Turning the Tables: Bill Would Give Physicians Recourse Against Frivolous Suits

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Law Feature -- April 2001  

By Walt Borges
Associate Editor

Physicians who are targets of medical liability lawsuits currently find themselves between a rock and a hard place with only two options: fight or settle. But if State Rep. Juan Hinojosa is successful in passing a Texas Medical Association-backed bill, doctors will have a third way of responding to frivolous and abusive suits.

In a bill filed Feb. 8, Representative Hinojosa seeks to give doctors, hospitals, and other health care professionals the ability to recover damages from patients and their lawyers who act in bad faith to file or pursue medical liability suits without a legitimate legal basis. The bill is not designed to suppress lawsuits by patients and lawyers who go to court to recover for injuries resulting from malpractice or negligence by health care professionals. Instead, it is designed to make lawyers and their clients pay when they maliciously file or pursue unwarranted suits, damaging the reputations of the physicians and hospitals that are sued.

"The physicians of the Texas Medical Association support Representative Hinojosa's efforts to address this growing problem and will work with him to achieve a balance that deters lawsuit abuse without compromising the ability of patients to pursue legitimate legal actions," said TMA President Jim Rohack, MD. "It is only fair that patients be made whole if they have been injured. Likewise, it is only fair that unjustly sued doctors be able to restore their good reputation and regain the trust of their patients."

But it's not just the reputations of physicians, hospitals, and health care professionals that prompted Representative Hinojosa to file the bill.

"As a representative of the people, I am looking at implications much bigger than a doctor's reputation," Representative Hinojosa said in announcing the bill. "I want to preserve access to health care services."

The McAllen Democrat, a lawyer, says abusive lawsuits drive physicians from areas where they face a high risk of lawsuits to other communities where legal action is less likely. Abusive lawsuits in the Rio Grande Valley, already identified as an underserved area for medical care, will drive out the targeted physicians, and the resulting rise in premiums for medical liability insurance will prompt other doctors to leave as well.

Harold Freeman, TMA's associate director of legislative affairs, says the new bad faith cause of action is needed because traditional sanctions against lawyers and clients who recklessly disregard whether they have a basis for a medical liability suit are not used. Judges are hesitant to use such sanctions, and the sanctions that can be imposed are limited, Mr. Freeman says. Sometimes, the situation is complicated by the fact that the support of the legal community is needed in the judge's next election campaign.

Mr. Freeman says TMA is not aware of any instance in the last year of lawyers being sanctioned for filing frivolous lawsuits through the State Bar of Texas, which runs the lawyer disciplinary system. As of press time, the association was working with the State Bar to search and analyze disciplinary records relating to frivolous lawsuits in response to an open records request filed by Dr. Rohack.

Valley of the besieged  

The need for legislation was prompted partially by an unprecedented set of lawsuits that are being pursued in the Rio Grande Valley against a physician and hospital in McAllen.

In 1999, a class action suit covering as many as 2,000 claimants was filed against McAllen cardiovascular surgeon Francisco Bracamontes, MD, and the McAllen Medical Center. It alleged that the defendants had represented to patients that Dr. Bracamontes, who received his medical education and served his residency in Mexico, was board certified. Although Dr. Bracamontes had trained and practiced under Denton Cooley, MD, and other leading heart surgeons at the Texas Heart Institute in Houston, he was ineligible for board qualification in the United States because he did his residency in Mexico.

The class action lawsuit was filed on behalf of all the patients treated by Dr. Bracamontes at the McAllen Medical Center between 1993 and 1999. The lead attorney for the plaintiffs, Michael Caddell, JD, of Houston, successfully sought a temporary restraining order blocking Dr. Bracamontes from performing surgery. The plaintiffs' lawyers argued that because the doctor was not board certified in cardiovascular surgery, he was not eligible to perform the surgery, even though this is not the case. The restraining order later was dissolved.

Dr. Bracamontes subsequently faced at least 30 lawsuits alleging medical malpractice filed by two law firms. About half the suits have been dismissed or withdrawn because the plaintiff failed to show a legitimate cause of action.

A second set of lawsuits involving approximately 235 plaintiffs was filed by the law firm of Ramon Garcia. The defendants were the McAllen Medical Center; Dr. Bracamontes' office mate, cardiovascular surgeon Lester Dykes, MD; and Hector M. Urrutia, MD, a cardiologist who referred patients to Dr. Bracamontes. The suits alleged that the defendants misrepresented Dr. Bracamontes' board certification and made negligent referrals to Dr. Bracamontes. Dr. Bracamontes was not named in these suits.

