Looking Back at Tort Reform

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Commentary — November 2013

Tex Med. 2013;109(11):7-8.

By Carlos R. Hamilton Jr., MD

2013 is a year for all Texans to celebrate! This is the 10th anniversary of legislative achievements that have greatly benefitted the general economy, medical practice, and health care in our state. 

These achievements were the enactment by the Texas Legislature and the signing into law by Gov. Rick Perry of House Bill 4 and the approval by Texas voters of the companion Constitutional amendment Proposition 12. This legislation was the result of years of effort by the medical and business communities to create a political milieu in which comprehensive tort reform could be enacted and a judicial climate in which it could be sustained.

HB 4 addressed bringing a balance to the civil justice system, mitigating the costs of litigation, and reducing the role of legal tort action in our society. These reforms included permitting juries to hear more evidence about the cause of an injury, expecting payment only from those causing harm and then only to the extent of their own fault, and limiting damages to what was actually incurred. These broad actions have contributed to the dramatic economic growth and job creation that has characterized the past decade in our state.

From the medical liability perspective, the legislation requires: 

A written medical report by a physician in the same or similar field as the one being sued;
A report that clearly identifies the appropriate standard of care and how it was violated; and
Delineation of specific damages resulting from the violation of the standard.  

It also caps noneconomic damages at $250,000 for all physician defendants and an additional cap of $250,000 for each of up to two medical care institutions. Other previous plaintiff-friendly procedural devices, such as forum shopping, are eliminated. 

Prop 12 gave HB 4 full effect, establishing the authority of the legislature to limit damages, therefore overturning the 1988 Texas Supreme Court decision against caps on noneconomic damages. Voters approved this amendment in September 2003, and HB 4 became the law in Texas.

It is proper to celebrate these events of one decade ago, but it is the miraculous effects of those events that add poignancy to that celebration. Instead of physicians fleeing the state to avoid a hostile judicial environment, the number of licensed physicians in Texas has nearly doubled and is growing at twice the rate of the state's population. Access to health care by Texans greatly improved as rural and border communities added needed specialists. Timely and lifesaving care can now be obtained in parts of our state where it previously was unavailable. The liability insurance market has seen an increase in the number of carriers, and the cost of insurance has significantly decreased. These savings have benefited all physicians in the state, and an improved fiscal position has permitted academic medical centers to expand specialty referral care throughout the state. 

As we and our patients acknowledge the value of HB 4 and Prop 12, it is appropriate to be reminded of how the previously mentioned political milieu and judicial climate were changed to make possible these benefits. 

The need for medical tort reform dates back to at least the 1970s when the cost and availability of professional liability insurance became prohibitive due to the number of frivolous suits and their economic impact. In response to this crisis, the Texas Medical Professional Liability Study Commission called for widespread changes in the judicial process, including the state's first cap on medical malpractice damages, in December 1976. The Texas Legislature passed its first tort reform law in 1977.

Physicians and the TMA Alliance played an important role through the Texas Medical Association Political Action Committee (TEXPAC) by urging passage of this legislation. Over the next decade, the plaintiff's lawyers responded by supporting the election of Texas Supreme Court members who dismantled each part of that legislation with decisions that could charitably be called imaginative and that amounted to the court's usurping the function of the legislative branch of government. This process culminated in 1988 when the court ruled that the 1977 cap on damages "violated the Texas Constitution's open courts provision."   

I recall commenting on an apparently frivolous case I was asked to review by the defense counsel. The lawyer's response was, "You will never be able to change the system until Texas has a new Supreme Court!"

That is exactly what TMA and TEXPAC set about to help accomplish. With the leadership of Drs. Max Butler, Alan Baum, John Coppedge, and many others, the Clean Slate for '88 campaign turned the tide for the Texas Supreme Court. After two more election cycles, the rout was well under way as such justices as Tom Phillips, Nathan Hecht, Eugene Cook, and Raul Gonzalez replaced predecessors whose minds (and election finances) were influenced by the plaintiff bar. By the mid-1990s, with the addition of Justices John Cornyn, Craig Enoch, Priscilla Owen, Jim Baker, and Greg Abbott, the rout was complete. 

Now came the daunting task of passing legislation to reform the broken tort system. Two occurrences greatly enhanced these chances. First was the election of Gov. George W. Bush, who had expressed a strong commitment to tort reform. Second was new organizations of businessmen, manufacturers, community leaders, and citizens who knew such legislation meant progress for the entire Texas economy, as well as the delivery of health care. These groups, such as Texans for Lawsuit Reform, TMA, and other like-minded groups, proved to be an unbeatable team, and the winning touchdown was scored in 2003 with the enactment of HB 4 and Prop 12. 

I was always told that one should learn from his or her mistakes, but perhaps we can learn even more from our successes. Hopefully, the medical community and our society in general can apply some of these lessons to the ongoing battle over general health care reform. The first lesson is that to succeed in the public arena we must build coalitions with larger, well-funded groups representing employers, businesses, communities, and the general public. Secondly, we must have patience, as the wheels of public policy change turn slowly. Thirdly, we must not be fickle friends to other groups, as entities with diverse interests rarely agree on 100 percent of the issues.

Examples of the latter can be found in the medical community's conflicts with the managed care industry that came center stage in the 1990s with the HMOs' attempt to deny patients' access to care that physicians had ordered or that the patients felt was needed. Once that issue seemed under control, the health insurance industry changed its tactics and instead of denying care, simply delayed or avoided paying for the care after the fact. Again, legislation to address this issue was the result of TMA and TEXPAC efforts.

We should all remember the adage "The price of freedom is eternal vigilance," as future legislatures and courts can change laws and judicial opinions. We must continue to support decisionmakers who adhere to the principles that make possible the most effective medical care that physicians can provide for their patients, sustain our economy, and enhance our quality of life.

The present and future generations of medical professionals will have health care reform and other issues that will challenge their abilities to interact effectively with our government and other public entities. The future of our profession will be in their hands.     

Dr. Hamilton was president of the Harris County Medical Society in 1999, was on the TEXPAC Board of Directors from 1989 to 2003, and served as its chair from 1994 to 1996.

All articles in Texas Medicine that mention Texas Medical Association's stance on state legislation are defined as "legislative advertising," according to Texas Govt. Code Ann. §305.027. That law requires disclosure of the name and address of the person who contracts with the printer to publish the legislative advertising in Texas Medicine: Louis J. Goodman, PhD, Executive Vice President, TMA, 401 W. 15th St., Austin, TX 78701. 

The Texas Medical Association Political Action Committee (TEXPAC) is a bipartisan political action committee of TMA and affiliated with the American Medical Association Political Action Committee (AMPAC) for congressional contribution purposes only. Its goal is to support and elect pro-medicine candidates on both the federal and state level. Voluntary contributions by individuals to TEXPAC should be written on personal checks. Funds attributed to individuals or professional associations (PAs) that would exceed legal contribution limits will be placed in the TEXPAC administrative account to support political education activities. Contributions are not limited to the suggested amounts. TEXPAC will not favor or disadvantage anyone based on the amounts or failure to make contributions. Contributions are subject to the prohibitions and limitations of the Federal Election Campaign Act. 

Contributions or gifts to TEXPAC or any CMS PAC are not deductible as charitable contributions or business expenses for federal income tax purposes.

Federal law requires us to use our best efforts to collect and report the name, mailing address, occupation, and name of the employer of individuals whose contributions exceed $200 in a calendar year. Contributions from a practice business account must disclose the name of the practice and the allocation of contributions for each contributing owner. Should you have any questions, call TEXPAC at (512) 370-1361.   

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May 13, 2016

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