Governor Perry to veto the bill.

"The bill not only changes the liability cap from a per-plaintiff standard to a per-defendant standard but also exposes these local governmental entities to tort liability risks way beyond those of the largest government facilities," Dr. Fleming said in a letter to the governor.

After the veto, Dr. Fleming said TMA worked in good faith with the bill's authors to add some very strong protections for patients and physicians. "But we also believe the bill was much too broad because many counties with fewer than 50,000 residents already have robust government-owned hospitals with large and active medical staffs."

He said TMA and its 44,000 members applaud the governor "for recognizing that we cannot risk even the slightest dent in a new liability system that has worked exactly as promised. The epidemic of health care lawsuit abuse has ended. Sick and injured Texans have better access to needed and timely care. More physicians provide specialty and high-risk obstetrical care in both urban and rural areas.

"We are proud that Governor Perry always has been and remains a true champion for our patients by standing tall and leading the way toward enacting and protecting the 2003 liability reforms," he said.

Dr. Fleming added that TMA "will continue to work with state leaders to craft a consensus plan for the 2011 legislative session that more effectively addresses the problem of underserved areas and protects patient care and access."

During this year's legislative session, TMA opposed attempts to allow hospitals to hire physicians, fearing such arrangements could interfere with the patient-physician relationship by restricting a physician's clinical autonomy. The association worked to add language to HB 3485 that protected physicians' autonomy. The hospitals would have had to meet Texas Medical Board (TMB) rules on credentialing and privileges, quality assurance, utilization review, peer review, and medical decision making. The bill also prohibited hospitals from including a non-compete clause in physicians' contracts, protected physicians from retaliation for reporting violations of TMB rules, and provided a fair process for terminations.

Even though he vetoed HB 3485, Governor Perry signed House Bill 2154 to help 114 medically underserved counties attract new physicians by helping them repay medical school loans.

In addition, the new budget the legislature approved increases medical education funding, particularly for graduate medical education (GME). The appropriations bill includes an 18.1-percent, or $15.7 million, increase in state support for GME. That raises GME formula funding for the next biennium from $5,634 to $6,653 per year per residency slot.

The Higher Education Coordinating Board also received an increase of $3.75 million, a 21.5-percent hike, for its Family Practice Residency Program. Total funding for primary care GME programs administered by the board will be $26.8 million for the biennium.