The impact of both suits on Dr. Bracamontes' practice was severe. He could not perform surgery while the restraining order was in effect. Until recently, physicians would not take call for him because they were afraid they would be sued. Dr. Bracamontes had to be available at all times for his patients, preventing him from vacationing or traveling overnight. And after Dr. Urrutia was sued for allegedly making a negligent referral to Dr. Bracamontes, many physicians stopped making referrals to Dr. Bracamontes.

A rising tide  

The Rio Grande Valley is not the only area where the rising tide of medical liability suits threatens to engulf the medical community, TMA officials say.

A TMA study completed in July 2000 shows that the statewide number of medical liability claims and lawsuits rose from 2,596 in 1997 to 3,656 in 1999, the highest number in at least six years. Other studies show that 82 percent of the medical liability claims and lawsuits were closed without a payment to the claimant in 1999, suggesting that many of the filed cases are discovered to be baseless at some point in the legal process.

Mr. Freeman says the problem with medical liability suits doesn't just surface in the Rio Grande Valley counties. "The problem ripples into other parts of the state as some carriers put Harris County and adjacent counties into the same territory as the Valley," Mr. Freeman explained, linking the claims experience of the Valley doctors to that of doctors in the larger area and driving up liability insurance rates throughout the South Texas and Gulf Coast area.

The affordability of insurance in the Valley is reaching a critical stage, says Mr. Freeman, threatening the availability of medical liability insurance. Physicians from the Valley have requested that the Texas Department of Insurance review the situation, Mr. Freeman says.

Tom Cotten, president of the Texas Medical Liability Trust (TMLT), reports that tort reform efforts culminating in 1995 resulted in a temporary reduction of the number of medical liability claims, but the numbers have returned to the 1995 levels in the past year.

"We are at the same place we were in 1995," said Mr. Cotten, who said that more lawsuits and the higher costs of defending and settling them have created a medical liability insurance crisis.

He says TMLT premiums for its 10,000 policyholders have risen an average of 50 percent in the past 18 months.


Fighting back  

Choosing to fight a medical liability suit means the physician will spend weeks and maybe months in court away from his or her practice, suffering through a very public dispute that will tarnish, if not destroy, his or her reputation. Choosing to settle is not much better. While the physician's insurer often will absorb the immediate financial costs of the settlement, a physician's willingness to settle implies he or she did something wrong and the settlement undermines his or her reputation among colleagues.

"There are no meaningful sanctions against those who file malicious suits," said Dr. Rohack. "Although the State Bar of Texas and the courts have the ability to impose penalties against bad lawyers, those remedies are rarely used."

On paper, there are several remedies for physicians who have seen reputations and practices destroyed by unwarranted medical liability suits. A physician can challenge the patient and his attorney in the courtroom by filing suit for malicious prosecution, abuse of process, or defamation. Or the doctor can ask a judge to impose sanctions under the judge's authority to regulate legal procedure and behavior, and seek either financial penalties or the striking of certain plaintiffs' pleadings. A third option is to use the lawyer discipline system, a process that punishes the attorney but which does not compensate the victims of lawyer misbehavior.

TMA lawyers and lobbyists say all three strategies are likely to fail.

The causes of action against lawyers and patients face substantial legal hurdles, TMA lawyers point out. Defamation of a physician does not occur in a legal sense in court filings, and doctors can sue plaintiffs and their attorneys only when they have been defamed outside of court proceedings and filings. To prove malicious prosecution allegations in Texas requires the target of the original lawsuit to show that the plaintiff has deprived the defendant of his or her liberty or property. That requirement is met only rarely in civil cases, Mr. Freeman says.

Abuse of prosecution is even harder to prove. A doctor who attempted to use the abuse-of-process cause of action in Houston a few years ago ended up having his suit dismissed by the judge. An appeals court upheld the dismissal and said that even when suits are brought maliciously and in bad faith, it is not abuse of the litigation process. Representative Hinojosa's bill would create a separate cause of action that is not subject to that interpretation, Mr. Freeman points out.

The lawyer disciplinary process is limited as well, says Mr. Freeman. Complaints about unscrupulous lawyers go through a local grievance committee and then are sent on through a complex administrative process. Even if the complainant wins a public reprimand or a more serious sanction, the process is not intended to compensate lawyers' victims for their losses.

Sanctions can be imposed under the Texas Rules of Civil Procedure, but they are rarely used. Mr. Freeman says judges hesitate to do anything that would chill the right under the Texas Constitution to take disputes to court, and they tend to err on the side of inaction despite their ability to level fines and strike court documents of offending lawyers and their clients. Many feel that dismissal of the lawsuit is remedy enough. And trial court judges, who are elected in Texas, also must weigh the impact of their sanctions on lawyers whose support will be needed during the next campaign.

A sanction was leveled against Mr. Caddell, the plaintiff's lawyer in the suit in McAllen, and his law firm. On Jan. 24, Judge Leticia Hinojosa (no relation to the state representative), of the 139th District, ordered the Houston law firm of Chapman and Caddell to pay the attorneys' fees for the defendants in a suit filed against Tawhid Shuaib, MD, and other doctors on behalf of heart patient Richard Trevino. Mr. Trevino said he had not approved a suit against Dr. Shuaib, his primary care physician. Mr. Caddell's firm, which has dropped the case against Dr. Shuaib, says it will appeal the sanction.

Focus on bad faith  

The Hinojosa bill attempts to give doctors, hospitals, and health professionals a chance to fight back against bad faith lawsuits. To sue independently or countersue as part of a medical liability suit, the physician must show that the plaintiff and his or her attorney filed or maintained the suit with reckless disregard as to whether reasonable grounds existed for suing the doctor.

Mr. Freeman says the new cause of action is not designed to allow doctors or their defense lawyers to use the bad faith suits to undermine legitimate medical malpractice suits or to make it easier to settle. "We are going after the attorneys who had no reason to file and pursue a case in the first place," Mr. Freeman said.

In fact, only physicians, hospitals, and other health care professionals who provide treatment to patients can sue. Insurers are not allowed to seek bad faith judgments against the opposing lawyers and patients, and it is doubtful that insurers can be required to pay for the bad faith suit as part of their duty to provide a defense for a covered physician.

Austin attorney David M. Davis, JD, immediate past president of the Texas Association of Defense Counsel, says he can see several drawbacks in the legislation.

First, Mr. Davis says, rulemaking is better undertaken by the Texas Supreme Court than by the Texas Legislature because the court deals with litigation.

Second, some defense lawyers fear the legislature will turn the Hinojosa bill "topsy-turvy on its head," he said. Instead of passing a law that allows physicians to recover damages for unsubstantiated lawsuits, the legislature could rewrite the bill so that defendant physicians and their lawyers are subject to being sued for frivolously defending suits.

A third problem, Mr. Davis suggests, is that the frivolous suit problem in medical liability cases is less a statewide problem than a regional problem in the Rio Grande Valley. Mr. Davis says that in the northern parts of the state, "we don't see cases that are frivolous, and when we do, we get rid of them through existing rules. We just don't seem to have this problem statewide, although the issues raised by Representative Hinojosa are certainly significant to the Valley and show clear need for an appropriate remedy."

Mr. Cotten, the TMLT president, says that while TMLT supports the concept of aggressively pursuing tort reforms efforts, he agrees with Mr. Davis' evaluation of the pitfalls facing the Hinojosa bill.

Judges also appear skeptical of the sanctions. A survey of state judges by the Civil Practices Committee of the Texas House of Representatives found that sanctions for frivolous lawsuits were requested in 37 percent of the courts responding to the survey. Sanctions were granted by only 18 percent of the courts. And only 11 percent of the responding judges said they needed additional authority to be able to impose effective sanctions to "deter the filing of a frivolous lawsuit, motion, or pleading."

Austin lawyer Tommy Jacks, JD, former president of the Texas Trial Lawyers Association, says that while there are occasional instances in which judges fail to use the available legal tools to deter frivolous suits, efforts to provide a legislative fix should proceed with caution.

"When the plaintiff loses, it doesn't mean it was a frivolous case or one that should never have seen the inside of the courthouse," Mr. Jacks noted, adding that it is important to make sure the bad faith cause of action can't be used to intimidate patients who have legitimate injuries and their lawyers.

Mr. Freeman points out that although both the patient and his lawyer can be targeted in the new bad faith suit, it inevitably will be the lawyer who pays when the doctor wins. Most patients, he notes, cannot afford the cost of a lawsuit that involves extensive scientific evidence and numerous expert witnesses, so they sign contingent fee contracts that allow their lawyers to fund the case and be paid from whatever damages are awarded. Most damages will come out of the pockets of the plaintiff's lawyer, Mr. Freeman predicted.

If the bill becomes law, physicians who use the bad faith cause of action improperly to intimidate injured patients could themselves be sued for bad faith, and a judgment against the physician would not be covered by a liability insurer. The damages for the losing physician would come out of the doctor's pocket, Mr. Freeman says.



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